SKYX Platforms Corp 10-Q for FY2023 Q1
SKYX Platforms Corp. (SKYX)
About this 10-Q
SKYX Platforms Corp filed this 10-Q on May 12, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.03K
- up 43.8% from $6971 a year earlier
- Net loss
- $7.97M
- compared with a net loss of $11.86M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from to
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address, including zip code, of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of May 3, 2023, the registrant had shares of common stock, no par value per share, issued and outstanding.
SKYX PLATFORMS CORP.
Form 10-Q
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | ||
| Cautionary Note Regarding Forward Looking Statements | ||
| Item 1 | Financial Statements | 4 |
| Consolidated Balance Sheets | 4 | |
| Consolidated Statements of Operations and Comprehensive Loss | 5 | |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficit) | 6 | |
| Consolidated Statements of Cash Flows | 7 | |
| Notes to Consolidated Financial Statements | 8 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 22 |
| Item 4 | Controls and Procedures | 22 |
| PART II. OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 23 |
| Item 1A | Risk Factors | 23 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| Item 3 | Defaults Upon Senior Securities | 24 |
| Item 4 | Mine Safety Disclosures | 24 |
| Item 5 | Other Information | 24 |
| Item 6 | Exhibits | 25 |
| Signatures | 26 |
| 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 been 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 integrate and manage the operations of Belami, Inc. (“Belami”) with our business; | |
| ● | our ability to expand, operate and successfully manage our operations, including managing our business transformation in connection with evolving our business strategy to focus on smart products and technologies and integrating new lines of business; | |
| ● | our ability to raise additional financing to support our operations as needed; | |
| ● | our ability to comply with the terms of, and timely repay, our current debt financing; | |
| ● | the impact of the COVID-19 pandemic on our business and operations, including the potential impact on manufacturing operations in China; | |
| ● | 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 our license agreement with General Electric (“GE”); | |
| ● | 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 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 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, 2022 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, 2023 | (Audited) December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investments, available-for-sale | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Other assets: | ||||||||
| Furniture and equipment, net | ||||||||
| Restricted cash | ||||||||
| Restricted investments, available-for-sale | ||||||||
| Right of use assets, net | ||||||||
| Intangible assets, definite life, net | ||||||||
| Other assets | ||||||||
| Total other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes payable, current | ||||||||
| Operating lease liabilities, current | ||||||||
| Royalty obligation | ||||||||
| Convertible notes, current-related parties | ||||||||
| Convertible notes, current | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities: | ||||||||
| Notes payable | ||||||||
| Operating lease liabilities | ||||||||
| Convertible notes, net | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingent Liabilities: | ||||||||
| Redeemable preferred stock - subject to redemption: $ par value; shares authorized; shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Common stock and additional paid-in-capital: $ par value, shares authorized; and and shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Non-controlling interest | ||||||||
| Total equity (deficit) | ||||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
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)
| 2023 | 2022 | |||||||
| For the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross income | ||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income / (expense) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other income, loan forgiveness | ||||||||
| Total other income (expense), net | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Common stock issued pursuant to antidilutive provisions | ( | ) | ||||||
| Preferred dividends | ( | ) | ||||||
| Non-controlling interest | ( | ) | ||||||
| Net loss attributed to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Unrealized gain on debt securities | ||||||||
| Net Comprehensive loss attributed to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding during the period – 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 (Deficit)
(Unaudited)
| 2023 | 2022 | |||||||
For the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Shares of Common stock | ||||||||
| Balance, beginning of period | ||||||||
| Common stock issued pursuant to offerings | ||||||||
| Common stock issued pursuant to services | ||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||
| Common stock issued pursuant to exercise of options | ||||||||
| Common stock issued pursuant to cashless exercise of warrants | ||||||||
| Common stock issued pursuant to antidilutive provisions | ||||||||
| 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 | ||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||
| Stock-based compensation | ||||||||
| Common stock issued pursuant to exercise of options | ||||||||
| Debt discount | ||||||||
| Common stock issued pursuant to antidilutive provisions | ||||||||
| Balance, end of period | ||||||||
| Accumulated Deficit | ||||||||
| Balance, beginning of period | $ | ( | ) | $ | ( | ) | ||
| Net loss | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Common stock issued pursuant to antidilutive provisions | ( | ) | ||||||
| Preferred Dividends | ( | ) | ||||||
| Balance, end of period | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ||||||||
| Balance, beginning of period | ( | ) | ||||||
| Unrealized gain on debt securities | ||||||||
| Balance, end of period | ( | ) | ||||||
| Beginning balance | ||||||||
| Net loss | ||||||||
| Total stockholders’ Equity (Deficit) | $ | $ | ||||||
| Ending balance | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 6 |
SKYX Platforms Corp.
Consolidated Statements of Cash Flows
(Unaudited)
| 2023 | 2022 | |||||||
| For the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| (Other income), loan forgiveness | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Non-cash equity-based compensation expense | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| 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: | ||||||||
| Investments, available-for-sale | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Payment of patent costs | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from common stock issuance | ||||||||
| Placement cost | ( | ) | ||||||
| Proceeds from exercise of options | ||||||||
| Proceeds from issuance of convertible notes | ||||||||
| Dividends paid | ( | ) | ||||||
| Principal repayments of notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Increase 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: | ||||||||
| Preferred stock conversion to common | $ | $ | ||||||
| Common stock issued pursuant to antidilutive provisions | ||||||||
| Debt discount | ||||||||
| 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 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 into a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products. In recent years the Company has expanded the capabilities of its power-plug product, to include advanced safe and quick universal installation methods, as well as advanced smart capabilities. The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy and voice control. It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing and much more. The Company’s second-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.
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, 2023 and for the three months ended March 31, 2023 and 2022 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, 2022 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, 2022 for additional disclosures and accounting policies.
Reclassifications
For comparability, reclassifications of certain prior-year balances were made to conform with current-year presentations, such as certain expenses previously included in cost of revenues and reclassified as sales, general, and administrative expenses in 2022.
| 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. At March 31, 2023 and December 31, 2022, the Company’s cash composition was follows:
SCHEDULE OF CASH EQUIVALENTS AND RESTRICTED CASH
| March 31, 2023 | December 31, 2022 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
Restricted Assets
The
Company issued a letter of credit of $
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.
SCHEDULE OF INVENTORY
| March 31, 2023 | December 31, 2022 | |||||||
| Inventory, component parts | $ | $ | ||||||
Basic net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding convertible debt, option and warrant contracts. For the three months ended March 31, 2023 and 2022, 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.
SCHEDULE OF EARNING (LOSS) PER SHARE
| March 31, 2023 | March 31, 2022 | |||||||
| 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.
| 9 |
NOTE 3 DEBT SECURITIES
The components of investments as of March 31, 2023 were as follows:
SCHEDULE OF COMPONENTS OF INVESTMENTS
| Fair value level | Cost | Unrealized loss | Carrying value | |||||||||||||
| Corporate debt securities | Level 1 | $ | $ | ( | ) | $ | ||||||||||
| State and local government debt securities | Level 1 | ( | ) | |||||||||||||
| State and local government debt securities | Level 2 | ( | ) | |||||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||
NOTE 4 FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
SCHEDULE OF FURNITURE AND EQUIPMENT
| March 31, 2023 | December 31, 2022 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Furniture and fixtures | ||||||||
| Tooling and production | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Depreciation
expense amounted to $
NOTE 5 INTANGIBLE ASSETS
Intangible assets consisted of the following:
SCHEDULE OF INTANGIBLE ASSETS
| March 31, 2023 | December 31, 2022 | |||||||
| Patents | $ | $ | ||||||
| Trademark | ||||||||
| Finite lived intangible assets, gross | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Amortization
expense on intangible assets was $
The following table sets forth the estimated amortization expense for future periods:
SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE FOR FUTURE
| Remainder of 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 |
NOTE 6 DEBT
The following table presents the details of the principal outstanding:
SCHEDULE OF DEBT TABLE
| March 31, 2023 | December 31, 2022 | APR at March 31, 2023 | Maturity | Collateral | ||||||||||||||||
| Notes payable (a) | $ | $ | % | Substantially all Company assets | ||||||||||||||||
| Convertible Notes (b) | % | Substantially all Company assets | ||||||||||||||||||
| PPP Loans (c) | % | - | ||||||||||||||||||
| Economic Impact Disaster loan | % | Substantially all Company assets | ||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
| Unamortized debt discount | $ | ( | ) | $ | ||||||||||||||||
| Debt, net of Unamortized debt Discount | $ | $ | ||||||||||||||||||
SCHEDULE OF INTEREST EXPENSE
| For the three-month period ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Interest expense associated with debt | ||||||||
As of March 31, 2023, the expected future principal payments for the Company’s debt are due as follows:
SCHEDULE OF FUTURE PRINCIPAL PAYMENTS
| Remainder of 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 and thereafter | ||||
| Total | $ |
| (a) | The
unpaid principal bears annual interest at the Wall Street Journal prime rate plus | |
| (b) | Included
in Convertible Notes are loans provided to the Company from two directors, an officer and two investors. The notes each have the
following terms: three-year subordinated convertible promissory note of principal face amounts. Subject to other customary terms,
the Convertible Notes mature between September 2023 and January 2024 and bear interest at an annual rate of |
| 10 |
| All
convertible notes are convertible at a price ranging between $ | ||
| During
the three-month period ended March 31, 2023, the Company issued convertible promissory notes for $ | ||
| (c) | The
Small Business Administration forgave approximately $ |
NOTE 7 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 into 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 $
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, 2023:
SCHEDULE OF LEASE COST OPERATING LEASE
| March 31, 2023 | ||||
| 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 | $ | |||
| March 31, 2023 | ||||
| Other information: | ||||
| Weighted-average discount rate | % | |||
| Weighted-average remaining lease term (in months) | ||||
SCHEDULE OF MINIMUM LEASE OBLIGATION
| Minimum Lease obligation | ||||
| Remainder of 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 and thereafter | ||||
| Total | $ | |||
| 11 |
NOTE 8 GE ROYALTY OBLIGATIONS
The Company has a license agreement with General Electric (“GE”) which provides, 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 Company cannot assign the agreement or sublicense the stated rights. The agreement imposes certain manufacturing and quality control conditions to continue to use the GE brand. The agreement expires in November 2023.
In
the event the Company receives significant funding rounds of at least $
Variable royalty payments are due quarterly, using a December 1 – November 30 contract year and based upon the prior quarter’s sales. Royalty payments will be paid from sales of GE branded product subject to the following repayment schedule:
SCHEDULE OF ROYALTY OBLIGATIONS
| Net Sales in Contract Year | Percentage of Contract Year Net Sales owed to GE | |||
| $ | % | |||
| $ | % | |||
| $ | % | |||
As
of March 31, 2023 and December 31, 2022, the outstanding balance of the aggregate Minimum Payment was $
NOTE 9 ACCRUED EXPENSES
Accrued expenses consisted of the following:
SCHEDULE OF ACCRUED EXPENSES
| March 31, 2023 | December 31, 2022 | |||||||
| Accrued interest, convertible notes | $ | $ | ||||||
| Trade payables | ||||||||
| Accrued compensation | ||||||||
| Total | $ | $ | ||||||
NOTE 10 RELATED PARTY TRANSACTIONS
Convertible Notes Due to Related Parties
Convertible
notes due to related parties represent amounts provided to the Company from two directors and the Chief Executive Officer of the Company.
The outstanding principal on the convertible promissory notes, associated with related parties was $
| 12 |
Initial Public Offering
The
Company issued shares of its common stock to certain directors, officers and greater than 5% stockholders which generated gross
proceeds of $
The Company issued shares of its common stock to affiliates of certain directors and greater than 5% stockholders pursuant to certain anti-dilutive provisions during the three-month period ended March 31, 2022. The issuance of such shares was triggered based on the Company’s effective price of its initial public offering in February 2022.
NOTE 11 STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
The Company issued the following common stock during the three months ended March 31, 2023 and 2022:
SCHEDULE OF COMMON STOCK
| Transaction Type | Shares Issued | Valuation $ | Range
of Value Per Share | |||||||||
| 2023 Equity Transactions | ||||||||||||
| Common stock issued, pursuant to services provided | – | |||||||||||
| Transaction Type | Shares Issued | Valuation $ (Issued) | Range of Value Per Share | |||||||||
| 2022 Equity Transactions | ||||||||||||
| Common stock issued per exercise of options and warrants | $ | $ | – | |||||||||
| Common stock issued per exercise of warrants, cashless | ||||||||||||
| Common stock issued, pursuant to services provided | – | |||||||||||
| Conversion of preferred stock | ||||||||||||
| Issuance of common stock pursuant to offering, net | ||||||||||||
| Issuance of common stock, pursuant to anti-dilutive provisions | ||||||||||||
The Company issued shares of its common stock to certain stockholders during the three-month period ended March 31, 2022. The issuance of such shares was triggered based on the Company’s effective price of its initial public offering. The shares were recorded as an increase in common stock and additional paid-in capital and accumulated deficit during the period, using the fair value of the shares at the date of issuance.
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Preferred Stock
The following is a summary of the Company’s Preferred Stock activity during the three months ended March 31, 2023 and 2022 respectively:
SCHEDULE OF PREFERRED STOCK ACTIVITY
| Transaction Type | Quantity | Valuation | Value per Share | |||||||||
| Preferred Stock Balance at January 1, 2023 | $ | $ | ||||||||||
| Preferred Stock redemptions | ||||||||||||
| Preferred Stock Balance at March 31, 2023 | $ | $ | ||||||||||
| Transaction Type | Quantity | Carrying Value | Value per Share | |||||||||
| Preferred Stock Balance at January 1, 2022 | $ | $ | ||||||||||
| Preferred Stock redemptions | ( | ) | ( | ) | ||||||||
| Preferred Stock Balance at March 31, 2022 | $ | $ | ||||||||||
The
Preferred Stock is convertible at the holder’s option. Shares of the Preferred Stock may be repurchased by the Company upon 30
days’ prior written notice, for USD $ per share. Holders also have a put option, allowing them to sell their shares of Preferred
Stock back to the Company at $ per share, and therefore the stock is classified as Mezzanine equity rather
than permanent equity. The Company paid dividends in the amount of $
Stock Options
SCHEDULE OF STOCK OPTION ACTIVITY
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2023 | $ | $ | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Granted | ||||||||||||||||
| Awards Canceled | $ | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding, March 31, 2023 | $ | $ | ||||||||||||||
| Exercisable, March 31, 2023 | $ | $ | ||||||||||||||
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2022 | $ | –– | $ | –– | ||||||||||||
| Exercised | ( | ) | –– | $ | –– | |||||||||||
| Granted | –– | |||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding, March 31, 2022 | $ | $ | ||||||||||||||
| Exercisable, March 31, 2022 | $ | $ | ||||||||||||||
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Warrants Issued
The following is a summary of the Company’s warrant activity during the three month periods ended March 31, 2023 and 2022:
SCHEDULE OF WARRANT ACTIVITY
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2023 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Balance, March 31, 2023 | $ | |||||||
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2022 | $ | |||||||
| Exercised | ( | ) | ||||||
| Issued | ||||||||
| Forfeited | ( | ) | ||||||
| Balance, March 31, 2022 | $ | |||||||
Assumptions- Fair Value of Warrants and Options
The Company issued options in connection for services during the three-month period ended March 31, 2022 and none during the three-month period ended March 31, 2023. The Company issued warrants in connection with certain convertible promissory notes during the three-month period ended March 31, 2023, which are considered inducements to enter into debt transactions and are recognized as debt discount at fair value. The following table summarizes the range of the Black Scholes pricing model assumptions used by the Company to value certain warrants issued during the three-month period ended March 31, 2023 and options granted the three-month period ended March 31, 2022:
| March 31, 2023 | March 31, 2022 | |||||||
| 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 $
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NOTE 12 CONCENTRATIONS OF RISKS
Major Customers
The Company had no customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable.
Major Vendors
The
Company had two major vendors that accounted for
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 its proprietary-based technology and related products sold in the United States.
NOTE 13 SUBSEQUENT EVENTS
Management has evaluated subsequent events through May 9, 2023, which is the date the consolidated financial statements were available to be issued. There were no subsequent events that required adjustment to or disclosure in the consolidated financial statements with the exception of the following:
The
Company completed its acquisition of Belami, Inc. and subsidiaries in April 2023. The Company paid $
The
Company satisfied its obligations under a note payable amounting to $
In
May 2023, the Company entered into a $
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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, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022. 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, 2022 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-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, 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 second-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. While we have developed and created working prototypes of our advanced and smart products, we are continuing to refine the product prototypes and expect to begin manufacturing during 2023 for the advanced products and the smart universal power-plug, ceiling fans and lighting products and for the Smart Sky Platform. We hold over 60 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 materially differ 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 increased during 2022 and have continued to impact operations during 2023. 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 foreseeable future (especially if inflation rates continue to rise). In addition, we may be negatively impacted as a result 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.
During April 2023, we completed the previously-announced acquisition of all of 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 1,923,285 shares of common stock as consideration for the acquisition. The Company expects that Belami will serve as a marketing and growth platform and should provide several distribution channels, including to retail customers, builders and professionals.
In connection with the acquisition, the Company engaged in private placements of its securities during the first quarter of 2023, pursuant to which the Company issued and sold (i) subordinated secured convertible promissory notes in the aggregate principal amount of $10.35 million and (ii) warrants to purchase an aggregate of up to 1,391,667 shares of the Company’s common stock. The proceeds were used to fund the cash component of the Belami acquisition and to pay certain transaction expenses in connection with the acquisition and the private placements.
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In addition, in March 2023, the Company acquired 50% of the equity of a strategic e-commerce private label lighting website, for $225,000, and acquired the other 50% of the equity, which is owned by Belami, as part of the Belami acquisition. Following completion of the Belami acquisition, the Company transferred the equity it previously acquired to Belami, and Belami now holds 100% of the outstanding equity of such entity. The Company expects that this acquisition will serve as another marketing and growth platform for the Company and should provide additional distribution to both professional and retail channels for the Company’s products.
During the second quarter of 2023, the Company repaid in full approximately $5.2 million in principal and interest due under the Company’s five-year secured promissory note, dated December 14, 2021, previously issued to Nielsen & Bainbridge, LLC, by issuing 574,713 shares of the Company’s common stock and paying $2 million. The Company also entered into a $2 million secured revolving line of credit with First-Citizens Bank & Trust Company, which matures May 1, 2024.
Results of Operations
Comparison of the Three Months Ended March 31, 2023 and 2022
For the Three Months Ended March 31, | Change Between the Months Ended March 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 10,025 | $ | 6,971 | $ | (3,054 | ) | 44.0 | % | |||||||
| Cost of revenues | (1,468 | ) | (5,640 | ) | 4,172 | (74 | )% | |||||||||
| Gross income | 8,557 | 1,331 | (7,226 | ) | NM | |||||||||||
| Selling, general and administrative expenses | (7,248,205 | ) | (11,947,440 | ) | (4,699,235 | ) | (40 | )% | ||||||||
| Loss from operations | (7,239,648 | ) | (11,946,109 | ) | 4,706,461 | (40) | % | |||||||||
| Other income / (expense) | ||||||||||||||||
| Interest expense | (730,621 | ) | (90,505 | ) | 640,116 | NM | ||||||||||
| Other income, loan forgiveness | - | 178,250 | (178,250 | ) | 100 | % | ||||||||||
| - | 100 | % | ||||||||||||||
| Total other income (expense), net | (730,621 | ) | 87,745 | 818,366 | NM | |||||||||||
| Net loss | (7,970,269 | ) | (11,858,364 | ) | 3,888,095 | (33 | )% | |||||||||
NM: Not meaningful
Revenue
The revenues are at comparable levels during the three-month period ended March 31, 2023 and 2022.
They are related to the planned reduction of discontinued inventory as we continued to shift our focus to the development of our new patented “Smart” platforms and technologies. During 2022 and the first quarter of 2023, we continued to sell through our existing inventory of discontinued products to facilitate our planned transition into our new patented product lines.
We believe that revenues will be higher in 2023 than in 2022, since we launched the marketing of our advanced and smart products in late 2022 and expect to begin commercial sales in 2023. We also expect our revenues to increase following the closing of the Belami acquisition.
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Cost of Revenues
The cost of revenues consists primarily of inspection fees related to certain certifications. Revenues are mostly derived from the sale of a small number of replacement parts and standard canopy kits. The inventory and related costs of such products are not significant and are not reflected on our balance sheet nor in the cost of revenues. The reduction in cost of revenues was related to the decrease in sales, which resulted from our decision to discontinue our old products and transition to our patented “Smart” platforms and technologies.
We believe that cost of revenues will increase in 2023 compared to 2022, commensurate with an anticipated increase in revenues.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of an allocation of product development, sales and marketing, finance, legal, human resources, including salaries, wages, and benefits, and depreciation and amortization, including non-cash equity-based compensation.
The decrease in selling, general, and administrative expenses during the three months ended March 31, 2023 when compared to the prior year period was primarily due to the following:
| ● | Decrease of $5.8 million related to share-based payments which is primarily due to a greater number of shares of common stock issued and options granted for services during the three-month ended March 31, 2022 at a higher price per share when compared to the first quarter of 2023; | |
| ● | Offset by increased expenses related to product development of $527,000 incurred during the first quarter of 2023; | |
| ● | Offset by an increase in other spending related to the support of planned scope of operations and the acquisition of Belami, Inc. |
We believe that our selling, general, and administrative expenses will be higher during 2023 when compared to 2022 as we continue to invest to support our anticipated growth and following the closing of the Belami acquisition.
Other Income (Expense)
The increase in interest expense in the three months ended March 31, 2023 when compared to the prior year period resulted primarily from interest charges related to operating lease liabilities which were entered into the latter part of 2022, and, to a lesser extent, amortization of debt discount resulting from inducements granted to holders of convertible promissory notes issued in the first quarter of 2023.
The decrease in other income loan forgiveness during the three months ended March 31, 2023 when compared to the prior year period was the forgiveness of a PPP loan during the three months ended March 31, 2022, which did not occur during the same period in 2023.
Liquidity and Capital Resources
As we develop our revenue base, we have raised additional funds through the sale of our common stock and securities convertible into our common stock and issuance of debt, including completing our initial public offering in February 2022 for gross proceeds of $23.1 million and the private placements in February and March 2023 for gross proceeds of $10.35 million, pursuant to which we issued convertible notes and warrants. We believe that our existing cash and debt securities will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including 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 in 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.
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During April and May 2023, the Company repaid in full approximately $6.2 million in principal and interest due under the Company’s five-year secured promissory note, dated December 14, 2021, previously issued to Nielsen & Bainbridge, LLC, by issuing 574,713 shares of the Company’s common stock and paying $2.0 million in cash. The Company also entered into a $2.0 million secured revolving line of credit with First-Citizens Bank & Trust Company. The line of credit bears interest at a variable rate equal to The Wall Street Journal Prime Rate plus 0.250%, subject to a floor of 5.0% and ceiling of the lesser of 18.0% or the maximum rate allowed under applicable law, payable monthly, and matures May 1, 2024.
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.
Three-months period ended March 31, 2022:
We had $27.6 million in cash and cash equivalents as of March 31, 2022.
We used $3.4 in our operating activities which consists of a net loss of $12 million adjusted for the following:
| ● | Stock-based compensation of $8.8 million |
We generated $20.7 million in financing activities which were primarily related to proceeds we generated from the issuance of shares of common stock pursuant to our initial public offering.
Non-GAAP Financial Measures
Management considers selling, general, and administrative expenses, adjusted for non-cash stock compensation depreciation and amortization and transaction costs, an important indicator in consistently evaluating our business operations and the use of cash in our operating activities. We use such measure to analyze and evaluate our liquidity and capital resources and intend to continue using such measure until we generate revenues. Such a measure eliminates significant items that do not involve cash outlay or non-recurring transactions. This measure should be considered in addition to, rather than as a substitute, for selling, general and administrative expenses. 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-month period ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Sales, general, and administrative expenses, as reported | $ | 7,248,205 | $ | 11,947,440 | ||||
| Depreciation and amortization | (497,373 | ) | (21,900 | ) | ||||
| Transaction costs | (393,601 | ) | - | |||||
| Non-cash share-based payments | (2,963,702 | ) | (8,767,894 | ) | ||||
| Sales, general, and administrative expenses, as adjusted | $ | 3,393,529 | $ | 3,157,646 | ||||
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Critical Accounting Policies
Our significant accounting policies are disclosed in Note 2 to our consolidated financial statements for the year ended December 31, 2022 contained in our Annual Report on Form 10-K for the year ended December 31, 2022. 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, 2023 and December 31, 2022, 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. |
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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, 2023.
Changes in Internal Controls Over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2023 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
There are no legal proceedings or arbitration proceedings currently pending against our Company. 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 were not a party to any material legal matters or claims. In the future, we may become party to legal matters and claims in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. However, legal proceedings are inherently uncertain. As a result, 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, 2022, other than as noted below. 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.
Risks Related to Acquisition of Belami
Global economic conditions and the effect of economic pressures and other business factors on discretionary consumer spending and consumer preferences may have a material adverse effect on our business, results of operations and financial condition.
Uncertainties in global economic conditions that are beyond our control could materially adversely affect our business, results of operations, financial condition and stock price. These adverse economic conditions include inflation, slower growth or recession, new or increased tariffs and other changes to fiscal and monetary policy, higher interest rates, high unemployment, decreased consumer confidence in the economy, armed hostilities, such as the ongoing military conflict between Russia and Ukraine, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products we sell, and other matters that influence consumer spending and preferences. In addition, consumer confidence and spending can be materially adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, including home equity loans and consumer credit, changes in net worth based on market changes and uncertainty, energy shortages and cost increases, labor and healthcare costs, government actions and general uncertainty regarding the overall future economic environment. Consumers may view a substantial portion of the products we offer as discretionary items rather than necessities. As a result, our operating results are sensitive to changes in macroeconomic conditions that impact consumer spending, including discretionary spending. Declines in consumer spending have resulted in, and could in the future result in, decreased demand for our products and services, which has adversely affected our results of operations and may do so in the future.
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Our marketing efforts to help grow our business may not be effective, and failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our e-commerce channel.
If the online market for home goods does not continue to gain acceptance, a significant portion of our business may suffer. Our success will depend, in part, on our ability to attract consumers who have historically purchased home goods through traditional retailers. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional expenditures to attract additional online consumers to our sites and convert them into purchasing customers online. Specific factors that could impact consumers’ willingness to purchase home goods from us online, especially in markets where we do not have physical stores, include concerns about buying products without a physical storefront, face-to-face interaction with sales personnel and the inability to physically handle, examine and compare products; delivery time associated with online orders; actual or perceived lack of security of online transactions and concerns regarding the privacy or protection of personal information; delayed shipments or shipments of incorrect or damaged products; inconvenience associated with returning or exchanging items purchased online; usability, functionality and features of our sites; and our reputation and brand strength. In addition, if we do not have a clear and relevant promotional calendar to engage our customers, especially in the current macroeconomic environment, our customers may purchase fewer goods from us, or we may have to increase our promotional activities. If the shopping experience we provide does not appeal to consumers or meet the expectations of existing customers, we may not acquire new customers at sustainable rates, acquired customers may not become repeat customers and existing customers’ buying patterns and levels may decrease. In addition, we may experience surges in online traffic and orders associated with promotional activities and seasonal trends, which could cause fluctuations in our results of operations from quarter to quarter.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
There are no unregistered sales of equity securities during the period covered by this report that were not previously reported in a Current Report on Form 8-K.
Use of Proceeds
On February 14, 2022, we completed our initial public offering. We received approximately $20.5 million in net proceeds after deducting underwriting discounts and commissions of $1.8 million and offering expenses of approximately $700,000. There has been no material change in the use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act of 1933, as amended, and other periodic reports previously filed with the SEC.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. Other Information
Not applicable.
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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.
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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 12, 2023 | By: | /s/ John P. Campi | |
| John P. Campi, Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| Date: | May 12, 2023 | By: | /s/ Marc-Andre Boisseau | |
| Marc-Andre Boisseau, Chief Financial Officer | ||||
| (Principal Financial and Accounting Officer) | ||||
| 26 |
Exhibit 10.11
Form of Cash Retention Incentive Agreement (April 2023)
____________, 2023
[employee name]
[address]
Re: Retention Incentive Agreement
Dear [name],
You are a highly valued employee or other service provider of Belami, Inc. (the “Company”). In order to encourage your continued attention and dedication to the Company after its acquisition by SKYX Platforms Corp. (“SKYX”), this letter agreement documents your opportunity to earn a cash retention incentive payment upon the terms, and subject to the conditions, set forth below.
1. Retention Incentive.
(a) If you remain in the continuous employment or other service (“Continuous Service”) of the Company (or by SKYX or an affiliate of SKYX) through the Vesting Date (as defined below), then you will be entitled to receive a retention incentive bonus (the “Retention Incentive”) of (i) $[●]. For purposes of this letter agreement, the “Vesting Date” means the first anniversary of the “Closing Date”, as defined in that certain Stock Purchase Agreement, dated February 6, 2023, by and among SKYX and the sellers of the common stock of the Company. Except as otherwise provided in Section 1(b) below, the Retention Incentive will be forfeited automatically and without further action or notice if your Continuous Service terminates prior to the Vesting Date.
(b) Notwithstanding the foregoing, if, prior to the Vesting Date, your Continuous Service is terminated by the Company without Cause (as defined in Section 2 below) or by you for Good Reason (as defined in Section 2 below), your Retention Incentive shall become fully vested as of the date of such termination.
(c) Any Retention Incentive earned under this letter agreement shall be paid to you in a single lump sum payment in cash (net of all taxes and withholdings that may be required, as determined by the Company), within thirty (30) days following the date that Retention Incentive becomes vested in accordance with Section 1 above.
2. Certain Definitions. For purposes of this letter agreement:
(a) “Cause” shall have the meaning provided in any applicable employment or severance agreement between you and the Company (or SKYX or an affiliate), or in the absence of such an agreement that defines the term, “Cause” shall mean: (i) embezzlement, fraud or other conduct that would constitute a felony (other than traffic-related citations); (ii) willful unauthorized disclosure of confidential information; (iii) gross misconduct or gross neglect in the performance of your duties; (iv) willful failure to cooperate with a bona fide internal investigation or investigation by regulatory or law enforcement authorities, after being instructed by the Company (or SKYX or an affiliate) to cooperate, or the willful destruction or failure to preserve documents or other material reasonably known to be relevant to such an investigation, or the willful inducement of others to fail to cooperate or to destroy or fail to produce documents or other material relevant to such an investigation; or (v) willful and material violation of the Company’s (or SKYX’s or an affiliate’s) written conduct policies; provided, however, that a termination of your employment by the Company (or SKYX or an affiliate) pursuant to sub-paragraphs (iii), (iv) or (v) of the foregoing shall not be deemed to be for Cause unless the Company (or SKYX or an affiliate) gives you written notice prior to such termination, setting forth the nature of any alleged failure, breach or refusal in reasonable detail and the conduct required to cure, and, except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, you shall have 30 business days from the giving of such notice (or, if the Company (or SKYX or an affiliate) reasonably expects irreparable injury from a delay of 30 business days, such shorter period set out in the written notice to you as is reasonable under the circumstances) within which to cure any failure, breach or refusal under sub-paragraphs (iii), (iv) or (v) of the foregoing.
(b) “Good Reason” shall have the meaning provided in any applicable employment or severance agreement between you and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Good Reason” shall mean the occurrence of any of the following without your consent: (i) a material reduction by the Company (or SKYX or an affiliate) of your title, duties, responsibilities or reporting relationship; (ii) a material reduction by the Company (or SKYX or an affiliate) of your annual base salary; (iii) the relocation of your principal place of employment, as determined as of the date hereof, by more than twenty-five (25) miles without offering you the ability work remotely; or (iv) a material breach of any applicable employment agreement between your and the Company (or SKYX or an affiliate); provided, however, that your termination of your employment pursuant to sub-paragraphs (i), (ii),(iii) or (iv) of the foregoing shall not be deemed to be for Good Reason unless (x) you give written notice to the Company (or SKYX or an affiliate, if your employer) of the existence of the event or condition constituting Good Reason within 60 calendar days after such event or condition initially occurs or exists, (y) the Company (or SKYX or an affiliate) fails to cure such event or condition within 30 calendar days after receiving such notice, and (z) you terminates your employment within 120 calendar days after the initial occurrence of the event or condition constituting Good Reason.
4. Miscellaneous
(a) This letter agreement is binding upon the Company and its successors and assigns and will be interpreted, enforced and governed under the laws of the State of California without regard to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any other jurisdiction. This letter agreement may not be transferred or assigned by you. This letter agreement is not a contract of employment and does not create a guarantee of continued employment with the Company or any affiliate.
(b) This letter agreement supersedes any and all prior agreements, negotiations and discussions of the parties with respect to the matters contained herein.
(c) This letter may be executed in counterparts (including by means of pdf or electronic signature), each of which shall be deemed an original, and both of which taken together shall constitute one and the same agreement. No provision of this letter agreement may be amended, modified, waived or discharged unless such amendment, waiver, modification or discharge is agreed to in writing signed by you and SKYX. No waiver of any provision of this letter agreement shall be deemed a continuing waiver or a waiver of any other provision, whether or not similar.
(e) The parties intend that any Retention Incentive payable pursuant to this letter agreement be exempt from or comply with the restrictions of Section 409A of the Internal Revenue Code of 1986, as amended, and this letter agreement will be interpreted and administered in accordance with such intent. However, the tax treatment of any payment made under this letter agreement is not warranted or guaranteed.
[SIGNATURE PAGE FOLLOWS]
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Please indicate your acceptance of these terms by signing below.
| SKYX PLATFORMS CORP. | ||
| By: | ||
| Name: | ||
| Title | ||
| Agreed and Accepted: | ||
| Name: | [●] | |
| 3 |
Exhibit 10.12
Form of Nonqualified Stock Option Agreement (April 2023)
SKYX PlATFORMS Corp.
2021 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
| Name of Participant: | [ ] |
| Date of Grant: | [ ] |
| Number of Option Shares: | [ ] |
| Option Price: | $[ ] per Share |
| Type of Option: | Nonqualified Stock Option (NSO or NQSO) |
| Right to Exercise: | From and after the Date of Grant, and so long as the Participant remains in continuous employment or other service with the Company or a Subsidiary (“Continuous Service”) through the dates set forth below (each, a “Vesting Date”), the Option Shares shall vest and become exercisable as follows, provided that the Option (as defined below) has not otherwise terminated or expired in accordance with the provisions of this Agreement (as defined below):
33.33% on the one year anniversary of the Date of Grant (the first Vesting Date)
33.33% on the two year anniversary of the Date of Grant (the second Vesting Date)
33.34% on the three year anniversary of the Date of Grant (the third Vesting Date) |
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THIS AGREEMENT SHALL BE VOID IF IT HAS NOT BEEN EXECUTED AND RETURNED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE DATE OF GRANT.
SKYX PLATFORMS Corp.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT (this “Agreement”) is made as of the date of grant on the cover page hereof (the “Date of Grant”) by and between SKYX Platforms Corp., a Florida corporation (the “Company”), and the recipient named on the cover page hereto (the “Participant”).
1. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement and in the Company’s 2021 Stock Incentive Plan (the “Plan”), the Compensation Committee (the “Committee”) of the Company’s board of directors (the “Board”) hereby grants to the Participant as of the Date of Grant a stock option (the “Option”) to purchase the number of shares of the Company’s common stock, no par value (the “Common Stock”) shown on the cover page hereof (the “Option Shares”). The Option may be exercised from time to time in accordance with the terms of this Agreement. The price per Option Share at which the Option Shares may be purchased pursuant to the Option shall be as set forth on the cover page hereof (the “Option Price”). This Option is not intended to be an “incentive stock option” within the meaning of that term under Section 422 of the Code.
2. Term of Option. The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 6 of this Agreement, shall expire five (5) years from the Date of Grant.
3. Right to Exercise.
(a) Subject to the expiration or earlier termination of the Option in accordance with its terms, the Option shall vest and become exercisable as set forth on the cover page hereof. To the extent the Option is vested and exercisable, it may be exercised in whole or in part. In no event shall the Participant be entitled to acquire a fraction of one Option Share pursuant to the Option. The Participant shall be entitled to the privileges of ownership with respect to Option Shares purchased and delivered to him/her upon the complete and valid exercise of all or part of the Option and payment of the applicable Option Price therefor.
(b) Notwithstanding the foregoing, upon the termination of Participant’s Continuous Service prior to a Vesting Date by the Company or a Subsidiary without Cause (as defined below) or by Participant for Good Reason (as defined below), the portion of the Option that would become exercisable on the next scheduled Vesting Date if Participant’s Continuous Service had continued until such Vesting Date shall immediately vest and become exercisable (and any portion of the Option not otherwise vested and exercisable as of such termination of Continuous Service shall be forfeited and terminate automatically, without further action or notice). For purposes of this Agreement:
(A) “Cause” shall have the meaning provided in any applicable employment or severance agreement between Participant and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Cause” shall mean: (I) embezzlement, fraud or other conduct that would constitute a felony (other than traffic-related citations); (II) willful unauthorized disclosure of confidential information; (III) gross misconduct or gross neglect in the performance of Participant’s duties; (IV) willful failure to cooperate with a bona fide internal investigation or investigation by regulatory or law enforcement authorities, after being instructed by the Company or a Subsidiary to cooperate, or the willful destruction or failure to preserve documents or other material reasonably known to be relevant to such an investigation, or the willful inducement of others to fail to cooperate or to destroy or fail to produce documents or other material relevant to such an investigation; or (V) willful and material violation of the Company’s (or a Subsidiary’s) written conduct policies; provided, however, that a termination of Participant’s employment by the Company or Subsidiary pursuant to sub-paragraphs (III), (IV) or (V) of the foregoing shall not be deemed to be for Cause unless the Company or a Subsidiary gives Participant written notice prior to such termination, setting forth the nature of any alleged failure, breach or refusal in reasonable detail and the conduct required to cure, and, except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, Participant shall have 30 business days from the giving of such notice (or, if the Company reasonably expects irreparable injury from a delay of 30 business days, such shorter period set out in the written notice to Participant as is reasonable under the circumstances) within which to cure any failure, breach or refusal under sub-paragraphs (III), (IV) or (V) of the foregoing.
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(B) “Good Reason” shall have the meaning provided in any applicable employment or severance agreement between Participant and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Good Reason” shall mean the occurrence of any of the following without Participant’s consent: (I) a material reduction by the Company or a Subsidiary of Participant’s title, duties, responsibilities or reporting relationship; (II) a material reduction by the Company or a Subsidiary of Participant’s annual base salary; (III) the relocation of the Participant’s principal place of employment by the Company or a Subsidiary, as determined as of the Date of Grant, by more than twenty-five (25) miles without the Company or a Subsidiary offering the Participant the ability to work remotely; or (IV) a material breach of any applicable employment agreement between Participant and the Company or a Subsidiary; provided, however, that termination of Participant’s employment by Participant pursuant to sub-paragraphs (I), (II), (III) or (IV) of the foregoing shall not be deemed to be for Good Reason unless (x) Participant gives written notice to the Company or the employing Subsidiary of the existence of the event or condition constituting Good Reason within 60 calendar days after such event or condition initially occurs or exists, (y) the Company or a Subsidiary fails to cure such event or condition within 30 calendar days after receiving such notice, and (z) Participant terminates Participant’s employment within 120 calendar days after the initial occurrence of the event or condition constituting Good Reason.
4. Option Transferability. Except as otherwise provided in this Section 4, the Option granted hereby shall be neither transferable nor assignable by the Participant except by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Participant, only by the Participant, or in the event of his or her legal incapacity, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and court supervision. Notwithstanding the foregoing, the Option granted hereby may be transferred to a Permitted Transferee upon approval by the Committee. A “Permitted Transferee” shall mean (i) a parent, child, spouse or sibling of the Participant (a “Family Member”), (ii) a trust created solely for the benefit of the Participant or a Family Member, or (iii) a partnership, limited liability company or entity whose only partners or stockholders are the Participant and/or Family Members.
5. Notice of Exercise; Payment. To the extent then vested and exercisable, the Option may be exercised by written notice (on the form attached hereto as Attachment 1 or such other form acceptable to the Company) to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. Payment equal to the aggregate Option Price of the Option Shares for which the Option is being exercised shall be tendered in full with the notice of exercise to the Company in cash in the form of currency or check or other cash equivalent acceptable to the Company. The Participant may also tender the Option Price by (a) the actual or constructive transfer to the Company of nonforfeitable, nonrestricted shares of Common Stock, (b) by any combination of the foregoing methods of payment, including a partial tender in cash and a partial tender in nonforfeitable, nonrestricted shares of Common Stock, or (c) any other method approved or accepted by the Committee in its sole discretion, including, if the Committee so determines, a cashless exercise that complies with all applicable laws. Nonforfeitable, nonrestricted shares of Common Stock that are transferred by the Participant in payment of all or any part of the Option Price shall be valued on the basis of their Fair Market Value per share of Common Stock, as determined by the Committee. As a further condition precedent to the exercise of the Option, the Participant shall execute any documents which the Committee shall, in its sole discretion, deem necessary or advisable.
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6. Termination of Agreement.
(a) This Agreement and the portion of the Option that has not yet been exercised shall be forfeited and terminate automatically, without further action or notice, five (5) years from the Date of Grant.
(b) Notwithstanding the foregoing, in the event that the Participant’s Continuous Service is terminated for Cause (as determined by the Committee), this Agreement shall terminate at the time of such termination and the Participant shall forfeit all rights under this Agreement without further action or notice, including his or her rights with respect to any unvested portion of the Option and any portion of the Option vested but not yet exercised, notwithstanding any other provision of this Agreement.
(c) In the event of the termination of the Participant’s Continuous Service for any reason other than that set forth in Section 6(b) above, only the portion of the Option vested as of the date of such termination pursuant to Section 3 may be exercised. For the purposes of this Agreement, the Continuous Service of the Participant with the Company shall not be deemed to have been interrupted, and the Participant shall not be deemed to have ceased to be an employee of the Company, by reason of the transfer of his or her employment or other service among the Company and its Subsidiaries or a leave of absence of not more than thirty (30) days unless otherwise approved by the Committee. The Committee may, in its sole discretion, provide for the full or partial acceleration of vesting and exercisability of the Option in connection with the termination of Participant’s Continuous Service for any other reason prior to vesting.
7. Compliance with Law. Notwithstanding any other provision of this Agreement, the Option shall not vest or be exercisable if the exercise thereof would result in a violation of any applicable federal or state securities law.
8. Lock-Up Agreement. The Participant agrees that, if requested by the Company in connection with a public offering of shares of Common Stock or other securities of the Company, the Participant will not sell, offer for sale or otherwise dispose of the Option Shares for such period of time as is determined by the Committee; provided that at least a majority of the Company’s directors and officers who hold options, shares of Common Stock or such other securities of the Company at such time are similarly bound.
9. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Participant under this Agreement without the Participant’s consent.
10. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
11. Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the Option or its exercise.
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12. Successors and Assigns. Without limiting Section 4, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Participant, and the successors and assigns of the Company.
13. Data Privacy. In order to administer the Plan, the Company may process personal data about the Participant. Such data includes, but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about the Participant such as home address and business addresses and other contact information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. The Participant hereby gives explicit consent to the Company to process any such personal data. The Participant also gives explicit consent to the Company to transfer any such personal data outside the country in which the Participant works or is employed, including, if the Participant is not a U.S. resident, to the United States, to transferees that shall include the Company and other persons who are designated by the Company to administer the Plan.
14. Electronic Delivery. The Participant hereby consents and agrees to electronic delivery of any documents (including prospectus information) that the Company may elect to deliver in connection with this Agreement, the Option and any other award made or offered under the Plan. The Participant understands that, unless earlier revoked by the Participant by giving written notice to the Chief Executive Officer of Company, this consent shall be effective for the duration of the Agreement. The Participant also understands that he or she shall have the right at any time to request that the Company deliver written copies of any and all materials referred to above at no charge. The Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. The Participant consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.
15. No Fractional Shares. Fractional shares of Common Stock will be subject to rounding conventions adopted by the Company from time to time; provided, that in no event will the total shares of Common Stock issued pursuant to this Agreement and the Option exceed the total Option Shares granted under this award.
16. Taxes and Withholding. The Participant is responsible for any federal, state, local or other taxes with respect to the Option Shares. The Company does not guarantee any particular tax treatment or results in connection with the grant, vesting or exercise of the Option or the delivery of the Option Shares. To the extent the Company is required to withhold any federal, state, local, foreign or other taxes in connection with the delivery of Option Shares under this Agreement, then the Participant shall be required to pay such required withholding to the Company, or make arrangements satisfactory to the Company regarding the payment of such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant.
17. Change in Control. In the event of a Change in Control (as defined in the Plan), any portion of the Option that has not vested shall immediately vest and shall be exercisable until the termination of this Agreement pursuant to Section 6 hereof.
18. Adjustments. The number and kind of Option Shares and the Option Price shall be subject to adjustment as provided in Section 15 of the Plan.
19. No Employment Contract. Nothing contained in this Agreement shall confer upon the Participant any right with respect to continuance of employment or other service by the Company and its subsidiaries, nor limit or affect in any manner the right of the Company and its subsidiaries to terminate the employment or other service of the Participant or adjust the compensation of the Participant, in each case with or without cause.
20. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Florida.
21. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: Chief Executive Officer, and any notice to the Participant shall be addressed to the Participant at his or her address, e-mail or fax number on file with the Company. Any written notice required to be given to the Company shall be deemed to be duly given only when actually received by the Company.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and the Participant has also executed this Agreement, as of the day and year first above written.
| PARTICIPANT: | COMPANY: | |||
| [ ] | SKYX PLATFORMS Corp. | |||
| Signature: | Signature: | |||
| Signature: | Name: | |||
| Title: | ||||
| Dated: | Dated: | |||
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ATTACHMENT 1
FORM OF EXERCISE OF OPTION TO PURCHASE
SKYX Platforms Corp.
Re: Stock Option Exercise Notice
I was granted an option (the “Option”) to purchase shares of the common stock (the “Shares”) of SKYX Platforms Corp. (the “Company”) pursuant to the Company’s 2021 Stock Incentive Plan (the “Plan”) and my Nonqualified Stock Option Agreement (the “Option Agreement”) as follows:
| Date of Grant: | ______________________ | |
| Number of Shares: | ______________________ | |
| Exercise Price per Share: | $ | ______________________ |
2. Exercise of Option. I hereby elect to exercise the Option to purchase the following number of Shares, all of which have vested in accordance with the Option Agreement:
| Total Shares Purchased: | ______________________ |
Total Exercise Price (Total Shares X Exercise Price per Share)
| $ | ______________________ |
3. Payments. I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by the Option Agreement:
| Cash: | $ | ______________________ |
| Check: | $ | ______________________ |
| Tender of shares of Company common stock: | Contact Plan Administrator | |
| Cashless Exercise (same-day sale): | Contact Plan Administrator | |
4. Tax Withholding. I authorize payroll withholding and otherwise will make adequate provision for the federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with the Option. I enclose payment in full of my withholding taxes, if any, as follows: _________________________
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Exhibit 10.13
Form of Restricteed Share UNit Award (three year vesting)(april 2023)
SKYX PLATFORMS CORP.
RESTRICTED SHARE UNIT AWARD AGREEMENT
This Restricted Share Unit Award Agreement (the “Agreement”) is entered into between SKYX Platforms Corp. (the “Company”) and the individual named below as the “Grantee”, effective as of the Date of Grant set forth below.
| Grantee: | |
| Date of Grant: | |
| Number of Restricted Share Units: | [______] Restricted Share Units |
| Vesting Dates: | The first, second and third anniversaries of the Date of Grant. |
1. Grant of Restricted Share Units. The Company has granted to the Grantee, in accordance with the terms and conditions of the SKYX Platforms Corp. 2021 Stock Incentive Plan (the “Plan”) and this Agreement, the number of Restricted Share Units set forth above (the “Restricted Share Units”), on the Date of Grant set forth above. Each Restricted Share Unit shall represent the contingent right to receive one Share and shall at all times be equal in value to one Share. The Restricted Share Units shall be credited in a book entry account established for the Grantee until payment in accordance with Section 4 hereof.
THIS AGREEMENT SHALL BE VOID IF IT HAS NOT BEEN EXECUTED AND RETURNED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE DATE OF GRANT
2. Vesting of Restricted Share Units.
(a) One-third of the Restricted Share Units (subject to such rounding conventions as applied by the Company) shall vest on each of the Vesting Dates set forth above (each, a “Vesting Date”), provided that Grantee shall have remained in continuous employment or other service with the Company or a Subsidiary (“Continuous Service”) through the applicable Vesting Date.
(b) Notwithstanding Section 2(a):
(i) Upon the occurrence of a Change in Control prior to a Vesting Date and during Grantee’s Continuous Service, any Restricted Share Units that have not vested shall immediately vest; and
(ii) Upon the termination of Grantee’s Continuous Service prior to a Vesting Date by the Company or a Subsidiary without Cause (as defined below) or by Grantee for Good Reason (as defined below), the Restricted Share Units that would vest on the next scheduled Vesting Date if Grantee’s Continuous Service had continued until such Vesting Date shall immediately vest (and any Restricted Share Units not otherwise vested as of such termination of Continuous Service shall be forfeited and terminate automatically, without further action or notice). For purposes of this Agreement:
(A) “Cause” shall have the meaning provided in any applicable employment or severance agreement between Grantee and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Cause” shall mean: (I) embezzlement, fraud or other conduct that would constitute a felony (other than traffic-related citations); (II) willful unauthorized disclosure of confidential information; (III) gross misconduct or gross neglect in the performance of Grantee’s duties; (IV) willful failure to cooperate with a bona fide internal investigation or investigation by regulatory or law enforcement authorities, after being instructed by the Company or a Subsidiary to cooperate, or the willful destruction or failure to preserve documents or other material reasonably known to be relevant to such an investigation, or the willful inducement of others to fail to cooperate or to destroy or fail to produce documents or other material relevant to such an investigation; or (V) willful and material violation of the Company’s (or a Subsidiary’s) written conduct policies; provided, however, that a termination of Grantee’s employment by the Company or Subsidiary pursuant to sub-paragraphs (III), (IV) or (V) of the foregoing shall not be deemed to be for Cause unless the Company or a Subsidiary gives Grantee written notice prior to such termination, setting forth the nature of any alleged failure, breach or refusal in reasonable detail and the conduct required to cure, and, except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, Grantee shall have 30 business days from the giving of such notice (or, if the Company reasonably expects irreparable injury from a delay of 30 business days, such shorter period set out in the written notice to Grantee as is reasonable under the circumstances) within which to cure any failure, breach or refusal under sub-paragraphs (III), (IV) or (V) of the foregoing.
(B) “Good Reason” shall have the meaning provided in any applicable employment or severance agreement between Grantee and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Good Reason” shall mean the occurrence of any of the following without Grantee’s consent: (I) a material reduction by the Company or a Subsidiary of Grantee’s title, duties, responsibilities or reporting relationship; (II) a material reduction by the Company or a Subsidiary of Grantee’s annual base salary; (III) the relocation of the Grantee’s principal place of employment by the Company or a Subsidiary, as determined as of the Date of Grant, by more than twenty-five (25) miles without the Company or a Subsidiary offering the Grantee the ability to work remotely; or (IV) a material breach of any applicable employment agreement between Grantee and the Company or a Subsidiary; provided, however, that termination of Grantee’s employment by Grantee pursuant to sub-paragraphs (I), (II), (III) or (IV) of the foregoing shall not be deemed to be for Good Reason unless (x) Grantee gives written notice to the Company or the employing Subsidiary of the existence of the event or condition constituting Good Reason within 60 calendar days after such event or condition initially occurs or exists, (y) the Company or a Subsidiary fails to cure such event or condition within 30 calendar days after receiving such notice, and (z) Grantee terminates Grantee’s employment within 120 calendar days after the initial occurrence of the event or condition constituting Good Reason.
(iii) The Committee may, in its sole discretion, provide for the full or partial acceleration of vesting of the Restricted Share Units in connection with the termination of Grantee’s Continuous Service for any other reason prior to a Vesting Date.
3. Forfeiture of Restricted Share Units. The Restricted Share Units that have not yet vested pursuant to Section 2(a) (and any related right to receive cash dividend equivalents pursuant to Section 7(b)) shall be forfeited automatically without further action or notice if Grantee’s Continuous Service with the Company or a Subsidiary terminates prior to a Vesting Date for any reason other than to the extent provided pursuant to Section 2(b).
4. Payment.
(a) Except as may be otherwise provided in this Section, the Company shall deliver to the Grantee (or the Grantee’s estate in the event of death) the Shares underlying the vested Restricted Share Units, together with cash dividend equivalents, if any, as provided pursuant to Section 7(b), within thirty (30) days following the date that the Restricted Share Units become vested in accordance with Section 2.
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(b) Notwithstanding Section 4(a), to the extent that the Grantee’s right to receive payment of the Restricted Share Units constitutes a “deferral of compensation” within the meaning of Section 409A of the Code, payment of any vested Restricted Share Units (and any related cash dividend equivalents) shall be subject to the following rules, to the extent necessary to comply with Section 409A of the Code:
(i) Except as provided in Section 4(b)(ii), the Shares underlying the vested Restricted Share Units (and any related cash dividend equivalents pursuant to Section 7(b)) shall be delivered to the Grantee (or the Grantee’s estate in the event of death) within thirty (30) days after the earlier of: (A) the Grantee’s “separation from service” within the meaning of Section 409A of the Code; (B) the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code; or (C) the applicable Vesting Date.
(ii) If the Restricted Share Units become payable as a result of Section 4(b)(i)(A), but not as a result of the Grantee’s death, and the Grantee is a “specified employee” at that time within the meaning of Section 409A of the Code, then the Shares underlying the vested Restricted Share Units (and any related cash dividend equivalents pursuant to Section 7(b)) shall instead be delivered to the Grantee within thirty (30) days after the first business day that is more than six months after the date of his or her separation from service (or, if the Grantee dies during such six-month period, within thirty (30) days after the Grantee’s death).
(c) The Company’s obligations with respect to the Restricted Share Units shall be satisfied in full upon the delivery of the Shares underlying the vested Restricted Share Units and the payment of any related dividend cash equivalents pursuant to Section 7(b).
5. Restrictions on Transfer. The Restricted Share Units (including any related dividend cash equivalents pursuant to Section 7(b)) may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of by Grantee, except to the Company, by will or the laws of descent and distribution. Any purported transfer or encumbrance in violation of this provision shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in the Restricted Share Units.
6. Lock-Up Agreement. Grantee agrees that, if requested by the Company in connection with a public offering of Shares or other securities of the Company, Grantee will not sell, offer for sale or otherwise dispose of any Shares received upon settlement of the Restricted Share Units for such period of time as is determined by the Committee; provided that at least a majority of the Company’s directors and officers who hold options, Restricted Shares, Restricted Share Units or such other securities of the Company at such time are similarly bound.
7. No Shareholder Rights; Dividend Equivalents.
(a) The Grantee shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in the Shares underlying the Restricted Share Units until such Shares have been delivered to the Grantee in accordance with Section 4 hereof. The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Shares in the future (and cash dividend equivalents pursuant to Section 7(b)), and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
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(b) From and after the Date of Grant and until the earlier of (i) the time when the Shares underlying the vested Restricted Share Units (if any) are delivered to the Grantee in accordance with this Agreement, or (ii) the time that the Restricted Share Units are forfeited in accordance with this Agreement, on each date that the Company pays a cash dividend to holders of its Shares generally, the Company will credit the Grantee’s account hereunder with the right to receive a cash amount equal to the product of (x) the dollar amount of the cash dividend paid per Share paid to stockholders on such date multiplied by (y) the total number of unpaid Restricted Share Units credited to the Grantee’s account under this Agreement as of such date. Subject to and conditioned upon the vesting of the underlying Restricted Share Units, the aggregate amount of all such dividend equivalents credited to the Grantee’s account hereunder shall be paid to the Grantee in cash (without interest), at the same time that the Shares underlying the vested Restricted Share Units are delivered to the Grantee, and the Grantee’s right to receive any such dividend equivalents shall be automatically and correspondingly forfeited to the extent that the underlying Restricted Share Units are forfeited pursuant to the terms of this Agreement and the Plan.
8. Tax Withholding. To the extent the Company or any Subsidiary is required to withhold any federal, state, local, foreign or other taxes in connection with the delivery of Shares under this Agreement, then the Company or Subsidiary (as applicable) shall retain a number of Shares otherwise deliverable with a value equal to the required withholding (based on the Fair Market Value of the Shares on the applicable date); provided that in no event shall the value of the Shares retained exceed the amount of taxes required to be withheld based on the maximum statutory tax rates in the applicable taxing jurisdictions. Notwithstanding the foregoing, Grantee may elect, in accordance with procedures adopted by the Company from time to time, to either (i) pay or provide for payment of the required tax withholding, or (ii) have the required tax withholding deducted from any amount of salary, bonus, incentive compensation or other amounts otherwise payable in cash to Grantee (including cash dividend equivalent payments pursuant to Section 4 of this Agreement); provided that the Company may require the use of one or both of these methods in the event that the Company or any Subsidiary is required to withhold taxes at any time other than upon delivery of Shares under this Agreement.
9. Relation to Other Benefits. Any economic or other benefit to Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary.
10. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
11. Entire Agreement; Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. This Agreement and the Plan contain the entire agreement and understanding of the parties with respect to the subject matter contained in this Agreement, and supersede all prior written or oral communications, representations and negotiations in respect thereto. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. Capitalized terms used in this Agreement without definition shall have the meanings assigned to them in the Plan.
12. Adjustments. The number and kind of Restricted Share Units and the Shares deliverable pursuant to this Agreement are subject to adjustment as provided in Section 15 of the Plan.
13. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws and listing requirements with respect to the Restricted Share Units; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any Shares pursuant to this Agreement if the delivery or vesting thereof would result in a violation of any such law or listing requirement.
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14. Successors and Assigns. Without limiting Section 5, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the permitted successors, administrators, heirs, legal representatives and assigns of Grantee, and the successors and assigns of the Company.
15. Data Privacy. In order to administer the Plan, the Company may process personal data about Grantee. Such data includes, but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about Grantee such as home address and business addresses and other contact information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. Grantee hereby gives explicit consent to the Company to process any such personal data. Grantee also gives explicit consent to the Company to transfer any such personal data outside the country in which Grantee works or is employed, including, if Grantee is not a U.S. resident, to the United States, to transferees that shall include the Company and other persons who are designated by the Company to administer the Plan.
16. Electronic Delivery. Grantee hereby consents and agrees to electronic delivery of any documents (including prospectus information) that the Company may elect to deliver in connection with this Agreement, the Restricted Share Units and any other award made or offered under the Plan. Grantee understands that, unless earlier revoked by Grantee by giving written notice to the Chief Executive Officer of Company, this consent shall be effective for the duration of the Agreement. Grantee also understands that he or she shall have the right at any time to request that the Company deliver written copies of any and all materials referred to above at no charge. Grantee hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. Grantee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.
17. No Employment Contract. Nothing contained in this Agreement shall confer upon Grantee any right with respect to continuance of employment or other service by the Company and its subsidiaries, nor limit or affect in any manner the right of the Company and its subsidiaries to terminate the employment or other service of Grantee, or adjust the compensation of Grantee, in each case with or without cause.
18. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Florida.
19. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: Chief Executive Officer, and any notice to Grantee shall be addressed to Grantee at his or her address, e-mail or fax number on file with the Company. Any written notice required to be given to the Company shall be deemed to be duly given only when actually received by the Company.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and Grantee has also executed this Agreement, as of the day and year first above written.
| GRANTEE: | COMPANY: | |||
| [ ] | SKYX PLATFORMS CORP. | |||
| Signature: | Signature: | |||
| Name: | ||||
| Title: | ||||
| Dated: | Dated: | |||
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EXHIBIT 10.14
Form of Restricted Share Unit Award (one year vestinG) (April 2023)
SKYX PLATFORMS CORP.
RESTRICTED SHARE UNIT AWARD AGREEMENT
This Restricted Share Unit Award Agreement (the “Agreement”) is entered into between SKYX Platforms Corp. (the “Company”) and the individual named below as the “Grantee”, effective as of the Date of Grant set forth below.
| Grantee: | |
| Date of Grant: | |
| Number of Restricted Share Units: | [______] Restricted Share Units |
| Vesting Date: | April 28, 2024 |
1. Grant of Restricted Share Units. The Company has granted to the Grantee, in accordance with the terms and conditions of the SKYX Platforms Corp. 2021 Stock Incentive Plan (the “Plan”) and this Agreement, the number of Restricted Share Units set forth above (the “Restricted Share Units”), on the Date of Grant set forth above. Each Restricted Share Unit shall represent the contingent right to receive one Share and shall at all times be equal in value to one Share. The Restricted Share Units shall be credited in a book entry account established for the Grantee until payment in accordance with Section 4 hereof.
THIS AGREEMENT SHALL BE VOID IF IT HAS NOT BEEN EXECUTED AND RETURNED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE DATE OF GRANT
2. Vesting of Restricted Share Units.
(a) One hundred percent (100%) of the Restricted Share Units shall vest on the Vesting Date set forth above (the “Vesting Date”), provided that Grantee shall have remained in continuous employment or other service with the Company or a Subsidiary (“Continuous Service”) through the Vesting Date.
(b) Notwithstanding Section 2(a):
(i) Upon the occurrence of a Change in Control prior to the Vesting Date and during Grantee’s Continuous Service, any Restricted Share Units that have not vested shall immediately vest; and
(ii) Upon the termination of Grantee’s Continuous Service prior to the Vesting Date by the Company or a Subsidiary without Cause (as defined below) or by Grantee for Good Reason (as defined below), any Restricted Share Units that have not vested shall immediately vest. For purposes of this Agreement:
(A) “Cause” shall have the meaning provided in any applicable employment or severance agreement between Grantee and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Cause” shall mean: (I) embezzlement, fraud or other conduct that would constitute a felony (other than traffic-related citations); (II) willful unauthorized disclosure of confidential information; (III) gross misconduct or gross neglect in the performance of Grantee’s duties; (IV) willful failure to cooperate with a bona fide internal investigation or investigation by regulatory or law enforcement authorities, after being instructed by the Company or a Subsidiary to cooperate, or the willful destruction or failure to preserve documents or other material reasonably known to be relevant to such an investigation, or the willful inducement of others to fail to cooperate or to destroy or fail to produce documents or other material relevant to such an investigation; or (V) willful and material violation of the Company’s (or a Subsidiary’s) written conduct policies; provided, however, that a termination of Grantee’s employment by the Company or Subsidiary pursuant to sub-paragraphs (III), (IV) or (V) of the foregoing shall not be deemed to be for Cause unless the Company or a Subsidiary gives Grantee written notice prior to such termination, setting forth the nature of any alleged failure, breach or refusal in reasonable detail and the conduct required to cure, and, except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, Grantee shall have 30 business days from the giving of such notice (or, if the Company reasonably expects irreparable injury from a delay of 30 business days, such shorter period set out in the written notice to Grantee as is reasonable under the circumstances) within which to cure any failure, breach or refusal under sub-paragraphs (III), (IV) or (V) of the foregoing.
(B) “Good Reason” shall have the meaning provided in any applicable employment or severance agreement between Grantee and the Company or a Subsidiary, or in the absence of such an agreement that defines the term, “Good Reason” shall mean the occurrence of any of the following without Grantee’s consent: (I) a material reduction by the Company or a Subsidiary of Grantee’s title, duties, responsibilities or reporting relationship; (II) a material reduction by the Company or a Subsidiary of Grantee’s annual base salary; (III) the relocation of the Grantee’s principal place of employment by the Company or a Subsidiary, as determined as of the Date of Grant, by more than twenty-fie (25) miles without the Company or a Subsidiary offering the Grantee the ability to work remotely; or (IV) a material breach of any applicable employment agreement between Grantee and the Company or a Subsidiary; provided, however, that termination of Grantee’s employment by Grantee pursuant to sub-paragraphs (I), (II), (III) or (IV) of the foregoing shall not be deemed to be for Good Reason unless (x) Grantee gives written notice to the Company or the employing Subsidiary of the existence of the event or condition constituting Good Reason within 60 calendar days after such event or condition initially occurs or exists, (y) the Company or a Subsidiary fails to cure such event or condition within 30 calendar days after receiving such notice, and (z) Grantee terminates Grantee’s employment within 120 calendar days after the initial occurrence of the event or condition constituting Good Reason.
(iii) The Committee may, in its sole discretion, provide for the full or partial acceleration of vesting of the Restricted Share Units in connection with the termination of Grantee’s Continuous Service for any other reason prior to the Vesting Date.
3. Forfeiture of Restricted Share Units. The Restricted Share Units that have not yet vested pursuant to Section 2(a) (and any related right to receive cash dividend equivalents pursuant to Section 7(b)) shall be forfeited automatically without further action or notice if Grantee’s Continuous Service with the Company or a Subsidiary terminates prior to the Vesting Date for any reason other than as provided pursuant to Section 2(b).
4. Payment.
(a) Except as may be otherwise provided in this Section, the Company shall deliver to the Grantee (or the Grantee’s estate in the event of death) the Shares underlying the vested Restricted Share Units, together with cash dividend equivalents, if any, as provided pursuant to Section 7(b), within thirty (30) days following the date that the Restricted Share Units become vested in accordance with Section 2.
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(b) Notwithstanding Section 4(a), to the extent that the Grantee’s right to receive payment of the Restricted Share Units constitutes a “deferral of compensation” within the meaning of Section 409A of the Code, payment of any vested Restricted Share Units (and any related cash dividend equivalents) shall be subject to the following rules, to the extent necessary to comply with Section 409A of the Code:
(i) Except as provided in Section 4(b)(ii), the Shares underlying the vested Restricted Share Units (and any related cash dividend equivalents pursuant to Section 7(b)) shall be delivered to the Grantee (or the Grantee’s estate in the event of death) within thirty (30) days after the earlier of: (A) the Grantee’s “separation from service” within the meaning of Section 409A of the Code; (B) the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code; or (C) the applicable Vesting Date.
(ii) If the Restricted Share Units become payable as a result of Section 4(b)(i)(A), but not as a result of the Grantee’s death, and the Grantee is a “specified employee” at that time within the meaning of Section 409A of the Code, then the Shares underlying the vested Restricted Share Units (and any related cash dividend equivalents pursuant to Section 7(b)) shall instead be delivered to the Grantee within thirty (30) days after the first business day that is more than six months after the date of his or her separation from service (or, if the Grantee dies during such six-month period, within thirty (30) days after the Grantee’s death).
(c) The Company’s obligations with respect to the Restricted Share Units shall be satisfied in full upon the delivery of the Shares underlying the vested Restricted Share Units and the payment of any related dividend cash equivalents pursuant to Section 7(b).
5. Restrictions on Transfer. The Restricted Share Units (including any related dividend cash equivalents pursuant to Section 7(b)) may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of by Grantee, except to the Company, by will or the laws of descent and distribution. Any purported transfer or encumbrance in violation of this provision shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in the Restricted Share Units.
6. Lock-Up Agreement. Grantee agrees that, if requested by the Company in connection with a public offering of Shares or other securities of the Company, Grantee will not sell, offer for sale or otherwise dispose of any Shares received upon settlement of the Restricted Share Units for such period of time as is determined by the Committee; provided that at least a majority of the Company’s directors and officers who hold options, Restricted Shares, Restricted Share Units or such other securities of the Company at such time are similarly bound.
7. No Shareholder Rights; Dividend Equivalents.
(a) The Grantee shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in the Shares underlying the Restricted Share Units until such Shares have been delivered to the Grantee in accordance with Section 4 hereof. The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Shares in the future (and cash dividend equivalents pursuant to Section 7(b)), and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
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(b) From and after the Date of Grant and until the earlier of (i) the time when the Shares underlying the vested Restricted Share Units (if any) are delivered to the Grantee in accordance with this Agreement, or (ii) the time that the Restricted Share Units are forfeited in accordance with this Agreement, on each date that the Company pays a cash dividend to holders of its Shares generally, the Company will credit the Grantee’s account hereunder with the right to receive a cash amount equal to the product of (x) the dollar amount of the cash dividend paid per Share paid to stockholders on such date multiplied by (y) the total number of unpaid Restricted Share Units credited to the Grantee’s account under this Agreement as of such date. Subject to and conditioned upon the vesting of the underlying Restricted Share Units, the aggregate amount of all such dividend equivalents credited to the Grantee’s account hereunder shall be paid to the Grantee in cash (without interest), at the same time that the Shares underlying the vested Restricted Share Units are delivered to the Grantee, and the Grantee’s right to receive any such dividend equivalents shall be automatically and correspondingly forfeited to the extent that the underlying Restricted Share Units are forfeited pursuant to the terms of this Agreement and the Plan.
8. Tax Withholding. To the extent the Company or any Subsidiary is required to withhold any federal, state, local, foreign or other taxes in connection with the delivery of Shares under this Agreement, then the Company or Subsidiary (as applicable) shall retain a number of Shares otherwise deliverable with a value equal to the required withholding (based on the Fair Market Value of the Shares on the applicable date); provided that in no event shall the value of the Shares retained exceed the amount of taxes required to be withheld based on the maximum statutory tax rates in the applicable taxing jurisdictions. Notwithstanding the foregoing, Grantee may elect, in accordance with procedures adopted by the Company from time to time, to either (i) pay or provide for payment of the required tax withholding, or (ii) have the required tax withholding deducted from any amount of salary, bonus, incentive compensation or other amounts otherwise payable in cash to Grantee (including cash dividend equivalent payments pursuant to Section 4 of this Agreement); provided that the Company may require the use of one or both of these methods in the event that the Company or any Subsidiary is required to withhold taxes at any time other than upon delivery of Shares under this Agreement. The Company will work in good faith to receive from the Participant rates applicable to Participant under state and federal laws and maintain such rates for use in withholdings.
9. Relation to Other Benefits. Any economic or other benefit to Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary.
10. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
11. Entire Agreement; Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. This Agreement and the Plan contain the entire agreement and understanding of the parties with respect to the subject matter contained in this Agreement, and supersede all prior written or oral communications, representations and negotiations in respect thereto. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. Capitalized terms used in this Agreement without definition shall have the meanings assigned to them in the Plan.
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12. Adjustments. The number and kind of Restricted Share Units and the Shares deliverable pursuant to this Agreement are subject to adjustment as provided in Section 15 of the Plan.
13. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws and listing requirements with respect to the Restricted Share Units; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any Shares pursuant to this Agreement if the delivery or vesting thereof would result in a violation of any such law or listing requirement.
14. Successors and Assigns. Without limiting Section 5, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the permitted successors, administrators, heirs, legal representatives and assigns of Grantee, and the successors and assigns of the Company.
15. Data Privacy. In order to administer the Plan, the Company may process personal data about Grantee. Such data includes, but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about Grantee such as home address and business addresses and other contact information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. Grantee hereby gives explicit consent to the Company to process any such personal data. Grantee also gives explicit consent to the Company to transfer any such personal data outside the country in which Grantee works or is employed, including, if Grantee is not a U.S. resident, to the United States, to transferees that shall include the Company and other persons who are designated by the Company to administer the Plan.
16. Electronic Delivery. Grantee hereby consents and agrees to electronic delivery of any documents (including prospectus information) that the Company may elect to deliver in connection with this Agreement, the Restricted Share Units and any other award made or offered under the Plan. Grantee understands that, unless earlier revoked by Grantee by giving written notice to the Chief Executive Officer of Company, this consent shall be effective for the duration of the Agreement. Grantee also understands that he or she shall have the right at any time to request that the Company deliver written copies of any and all materials referred to above at no charge. Grantee hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. Grantee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.
17. No Employment Contract. Nothing contained in this Agreement shall confer upon Grantee any right with respect to continuance of employment or other service by the Company and its subsidiaries, nor limit or affect in any manner the right of the Company and its subsidiaries to terminate the employment or other service of Grantee, or adjust the compensation of Grantee, in each case with or without cause.
18. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Florida.
19. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: Chief Executive Officer, and any notice to Grantee shall be addressed to Grantee at his or her address, e-mail or fax number on file with the Company. Any written notice required to be given to the Company shall be deemed to be duly given only when actually received by the Company.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and Grantee has also executed this Agreement, as of the day and year first above written.
| GRANTEE: | COMPANY: | |||
| [ ] | SKYX PLATFORMS CORP. | |||
| Signature: | Signature: | |||
| Name: | ||||
| Title: | ||||
| Dated: | Dated: | |||
| 6 |
EXHIBIT 10.15
Form of Restricted Shares Award Agreement (April 2023)
SKYX PLATFORMS CORP.
RESTRICTED SHARES AWARD AGREEMENT
This Restricted Shares Award Agreement (the “Agreement”) is entered into between SKYX Platforms Corp. (the “Company”) and the individual named below as the “Grantee”, effective as of the Date of Grant set forth below.
| Grantee: | |
| Date of Grant: | |
| Number of Restricted Shares: | ___ Restricted Shares |
1. Grant of Restricted Shares. The Company has granted to the Grantee, in accordance with the terms and conditions of the SKYX Platforms Corp. 2021 Stock Incentive Plan (the “Plan”) and this Agreement, the number of Restricted Shares set forth above (the “Restricted Shares”), on the Date of Grant set forth above. Any stock certificate or uncertificated book-entry evidencing the Restricted Shares issued shall bear all legends determined by the Company necessary to effectuate the provisions of this Agreement and shall be held in custody by the Company. Grantee agrees that, in order to ensure compliance with the restrictions imposed on the Restricted Shares under the Agreement, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any.
THIS AGREEMENT SHALL BE VOID IF IT HAS NOT BEEN EXECUTED AND RETURNED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE DATE OF GRANT
2. Vesting of Restricted Shares. The Restricted Shares shall be fully vested and nonforfeitable on the Date of Grant.
3. Voting and Dividends. From and after the Date of Grant, Grantee shall have all of the rights of a shareholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and receive any dividends that may be paid thereon.
4. Lock-Up Agreement. Grantee agrees that, if requested by the Company in connection with a public offering of Shares or other securities of the Company, Grantee will not sell, offer for sale or otherwise dispose of any Restricted Shares for such period of time as is determined by the Committee; provided that at least a majority of the Company’s directors and officers who hold options, Restricted Shares or such other securities of the Company at such time are similarly bound.
5. Tax Withholding. To the extent the Company or any Subsidiary is required to withhold any federal, state, local, foreign or other taxes in connection with the grant of the Restricted Shares, then the Company or Subsidiary (as applicable) shall retain a number of Restricted Share with a value equal to the required withholding (based on the Fair Market Value of the Shares on the Date of Grant); provided that in no event shall the value of the Shares retained exceed the amount of taxes required to be withheld based on the maximum statutory tax rates in the applicable taxing jurisdictions. Notwithstanding the foregoing, Grantee may elect, in accordance with procedures adopted by the Company from time to time, to either (i) pay or provide for payment of the required tax withholding, or (ii) have the required tax withholding deducted from any amount of salary, bonus, incentive compensation or other amounts otherwise payable in cash to Grantee; provided that the Company may require the use of one or both of these methods in the event that the Company or any Subsidiary is required to withhold taxes at any time other than upon delivery of the Shares.
6. Relation to Other Benefits. Any economic or other benefit to Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary.
7. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
8. Entire Agreement; Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. This Agreement and the Plan contain the entire agreement and understanding of the parties with respect to the subject matter contained in this Agreement, and supersede all prior written or oral communications, representations and negotiations in respect thereto. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. Capitalized terms used in this Agreement without definition shall have the meanings assigned to them in the Plan.
9. Adjustments. The number and kind of Restricted Shares are subject to adjustment as provided in Section 15 of the Plan.
10. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws and listing requirements with respect to the Restricted Shares; provided, however, notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any Shares pursuant to this Agreement if the delivery thereof would result in a violation of any such law or listing requirement.
11. Successors and Assigns. Without limiting Section 5, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the permitted successors, administrators, heirs, legal representatives and assigns of Grantee, and the successors and assigns of the Company.
12. Data Privacy. In order to administer the Plan, the Company may process personal data about Grantee. Such data includes, but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about Grantee such as home address and business addresses and other contact information, and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. Grantee hereby gives explicit consent to the Company to process any such personal data. Grantee also gives explicit consent to the Company to transfer any such personal data outside the country in which Grantee works or is employed, including, if Grantee is not a U.S. resident, to the United States, to transferees that shall include the Company and other persons who are designated by the Company to administer the Plan.
13. Electronic Delivery. Grantee hereby consents and agrees to electronic delivery of any documents (including prospectus information) that the Company may elect to deliver in connection with this Agreement, the Restricted Shares and any other award made or offered under the Plan. Grantee understands that, unless earlier revoked by Grantee by giving written notice to the Chief Executive Officer of Company, this consent shall be effective for the duration of the Agreement. Grantee also understands that he or she shall have the right at any time to request that the Company deliver written copies of any and all materials referred to above at no charge. Grantee hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. Grantee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.
14. No Employment Contract. Nothing contained in this Agreement shall confer upon Grantee any right with respect to continuance of employment or other service by the Company and its subsidiaries, nor limit or affect in any manner the right of the Company and its subsidiaries to terminate the employment or other service of Grantee, or adjust the compensation of Grantee, in each case with or without cause.
15. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Florida.
16. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: Chief Executive Officer, and any notice to Grantee shall be addressed to Grantee at his or her address, e-mail or fax number on file with the Company. Any written notice required to be given to the Company shall be deemed to be duly given only when actually received by the Company.
[SIGNATURES ON FOLLOWING PAGE]
| 2 |
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and Grantee has also executed this Agreement, as of the day and year first above written.
| GRANTEE: | COMPANY: | |||
| [ ] | SKYX PLATFORMS Corp. | |||
| Signature: | Signature: | |||
| Name: | ||||
| Title: | ||||
| Dated: | Dated: | |||
| 3 |
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 12, 2023 | By: | /s/ John P. Campi |
| John P. Campi | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
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 12, 2023 | 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, 2023, 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 12, 2023 | By: | /s/ John P. Campi |
| John P. Campi | ||
| 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, 2023, 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 12, 2023 | By: | /s/ Marc-Andre Boisseau |
| Marc-Andre Boisseau | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |