Item 1A. Risk Factors 15
Item 1B. Unresolved Staff Comments 43
Item 1C. Cybersecurity 43
Item 2. Properties 44
Item 3. Legal Proceedings 44
Item 4. Mine Safety Disclosures 44
PART II
Item 6. [Reserved] 45
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52
Item 8. Financial Statements and Supplementary Data 52
Item 9A. Controls and Procedures 52
Item 9B. Other Information 53
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 53
PART III
Item 10. Directors, Executive Officers and Corporate Governance 54
Item 11. Executive Compensation 61
Item 14. Principal Accountant Fees and Services 82
PART IV
Item 15. Exhibits and Financial Statement Schedules 83
SIGNATURES 86
FINANCIAL STATEMENTS F-1
i
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K (this “Form 10-K”) of SKYX Platforms Corp. (the “Company,” “Sky Technologies,”
“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-K, 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-K include, but are not limited to, statements about:
● any downturn in the cyclical industries in which our customers operate;
● the potential outcome of any legal proceedings;
● our ability to attract and retain key executives and qualified personnel;
● the potential impact of natural disasters and other catastrophic events;
● risks related to ownership of our common stock;
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-K. Investors should refer to the “Risk Factors” section of this Form 10-K 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-K will prove to be
accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of 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-K represent our views as of the date of this Form 10-K. 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 because 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-K.
RISK
FACTORS SUMMARY
The
following is a summary of the principal risks that could materially adversely affect our business, results of operations and financial
condition, all of which are more fully described in the section titled “Risk Factors.” This summary should be read in conjunction
with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business,
as it does not address all of the risks that we face.
● We depend on a limited number of third-party manufacturers and suppliers.
PART
I
ITEM
1. BUSINESS
Our
Mission
As
electricity is a standard in every home and building, our mission is to make homes and buildings become safe advanced and smart as the
standard.
Overview
Sky
Technologies has a series of highly disruptive advanced-safe-smart platform technologies, with over 96 U.S. and global patents and
patent pending applications. Our technologies place an emphasis on high quality and ease of use, while significantly enhancing both
safety and lifestyle in homes and buildings. We believe that our products are a necessity in every room in both homes and other
buildings in the U.S. and globally. In addition, during 2023, we expanded our operations by acquiring an online retailer and
e-commerce provider specializing in home lighting, ceiling fans, and other home furnishings.
Our first- and second-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged
in to a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology
method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling,
enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug
technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired
electrical products. In recent years, we have expanded the capabilities of our power-plug product, to include advanced safe and quick
universal installation methods, as well as advanced smart capabilities. The smart features include control of light fixtures and ceiling
fans by the SkyHome App, through WIFI, Bluetooth Low Energy (“BLE”) and voice control connections. The SkyHome App allows
scheduling, energy saving-eco mode, dimming, back-up emergency light, night light, light color changing and much more.
We
believe that due to safety, convenience, cost, and time that all hard-wired electrical products, such as light fixtures, ceiling fans
and other products, should become plug and play and smart, as the standard, enabling consumers to plug their fixtures and control them
through their smart phones at any time.
Our third-generation technology is an all-in-one safe and smart advanced platform (the “Smart Sky Platform”) that is designed
to enhance all-around safety and lifestyle of homes and other buildings.
We
believe that our patented advanced, safe and smart home platform technologies will enhance and promote safety in homes and buildings
and make them smart, as a standard, in a fraction of the time and cost, as compared to other market products.
We
believe that our smart home products will enable builders to deliver smart homes as a standard, in the same way they deliver electricity
and appliances as a standard.
As
our products, including our advanced, safe and smart products, can
be easily implemented and installed in both existing and new homes and buildings in just minutes, installing our products is expected
to save a major part of the cost and time associated with installation of smart home products. As many people spend the majority of time
at their homes, we believe that they should have an affordable, easily installed, standard solution to make their homes safe, secured
and smart. Similar to how smartphones serve people as an all-in-one personal smart platform, we believe that our all-in-one Smart Sky
Platform will enable every room in homes and other buildings to include a smart platform as a standard.
The
Smart Sky Platform technology is an open system that can integrate with both existing and new smart home features, devices, and systems.
The Smart Sky Platform is designed and built in a way that it can accommodate additional smart home features, enabling the platform to
serve as a gateway for safe and smart technologies into rooms/homes, buildings, and that it can act like a “Panama-Canal”
that can accommodate other type of software systems, wireless systems, electronic chips and more.
We
previously sold our standard products, which include ceiling fans and light fixtures with our standard “plug and play”
feature built in and are described further below under “Products—Our First Product Gen-1: The Weight Bearing
Power-Plug”. We wound down the sales of our standard products by discontinuing production of light fixtures and ceiling fans
that include the older version of our standard Sky Plug & Receptacle in favor of launching our new line of products, which are
in the third and final prototype stage prior to launching and include a universal “plug and play” adapter kit, our smart
products, which will include smart light fixtures and ceiling fans with our smart “plug and play” features, and our
Sky Smart Gen-3 All-in-One Smart Home Platform. Additional information regarding our new line of products is described below under
“Products—Advanced Products” and “—Smart Products- Gen-2.” We shifted to smart products because we
believe that the market has great demand for smart advanced products, and that we will be able to generate significant sales from
our new line of advanced and smart products from direct sales as well as from licensing All advanced and smart products, other than
our Smart Sky Platform, were available during 2023 and we expect our Smart SKY Platform will be available during 2024.
E-Commerce
On
April 28, 2023, we completed our acquisition (the “Closing”) of all of the issued and outstanding shares of Belami, an
online retailer and e-commerce provider specializing in home lighting, ceiling fans, and other home furnishings. We expect these 60
websites will serve as a marketing and growth platform for our smart products and should provide several distribution channels,
including to retail customers, builders, and professionals.
The
acquisition was completed in accordance with the terms and conditions of the Stock Purchase Agreement, dated February 6, 2023, between
the Company and the stockholders of Belami (the “Sellers”) (as amended, the “Stock Purchase Agreement). The purchase
price paid at the Closing consisted of $7,000,000 in cash (which excluded, among other things, $1.0 million released to the Sellers from
escrow) and an aggregate of 1,923,285 shares of the Company’s common stock. At the Closing, $750,000 of the purchase price was
deposited into an escrow account, which will be held for 12 months following the Closing as a source of recourse for claims the Company
may have against the Sellers under the Stock Purchase Agreement. Prior to the Closing, Belami issued the following promissory notes to
the Sellers, which remain in place following the Closing and are guaranteed by the Company: (i) promissory notes in an aggregate amount
of $1.0 million, which were paid in July 2023, which have a 90-day term and an interest rate of 4.86% per annum (the “Closing Notes”); and (ii) promissory
notes in the aggregate amount of $239,266 (the “Retained Earnings Notes”), which was equal to the difference between retained
earnings, on the one hand, and the cash and Closing Notes distributed to the Sellers prior to the Closing, on the other hand, and which
amount is subject to adjustment, which have a one-year term[and an interest rate of 4.86% per annum.
The
Company agreed to pay to the Sellers on the first anniversary of the Closing, or April 28, 2024, (i) $3,117,408 in cash and (ii) a
number of shares of common stock equal to $5,560,262 divided by $3.00 per share. The deferred payment will be increased or decreased
by the amount of a working capital adjustment, as provided for in the Stock Purchase Agreement, and will be subject to offset for
indemnification claims.
On
March 29, 2024, the Company and the Sellers entered into a letter agreement 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. The Seller Notes include customary events of default accelerating
maturity, including a breach of the Company’s covenants, representations and warranties under the Stock Purchase Agreement and
a change of control of Belami. The letter agreement further provides 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.
Safety
We
believe that safety is a necessity and the top priority in all aspects of life. Therefore, our technologies and products emphasize human
safety, home, building and property safety and security, while combining safety features with high demand smart home features. We believe
our products should contribute to the elimination of many cases of hazardous incidents, including ladder falls, electric shock/electrocutions,
fires, carbon monoxide poisonings, injuries and deaths, as management believes that our products will result in easier installment processes
and enhance the use of life saving products such as smoke detectors, carbon monoxide detectors, and emergency lights, among other products.
Our products, including the Smart Sky Platform, incorporate our “plug and play” technology, which eliminates the need to
touch wires during the later plug-in installation, replacement and maintenance, and cleaning and, accordingly, could result in reduced
incidents of electrical shocks and fires resulting from faulty wiring. While the installation of our products and retrofitting of electrical
services does not require the services of a licensed electrician, it does not preclude the services of a licensed electrician. As more
individuals engage in do-it-yourself (DIY) lighting projects, using our products rather than traditional lighting products could reduce
incidents of incorrect wiring, shocks, injury and even death. In addition, we believe installing our products will allow installers to
spend less time on a ladder during initial installation. Installers often wire light fixtures and fans while also holding such fixture
or fan; with our products, including the Smart Sky Platform, the initial receptacle installation will be completed on the ladder and,
afterwards, the fixture can simply be plugged into place, resulting in a faster and, we believe, much safer process, as installers can
focus on wiring without also holding potentially heavy or breakable fixtures. Further, the Smart Sky Platform will incorporate a hard-wired
smoke detector with battery back-up and a carbon monoxide monitor, which we believe could reduce injuries and deaths from fire and carbon
monoxide poisoning.
Products
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 during 2023 and expect to manufacture and make commercially available our Smart Sky
Platform during 2024.
Our
First Product Gen-1: The Weight Bearing Power-Plug
Our
first patented technology was the Gen-1 Power-Plug, a weight bearing power plug that acts as a safe and quick installation device,
designed for “plug and play” installation of weight bearing electronics, such as light fixtures, ceiling fans and other
electrical products, into ceiling electrical outlet boxes.
Our
patented technology consists of a fixable socket and a revolving plug (the Power-Plug) for conducting electric power and supporting an
electrical appliance attached to a wall or ceiling. The socket is comprised of a non-conductive body that houses conductive rings connectable
to an electric power supply through terminals in its side exterior. The Power-Plug, which is comprised of a non-conductive body that
houses corresponding conductive rings, attaches to the socket via a male post and can feed electric power to an appliance. The Power-Plug
also includes a second structural element allowing it to revolve with a releasable latch that, when engaged, provides a retention force
between the socket and the Power-Plug to prevent disengagement. The socket and Power-Plug can be detached by releasing the latch, disengaging
the electric power from the Power-Plug. The socket is designed to replace the support bar incorporated in electric junction boxes, and
the Power-Plug can be installed in light fixtures, ceiling fans, wall sconce fixtures and other electrical devices and products. Once
installed, the socket can remain affixed to the junction box, enabling any electronic fixture installed with the Power-Plug to be connected
and/or removed in seconds. The combined socket and Power-Plug technology are referred to throughout this Form 10-K as the “Sky
Plug & Receptacle”.
We
previously sold products with the Sky Plug & Receptacle built in, including ceiling fans and light fixtures. We wound down the sales
of our standard products by discontinuing production of light fixtures and ceiling fans that include the older version of our standard
Sky Plug & Receptacle in favor of launching our new line of products described below.
Advanced
Gen-1 Products
Sky Universal Power-Plug & Receptacle: Our universal “plug and play” Sky Plug & Receptacle technology is comprised
of two devices. The first device is a male Power-Plug Retrofit Kit, which can be easily embedded in the base of light fixtures and ceiling
fans. The second device is a Ceiling Receptacle, which can be connected to a ceiling outlet box. After a one-time installation of the
Ceiling Receptacle to a ceiling outlet box, a light fixture or ceiling fan that includes the Power-Plug Retrofit Kit can be plugged into
the Ceiling Receptacle within seconds. The Universal Power-Plug & Receptacle should contribute to the elimination of hazardous incidents
in homes and buildings including ladder falls, electric shock/electrocutions, fires, injuries, and deaths, etc.
Smart
Products
Our
Gen-2 Smart Products have advanced smart and safety technologies, have unique modern designs and are controlled by our proprietary SkyHome
App or through voice control. All these products can be linked to the SkyHome application that works with both iPhones and Android phones
to control features and specifications of connected devices, such as scheduling and eco/energy-saving mode. Gen-2 products also integrate
with AI home assistants Siri, Alexa, Google Home, Samsung SmartThings, and more. Our SkyHome App and Gen-2 products are an open system
that can integrate with other smart home devices and systems.
SkyHome
App: Our proprietary SkyHome Application works with both iPhones and Android phones. The SkyHome App controls products through WIFI
and BLE and is designed to control our products through additional communication methods as needed. The SkyHome App controls various
products, features and specifications, including scheduling, safety features, security features, lifestyle features, sound, lights, dimming,
emergency back-up battery and much more.
Sky
Smart Gen-2 – Universal Power-Plug & Receptacle: Our Sky Smart Universal Power-Plug & Receptacle system contains
two devices. First, the male Smart Power-Plug, which includes a smart electronic board, comes as a Retrofit Kit, that can be simply
embedded to the base of light fixtures and ceiling fans, enabling them to become both “plug and play” and smart. The
second device is a Ceiling Receptacle that can be simply connected to a ceiling outlet box. After a one-time simple installation of
the Ceiling Receptacle to a ceiling outlet box, a light fixture or ceiling fan that includes the male Smart Power-Plug Retrofit Kit
can be plugged into the Ceiling Receptacle within seconds. Our Smart Power-Plug is controlled by our proprietary SkyHome App or
through voice control and is an open system that can integrate with other smart home devices and systems. Our Smart Power-Plug is
connected through WIFI and BLE, and includes numerous smart features, including scheduling, energy saving-eco mode, dimming, back-up
emergency light, night light, light color changing and more. We believe that, due to safety, convenience, cost and time, all
hard-wired electrical products, such as light fixtures and ceiling fans, should become plug and play and smart, as the standard,
enabling consumers to plug their fixture and control them through their smart phones at any time. The Smart Universal Power-Plug
& Receptacle should contribute to the elimination of hazardous incidents in homes and buildings including ladder falls, electric
shock/electrocutions, fires, injuries, and deaths, etc.
Sky
– Smart Gen2 for Plug and Play Ceiling Fans: Our line of high-end smart plug and play ceiling fans can be installed to our
matching ceiling receptacle within seconds. Our smart ceiling fans incorporate advanced technologies, have unique modern designs,
and are controlled by our proprietary SkyHome App or through voice control, and are an open system that can integrate with other
smart home devices and systems. Our Smart Plug and Play Ceiling Fan is connected through WIFI and BLE, and includes numerous smart
features, including scheduling, energy saving-eco mode, dimming, back-up emergency light, night light, light color changing and
more. We believe that, due to safety, convenience, cost and time, all hard-wired electrical products, such as ceiling fans, should
become plug and play and smart, as the standard, enabling consumers to plug their fixture and control them through their smart
phones at any time. The Smart Plug and Play Ceiling Fan should contribute to the elimination of hazardous incidents in homes and
buildings including ladder falls, electric shock/electrocutions, fires, injuries, and deaths, etc.
Sky
– Smart Gen-2 for Plug and Play Lighting: Our line of high-end Smart Plug and Play light fixtures can be installed to our
matching ceiling receptacle within seconds. Our smart light fixtures incorporate advanced technologies, have unique modern designs,
and are controlled by our proprietary SkyHome App or through voice control, and are an open system that can integrate with other
smart home devices and systems. Our smart light fixture is connected through WIFI and BLE, and includes numerous smart features,
including scheduling, energy saving-eco mode, dimming, back-up emergency light, night light, light color changing and more. We
believe that, due to safety, convenience, cost and time, all hard-wired electrical products, such as light fixtures, should become
plug and play and smart, as the standard, enabling consumers to plug their fixture and control them through their smart phones at
any time. The Smart Plug and Play Lighting should contribute to the elimination of hazardous incidents in homes and buildings
including ladder falls, electric shock/electrocutions, fires, injuries, and deaths, etc.
Sky
– All-In-One Smart Sky Platform: As most people spend a majority of their time in their homes, we believe that they should
have an easy solution to make their homes safe, secure, and smart in a simple way and as the standard. We believe that our patented
advanced-safe-smart home platform technologies will make homes and buildings safer, and have numerous technological features and smart
as a standard, in a fraction of time and cost, compared to other market products. Our all-in-one Smart Sky Platform is designed to enhance
the all-around safety and lifestyle of homes and other buildings and can be easily implemented and installed to the ceiling receptacle
in both existing and new homes and other buildings within minutes. Our Smart Sky Platform includes advanced smart and safety technologies,
has unique modern designs and is controlled by our proprietary SkyHome App or through voice control. It is an open system that can integrate
with other smart home devices and systems.
As
smart phones serve people as an all-in-one personal smart platform, we believe that our all-in-one Smart Sky Platform technology will
enable every room in homes and buildings to have a smart platform as a standard. Our Smart Sky Platform is connected through WIFI and
BLE, includes numerous smart and safety features, including a smart smoke detector, a smart carbon monoxide detector, time scheduling,
temperature sensor, humidity sensor, WIFI extender, energy saving-eco mode, high quality speakers, and a back-up battery that can power
back-up internet and an emergency light, as well as dimming, night light, light color changing and more. The platform’s electrical
power and transformer, combined with the size of our platform’s data storage space, which represents vast electronic “Real-Estate”
in terms of today’s technology, driven by microchips, enables the platform to accommodate a significant amount of software as well
as electronic microchips, while the unique ceiling location of the platform significantly enhances the performance of the platform’s
features, including WIFI and BLE, as well as the performance of sensors and alarms.
The
Smart Sky Platform is inconspicuous to the décor. It is designed to install in only minutes over existing ceiling electrical outlet
boxes while allowing any pre-existing fixture to reconnect to the same box utilizing our Retrofit Kits. This innovation gives our products
access to the best location for the gathering and distribution of electronic signals, virtually unlimited power for our low-voltage safety
and smart features, and a vast amount of electronic real estate.
This
open-system Smart Sky Platform Gen-3 is intended to seamlessly integrate unrelated safe and smart products into a single, spatially
designed unit whose functionality is controlled by an all-in-one app, the SkyHome App. The Smart Sky Platform is intended to
eliminate the need for installation of numerous stand-alone devices and their integration into a single working unit.
The
adoption of the Smart Sky Platform should contribute to the elimination of hazardous incidents in homes and buildings including ladder
falls, electric shock/electrocutions, fires, carbon monoxide poisonings, injuries, and deaths, etc.
Sustainability
We
aim to provide safe and sustainable solutions to consumers, who increasingly consider sustainability and energy efficiency when purchasing
products. We believe that creating sustainable products and streamlining our operations drives efficiency, innovation and, ultimately,
long-term value-creation. In designing and improving our products, we consider and apply sustainability strategies, as appropriate. For
example, our products’ features include an energy savings economical mode, which can help users reduce their energy consumption,
and we generally use LED lighting in our ceiling fans and light fixtures, which is more energy-efficient than traditional lighting products.
Cybersecurity
We
have implemented measures and protocols to ensure that our users’ information is safe and protected. We use high level of cybersecurity
measures and protocols to ensure that our software, technologies, servers, products, platform, and devices are all protected to prevent
any type of unauthorized or illegal access or interference to our software, technologies, servers, products, platforms, and devices.
Our
products, platforms and devices communicate over MQTT and are encrypted over Transport Layer Security, with each individual product,
platform and device having its own set of certificates, keys, and universally unique identifiers, which ensures that each device can
only communicate with its own topic. This ensures that even in extreme cases of illegally gaining control over a specific device, it
will not affect other devices.
Each
login to the platform generates the user a temporary token that grants access to the services for a limited amount of time, which ensures
that there is no permanent access token that can be used by hackers for unauthorized access. Each token has permissions to access only
the user’s resources.
Our
solutions are designed in a way that the user will need to conduct a restricted set of permissions, thus minimizing the risk of unwanted
users gaining control over other locations.
Sky
Plug & Receptacle – NEC Code
The
National Electrical Code (“NEC”) is the U.S. electrical safety building code, and is the benchmark for safe electrical design,
installation, and inspection to protect people and property from electrical hazards. It has been adopted in some form in all 50 states
in the United States and is intended to improve safety in U.S. homes and buildings.
Based
on the safety aspects of the Sky Plug & Receptacle, it was voted into the NEC and is represented by 10 different segments in the
NEC Code Book. The Company has provided data relating to safety aspects of its receptacle as to electrocutions, fires and ladder falls
to NEC.
One
of the key votes and segments relating to our technologies in the NEC Code Book was the change of the definition of “receptacle”
in the Code Book, which we believe is one of the most significant additions to the NEC in the past 120 years. The NEC leads the United
States and globally with respect to electrical safety standards; as such, we believe the reputable standards of the NEC can assist with
the adoption of our technology in additional countries.
Pursuant
to these NEC provisions, the Sky Plug & Receptacle enables builders to expedite and obtain a Certificate of Occupancy without the
need to install a light fixture to the ceiling.
During
the third quarter of 2022, the Company received NEC generic name approval for its weight-bearing safe plug and play outlet/receptacle
for ceilings as WSCR (Weight-Supporting Ceiling Receptacle) for its universal ceiling outlet and WSAF (Weight-Supporting Attachment Fitting)
for its ceiling plug. The specifications for the WSCR and WSAF received a standardization approval vote by the American National Standards
Institute (ANSI) and the National Electrical Manufacturers Association (NEMA), leading U.S. standardization organizations. The American
National Standards Institute’s and the National Electrical Manufacturers Association’s vote for the standardization of the
Company’s weightbearing plug and outlet/receptacle for ceilings does not guarantee approval by the National Fire Protection Association’s
(NFPA) Committee on the National Electrical Code (which consists of multiple code-making panels and a technical correlating committee
and develops the NEC) or any other trade or regulatory organization and does not guarantee that any of the Company’s products will
become NEC mandatory in any jurisdiction, or that any of the Company’s current or future products or technologies will be adopted
by any state, country, or municipality, within any specific timeframe or at all.
In
addition, we filed an application with the NEC seeking mandatory safety standardization for our ceiling outlet receptacle platform in
September 2023. The filing of the Company’s application for a mandatory safety standardization with the NEC does not guarantee
approval within any specific timeframe or at all.
Intellectual
Property
Developing
and maintaining a strong intellectual property position is one of the most important elements of our business. We rely on a combination
of patents, copyright, trademarks, and trade secret laws, as well as confidential procedures and contractual provisions, to protect our
proprietary technology and our brands. We enter into confidentiality and proprietary rights agreements with our employees, consultants
and other third parties. We have sought, and will continue to seek, patent protection for our technology and for improvements to our
technology, as well as for any of our other technologies where we believe such protection will be advantageous. In addition, certain
intellectual property and proprietary information held by a third party is central to our products and technologies. If we lose our rights
to use such intellectual property and proprietary information in the future, our business or operating results and our ability to compete
could be adversely impacted.
We
protect our intellectual property through various aspects and strategies including broad and particular intellectual property
claims. We have over 96 U.S. and global patents and patent applications, including in China, India, and Europe, as well in other
countries around the world. These patents and patent applications protect different aspects of our technologies. We sought
intellectual property protection of our technologies in China due to our current manufacturing operations and prospective sales in
China’s market, and we sought protection in India in anticipation of future growth into India’s developing market, both
with respect to the sales of our products and our potential operations. As of December 31, 2023, in the U.S., we owned 10 issued
patents, which expire from 2036 to 2038, and four pending or published but not yet issued patents, and outside of the U.S., we owned
29 issued patents, which expire from 2026 to 2039, and 53 pending or published but not yet issued patents. We intend to
diligently maintain and vigorously defend our intellectual property and to enhance our patent protections actively and continuously
in the U.S. and globally.
The
issued patents are directed to various aspects of our platform technologies, including our smart and standard plug and play products,
as well as our safe and smart platform technologies. As further innovations are developed, we intend to seek additional patent protection
to enhance and maintain our competitive advantage. Additionally, we have submitted 10 trademark applications, seven of which have been
issued and three of which are pending.
General
Electric Agreement
In
December 2023, the Company renewed its five-year Licensing Master Services Agreement for U.S. and global licensing services of its standard
and smart products (the “GE MSA”) with GE Technology Development, Inc. (“GE”), while sunsetting its original
License Trademark Agreement with GE Trademark Licensing, Inc. (“GE-TL”). The term of the GE MSA runs for an initial five-year
term, includes automatic one-year renewal provisions, and replaces the Company’s Master Services Agreement for global licensing
services with GE dated June 14, 2019. Pursuant to the GE MSA, GE’s licensing team will license certain of the Company’s standard
and smart products in the U.S. and worldwide. For each licensing program the Company engages GE to conduct, GE’s licensing team
will provide certain licensing services, including seeking and arranging for licensee partners, negotiating agreement terms, administering
contracts, auditing partners, assisting with monetization and patent protection strategy, and providing mutually agreed support to defend
the Company’s intellectual property. The Company will pay a percentage of earned revenue to GE collected pursuant to license agreements
established in connection with a program commercialized by GE’s licensing team, or with certain licensees introduced by GE to the
Company.
In
connection with the sunsetting of the License Trademark Agreement, the Company and a subsidiary of the Company has entered into a letter
agreement with GE-TL restructuring the aggregate amount of $2.7 million in royalty payments owed to GE-TL to be paid over thirteen quarterly
installments, with the first two payments of $200,000 each being made in December 2023 and March 2024, respectively. The final payment
is scheduled for December 2026. The Company also agreed to pay an amount of $1.4 million to GE-TL, payable in 2027, in addition to the then agreed royalty payments.
Employees
Our
management members include leading executives from various industries and have joined us as they believe in our vision, technology, and
strategy. Many of our key personnel are employed pursuant to an employment agreement or a consulting agreement.
As
of December 31, 2023, we had 60 employees all of which are full-time employees. We also employ independent contractors to support our
operations. We have never had a work stoppage, and none of our employees are represented by a labor union. We consider our relations
with our employees to be good. We expect to continue to expand our staff and team of engineers to develop our products and operate our
e-commerce websites.
Our
human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our current
and future employees. We encourage and support the growth and development of our employees. Continual learning and career development
is advanced through ongoing performance and development conversations with employees, and reimbursement is available to employees for
seminars, conferences, formal education and other training events employees attend in connection with their job duties.
Our
core values of accountability, openness, and integrity underscore everything we do and drive our day-to-day interactions. The safety,
health and wellness of our employees is a top priority.
Business
Strategy
We
believe that our advanced-safe-smart platform technologies will disrupt and positively influence various industries, both in the U.S.
and globally, and that, due to ease of installation, time savings, cost savings on installations and the safety aspect of our product,
our product provides a competitive advantage within the light fixture, ceiling fan and smart home industries:
Our
Advanced All-In-One Smart Sky Platform significantly enhances smart home products’ performance, including the speed and range
of both WIFI and Bluetooth, as well as the performance of sensors and alarms. We believe that widespread adoption of the All-In-One
Smart Sky Platform should contribute to the elimination of most related hazardous incidents in homes and buildings including ladder
falls, electric shock/electrocutions, fires, carbon monoxide poisonings, injuries, and deaths. Therefore, we believe our product is
a necessity in rooms, homes, and buildings.
Our
Advanced All-In-One Safe Smart Sky Platform can be used in existing homes and buildings, by builders, rental properties, hotels, cruise
ships, elder living facilities, schools, hospitals, offices, commercial, retail and other.
We
launched our new universal power plug, our SkyHome App, and our smart universal plug, as well as the smart ceiling fans and lighting
fixtures containing such plug, in 2023 and expect to launch our Smart Sky Platform during 2024.
Bringing our products to market will require us to take certain steps, including, but not limited to, the following:
Expected
Revenue Stream
We
believe our products will enable us to access a global market with multiple revenue streams, including the following:
Our
History
We
began in 2004 and started developing the Sky Plug & Receptacle technology in 2007 for installation of light fixtures and ceiling
fans during manufacturing and as a Retrofit Kit for installing the Sky Technology in existing light fixtures and ceiling fans. Historically,
we have sold hundreds of thousands of units of the Sky Plug & Receptacle technology through original equipment manufacturing and
through other channels to lighting manufacturers and retailers who installed the Sky Plug & Receptacle technology into their lighting
fixtures for sale at retail stores. We also sold, directly to retailers, approximately hundreds of thousands of Sky Plugs & Receptacles
embedded with ceiling fans. We wound down our standard product sales by discontinuing production of light fixtures and ceiling fans that
include the older version of our standard Sky Plug & Receptacle, in favor of licensing our product and developing our Smart Power-Plug
and Smart Sky Platform technologies. In addition, in April 2023, we acquired Belami, an online retailer and e-commerce provider specializing
in home lighting, ceiling fans, and other home furnishings.
Third-Party
Manufacturing and Suppliers
Our
business model entails the use of third-party manufacturers to produce the Sky Technology product. The manufacturers currently used by
us are in China. To further ensure that quality specifications are maintained, we maintain an office in the Guangdong province in China
that is staffed with GE trained auditors who regularly inspect the products that are being produced by third-party manufacturers.
Raw
materials used in our products include copper, aluminum, zinc, steel, acrylonitrile butadiene styrene (ABS) plastic and wood. We also
purchase integrated circuit chip sets or other electronic components from third-party suppliers or rely on third-party independent contractors,
some of which are customized or custom made for us. While we have experienced shortages in obtaining necessary materials, including zinc,
copper and steel, as well as integrated circuit chips to be used in our products, we have been able to make other arrangements and find
additional suppliers as necessary. Going forward, we believe we can obtain more chips and other materials as needed within a reasonable
time period and may be able to replace components with different products or modify our design if necessary. Geopolitical matters may
also impact our manufacturing.
Our
principal suppliers are Mei Pin Metal & Electrical Co., Ltd (Guangdong, China), Siterwell Electronics Co., Ltd (Zhejiang, China),
Zhongshan Paragon Source Lighting Co., Ltd. (Noble) (Zhongshan, Guangdong, China), Artisan Industrial Co., Ltd. (Jiangmen, Guangdong,
China) and Youngo Limited (Aircool) (Huizhou City, Guangdong, China).
Competition
We
believe our technologies are highly disruptive and with an edge compared to other market technologies. Our competitors for our Sky Technologies
products vary based on our products, market, and industry.
Our
competitors for our e-commerce websites, some of which have substantially greater resources than us, range from other online-only
retailers specializing in lighting and other home décor items, such as Wayfair and Overstock.com, to
retailers with both online and physical presences specializing in home décor, such as Pottery Barn and Crate and Barrel, to
retailers that sell home décor items as part of a much larger assortment of items, such as Amazon, Target, Home Depot and
Lowe’s.
Government
and Environmental Regulation
Although
not legally required to do so, we strive to obtain certifications for substantially all our products, both in the United States, and,
where appropriate, in jurisdictions outside the United States. Products certified by a Nationally Recognized Testing Laboratory (“NRTL”),
such as UL, Intertek Testing Lab (ETL) or Canadian Standards (CSA), bear a certification mark signifying that the product complies with
the requirements of the product safety standard. UL Standards are used for evaluation of U.S. products, CSA Standards for Canada and
IEC (International Electrotechnical Commission) Standards for European countries. We use UL as our main third-party NRTL safety laboratory.
While we have received a variety of safety certifications on our products, including UL, Underwriters Laboratories of Canada (cUL), Conformité
Européenne (CE) and International Electrotechnical Commission for Electrical Equipment Certification Body (the IECEE CB scheme),
we may need or desire to obtain additional certifications for new product configurations, which will increase the time and costs to complete
our product launches and which we may be unable to obtain within a reasonable time, or at all. In addition, certain electronic products
require Federal Communications Commission (“FCC”) certification, and we have obtained FCC certification on applicable products
to ensure electromagnetic interference compliance. Although we believe that our broad knowledge and experience with electrical codes
and safety standards have facilitated certification approvals, we cannot provide any assurance that we will be able to obtain any such
certifications for our new products or that, if certification standards are amended, we will be able to maintain such certifications
for our existing products.
Our
facilities and operations are subject to federal, state and local laws and regulations relating to environmental protection and human
health and safety. Some of these laws and regulations may impose strict, joint and several liabilities on certain persons for the cost
of investigation or remediation of contaminated properties. These persons may include former, current or future owners or operators of
properties and persons who arranged for the disposal of hazardous substances. Our leased real property may give rise to such investigation,
remediation and monitoring liabilities under environmental laws. In addition, anyone disposing of certain products we distribute, such
as fluorescent lighting, must comply with environmental laws that regulate certain materials in these products. We believe that we are
in compliance, in all material respects, with applicable environmental laws. As a result, we do not anticipate making significant capital
expenditures for environmental control matters either in the current year or in the near future.
Corporate
History and Information
We
were originally organized in May 2004 as a Florida limited liability company under the name of Safety Quick Light, LLC. We converted
to a Florida corporation on November 6, 2012. Effective August 12, 2016, we changed our name from “Safety Quick Lighting &
Fans Corp.” to “SQL Technologies Corp.,” and, effective June 14, 2022, we changed our name to “SKYX Platforms
Corp.” We currently do business as “Sky Technologies.” Our principal executive offices are located at 2855 W. McNab
Road, Pompano Beach, Florida 33069, and our telephone number is (855) 759-7584. Our website can be found at www.skyplug.com. The information
contained in or accessible from our website is not incorporated into this Form 10-K, and you should not consider it part of this Form
10-K. We have included our website address in this Form 10-K solely as an inactive textual reference.
Available
Information
We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Exchange
Act requires us to file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at http://www.sec.gov.
We
maintain a website at www.skyplug.com, and we make our annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K and amendments to those reports available on our website, free of charge, as soon as reasonably practicable after
such reports have been filed with or furnished to the SEC. Information contained on or accessible through our website is not a part of,
and is not incorporated by reference into, this Annual Report on Form 10-K or any other report or document we file with the SEC. Our
Code of Business Conduct and Ethics, as well as any waivers from and amendments to the Code of Business Conduct and Ethics, is also posted
on our website.
ITEM
1A. RISK FACTORS
You
should carefully consider the risks described below, together with all of the other information included in this Form 10-K, including
our consolidated financial statements and related notes included elsewhere in this Form 10-K, before making an investment decision. Our
business, financial condition and results of operations, as well as the trading price of our common stock, could be materially and adversely
affected by any of these risks or uncertainties. There may be additional risks that are not presently material or known. You should not
interpret the disclosure of any risk factor to imply that the risk has not already materialized.
Risks
Related to Our Business
We
have incurred net losses since inception, and we cannot assure you that we will ever generate sustainable revenue; in addition, our business
has evolved, which makes it difficult to predict our future operating results.
We
have incurred net losses since inception. In addition, in recent years, we have shifted our business strategy to transition developing
and manufacturing smart products and technologies and further evolved our strategy by acquiring an online retailer and e-commerce provider
specializing in home lighting, ceiling fans, and other home furnishings during 2023. As a result of these recent changes to our business
strategy, our ability to forecast our future operating results is limited and subject to a number of uncertainties, including our ability
to plan for and model our future growth. It is difficult to predict our future revenues and appropriate budget for our expenses, and
we may have limited insight into trends that may emerge and affect our business. Rather than relying on historical information, financial
or otherwise, to evaluate us, you should evaluate us in light of your assessment of the growth potential of our business and the expenses,
delays, uncertainties and complications typically encountered by businesses in the early stage of their product development and launch,
many of which will be beyond our control. We are subject to the substantial risk of failure facing businesses seeking to develop and
commercialize new products and technologies, as well as integrating additional operations, as well as the following risks, among others:
● lack of sufficient capital;
● uncertain revenue generation.
If
our assumptions regarding these risks and uncertainties are incorrect or change due to changes in our industry, or if we do not address
these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
We
have a history of operating losses and will likely incur losses in the future as we continue our efforts to transition our product lines,
achieve our strategic initiatives, grow our business and streamline our operations at a profitable level.
We
have incurred substantial losses in the past and reported net losses from operations of approximately $37.4 million and $26.6
million during 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of approximately $145.4
million.
We
cannot assure you that we can achieve or sustain profitability in the future. For us to operate our business profitably, we need to successfully
launch and market our new products and technologies, grow our sales, including our retail operations, maintain cost control discipline
while balancing development of our enhanced “all-in-one” Smart Sky Platform, costs relating to our retail operations and
potential long-term revenue growth, continue our efforts to reduce product cost, drive operating efficiencies and develop and execute
our key strategic initiatives. Our planned expense levels are, and will continue to be, based in part on our expectations, which are
difficult to forecast accurately based on our stage of development, our recently acquired retail business, and factors outside of our
control. Developing and marketing our products and technologies is costly, and we anticipate our costs will increase in the future as
we continue to invest in our research and development efforts, expand our operations, and make additional expenditures to develop and
market our products and technologies, including new features, integrations, capabilities, and enhancements. Our expenditures may not
result in improved business results or profitability over the long term, and our expenses may be greater than we anticipate, including
due to, among other things, an increase in legal risk from the use of our products and technologies due to evolving laws, regulations
or standards and from our expansion into retail operations, an inability to timely and cost-effectively introduce and sell successful
smart products and other products and technologies, a security incident or our failure, for any reason, to capitalize on growth opportunities.
In addition, we may be unable to adjust spending in a timely manner to compensate for any unexpected developments. There is a risk that
our strategy to operate profitably may not be as successful as we envision or occur as quickly as we expect. We may not achieve our business
objectives, and the failure to achieve such goals would have an adverse impact on us. To the extent that our revenues do not increase
commensurate with our costs, our business, operating results, and financial condition will be materially and adversely affected.
We
will require additional financing in the near-term, and if our operations do not achieve, or we experience an unanticipated delay in
achieving, our intended level and pace of profitability, we will continue to need additional funding, which may not be available on favorable
terms, or at all, and could require us to sell certain assets or discontinue or curtail our operations.
We
cannot ascertain that there are no substantial doubt about our ability to continue as a going concern. We will not be able to achieve
our objectives and will not be able to continue our operations if we cannot adequately fund our operations.
There
is substantial doubt that the Company can continue as an ongoing business for the next 12 months. If we are unable to continue as a going
concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly
lower than the values reflected in our financial statements. In addition, the inclusion of an explanatory paragraph regarding substantial
doubt about our ability to continue as a going concern and our lack of sufficient liquidity resources may materially adversely affect
our share price and our ability to raise new capital or to enter into critical contractual relations with third parties. There is no
assurance that we will be able to adequately fund our operations in the future.
We
expect to derive a substantial portion of our future revenue from a portfolio of related products and technologies; if we cannot successfully
launch our products or further develop them to include additional features, or our products and technologies fail to satisfy customer
demands or achieve widespread market acceptance, our business, operating results, financial condition, and growth prospects would be
adversely affected.
We
expect to derive a substantial portion of our future revenue from smart products incorporating our “plug and play” technologies.
Our ability to launch our smart products and obtain market acceptance of, and grow market demand for, our products and technologies is