SKYX Platforms Corp.

Good day and welcome to the SkyX Platforms Corp First Quarter 2025 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Before we begin, please note that today's call may contain forward-looking statements based on current expectations and assumptions. These are subject to risk and uncertainties and actual results may differ materially. For a more complete discussion, please refer to our form 10Q for the quarter ending March 31st of 2025, filed with the SEC. Please note this event is being recorded. I would now like to turn the conference over to SkyX's founder and executive chairman, Mr. Ronnie Cohen. Please go ahead, sir.

Thank you. Good afternoon, everyone. Happy to be here again as we continue to progress with our business goals. We will have, and I'll pass it to our president, Steve Schmidt, to start our conference. Steve?

Hey, Ronnie, thank you very much. You know, as I think about the comments I'm about ready to make, I think several things stand out. First of all, we are making great progress, and we're excited about the momentum that we have in the business right now. And we really see significant activity going on that's going to really move us forward to really become something very, very significant. It's an exciting time at SkyX. It really is. So let's jump into kind of our key highlights that we've got. We recorded first quarter sales in 2025 of 20.1 million compared to 18.9 million for the first quarter of 2024, and we continue to grow our market penetration of our advanced and smart platform products in both the U.S. and Canadian markets. This is our fifth consecutive quarter of year-over-year revenue growth, and we hope that that will continue. We expect our products to be in 30,000 U.S. and Canadian homes by the end of the second quarter of 2025. We are progressing with significant projects and orders that will enable us to become cash flow positive in the second half of 2025. Our GNA expenses decreased by 17% compared to the first quarter of 2024, and gross margin and gross profit improved by 4.8% and 2% in the first quarter of 2025, sequentially from the fourth quarter of 2024. Very important regarding our safety code standardization team is receiving support from a new significant leading individual with our government safety organization process for a safety mandatory standardization of our electrical ceiling outlet and more to come. As of March 31st, 2024, we reported $12.3 million in cash, cash equivalents and restricted cash, as compared to $15.5 million as of March 31st, 2024. We recently secured approximately $4 million in additional equity, mainly through preferred stock investments, representing $2 per share of common stock with no warrants, part of a broader financing round totaling approximately $15 million to date, led by the Shader Group, owner and developer of more than 70 hotels worldwide. The $15 million broader round included substantial participation from company insiders, including myself and co-CEOs Lenny Sokolow and John Campy. underscoring their continued confidence in Sky's strategic vision and growth trajectory. As you can see, we are continuing to raise money from strategic investors that understand the depth of our strategic vision and our significant value proposition for builders, insurance companies, and others. As common with companies such as ours, when sales are converted into cash rapidly, often referred to as the Dell Working Capital Model, we leverage our trades payable to finance our operations to enhance our cash position and lower our cost of capital. We strongly believe our product can save insurance companies many billions of dollars annually by reducing fires, ladder falls, electrocutions, We expect once we complete an entire range of variation of our safe plug and play products, we will start being recommended by insurance companies. Our technologies provide opportunities for recurring revenues through interchangeability, upgrades, monitoring, and subscriptions. We are focused on the razor and blade model, and our product range includes our advanced sealing electrical outlet, the razor, and our advanced smart home plug-and-play products, the Blade, including our advanced smart home plug-and-play platform products, lighting, recessed lights, down lights, exit signs, emergency lights, ceiling fans, chandeliers, pendants, holiday kits, you name it, outdoor and indoor lights, along other things. You can think it, we've got it. Our plug-and-play technology enables an installation of lighting, fans, and smart home products in high-rise buildings and hotels within days rather than months. Our total addressable market, our TAM, in the U.S. is roughly $500 billion, with over 42 billion ceiling applications in the U.S. alone. Expected revenue streams from our retail and professional segments include product sales, royalties, licensing subscriptions, monitoring, and the sale of global country rights. We continue to utilize our e-commerce platform of over 60 websites for lighting and home decor to educate, enhance our market penetration to both retail and the professional segments. So as I said, great progress, a lot going on, and significant more information to come. So with that, let me introduce our co-CEO, Lenny Sokolow, who will walk you through the financials. Lenny, all yours. Thank you.

Thank you, Steve. Thank you very much. Welcome, everyone, again. Just if I could run through some select first quarter 2025 financial results. Our revenue in the first quarter of 2025 increased 6% to a 20.1 million in revenues, including e-commerce sales, as well as smart and standard plug and play products. as compared to 18.9 million in the first quarter of 2024. Our gross profit for the first quarter ending March 31, 2025 increased sequentially to 2% to 5.7 million And as discussed, our gross margin increased 4.8% as compared to the fourth quarter of 2024. Net cash used in operating activities for the first quarter ending March 31 decreased sequentially by 29% to 4 million compared to 6.1 million in the fourth quarter of 2024. For the first quarter of 2025, Adjusted EBITDA loss, which is the loss before interest, taxes, depreciation, and amortization, as adjusted for share-based payments, which is a non-GAAP measure, decreased to $3.6 million or $0.04 per share, as compared to $4.5 million or $0.05 per share in the first quarter of 2024. You know, we would like to emphasize that we have sufficient cash to achieve our goals including being cash flow positive in 2025. And as we reported, we realized the reduction in the general administrative expenses by 17% by $1.3 million to $6.6 million in the first quarter of 2025 from $7.9 million in the first quarter of 2024. And again, emphasizing that our gross margin and gross profit for the first quarter increased in both events by 4.8% and 2% compared to the quarter ending December 31, 2024. Our net loss per share decreased by 1% to $0.09 per share in the first quarter compared to $0.10 per share lost in the first quarter of 2024. And again, as reported, our EBITDA loss decreased to 4 cents per share in the first quarter compared to 5 cents per share in the first quarter of 2024. We continue to grow our market penetration of our advanced and smart plug-and-play products, and we expect our products to be in 30,000 U.S. and Canadian homes by the end of the second quarter. So our penetration continues. We expect our products to be in tens of thousands of additional homes in the second half of 2025. We also expect to continue to increase our units and grow our revenue to the professional and builder segments. As previously announced, we entered into a U.S. strategic manufacturing partnership with Profab Electronics, a premier electronic contract manufacturer based in Pompano Beach, Florida. This collaboration marks a significant step in SkyX's commitment to building a resilient, efficient, and localized supply chain for our innovative product lines. This partnership, if I can emphasize, is in addition to manufacturing collaborations that SkyX has in Vietnam, Taiwan, China, and Cambodia. And if I may, hand it back to Ronnie, our founder and executive chairman.

Thank you very much, Lenny and Steve. As you know, we're progressing, and as you heard, we're progressing nicely on several fronts. I think that and we hope that in the very near future, we can share a few additional items that we're working on and show some more significant or even more significant progress We intend to launch a few new patented products, and we're just getting ready for that production. And once we are, we will be able to share that with the public. And we're also working on some major projects. And as Steve mentioned and emphasized that we are doing some tremendous progress with adding leading, significant leading, and prominent leaders to our code team led by Mark Early, former head of the National Electrical Code, and Eric Jacobson, former president and CEO of American Lighting Association. We have an addition to that team in a very high level that will help our team and it already working with us and our team and ways to expedite our standardization of safety to a mandated position that we all hope and our management team and our leadership, co-leadership, strongly believe that we met all the conditions and the significant life-saving aspects as well. Thousands of people per day in the U.S. fall from ladders, get electrocuted, and fires happen on a daily basis. And millions of hazardous incidents annually happen that we can probably mitigate, if not prevent completely in many cases. So we are excited in our progress, and we hope that we'll be able to share some of those aspects in the next coming months or hopefully sooner. I think in general, we're very happy to, you know, where we are. And as Steve and Lenny both mentioned, we believe we can be with our products in 30,000 homes by the end of this quarter, and we also expect to have a much more significant growth towards the second half of the year with homes and units that we penetrate with our products. So that's a general overview here that you got from us with some details. We'll be happy to share, to answer any questions you have. So That being said, I'll transfer it to Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster.

Yes, and I see here Pat. from Noble.

So your line is open.

Hey, guys, thanks for taking my question. First of all, I wanted to ask about about the manufacturing the US partnership that that you guys recently announced, you know, given the tenuous tariff situation, what is the current state of manufacturing as far as where where that is mostly occurring now, and then with regard to the U.S. partnership, what's the cost difference between that versus your partnership with RUI? You know, if you were to ignore the tariffs, you know, how much more expensive might that be? If you could kind of give a little bit of an overview of that.

Yeah, Pat, it's a great question. And what we're doing here is actually part of our collaboration with ProFib electronics, a prominent leader here in Florida and also a player nationwide, is that our goal is, together with them, to fully automate many of our products and production that's fully automated. The cost difference is not significant. And this is our goal, and we have a few ways to achieve that goal. Working with them is selling the advanced facility, 60,000 square foot. I think we shared that in the press release we had a couple months ago, 45 days ago probably. And their machinery and their sophistication level of production is very high, and there's – many major products that we have had to launch that we can, with time, can fully automate the production here in the U.S. And by this, we mitigate most of the differences, and it's made in the U.S. So I don't want to promise it's going to be cheaper, but, you know, fully automated can be very competitive.

Thanks. And then I also wanted to just ask a little bit about the additional investment primarily from the Shainer Group. So is there room to continue to add to that source of funds through the preferred offering? And also, as long as we're on that topic, I was curious if you could maybe give a little bit of an update on the hotel distribution channel as well, as I would imagine that would be a potential partnership with the Shainer Group there as well.

Yeah, with the last approximately $4 million that we raised came from strategic investors, and that's part of our Browder Rounds program. led by the Shainer Group. And, you know, we always welcome strategic people that believe in us and would like to invest. And it's always good to take, you know, investments or to accept investments from strategic people that can help and are interested to help us growing the company. So that's something that when we have the right opportunity, you know, we will do, but it really depends where we are from a market standpoint, but we feel today, we're just talking today, it's a very compelling, you know, offering from our perspective and it's a great win-win for investors because they strongly believe in our future and they strongly believe in many cases that the mandate standardization might happen. So they want to be involved. And they also really understand, as Steve mentioned, the value proposition we have in real estate and also for insurance companies that once we have the entire assortment here, we think that that might become – and we're getting more and more products as we're rolling. So we expect to launch this quarter, announce a few additional new products here. And so the more product we get in, that we expect to start working with insurance companies here. Your second question regarding hotels is kind of same answer here. We are rolling production or started production with all the products that we need. If we're talking about recess lights, that we mentioned before is a multi-billion unit market globally. And U.S. is a very big market, and still it's a small picture, but plug-and-play is not only safer, it saves a lot of time and significant cost on the installation, probably 90%, if not more. And it's easy to replace because this is LED-embedded. LED-embedded is significant for our growth because today light bulbs are becoming less and less important in the market. as everything is converting into LED integrated. So those are electronic chips that provide light. And when they burn or the driver burns, the only way to replace them is really replace the fixture. And that's the market is the most significant growth in the market is LED embedded. It goes on recess lights and chandeliers and many other products. And if it goes wrong, the driver burns or the light bulb burns, the only solution is to replace the entire fixture. So that helps us a lot. And we're in production here, including exit signs and emergency lights that are key for hotels. Wall sconces are key for hotels, indoor and outdoor, that we started receiving. And once we have the entire assortment that's going to include ceiling fans that we hope very soon to launch, Towards the summer and early even before the summer so once we have the entire assortment it will position us to to go forward with hotels, so we're looking forward to that and This quarter we have a lot of expectations of a product that started productions and will arrive and our goal is to have the entire assortment here by the end of this quarter and And once we have it, I think next half of the year, we're going to have some more updates regarding the pro and builder market. And with that being said, the pro and builder market is a major emphasis of our business plan that we're looking forward to grow.

Great. I appreciate all the additional color. I'll jump back in the queue. Congrats on the quarter.

Okay. And then we have Jack. From Maxson Group.

Hey, Ronnie. Hey, Lenny. Thanks for the update. I appreciate it. And good to hear the continued growth momentum and looks like a solid control over the OPEX in this kind of challenging environment here. So, you know, a follow-up question on manufacturing and tariff mitigation. You know, with the recent announcement of Profab to establish a domestic supply chain, And any other moves you're making, maybe you're making to establish domestic manufacturing. Do you have a goal for what percentage of products will be manufactured domestically? And then second part is you mentioned you're working at Profab to increase automation of production. How long will that take until it's kind of like fully up to scale at capacity and utilization to get to, you know, whatever the envisioned automation is of the production ramp. Just curious to hear your update there. Overall source of domestic manufacturing and then also how long will it take to get to automation?

Yes, and Jack, thank you for your question, the broader question. So, you know, as everyone knows, it's a day-to-day situation here with the tariffs, right? Because if you asked me that question three days ago, I'll probably answer it differently than I'm going to answer it now. So the good news is we really have four significant relationships here in the U.S., and Profile are also investors and long-term investors with us. So they're very talented and extremely capable, and we are exploring what the right product and when is the right time to do things in the U.S., but definitely a goal we have. And this is, you know, we're exploring it. As we're exploring it, you know, the announcement on tariffs going down again in China now, you know, brought the Chinese manufacturers back to the picture where they kind of were out, or some of them that we have good relationship with them already have sources in Vietnam and Cambodia and in Taiwan. So they're not out, but China was out for now, and now is back in play. So, you know, for us is the more solutions we have, the more options we have, we're situated better. And we're obviously always calculating where's the best place to produce. And the future goal is really to get a lot of production here in the US because we believe that's the best thing to do for the company, for the country. and that's a good thing that we can achieve, and we're definitely looking into it more than ever. But in the short term, we'll explore the best possibilities to get the product as fast as possible, but on the long term and maybe even shorter term, we're looking for some solutions to start production here in the U.S., but we just announced it 45 days ago, and the product is – We like to say it's a product, it's not a bakery here, so it takes a bit more time between tooling and other things that we're working on. But the good news is really we have all those options open to us, and all of them are very good options that we have on the table.

Okay, great. I appreciate the color there. And then kind of a two-part second question, then I'll hop back in the queue. Can you maybe just, questions kind of just to clarify again or remind us of the safety code mandatory standardization process of the ceiling receptacle? And then just given the growing additions to the team of, you know, very well-connected personnel. So, two things. I believe the earliest or next possible vote to receive mandatory standardization is around September 2026. So the question is really, will you get an indication in advance of that date? And then the second part is, would you expect a ramp of actual product orders to come in in advance of that date as well? Thanks.

So what we're exploring now and what we said recently, there are several government organizations that their criteria is to save lives uh, mitigate injuries and property damages. Uh, and there's more than one organization that can influence, uh, a mandatory standardization. And, uh, what we are saying here at this point, we can't say more than this, but we are finding that there is, uh, ways to expedite, um, some, some of the government, there's some nonprofits and some of government, uh, associations that that's actually their obligation to find products like what we have that will save lives, injuries and property damages or mitigate property damages and injuries in a significant way. So the good news is that we are today exploring are possibilities similar like what I said with the manufacturers, but what we're finding recently is that there are several organizations that really their mandate is to save lives, mitigate injuries and property damages. So that's in addition to what you mentioned. Also important to say is a mandate will happen so the date the mandate is If you mention a date, and I don't want to go to details and dates because they're different ways, but when you mention a date, the most important date is a decision date because there's the mandate or effective date of situations like this is usually 18 months or 24 months ahead. So if you get a product mandated but happened many times, with seatbelts and airbags and GFCI that you have in your bathrooms. And another famous one is hair dryers. Someone knows how a hair dryer plug looks. It has a big lock on it with the GFCI. So when there's a decision to mandate a product like this, it gives the market some time. So the decision date of... a mandate is extremely important, okay? And again, going, we're exploring ways to expedite it because our code team strongly believes that they met all the conditions, our product met all the conditions to become mandate, and we're being looked at in a different angle recently.

Okay, great. Now, that's really helpful, Culler. I appreciate that, Ronnie. I'll hop back in the queue. I may have a few more later. Thanks.

Okay. So, yeah, I think today we're taking calls only from analysts. So if you have another question, please do it. If not, if there's investors that want to call us, feel free to call our co-CEO, Lenny Sokolov, or email him through our PCG, our IR firm. and they will be happy to arrange a call with investors that want to talk to us. And if there's more analysts that want to ask questions, we'll be happy to take them. And if not, we're looking forward to the next call or hopefully some announcements prior to that next call. Again, if you have a question, please press star, then 1.

There seems to be no more questions for today. I would like to turn the conference back over to Mr. Ronnie Cohen for any closing remarks.

Thank you. Thank you, everyone, Steve and Lenny, for your comments and highlights here. And thank you to the team and thank you to all of you on the call. We're progressing and we look forward to share, hopefully, more good things.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.