UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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the quarterly period ended
OR
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| The
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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
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has been subject to such filing requirements for the past 90 days.
Indicate
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405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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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
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As of May 1, 2024, the registrant had shares of common stock, no par value per share, issued and outstanding.
SKYX PLATFORMS CORP.
Form 10-Q
TABLE OF CONTENTS
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) of SKYX Platforms Corp. (the “Company,” “we,” “us,” or “our”) contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, outlook, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “aim,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “target,” “seek” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors, many of which have outcomes that are difficult to predict and may be outside our control, that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q include, but are not limited to, statements about:
| ● | our ability to successfully launch, develop additional features and achieve market acceptance of our smart products and technologies, access and integrate our products and technologies with third-party platforms or technologies, respond to rapidly changing technology and customer demands, and compete in our industry; | |
| ● | our ability to successfully manage and grow the operations of Belami, Inc. (“Belami”) with our business; | |
| ● | our ability to expand and successfully manage our operations, including managing our business transformation in connection with evolving our business strategy to focus on smart products and technologies and integrating new lines of business; | |
| ● | our ability to raise additional financing to support and continue our operations as needed; | |
| ● | our ability to comply with the terms of, and timely repay, our current debt financing; | |
| ● | our reliance on a limited number of third-party manufacturers and suppliers and our ability to successfully reduce our production costs; | |
| ● | our potential dependence upon a limited number of customers and/or on contracts awarded through competitive bidding processes; | |
| ● | any downturn in the cyclical industries in which our customers operate; | |
| ● | our ability to acquire other businesses, license rights, form alliances or dispose of operations when desired; | |
| ● | our ability to comply with regulations relating to applicable quality standards; | |
| ● | our ability to maintain, protect and enhance our intellectual property and retain rights to use intellectual property owned by third parties; | |
| ● | the potential outcome of any legal proceedings; | |
| ● | compliance with various tax laws and regulations, including income and sale tax; | |
| ● | our ability to successfully sell and distribute our products and technologies; | |
| ● | our ability to attract and retain key executives and qualified personnel; | |
| ● | guidance provided by management, which may differ from our actual operating results; | |
| ● | our ability to successfully manage our planned development and expansion, including the additional costs of being a public company; | |
| ● | Our estimated total addressable market; | |
| ● | our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; | |
| ● | the potential impact of unstable market and economic conditions on our business, financial condition and stock price, including the effects of governmental regulations, geopolitical conflicts, including the Israel-Hamas war and potentially deteriorating relationships with China, inflation, labor shortages, supply chain constraints and shortages, including availability of affordable electronic microchips, instability in the global banking system and the possibility of an economic recession; | |
| ● | the potential impact of cybersecurity breaches or disruptions to our information systems, including our cloud-based infrastructure; | |
| ● | the potential impact of natural disasters and other catastrophic events; | |
| ● | risks related to ownership of our common stock; and | |
| ● | the potential impact of anti-takeover and director and officer liability provisions in our charter documents and under Florida law. |
These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors, including unpredictable or unanticipated factors that we have not discussed in this Form 10-Q. Investors should refer to the heading “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of other important factors, many of which are outside of our control, that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change; however, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by U.S. federal securities laws. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.
| 3 |
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SKYX PLATFORMS CORP.
Consolidated Balance Sheets
(Unaudited) March 31, 2024 | (Audited) December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Account receivable | ||||||||
| Inventory | ||||||||
| Deferred cost of revenues | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Furniture 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 obligation | ||||||||
| Consideration payable | ||||||||
| Deferred revenues | ||||||||
| Convertible notes, related parties | ||||||||
| Convertible notes | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Notes payable | ||||||||
| Consideration payable | ||||||||
| Operating lease liabilities | ||||||||
| Convertible notes | ||||||||
| Convertible notes related parties | ||||||||
| Royalty obligations | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock and additional paid-in-capital: $ par value, shares authorized; and and shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ||||||||
| Total stockholders’ equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 4 |
SKYX Platforms Corp.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit (loss) | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Total expenses, net | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income / (expense) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Gain on extinguishment of debt | ||||||||
| Other income | ||||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| Unrealized loss on debt securities | ||||||||
| Net comprehensive 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 unaudited consolidated financial statements.
| 5 |
SKYX Platforms Corp.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Shares of common stock | ||||||||
| Balance, beginning of period | ||||||||
| Common stock issued pursuant to offerings | ||||||||
| Common stock issued pursuant to services | ||||||||
| Balance, end of period | ||||||||
| Common stock and paid-in capital | ||||||||
| Balance, beginning of period | $ | $ | ||||||
| Common stock issued pursuant to offerings | ||||||||
| Common stock issued pursuant to services | ||||||||
| Debt discount | ||||||||
| Balance, end of period | $ | $ | ||||||
| Accumulated Deficit | ||||||||
| Balance, beginning of period | $ | ( | ) | $ | ( | ) | ||
| Net loss | ( | ) | ( | ) | ||||
| Balance, end of period | $ | ( | ) | $ | ( | ) | ||
| Accumulated other comprehensive loss | ||||||||
| Balance, beginning of period | $ | $ | ( | ) | ||||
| Unrealized gain on debt securities | ||||||||
| Balance, end of period | ( | ) | ||||||
| Total stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 6 |
SKYX Platforms Corp.
Consolidated Statements of Cash Flows
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Non-cash equity-based compensation expense | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Deferred charges | ( | ) | ||||||
| Deferred revenues | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Accretion operating lease liabilities | ||||||||
| Royalty obligation | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of debt securities | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Payment of patent costs and other intangibles | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock- offerings | ||||||||
| Proceeds from issuance of convertible notes | ) | |||||||
| Principal repayments of notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplementary disclosure of non-cash financing activities: | ||||||||
| Substitution of consideration payable to convertible notes | $ | $ | ||||||
| Debt discount | $ | |||||||
| Right-of-use assets and operating lease liabilities | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 7 |
SKYX Platforms Corp.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS
SKYX Platforms Corp., a corporation (the “Company”), was incorporated in Florida in May 2004.
The Company maintains offices in Sacramento, California, Johns Creek, Georgia, Miami and Pompano Beach, Florida, New York City, and Guangdong Province, China.
The Company has a series of advanced-safe-smart platform technologies. The Company’s first-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged-in to a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products. In recent years the Company has expanded the capabilities of its power-plug product, to include its second generation advanced-safe and quick universal installation methods, as well as advanced-smart capabilities. The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy and voice control. It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing and much more. The Company’s third-generation technology is an all-in-one safe and smart-advanced platform that is designed to enhance all-around safety and lifestyle of homes and other buildings.
Since April 2023, the Company also markets home lighting, ceiling fans and other home furnishings from third parties.
Going Concern
The
Company’s liquidity sources include $
Management intends to mitigate such conditions by supporting its continued growth, 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, generate cash provided by financing activities through its at the market (“ATM”) offering or other equity or debt financing means.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional disclosures and accounting policies.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results could differ significantly from estimates.
Reclassifications
For comparability, reclassifications of prior-year balances were made to conform with current-year presentations, such as sales and marketing expenses which were previously included in selling, general, and administrative expenses in the 2023 comparable period.
Basis of Consolidation
The consolidated financial statements include the results of the Company and one of its subsidiaries, SQL Lighting and Fans LLC from January 1, 2023 and the results from its remaining subsidiaries, Belami, Inc., BEC, CA 1, Inc., BEC CA 2, LLC, Luna BEC, Inc., and Confero Group LLC from April 28 2023. All intercompany balances and transactions have been eliminated in consolidation.
| 8 |
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. The Company’s cash composition was as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| 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. As of March 31, 2024, and December 31, 2023, the Company’s allowance for doubtful accounts 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. 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 related inventory, freight, and sales charges. The deferred charges amounted to $
Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand.
| Match 31, 2024 | December 31, 2023 | |||||||
| Inventory, component parts | $ | $ | ||||||
| Inventory, finished goods | ||||||||
| Allowance | ( | ) | ( | ) | ||||
| Inventory-total | ||||||||
The
Company will maintain an allowance based on specific inventory items that have shown no activity over a reasonable period of time.
The Company tracks inventory as it is repurposed, disposed, scrapped or sold at below cost to determine whether additional items on
hand should be reduced in value through an allowance method. The Company has recorded an allowance of $
GE Agreements
The Company has two U.S. and global agreements with General Electric (“GE”) related to the Company’s products.
| ● | A U.S. and Global Licensing and Master Service Agreement dated December 4, 2023, which replaced a prior agreement under similar terms. The agreement expires on December 4, 2028 and includes automatic renewal provisions. Pursuant to such agreement, GE’s licensing team has the rights to exclusively license certain of the Company’s Standard and Smart plug-and-play products set forth in a statement of work in the U.S. and worldwide. Pursuant to the agreement, the Company expects that GE’s licensing team will seek and arrange licensee partners for our products in the U.S. and globally, including negotiating agreement terms, managing contracts, collecting payments, auditing partners, assisting with patent strategy and protection, and assisting in auditing product quality control under the “Six Sigma” guidelines. For products licensed to third parties, the Company and GE will each receive a specified percentage of the earned revenue realized from such licensing, unless otherwise provided in the applicable statement of work. | |
| ● | A
letter agreement dated November 28, 2023. The agreement expires on December 15, 2027 and
includes a repayment plan relating to certain amounts due under the U.S. and Global Trademark
Agreement dated June 15, 2011 (as later amended), which expired November 30, 2023, between
SQL Lighting & Fans, LLC and GE Trademark Licensing, Inc. Under this new payment arrangement,
the Company was required to pay a revised royalty payment obligation of $ |
| 9 |
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 stocks, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding convertible debt, option and warrant contracts. For the three-month ended March 31, 2024, and 2023, the Company recognized net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been antidilutive for the period. Therefore, a separate computation of diluted earnings (loss) per share is not presented for the periods presented.
| March 31, 2024 | March 31, 2023 | |||||||
| Stock warrants | ||||||||
| Stock options | ||||||||
| Convertible notes | ||||||||
| Preferred stock | ||||||||
| Total | ||||||||
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.
NOTE 3 FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Furniture and fixtures | ||||||||
| Tooling and production | ||||||||
| Software development costs | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Depreciation
expense amounted to $
NOTE 4 INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Patents and trademarks (useful life | $ | $ | ||||||
| Customer relationships (useful life | ||||||||
| E-commerce technology platforms (useful life | ||||||||
| Less: accumulated amortization | $ | ( | ) | ( | ) | |||
| Total, net | $ | $ | ||||||
Amortization
expense on intangible assets amounted to $
The following table sets forth the estimated amortization expense for the next five years:
| Nine months ended December 31, 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 |
| 10 |
NOTE 5 DEBTS
The following table presents the details of the principal outstanding:
| March 31, 2024 | December 31, 2023 | APR at March 31, 2024 | Maturity | Collateral | |||||||||||
| Convertible Notes (b,c) | % | Substantially all company assets | |||||||||||||
| Notes payable to financial institutionsa) | Inventory, accounts receivable, cash | ||||||||||||||
| Notes payable to Belami sellers | % | – | |||||||||||||
| SBA-related loans | % | Substantially all Company assets | |||||||||||||
| Total | $ | $ | |||||||||||||
| Unamortized debt discount | ( | ) | ( | ) | |||||||||||
| Debt, net of Unamortized debt Discount | |||||||||||||||
| For the three-month period ended | ||||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Interest expense | $ | $ | ||||||
As of March 31, 2024, the expected future principal payments for the Company’s debt are due as follows:
| Nine-months ended December 31, 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thereafter | ||||
| $ |
| (a) | ||
| (b) |
During
2023, the Company issued convertible promissory notes for $ | |
| (c) |
| 11 |
NOTE 6 OPERATING LEASE LIABILITIES
In
April 2022, the Company entered into a 58-month lease related to certain office and showroom space pursuant to a sublease that expires
in February 2027. The Company recognized a right-of-use asset and a liability of $
In
September 2022, the Company entered in a 124-month lease related to its future headquarters offices and showrooms space. The Company
recognized a right-of-use asset and a liability of $
In
January 2024 the Belami, subsidiary of SKYX entered in a 35-month lease related to its Sacramento office. The Company recognized a right-of-use
asset and a liability of $
The following table outlines the total lease cost for the Company’s operating leases as well as weighted average information for these leases as of March 31, 2024:
| March 31, 2024 | ||||
| Lease costs: | ||||
| Cash paid for operating lease liabilities | $ | |||
| Right-of-use assets obtained in exchange for new operating lease obligations | $ | |||
| Fixed rent payment | $ | |||
| Lease – Depreciation expense | $ | |||
| years ended | ||||
| March 31, 2024 | ||||
| Other information: | ||||
| Weighted-average discount rate | % | |||
| Weighted-average remaining lease term (in months) | ||||
| Minimum Lease obligation | ||||
| Nine months ended December 31, 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 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 $
| 12 |
NOTE 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Accrued interest, convertible notes | $ | $ | ||||||
| Trade payables | ||||||||
| Accrued compensation | ||||||||
| $ | $ | |||||||
NOTE 9 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 Co-Chief Executive Officers.
The outstanding principal on the convertible promissory notes, associated with related parties was $
NOTE 10 STOCKHOLDERS’ EQUITY
(A) Common Stock
The Company issued the following common stock during the three months ended March 31, 2024, and 2023:
| Transaction Type | Shares Issued | Valuation $ | Range of Value Per Share $ | |||||||
| March 31, 2024 Equity Transactions | ||||||||||
| Common stock issued, pursuant to services provided | - | |||||||||
| Issuance of common stock pursuant to offering, net | - | |||||||||
| Transaction Type | Shares Issued | Valuation ($) | Range of Value Per Share ($) | |||||||
| March 31, 2023 Equity Transactions | ||||||||||
| Common stock issued, pursuant to services provided | – | |||||||||
As
of March 31, 2024, the remaining amount to be used under the ATM offering program is $
(B) Preferred Stock
The following is a summary of the Company’s Preferred Stock activity during the three months ended March 31, 2023:
| Transaction Type | Quantity | Carrying Value | Value per Share ($) | |||||||||
| Preferred Stock Balance at December 31, 2022 | $ | $ | ||||||||||
| Preferred Stock redemptions | ||||||||||||
| Preferred Stock Balance at March 31, 2023 | $ | $ | ||||||||||
The Series A Preferred Stock was convertible at the holder’s option. The Company could repurchase shares of the Preferred Stock for $ per share. Holders also had a put option, allowing them to sell their shares of Preferred Stock back to the Company at $ per share, and therefore the stock was classified as mezzanine equity rather than permanent equity.
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There were shares of Series A Preferred Stock outstanding at March 31, 2024 and the Company terminated its designation of the Series A Preferred Stock in May 2023. The Company has not designated any other preferred stock as of March 31, 2024.
(C) Stock Options
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2024 | $ | –– | $ | |||||||||||||
| Exercised | – | –– | –– | |||||||||||||
| Granted | –– | — | ||||||||||||||
| Forfeited | ( | ) | — | — | ||||||||||||
| Outstanding, March 31, 2024 | $ | $ | ||||||||||||||
| Exercisable, March 31, 2024 | $ | $ | ||||||||||||||
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2023 | $ | — | $ | |||||||||||||
| Exercised | — | — | ||||||||||||||
| Expired | — | — | ||||||||||||||
| Outstanding, March 31, 2023 | $ | $ | ||||||||||||||
| Exercisable, March 31, 2023 | $ | $ | ||||||||||||||
The following table summarizes the range of the Black Scholes pricing model assumptions used by the Company during three month ended March 31, 2024 and 2023:
| March 31, 2024 | March 31, 2023 | |||||||
| Range | Range | |||||||
| Stock price | $ | $ | - | |||||
| Exercise price | $ | - | $ | |||||
| Expected life (in years) | yrs. | yrs. | ||||||
| Volatility | % | % | ||||||
| Risk-fee interest rate | % | % | ||||||
| Dividend yield | ||||||||
The Company cannot use its historical volatility as expected volatility because there is not enough liquidity in trades of common stock during a term comparable to the expected term of stock option issued. The Company relies on the expected volatility of comparable publicly traded companies within its industry sector, which is deemed more relevant, to compute its expected volatility.
Unamortized
future option expense was $
| 14 |
(D) Warrants Issued
The following is a summary of the Company’s warrant activity during three month ended March 31, 2024 and 2023:
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2024 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ||||||
| Balance, March 31, 2024 | $ | |||||||
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2023 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Balance, March 31, 2023 | $ | |||||||
During the three months ended March 31, 2024, the Company did not issued
any warrants. During the three months ended March 31, 2023 as an inducement to enter certain financing transactions, the Company issued
(D) Restricted stock units
A summary of the Company’s non-vested restricted stock units during the three months ended March 31, 2024 and 2023 are as follows:
| Shares | Weighted Average Grant Due Fair Value | |||||||
| Non-vested restricted stock units, January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-Vested restricted stock units, March 31, 2024 | $ | |||||||
| Non-vested restricted stock units, January 1, 2023 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested restricted stock units on March 31, 2023 | $ | |||||||
The weighted-average remaining contractual life of the restricted units as of March 31, 2024 is years.
One RSU gives the right to receive one share of the Company’s common stock. RSUs that 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 RSU and RSA awards is expensed on a straight-line basis over the vesting period.
During the three months ended March 31, 2024, and 2023, the Company recognized compensation expense of $ , and $, respectively, related to stock options, RSUs and RSAs.
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NOTE 11 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 during the three months ended March 31, 2024 and 2023. The Company had
one 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.
NOTE 12 PROFORMA FINANCIAL STATEMENTS (unaudited)
The following pro forma consolidated results of operations have been prepared as if the acquisition occurred on January 1, 2023:
| Three-month period ended March 31, | ||||
| 2023 | ||||
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
| Basic and diluted loss per share | $ | ) | ||
| Weighted average number of shares outstanding- basic and diluted | ||||
These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect, among other things, 1) additional amortization that would have been charged assuming the fair value adjustments to amortizable intangible assets had been applied, 2) the shares issued and issuable by the Company to acquire Belami, 3) fair value of the initial grant and options to Belami employees, and 4) the increase in interest expense related to the issuance of convertible notes payable, including amortization of debt discount. Furthermore, it excludes transaction costs related to the Belami acquisition. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisition occurred on the date indicated or that may result in the future.
NOTE 13 SUBSEQUENT EVENTS
Management has evaluated subsequent events through May 14, 2024, 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 unaudited consolidated financial statements.
| 16 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023. This discussion and analysis and other parts of this Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, strategy, expectations, outlook, intentions and projections. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and in other filings with the Securities and Exchange Commission (the “SEC”). Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements” contained in this Form 10-Q.
Overview
We have a series of advanced-safe-smart platform technologies. Our first- and second-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged 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 to touch 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, 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 third-generation smart-advanced platform to be available in 2024. 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.
We believe our total addressable market in the United States exceeds $500 billion, based on the Company’s internal calculations derived from the estimation of the total target user pool, projected average selling price, and projected units per household. We believe there are billions of installations of light and other electrical fixtures globally. Our estimates of the addressable market for our products may prove to be incorrect. The projected demand for our products could differ materially from actual demand. Even if the total addressable market for our products is as large as we have estimated and even if we are able to gain market awareness and acceptance, we may not be able to penetrate the existing market to capture additional market share.
Inflation and related risk of recession has continued to impact operations during 2023 and 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 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.
The Israel-Hamas war 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.
During 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 common stock as consideration for the acquisition (including shares issued in April 2024). The Company expects that Belami will serve as a marketing and growth platform and should provide several distribution channels, including to retail customers, builders, and professionals.
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Recent Developments
In 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 date. In addition to other customary terms, the Seller Notes bear annual interest at 10%, with interest and principal becoming 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. The 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 will 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 will 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.
On April 11, 2024, the Company entered into an amendment to the letter agreement previously entered into with GE Trademark Licensing, Inc. (“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.
During 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.
Results of Operations
Comparison of the Three Months Ended March 31, 2024 and 2023
For the Three Months Ended March 31, | Increase/(Decrease) Between the Months Ended March 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 18,977,821 | $ | 10,025 | $ | 18,967,796 | NM | |||||||||
| Cost of revenues | 13,399,771 | 1,468 | 13,398,303 | NM | ||||||||||||
| Gross income | 5,578,050 | 8,557 | 5,569,493 | NM | ||||||||||||
| Selling and marketing expenses | 6,586,816 | 1,299,859 | 5,226,957 | 402 | % | |||||||||||
| General and administrative expenses | 7,939,581 | 5,948,346 | 1,991,235 | 33 | % | |||||||||||
| Total expenses, net | 14,466,397 | 7,248,205 | 7,218,192 | 100 | % | |||||||||||
| Other income / (expense) | ||||||||||||||||
| Interest expense | (787,854 | ) | (730,621 | ) | 57,233 | NM | ||||||||||
| Total other income (expense), net | (787,854 | ) | (730,621 | ) | 57,233 | 8 | % | |||||||||
| Net loss | $ | (9,676,201 | ) | $ | (7,970,269 | ) | $ | 1,705,932 | 21 | % | ||||||
NM: Not meaningful
Revenue
The increase in revenues during the three-month ended March 31, 2024, when compared to the prior year period, is primarily due to revenues from products marketed by Belami which was acquired in April 2023.
We believe that revenues will be higher in 2024 than in 2023, primarily resulting from revenues from Belami, and the sale of our advanced-safe-smart products.
| 18 |
Cost of Revenues
The cost of revenues consists primarily of costs associated with selling the products marketed by Belami. The increase in cost of revenues during the three-month periods ended March 31, 2024 when compared to the prior year period, is primarily due to costs associated with revenues from products marketed by Belami which was acquired on April 28, 2023.
We believe that cost of revenues will increase in 2024 compared to 2023, commensurate with an anticipated increase in revenues.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of sales and marketing compensation as well as sales and marketing programs.
The increase in selling and marketing expenses is primarily due to such expenses increasing following the acquisition of Belami aggregating $4.4 million during the three-month period ended March 31, 2024.
General and Administrative Expenses
General and administrative expenses consist primarily of an allocation of product development, finance, legal, human resources, including salaries, wages, and benefits, and depreciation and amortization, including share-based payments.
The increase in general, and administrative expenses during the three months ended March 31, 2024, when compared to the prior year period was primarily due to the following:
| ● | Increase in general and administrative expenses following the acquisition of Belami aggregating $2.0 million; | |
| ● | Increase of depreciation and amortization expenses of $1.0 million primarily related to increased intangibles acquired during the second quarter of 2023 |
We believe that our operating expenses will 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.
Other Income (Expense)
The increase in interest expense in the three-month periods ended March 31, 2024, when compared to the prior year period resulted primarily from interest charges related to increased interest-bearing weighted-average debt in the current period when compared to the prior year period.
Liquidity and Capital Resources
As of March 31, 2024 and 2023, we had $19.7 million and $23.1 million in cash, cash equivalents, and restricted cash respectively.
We have raised additional funds through the sale of our common stock for gross proceeds of $3.6 million and placements and offerings during the three-month period ended March 31, 2024.
These 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 March 31, 2024, we issued 2,733,361 shares of common stock under such a program for net proceeds of $ 3,582,610, net of brokerage fees of approximately $ 73,145. From inception through March 31, 2024, we issued 6,593,193 shares of common stock under such a program for net proceeds of $ 12,751,281, net of brokerage fees of approximately $ 260,230. As of March 31, 2024, the remaining amount to be used under the ATM offering program is $6.6 million.
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 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.
| 19 |
We owe approximately $11.5 million under fixed rate obligations as of March 31, 2024. In addition, we owe GE certain minimum royalty payments under a license agreement which amounted to $3.7 million as of March 31, 2024.
On 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 an 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 becoming due on May 16, 2025, and can be converted by the Sellers at any time at $3.00 per share of our common stock.
Three-months period ended March 31, 2024:
We had $19.8 million in cash, cash equivalents, and restricted cash as of March 31, 2024.
We used $6.1 million in our operating activities which consists of a net loss of $9.7 million adjusted for the following:
| ● | Stock-based compensation of $3.3 million. | |
| ● | Depreciation and amortization of $1.0 million. |
We generated $3.6 million in financing activities which were primarily related to proceeds we generated from the issuance of shares of our common stock.
Three-months period ended March 31, 2023:
We had $23.1 million in cash, cash equivalents, restricted cash and marketable debt securities as of March 31, 2023.
We used $4.1 million in our operating activities which consists of a net loss of $8 million adjusted for the following:
| ● | Stock-based compensation of $3 million. | |
| ● | Depreciation and amortization of $500,000. |
We generated $10.3 million in financing activities which were primarily related to proceeds we generated from the issuance of convertible promissory notes.
Going Concern
The Company’s liquidity sources include $ 19.8 million in cash and cash equivalents, including restricted cash of $5.6 million, and $ 1.2 million of working capital at March 31, 2024. However, the Company has a history of recurring operating losses and its net cash used in operating activities amounted to $6.2 million and $4.1 million during the three months ended March 31, 2024 and March 31, 2023, respectively. The Company has also generated net cash provided by financing activities of $3.6 million and $10.3 million during the three months ended March 31, 2024 and 2023, 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 issued.
Management intends to mitigate such conditions by supporting its continued growth, 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, generate cash provided by financing activities through its at the market offering or other equity or debt financing means.
Non-GAAP Financial Measures
Management considers earnings (loss) before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, an important indicator in evaluating our business on a consistent basis across various periods. Due to the significance of non-recurring items, EBITDA, as adjusted, enables our management to monitor and evaluate our business on a consistent basis. We use EBITDA, as adjusted, as a 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.
| For the three-months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net loss | $ | (9,676,201 | ) | $ | (7,970,269 | ) | ||
| Share-based payments | 3,295,029 | 2,963,702 | ||||||
| Interest expense | 787,854 | 730,621 | ||||||
| Depreciation, amortization | 1,060,571 | 497,373 | ||||||
| Transaction costs | - | - | ||||||
| EBITDA, as adjusted | $ | (4,532,747 | ) | $ | (3,778,573 | ) | ||
| 20 |
Critical Accounting Policies
Our significant accounting policies are disclosed in Note 2 to our consolidated financial statements for the year ended December 31, 2023 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.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from estimates.
Fair Value of Financial Instruments
Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2024, and December 31, 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.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
| 21 |
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Stock-based compensation is measured at the grant date based on the value of the award granted using the Black- Scholes option pricing model based on projections of various potential future outcomes and recognized over the period in which the award vests. For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination. The stock-based compensation expense is included in general and administrative expenses.
Revenue Recognition
We account for revenues in accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (Topic 606).
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
| ● | identification of the contract, or contracts, with a customer; | |
| ● | identification of the performance obligations in the contract; | |
| ● | determination of the transaction price; | |
| ● | allocation of the transaction price to the performance obligations in the contract; and | |
| ● | recognition of revenue when, or as, we satisfy a performance obligation. |
Recent Accounting Pronouncements
Although there are several new accounting pronouncements issued or proposed by the Financial Accounting Standards Board, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures and any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their control objectives.
As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based upon the evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2024.
Changes in Internal Controls Over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. As of the date of this Form 10-Q, we are not a party to any material legal matters or claims., Legal proceedings are inherently uncertain and the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors set forth in “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Our business, operations and financial results are subject to various risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, and the trading price of our common stock. You should carefully read and consider the risks and uncertainties included in the report referenced above, together with all of the other information in such report and this Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and other documents that we file with the SEC. The risks and uncertainties described in these reports may not be the only ones we face, and the disclosure of any risk factor should not be interpreted to imply that the risk has not already materialized. The factors discussed in these reports, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral statements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
The following is a summary of issuances of unregistered securities during the first quarter of 2024, to the extent not previously disclosed in a Current Report on Form 8-K filed by the Company: (i) the Company granted 393,703 shares of restricted shares of common stock pursuant to agreements regarding services provided to the Company: (ii) three of the Company’s previously issued subordinated convertible balloon promissory notes aggregating $575,000 were amended to, among other things, adjust the conversion price to $3.00 per share; and (iii) the Company issued convertible promissory notes to each of the sellers in the Belami acquisition in substitution of an aggregate of $3,117,408 in cash due to the sellers on April 28, 2024, which can be converted by the sellers into shares of the Company’s common stock at any time at $3.00 per share of the Company’s common stock.
The sales or issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, including Regulation D and Rule 506 promulgated thereunder, as transactions by the Company not involving a public offering.
Issuer Purchases of Equity Securities
During the quarter ended December 31, 2023, the Company withheld 3,785 shares of common stock, at a price per share of $1.72, to satisfy tax withholding obligations due upon the vesting of a restricted stock grant. We did not pay cash to repurchase these shares, nor was this repurchase part of a publicly announced plan or program.
| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs | ||||||||||||
| January 2024 | 386 | $ | 1.44 | — | — | |||||||||||
| February 2024 | 6,421 | 1.50 | — | — | ||||||||||||
| March 2024 | 22,325 | 1.28 | — | — | ||||||||||||
| Total | 29,132 | $ | 1.33 | — | — | |||||||||||
(1) Includes shares repurchased to satisfy tax withholding obligations due upon the vesting of restricted stock held by certain employees. We did not pay cash to repurchase these shares, nor were these repurchases part of a publicly announced plan or program.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During
the quarter ended March 31, 2024, none of the Company’s directors or executive officers
| 23 |
Item 6. Exhibits
* 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.
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SKYX PLATFORMS CORP. | ||||
| Date: | May 14, 2024 | By: | /s/ John P. Campi | |
| John P. Campi, Co- Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| Date: | May 14, 2024 | By: | /s/ Leonard J. Sokolow | |
| Leonard J. Sokolow, Co-Chief Executive Officer and Director | ||||
| (Principal Executive Officer) | ||||
| Date: | May 14, 2024 | By: | /s/ Marc-Andre Boisseau | |
| Marc-Andre Boisseau, Chief Financial Officer | ||||
| (Principal Financial and Accounting Officer) | ||||
| 25 |
Exhibit 31.1
CERTIFICATION
I, John P. Campi, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of SKYX Platforms Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 14, 2024 | By: | /s/ John P. Campi |
| John P. Campi | ||
| Co-Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Leonard J. Sokolow, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of SKYX Platforms Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 14, 2024 | By: | /s/ Leonard J. Sokolow |
| Leonard J. Sokolow | ||
| Co-Chief Executive Officer and Director | ||
| (Principal Executive Officer) |
Exhibit 31.3
CERTIFICATION
I, Marc-Andre Boisseau, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of SKYX Platforms Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: May 14, 2024 | By: | /s/ Marc-Andre Boisseau |
| Marc-Andre Boisseau | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SKYX Platforms Corp. (the “Company”) for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: May 14, 2024 | By: | /s/ John P. Campi |
| John P. Campi | ||
| Co-Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SKYX Platforms Corp. (the “Company”) for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: May 14, 2024 | By: | /s/ Leonard J. Sokolow |
| Leonard J. Sokolow | ||
| Co-Chief Executive Officer and Director | ||
| (Principal Executive Officer) |
Exhibit 32.3
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SKYX Platforms Corp. (the “Company”) for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: May 14, 2024 | By: | /s/ Marc-Andre Boisseau |
| Marc-Andre Boisseau | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value | $ 0 | $ 0 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares issued | 97,096,897 | 93,473,433 |
| Common stock, shares outstanding | 97,096,897 | 93,473,433 |
Pay vs Performance Disclosure - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Pay vs Performance Disclosure [Table] | ||
| Net Income (Loss) | $ (9,676,201) | $ (7,970,269) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Insider Trading Arrangements [Line Items] | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
ORGANIZATION AND NATURE OF OPERATIONS |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS
SKYX Platforms Corp., a corporation (the “Company”), was incorporated in Florida in May 2004.
The Company maintains offices in Sacramento, California, Johns Creek, Georgia, Miami and Pompano Beach, Florida, New York City, and Guangdong Province, China.
The Company has a series of advanced-safe-smart platform technologies. The Company’s first-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged-in to a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products. In recent years the Company has expanded the capabilities of its power-plug product, to include its second generation advanced-safe and quick universal installation methods, as well as advanced-smart capabilities. The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy and voice control. It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing and much more. The Company’s third-generation technology is an all-in-one safe and smart-advanced platform that is designed to enhance all-around safety and lifestyle of homes and other buildings.
Since April 2023, the Company also markets home lighting, ceiling fans and other home furnishings from third parties.
Going Concern
The Company’s liquidity sources include $ 19.7 million in cash and cash equivalents, including restricted cash of $5.6 million, and $ 1.2 million of working capital as of March 31, 2024. However, the Company has a history of recurring operating losses and its net cash used in operating activities amounted to $6.2 million and $4.1 million during the three months ended March 31, 2024 and March 31, 2023, respectively. The Company has also generated net cash provided by financing activities of $3.6 million and $10.3 million during the three months ended March 31, 2024 and 2023, 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 issued.
Management intends to mitigate such conditions by supporting its continued growth, 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, generate cash provided by financing activities through its at the market (“ATM”) offering or other equity or debt financing means.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional disclosures and accounting policies.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results could differ significantly from estimates.
Reclassifications
For comparability, reclassifications of prior-year balances were made to conform with current-year presentations, such as sales and marketing expenses which were previously included in selling, general, and administrative expenses in the 2023 comparable period.
Basis of Consolidation
The consolidated financial statements include the results of the Company and one of its subsidiaries, SQL Lighting and Fans LLC from January 1, 2023 and the results from its remaining subsidiaries, Belami, Inc., BEC, CA 1, Inc., BEC CA 2, LLC, Luna BEC, Inc., and Confero Group LLC from April 28 2023. All intercompany balances and transactions have been eliminated in consolidation.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. The Company’s cash composition was as follows:
Restricted Cash
The Company issued a letter of credit of $2.8 million in September 2023 to use as collateral for certain obligations to one of its lessors. The letter of credit was issued by a financial institution and was secured by cash of $2.8 million as of March 31, 2024 and December 31, 2023. Additionally, pursuant to the Company’s acquisition of Belami, Inc., the Company placed $750,000 in an escrow account. Furthermore, the Company secured a line of credit of $2.0 million with cash of the equivalent amount.
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. As of March 31, 2024, and December 31, 2023, the Company’s allowance for doubtful accounts was $54,987 and $54,987, respectively. The Company determines an allowance for sales returns based upon historical experience. As of March 31, 2024, and December 31, 2023, the Company’s allowance for sales returns was $185,501 and $182,584, respectively and is recorded as accrued expenses in the accompanying consolidated financial statements.
The Company defers the revenue related to undelivered customer orders for which it was paid or has a right to be paid at each measurement date. Such amounts are recognized as deferred revenues in the accompanying balance sheet. Deferred revenues amounted to $ 1,616,038 and $1,475,519 as of March 31, 2024 and December 31, 2023, respectively.
The costs associated with such deferred revenues are recognized as deferred charges in the accompanying balance sheet. Such charges include the carrying value of related inventory, freight, and sales charges. The deferred charges amounted to $ 245,734 and $224,445 as of March 31, 2024 and December 31, 2023, respectively.
Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand.
The Company will maintain an allowance based on specific inventory items that have shown no activity over a reasonable period of time. The Company tracks inventory as it is repurposed, disposed, scrapped or sold at below cost to determine whether additional items on hand should be reduced in value through an allowance method. The Company has recorded an allowance of $1.3 million as of March 31, 2024 and December 31, 2023.
GE Agreements
The Company has two U.S. and global agreements with General Electric (“GE”) related to the Company’s products.
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 stocks, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding convertible debt, option and warrant contracts. For the three-month ended March 31, 2024, and 2023, the Company recognized net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been antidilutive for the period. Therefore, a separate computation of diluted earnings (loss) per share is not presented for the periods presented.
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.
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FURNITURE AND EQUIPMENT |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FURNITURE AND EQUIPMENT | NOTE 3 FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
Depreciation expense amounted to $ 30,305 and $22,141 during the three-month ended March 31, 2024 and 2023, respectively.
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INTANGIBLE ASSETS AND GOODWILL |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS AND GOODWILL | NOTE 4 INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
Amortization expense on intangible assets amounted to $ 513,559 and $14,307 during the three-month ended March 31, 2024 and 2023, respectively.
The following table sets forth the estimated amortization expense for the next five years:
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DEBTS |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBTS | NOTE 5 DEBTS
The following table presents the details of the principal outstanding:
As of March 31, 2024, the expected future principal payments for the Company’s debt are due as follows:
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OPERATING LEASE LIABILITIES |
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| OPERATING LEASE LIABILITIES | NOTE 6 OPERATING LEASE LIABILITIES
In April 2022, the Company entered into a 58-month lease related to certain office and showroom space pursuant to a sublease that expires in February 2027. The Company recognized a right-of-use asset and a liability of $1,428,764 pursuant to this lease.
In September 2022, the Company entered in a 124-month lease related to its future headquarters offices and showrooms space. The Company recognized a right-of-use asset and a liability of $22,192,503 pursuant to such lease. In connection with the execution of lease, the Company was required to provide the landlord with a letter of credit in the amount of $2.7 million, which is secured by the same amount of cash.
In January 2024 the Belami, subsidiary of SKYX entered in a 35-month lease related to its Sacramento office. The Company recognized a right-of-use asset and a liability of $ 662,698 pursuant to such lease.
The following table outlines the total lease cost for the Company’s operating leases as well as weighted average information for these leases as of March 31, 2024:
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ROYALTY OBLIGATIONS |
3 Months Ended |
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Mar. 31, 2024 | |
| Royalty Obligations | |
| ROYALTY OBLIGATIONS | 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 $2.5 million to GE pursuant to the license agreement. The payments associated with this debt are payable in quarterly tranches aggregating $0.8 million during 2024 and 2025 and $0.9 million in 2026. Additionally, the Company owes an additional amount of $1.4 million pursuant to its agreements with GE which is payable in 2027. During April 2024, GE and the Company agreed to reduce the additional amount of $1.4 million by $400,000 in exchange for the issuance of a convertible promissory note of $1.0 million. The GE 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 $ per share. The Company may prepay the entire then-outstanding principal amount of a Note at any time, plus a prepayment premium; if the Company exercises such right, the Note holder may instead elect to convert the Note into shares of common stock. The Note also provides for certain piggyback registration rights.
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
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| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
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RELATED PARTY TRANSACTIONS |
3 Months Ended |
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Mar. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 9 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 Co-Chief Executive Officers. The outstanding principal on the convertible promissory notes, associated with related parties was $950,000 as of March 31, 2024, and December 31, 2023 and accrued interest of $ 272,824 and $151,081, respectively.
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STOCKHOLDERS’ EQUITY |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | NOTE 10 STOCKHOLDERS’ EQUITY
(A) Common Stock
The Company issued the following common stock during the three months ended March 31, 2024, and 2023:
As of March 31, 2024, the remaining amount to be used under the ATM offering program is $6.5 million.
(B) Preferred Stock
The following is a summary of the Company’s Preferred Stock activity during the three months ended March 31, 2023:
The Series A Preferred Stock was convertible at the holder’s option. The Company could repurchase shares of the Preferred Stock for $ per share. Holders also had a put option, allowing them to sell their shares of Preferred Stock back to the Company at $ per share, and therefore the stock was classified as mezzanine equity rather than permanent equity.
There were shares of Series A Preferred Stock outstanding at March 31, 2024 and the Company terminated its designation of the Series A Preferred Stock in May 2023. The Company has not designated any other preferred stock as of March 31, 2024.
(C) Stock Options
The following table summarizes the range of the Black Scholes pricing model assumptions used by the Company during three month ended March 31, 2024 and 2023:
The Company cannot use its historical volatility as expected volatility because there is not enough liquidity in trades of common stock during a term comparable to the expected term of stock option issued. The Company relies on the expected volatility of comparable publicly traded companies within its industry sector, which is deemed more relevant, to compute its expected volatility.
Unamortized future option expense was $13.9 million (excluding certain market-based options which management cannot ascertain to have a probable outcome amounting to $63 million) at March 31, 2024 and it is expected to be recognized over a weighted-average period of years.
(D) Warrants Issued
The following is a summary of the Company’s warrant activity during three month ended March 31, 2024 and 2023:
During the three months ended March 31, 2024, the Company did not issued any warrants. During the three months ended March 31, 2023 as an inducement to enter certain financing transactions, the Company issued 1,391,667 3- year warrants to the noteholders at an adjusted exercise price of $2.70 per warrant. The Company recorded a debt discount aggregating $5.6 million which was recognized as debt discount and additional paid-in capital in the accompanying balance sheet.
(D) Restricted stock units
A summary of the Company’s non-vested restricted stock units during the three months ended March 31, 2024 and 2023 are as follows:
The weighted-average remaining contractual life of the restricted units as of March 31, 2024 is years.
One RSU gives the right to receive one share of the Company’s common stock. RSUs that 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 RSU and RSA awards is expensed on a straight-line basis over the vesting period.
During the three months ended March 31, 2024, and 2023, the Company recognized compensation expense of $ , and $, respectively, related to stock options, RSUs and RSAs.
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CONCENTRATIONS OF RISKS |
3 Months Ended |
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Mar. 31, 2024 | |
| Risks and Uncertainties [Abstract] | |
| CONCENTRATIONS OF RISKS | NOTE 11 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 during the three months ended March 31, 2024 and 2023. The Company had one third-party payor accounts receivable balance representing 24% of the Company’s total accounts receivable at March 31, 2024 and none at March 31, 2023.
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.
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PROFORMA FINANCIAL STATEMENTS (unaudited) |
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| PROFORMA FINANCIAL STATEMENTS (unaudited) | NOTE 12 PROFORMA FINANCIAL STATEMENTS (unaudited)
The following pro forma consolidated results of operations have been prepared as if the acquisition occurred on January 1, 2023:
These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect, among other things, 1) additional amortization that would have been charged assuming the fair value adjustments to amortizable intangible assets had been applied, 2) the shares issued and issuable by the Company to acquire Belami, 3) fair value of the initial grant and options to Belami employees, and 4) the increase in interest expense related to the issuance of convertible notes payable, including amortization of debt discount. Furthermore, it excludes transaction costs related to the Belami acquisition. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisition occurred on the date indicated or that may result in the future.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 13 SUBSEQUENT EVENTS
Management has evaluated subsequent events through May 14, 2024, 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 unaudited consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional disclosures and accounting policies.
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| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results could differ significantly from estimates.
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| Reclassifications | Reclassifications
For comparability, reclassifications of prior-year balances were made to conform with current-year presentations, such as sales and marketing expenses which were previously included in selling, general, and administrative expenses in the 2023 comparable period.
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| Basis of Consolidation | Basis of Consolidation
The consolidated financial statements include the results of the Company and one of its subsidiaries, SQL Lighting and Fans LLC from January 1, 2023 and the results from its remaining subsidiaries, Belami, Inc., BEC, CA 1, Inc., BEC CA 2, LLC, Luna BEC, Inc., and Confero Group LLC from April 28 2023. All intercompany balances and transactions have been eliminated in consolidation.
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| Cash, Cash Equivalents, and Restricted Cash | 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:
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| Restricted Cash | Restricted Cash
The Company issued a letter of credit of $2.8 million in September 2023 to use as collateral for certain obligations to one of its lessors. The letter of credit was issued by a financial institution and was secured by cash of $2.8 million as of March 31, 2024 and December 31, 2023. Additionally, pursuant to the Company’s acquisition of Belami, Inc., the Company placed $750,000 in an escrow account. Furthermore, the Company secured a line of credit of $2.0 million with cash of the equivalent amount.
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| Customer Contracts Balances | 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. As of March 31, 2024, and December 31, 2023, the Company’s allowance for doubtful accounts was $54,987 and $54,987, respectively. The Company determines an allowance for sales returns based upon historical experience. As of March 31, 2024, and December 31, 2023, the Company’s allowance for sales returns was $185,501 and $182,584, respectively and is recorded as accrued expenses in the accompanying consolidated financial statements.
The Company defers the revenue related to undelivered customer orders for which it was paid or has a right to be paid at each measurement date. Such amounts are recognized as deferred revenues in the accompanying balance sheet. Deferred revenues amounted to $ 1,616,038 and $1,475,519 as of March 31, 2024 and December 31, 2023, respectively.
The costs associated with such deferred revenues are recognized as deferred charges in the accompanying balance sheet. Such charges include the carrying value of related inventory, freight, and sales charges. The deferred charges amounted to $ 245,734 and $224,445 as of March 31, 2024 and December 31, 2023, respectively.
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| Inventory | Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand.
The Company will maintain an allowance based on specific inventory items that have shown no activity over a reasonable period of time. The Company tracks inventory as it is repurposed, disposed, scrapped or sold at below cost to determine whether additional items on hand should be reduced in value through an allowance method. The Company has recorded an allowance of $1.3 million as of March 31, 2024 and December 31, 2023.
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| GE Agreements | GE Agreements
The Company has two U.S. and global agreements with General Electric (“GE”) related to the Company’s products.
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| Loss Per Share |
Basic net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stocks, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding convertible debt, option and warrant contracts. For the three-month ended March 31, 2024, and 2023, the Company recognized net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been antidilutive for the period. Therefore, a separate computation of diluted earnings (loss) per share is not presented for the periods presented.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CASH EQUIVALENTS AND RESTRICTED CASH | The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. The Company’s cash composition was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVENTORY |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ANTI-DILUTIVE COMMON STOCK EQUIVALENTS |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
FURNITURE AND EQUIPMENT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FURNITURE AND EQUIPMENT | Furniture and equipment consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INTANGIBLE ASSETS | Intangible assets consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE FOR FUTURE | The following table sets forth the estimated amortization expense for the next five years:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF DEBT | The following table presents the details of the principal outstanding:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INTEREST EXPENSE |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FUTURE PRINCIPAL PAYMENTS | As of March 31, 2024, the expected future principal payments for the Company’s debt are due as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING LEASE LIABILITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LEASE COST OPERATING LEASE | The following table outlines the total lease cost for the Company’s operating leases as well as weighted average information for these leases as of March 31, 2024:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF MINIMUM LEASE OBLIGATION |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCRUED EXPENSES | Accounts payable and accrued expenses consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMMON STOCK | The Company issued the following common stock during the three months ended March 31, 2024, and 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PREFERRED STOCK ACTIVITY |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF STOCK OPTION ACTIVITY |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF BLACK SCHOLES PRICING MODEL |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF WARRANT ACTIVITY | The following is a summary of the Company’s warrant activity during three month ended March 31, 2024 and 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NON-VESTED RESTRICTED STOCK | A summary of the Company’s non-vested restricted stock units during the three months ended March 31, 2024 and 2023 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROFORMA FINANCIAL STATEMENTS (unaudited) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||
| Proforma Financial Statements | |||||||||||||||||||||||||||||||
| SCHEDULE OF PROFORMA CONSOLIDATED RESULTS OF OPERATION | The following pro forma consolidated results of operations have been prepared as if the acquisition occurred on January 1, 2023:
|
||||||||||||||||||||||||||||||
ORGANIZATION AND NATURE OF OPERATIONS (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Restricted cash and cash equivalents | $ 19,700,000 | |
| Restricted cash | 5,600,000 | |
| Working capital | 1,200,000 | |
| Net cash used in operating activities | 6,182,308 | $ 4,118,989 |
| Net cash provided by financing activities | $ 3,595,365 | $ 10,349,107 |
SCHEDULE OF CASH EQUIVALENTS AND RESTRICTED CASH (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
|---|---|---|---|
| Accounting Policies [Abstract] | |||
| Cash and cash equivalents | $ 14,146,785 | $ 16,810,983 | |
| Restricted cash | 5,642,878 | 5,619,270 | $ 2,800,000 |
| Total cash, cash equivalents and restricted cash | $ 19,789,663 | $ 22,430,253 |
SCHEDULE OF INVENTORY (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Inventory, component parts | $ 2,944,213 | $ 2,230,252 |
| Inventory, finished goods | 2,133,511 | 2,495,482 |
| Allowance | (1,300,000) | (1,300,000) |
| Inventory-total | $ 3,777,724 | $ 3,425,734 |
SCHEDULE OF ANTI-DILUTIVE COMMON STOCK EQUIVALENTS (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 43,692,883 | 39,594,840 |
| Warrant [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 2,049,147 | 2,063,522 |
| Share-Based Payment Arrangement, Option [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 36,156,476 | 33,114,250 |
| Convertible Debt Securities [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 5,487,260 | 3,536,668 |
| Preferred Stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 880,400 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | ||||
|---|---|---|---|---|---|
Dec. 15, 2026 |
Dec. 15, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Restricted cash | $ 5,642,878 | $ 5,619,270 | $ 2,800,000 | ||
| Restricted investments | 2,800,000 | 2,800,000 | |||
| Escrow deposit | 750,000 | ||||
| Line of credit | 2,000,000.0 | ||||
| Allowance for doubtful accounts | 54,987 | 54,987 | |||
| Allowance for sales returns | 185,501 | 182,584 | |||
| Deferred revenues | 1,616,038 | 1,475,519 | |||
| Deferred charges | 245,734 | 224,445 | |||
| Inventory allowance | 1,300,000 | $ 1,300,000 | |||
| Subsequent Event [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Royalty payment | $ 1,400,000 | ||||
| Global Trademark Agreement [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Royalty payment | $ 2,700,000 | $ 3,700,000 | |||
| Convertible debt | 1,000,000 | ||||
| Accounts payable | $ 400,000 |
SCHEDULE OF FURNITURE AND EQUIPMENT (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total | $ 1,356,938 | $ 1,107,862 |
| Less: accumulated depreciation | (897,009) | (671,275) |
| Total, net | 459,929 | 436,587 |
| Machinery and Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | 391,895 | 282,799 |
| Computer Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | 6,846 | 6,846 |
| Furniture and Fixtures [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | 36,059 | 36,059 |
| Tooling and Production [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | 672,509 | 642,509 |
| Software Development [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | 219,076 | 109,096 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total | $ 30,553 | $ 30,553 |
FURNITURE AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 30,305 | $ 22,141 |
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Less: accumulated amortization | $ (1,704,359) | $ (1,299,895) |
| Total, net | 7,627,472 | 8,141,032 |
| Patents and Trademarks [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Total | 931,831 | 1,040,927 |
| Customer Relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Total | 4,500,000 | 4,500,000 |
| E-Commerce Technology Platforms [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Total | $ 3,900,000 | $ 3,900,000 |
INTANGIBLE ASSETS AND GOODWILL (Details) (Parenthetical) |
Mar. 31, 2024 |
|---|---|
| Patents and Trademarks [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Useful life | 15 years |
| Customer Relationships [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Useful life | 7 years |
| E-Commerce Technology Platforms [Member] | |
| Finite-Lived Intangible Assets [Line Items] | |
| Useful life | 4 years |
SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE FOR FUTURE (Details) |
Mar. 31, 2024
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Nine months ended December 31, 2024 | $ 1,269,150 |
| 2025 | 1,673,613 |
| 2026 | 1,673,613 |
| 2027 | 1,511,113 |
| 2028 | 698,613 |
| 2029 | $ 698,613 |
INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization expense | $ 513,559 | $ 14,307 |
SCHEDULE OF DEBT (Details) - USD ($) |
3 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|||||||
| Short-Term Debt [Line Items] | ||||||||
| Total | $ 21,273,071 | $ 18,266,053 | ||||||
| Debt instrument interest rate stated percentage | 1.75% | |||||||
| Unamortized debt discount | $ (4,410,702) | (4,591,222) | ||||||
| Debt, net of Unamortized debt Discount | 16,862,369 | 13,674,831 | ||||||
| Convertible Notes [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Total | [1],[2] | $ 14,642,909 | $ 11,525,000 | |||||
| Debt instrument interest rate stated percentage | 10.00% | 6.00% | ||||||
| Maturity date description | [1],[2] | September 2023-March 2026 | ||||||
| Convertible Notes [Member] | Minimum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt instrument interest rate stated percentage | [1],[2] | 6.00% | ||||||
| Convertible Notes [Member] | Maximum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt instrument interest rate stated percentage | [1],[2] | 10.00% | ||||||
| Notes Payable Financial Institutions [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Total | [3] | $ 6,233,624 | $ 6,348,104 | |||||
| Maturity date description | [3] | August 2024-August 2026 | ||||||
| Notes Payable Financial Institutions [Member] | Minimum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt instrument interest rate stated percentage | [3] | 7.93% | ||||||
| Notes Payable Financial Institutions [Member] | Maximum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Debt instrument interest rate stated percentage | [3] | 8.50% | ||||||
| Notes Payble Belami Sellers [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Total | $ 251,516 | 247,927 | ||||||
| Debt instrument interest rate stated percentage | 4.86% | |||||||
| Maturity date description | April 2024 | |||||||
| SBA Related Loans [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Total | $ 145,022 | $ 145,022 | ||||||
| Debt instrument interest rate stated percentage | 3.75% | |||||||
| Maturity date description | April 2025-November 2052 | |||||||
| ||||||||
SCHEDULE OF INTEREST EXPENSE (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Debt Disclosure [Abstract] | ||
| Interest expense | $ 787,854 | $ 730,621 |
SCHEDULE OF FUTURE PRINCIPAL PAYMENTS (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Nine-months ended December 31, 2024 | $ 6,334,514 | |
| 2025 | 4,086,855 | |
| 2026 | 10,582,955 | |
| 2027 | 3,040 | |
| 2028 and thereafter | 134,392 | |
| Total | $ 21,273,071 | $ 18,266,053 |
SCHEDULE OF DEBT TABLE (Details) (Parenthetical) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|||||
| Short-Term Debt [Line Items] | ||||||||
| Bears interest at a rate of percentage | 1.75% | |||||||
| Stock Purchase Agreement [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Bears interest at a rate of percentage | 10.00% | |||||||
| Debt conversion, convertible,conversion amount | $ 3.00 | |||||||
| Debt conversion, original debt, amount | $ 3,117,408 | |||||||
| Debt conversion, converted instrument, amount | $ 1,039,303 | |||||||
| Debt instrument, maturity date | May 16, 2025 | |||||||
| Convertible Notes [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Bears interest at a rate of percentage | 10.00% | 6.00% | ||||||
| Convertible notes payable | $ 600,000 | $ 10,400,000 | ||||||
| Warrants issued | 1,391,667 | 1,391,667 | ||||||
| Warrant price per share | $ 2.70 | $ 2.70 | ||||||
| Debt instrument convertible beneficial conversion feature | $ 5,600,000 | $ 5,600,000 | ||||||
| Amortization of debt discount | $ 228,499 | |||||||
| Convertible Notes [Member] | Minimum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Bears interest at a rate of percentage | [1],[2] | 6.00% | ||||||
| Debt conversion, convertible,conversion amount | $ 3 | |||||||
| Convertible Notes [Member] | Maximum [Member] | ||||||||
| Short-Term Debt [Line Items] | ||||||||
| Bears interest at a rate of percentage | [1],[2] | 10.00% | ||||||
| Debt conversion, convertible,conversion amount | $ 15 | |||||||
| ||||||||
SCHEDULE OF LEASE COST OPERATING LEASE (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
USD ($)
| |
| Operating Lease Liabilities | |
| Cash paid for operating lease liabilities | $ 505,920 |
| Right-of-use assets obtained in exchange for new operating lease obligations | 21,360,642 |
| Fixed rent payment | 300,933 |
| Lease - Depreciation expense | $ 516,707 |
| Operating lease, weighted average discount rate, percentage | 6.41% |
| Operating lease, weighted average remaining lease term (in months) | 107 months |
SCHEDULE OF MINIMUM LEASE OBLIGATION (Details) |
Mar. 31, 2024
USD ($)
|
|---|---|
| Operating Lease Liabilities | |
| Nine months ended December 31, 2024 | $ 1,595,397 |
| 2025 | 2,346,540 |
| 2026 | 2,589,372 |
| 2027 | 2,288,363 |
| 2028 and thereafter | 15,703,089 |
| Total | $ 24,522,761 |
OPERATING LEASE LIABILITIES (Details Narrative) - USD ($) |
Jan. 31, 2024 |
Sep. 30, 2022 |
Apr. 30, 2022 |
|---|---|---|---|
| 58-Month Lease [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Operating lease, liability | $ 1,428,764 | ||
| 124-Month Lease [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Operating lease, liability | $ 22,192,503 | ||
| Letter of credit | $ 2,700,000 | ||
| 35-Month Lease [Member] | |||
| Lessee, Lease, Description [Line Items] | |||
| Operating lease, liability | $ 662,698 |
SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued interest, convertible notes | $ 950,358 | $ 744,953 |
| Trade payables | 11,238,517 | 11,513,918 |
| Accrued compensation | 1,248,419 | 874,557 |
| Total | $ 13,437,294 | $ 13,133,428 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Accrued interest | $ 950,358 | $ 744,953 |
| Director and Co-Chief Executive Officer [Member] | ||
| Related party transactions amount | 950,000 | 950,000 |
| Accrued interest | $ 272,824 | $ 151,081 |
SCHEDULE OF PREFERRED STOCK ACTIVITY (Details) - Preferred Stock [Member] |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
USD ($)
$ / shares
shares
| |
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |
| Preferred stock beginning, shares outstanding | shares | 880,400 |
| Preferred stock beginning, carrying value | $ | $ 220,099 |
| Preferred stock, value per share, beginning | $ / shares | $ 0.25 |
| Preferred stock redemption shares | shares | |
| Preferred stock redemption shares, carrying value | $ | |
| Preferred stock redemption, value per share | $ / shares | |
| Preferred stock ending, shares outstanding | shares | 880,400 |
| Preferred stock ending, carrying value | $ | $ 220,099 |
| Preferred stock, value per share, ending | $ / shares | $ 0.25 |
SCHEDULE OF BLACK SCHOLES PRICING MODEL (Details) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Stock price | $ 1.76 | |
| Exercise price | $ 3.0 | |
| Expected term (in years) | 2 years 10 months 13 days | 5 years |
| Expected volatility | 37.00% | 42.00% |
| Risk-fee interest rate | 4.10% | 5.02% |
| Dividend yield | ||
| Minimum [Member] | ||
| Stock price | $ 3.74 | |
| Exercise price | $ 0 | |
| Maximum [Member] | ||
| Stock price | $ 3.84 | |
| Exercise price | $ 14 | |
SCHEDULE OF WARRANT ACTIVITY (Details) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Equity [Abstract] | ||
| Number of Warrants, Beginning balance | 2,063,522 | 671,855 |
| Weighted average exercise price outstanding, beginning | $ 5.76 | $ 11.5 |
| Number of Warrants, Issued | 1,391,667 | |
| Weighted Average Exercise Price, Issued | $ 3.0 | |
| Number of Warrants, Exercised | ||
| Weighted Average Exercise Price, Exercised | ||
| Number of Warrants, Forfeited | (14,375) | |
| Weighted Average Exercise Price, Forfeited | ||
| Number of Warrants, Ending balance | 2,049,147 | 2,063,522 |
| Weighted average exercise price outstanding, ending | $ 5.45 | $ 5.76 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Subsidiary, Sale of Stock [Line Items] | ||
| Unamortized future option expense | $ 13,900,000 | |
| Unamortized future option expense excluding market based options | $ 63,000,000 | |
| Weighted average period | 2 years | |
| Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 1 year 3 months 18 days | |
| Share based compensation expense | $ 3,295,029 | $ 2,963,702 |
| Restricted Stock Units (RSUs) [Member] | ||
| Subsidiary, Sale of Stock [Line Items] | ||
| Share based compensation expense | $ 3,295,029 | $ 2,963,702 |
| Preferred Stock [Member] | ||
| Subsidiary, Sale of Stock [Line Items] | ||
| Preferred stock, par value | $ 3.50 | |
| Sale of stock, price per share | $ 0.25 | |
| ATM Offering Program [Member] | ||
| Subsidiary, Sale of Stock [Line Items] | ||
| Number of shares value issued | $ 6,500,000 | |
STOCKHOLDERS’ EQUITY (DEFICIT) (Details Narrative) - Convertible Notes [Member] - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2023 |
|
| Short-Term Debt [Line Items] | ||
| Warrants issued | 1,391,667 | 1,391,667 |
| Warrants term | 3 years | |
| Warrant exercise price | $ 2.70 | $ 2.70 |
| Debt instrument convertible beneficial conversion feature | $ 5.6 | $ 5.6 |
CONCENTRATIONS OF RISKS (Details Narrative) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Third Party Payor [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk percentage | 24.00% | 24.00% |
SCHEDULE OF PROFORMA CONSOLIDATED RESULTS OF OPERATION (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
$ / shares
| |
| Proforma Financial Statements | |
| Revenues | $ | $ 18,636,969 |
| Net loss | $ | $ (10,349,191) |
| Basic loss per share | $ (0.11) |
| Diluted loss per share | (0.11) |
| Weighted average number of shares outstanding basic | 90,601,616 |
| Weighted average number of shares outstanding diluted | $ 90,601,616 |