SKYX - NASDAQ

Good day, and welcome to the SKYX Platforms Corp. Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Please note, this event is being recorded. I would now like to turn the conference over to Rani Kohen, Founder and Executive Chairman. Please go ahead.

Good afternoon, everyone. We're happy to have you all here in our Q2 earnings call 2025. We will start with our President, Steve Schmidt, with a general overview about some highlights of this quarter. Thank you. Steve?

Rani, thank you, and good afternoon, everyone, on the call, and it's my pleasure to be with you here this afternoon. what I'm going to do is kind of cover just briefly at a very high level, some very good results from a quarter standpoint on the financial side and then talking about some key updates relative to the business and progress we've been making. As an overview on kind of the key financials for the quarter, our revenue was up 15% versus Q1, good growth. Our cash position was up $3.4 million, growing significantly versus prior quarter; and our gross profit was up 23%, which shows significant progress on that side of the financial ledger. And our net cash used was down significantly, down 54%, primarily due to some favorability in payables and the improvement in gross profit. Len Sokolow, our Chief Executive Officer, will be going into more detail on the financials here in just a little bit. So let's talk now about kind of the business perspective and kind of key progress we've made. During the quarter, and it's important to talk about our patents, and significant progress was made. And we have granted 8 newly issued U.S. and global patents and we now have over 100 patents and pending applications with 45 issued patents, which is absolutely critical to maintaining the momentum of our business. It's very important that I mentioned everyone and note that each of our 100 patents and pending applications is based on 3 major factors: safety, massive addressable market, the TAM, and global applications, all of which will drive future growth for this company. We also continue our collaboration with Home Depot, which I've spoken about in our past updates with our advanced and smart plug and play products. And we are in the process of growing our product assortment in Home Depot to offer a variety of our advanced plug-and-play smart products including the ceiling fans, heating fans, light fixtures, exit signs, emergency lights, ceiling outlets, recess lights, downlights indoor/outdoor, you name it, we've got it, and we're very pleased that this growth continues as we expand our retail presence. We expect our products to be in over 40,000 unit size homes by the end of Q3 of 2023 and in the U.S. and Canada through Retail and Pro segments. As I mentioned, we have -- we raised and we talked this last quarter, the $15 million led by the Shaner Group, owner and developer of more than 70 hotels, including 60 Marriotts. It's important to add that we're making progress with this segment, and we hope that we can share some progress soon as a major Marriott developer. Our Safety Code Standardization Team, a very important area of focus for us, continues to make progress and is receiving significant support from a new prominent leader with its government safety organization process for safety mandatory standardization in homes and buildings of sealing outlets and the receptacle technology. We also, if you recall, last quarter, we announced and said to you that we'd have some major announcements relative to a major collaboration, and we did. So we have announced that major collaboration with a Miami $3 billion mixed-use urban smart home city project, a significant opportunity for the company, and we are working on some additional large projects that we hope to be able to talk to you soon about. So a lot of progress being made and good financial results. So with that, what I'm going to ask Rani to do is come back on and really speak more granular regarding the patents, the code and the Miami smart city. So let me turn it back to Rani. Rani?

Thank you, Steve. As Steve mentioned, we're happy with additional patents here and I think the most important aspect is everything we invent here in SKYX has to do with safety first, a massive TAM addressable market and with a global application, and we're proud to have over 100 patents that all fit in those 2 categories that is a contingency for anything we invent here. And that's our core foundation, and this is why I think we got a lot of support from tremendous leaders, Steve is one of them. But as you know, former CEO of Home Depot and President of Disney World, parks, hotels, cruise ships and resorts and many other key members, including the National Electrical Code Head and American Lighting Association Head and all of those good people are joining us here. Additionally, with the code, we are making some progress and we have found out that there's 2 safety -- government safety organizations that are really one of them in charge on ladder falls and falls in general and the other one in charge of electrical and electronics. And according to our code team, their general criteria is to save lives, mitigate injuries and property damages. And we are pursuing those aspects according to the criteria they probably need to find us too, but we're working on this, and we have some -- made some progress behind the scenes that hopefully, we will be able to share with you sometime hopefully sooner than later, but that's a quite significant progress that we -- our code team feels that we are doing behind the scenes with mandatory application for ceiling outlet receptacle, all based on safety. And then last but not least, year for now is the smart city. We're very proud to really announce that collaboration. It's a major milestone for us for the company. And we're just sharing a picture here of this entire footprint in the heart of Miami. The ones that have it online, they can see downtown, They can see South Beach and they can see Wynwood and just next to Wynwood and the Art Basel area, that's where that smart city is located, from west of I-95 all the way to US-1, huge footprint is a 200-year lease from the city of Miami. And if they had to do it the old way to wire the entire community, it will take them probably several years or several -- maybe several years more, but much more several times more than what that will take with our product. And in addition to this, they will also save not only a lot of time here, but I think we can do it in a much more cost-efficient way for them. And I think we're bringing here the future, our all-in-one smart platform. We hope to have it in production in the next coming months. That's going to be a big factor here. As Steve mentioned, we expect to deploy 500,000 units between our smart and advanced products, all plug and play, and that's going to include from smart -- all-in-one smart home platforms to other smart products and recess lights, exit signs, emergency lights that all going to be part of that urban city. And this is really a major milestone in the fact that we were able compete and probably one of the leading cities in America here and land probably one of the largest smart cities in America, too, based on our technology, working with those prominent developer/ developers that have a background of many huge projects, but this is their probably landmark project for them and for sure for us. And to collaborate with prominent developers, SG Holdings, and all their partnership is really -- we're not taking it for granted, and we're here doing together a project that I think is going to be a landmark in Miami, and there's a lot of excitement around the city and with the mayors and everyone around that project because it really is going to redefine Miami as a city. And again, we're very proud to be part of it. So with that being said, as Steve mentioned, we're progressing with Home Depot, progressing other things. We launched recently a plug-and-play, advanced and also smart heater. We announced that we hope to have it very soon in the market here for this coming winter, it's an all-on-one product that provides the air, the cool air for summertime and heat for winter. And we also announced that we had some global collaborations on this, and there's some excitement around this product, and we're happy to say it's in production, and we expect that product to land year soon. So more slides of the smart city here before we wrap up. There's a train station, as the ones that have a screen can see parks restaurants, malls, hotels. We understand they're going to have a Home Depot there and Publix. And it's really -- it's an urban smart city, huge train station with the bright line in Miami. Again, tremendous really achievement for the team, and I thank our team here for making that happen. Again, it's based on the razor and the blade model that we like to discuss. You have the razor, what we say the ceiling receptacles for the ones that can see the slide. And once you have a ceiling receptacle, you can decide what you want to plug in, if it's a smart fixture or a smart platform, ceiling fan and light fixture or any other type fixture, and really proud that we're able to deploy and lead that project. So with that being said, I'm going to pass it to our CEO here, Lenny Sokolow, with some additional financial highlights. Thank you. Lenny?

Great. And thank you, Rani. I appreciate that and that update. We have, as Steve mentioned, we reported an increase of 15% with a record second quarter 2025 revenues of $23.1 million compared to $20.1 million for the first quarter of 2025. And we continue to grow our market penetration in the U.S. and Canadian markets. And further to that, our growth has been -- has increased 6 comparable quarters from Q1 2024 to Q2 2025. So that's been really good progress for us. With respect to cash, just to reiterate, as of June 30, the company reported $15.7 million in cash and cash equivalents and restricted cash as compared to $12.3 million as of March 31, 2025. And as a common company such as ours, when sales are converted into cash rapidly, we often refer to that as the Dell Working Capital Model. We leveraged our trade payable to finance our operations and to enhance our cash position and to lower our cost of capital. We have -- we basically leveraged our e-commerce platform of our 60 websites, among other methods, to support this approach as well as support from strategic investors and insiders. We believe, and we've said this before, that we have sufficient cash to achieve our goal of becoming cash flow positive in 2025. And to that end, our net cash used in operating activities for the second quarter ending June 30, 2025, decreased sequentially by 54% to $2 million compared to $4.3 million in the first quarter of 2025. And contributing to that was that the gross profit for the second quarter ending June 30 increased sequentially by 23% to $7 million compared to the first quarter ending March 31, 2025. And as the beginning of, we hope, positive momentum, the gross margin for the second quarter ending June 30, 2025, increased sequentially by 7% to 30.3% and compared to the first quarter ending March 31, 2025. And finally, the adjusted EBITDA loss for the second quarter, which is a loss before interest, taxes, depreciation and amortization, and we adjust for share-based payments, which, of course, is a non-GAAP measure, decreased to $2.6 million or $0.02 per share as compared to $3.6 million or $0.04 per share in the first quarter of 2025. So Rani, if I could, maybe turn it over to you.

Thank you, Lenny. And then we can open it up for Q&A. I think we have Gerry Sweeney here from ROTH Capital and then -- you can go ahead, Gerry, and any questions, we're here for you. Gerry?

Gerry Sweeney.

Yes. Is my line open now?

Yes, you may proceed.

A couple of questions. I mean, obviously, you highlighted being some cash flow breakeven this year. And it looks like you're making some headway there. Can you maybe give us a little bit of a bridge from where we are today to cash flow breakeven. Is this accelerating sales? I did -- or is it a little bit of -- we also had some G&A was up a little bit in the quarter, but I just want to understand how we go get to cash flow breakeven by the end of the year?

Yes. We are -- as you can see, as Lenny mentioned here, we reduced some cash expenses on our end, and that by itself is a major step that we want to continue, and we believe we will continue in that direction. And additionally, we expect to launch a few products very soon. One of them is the all-in-one and advanced smart heater plug-and-play. As I mentioned, has a ceiling fan for the summer, but more important has a heat as we mentioned, related to our patents, we always think about safety. That's a product that really is safe rather than having seaters on the floor, you can have a safe location in the ceiling that warms up the entire room and there's great demand to that product from some big box retailers and others, and we hope to let everyone know once we launch them. But based on these things, based on some things we're doing with our e-commerce platform, we feel that this winter can be a significant increase in revenues and in gross margins, and that's what we believe and anticipate to happen in the next coming months.

Got it. And the code, standardized code or the mandatory standardization of the code, I mean, that's always been like a huge potential catalyst for you guys. And I know there's been some movement on this over the last 6 months in different options, and you did highlight, I think, the 2, I think, government agencies where there could be some help in maybe achieving that. Could you give us a little bit more detail as much as possible as to what's going on there and maybe the path forward?

Yes. I'm sharing and interesting slide now, the ones that can see the slides. But those are prominent mandatory safety mandatory standardization that I think almost everyone knows the plug and play, the plug for the wall, the Edison bulb that was wires that we mentioned many times became the bulb socket, the GFCI that are in the bathrooms. Something we maybe didn't mention before, for example, but every hair dryer in the U.S. over 20 years ago was forced to change the plug that goes to the wall to a plug, a very big plug with the GFCI receptacle on it, and that became mandatory as well. Exit signs and buildings became mandatory, emergency lights in buildings became mandatory and airbags and seatbelts. And many that joined us, all our leadership here that people know we have top Fortune 100 CEOs and executives here that invested with us several rounds and joined us, all believe this does a matter of time. It's not an if, it's more when because we met all the contingencies, including the NEC, NEMA, including we got a generic name WSCR. We got also NFPA, NEC 10 votes, 10 segments into -- voted to the National Electrical Code. So we met all the conditions and now we believe there's some government organizations that can help expedite that process. Many of us believe it's more a when than an if. And this is really the lot. They forced every hair dryer change the plug. And they had a plug, okay? And the lighting industry and the smart home industry, you don't have even a plug, you go on ladders and you touch hazardous wires. So I think that we're under the radar for a long time. But based on recent progress, we strongly believe that we're getting closer to this and eventually will happen, as we said, hopefully sooner than later. And we hope to have some news about this as soon as possible. But again, we need to wait and see.

Got it. And just one more maybe a question for me. A big hire on your e-commerce platform from Amazon. Just any details on maybe some changes that have gone there or tweaking or the opportunity that they bring to that -- to the e-commerce platform?

Yes. We have a great e-commerce team, and we have our Executive Chairman Todd Johnson that was running the show and now he's focused on major platform changes. And we felt that the e-commerce, we can bring a prominent leader in that industry, Huey Long. And Huey was really started as a buyer and Circuit City became a business owner and with a sourcing coming overseas is the biggest customer was Amazon decided to sell it to the of Circuit City, the business and then announcing it to their biggest customer, Amazon and basis, so what are you doing? Come join us. And what Huey did for them is really established the first Amazon brand is Basic. Today, Amazon has 50 brands, I think, but the largest one in the most famous event is AmazonBasics, and really they started their own brand by sourcing around the world. And from that position, he also was running marketing and e-commerce for Walmart and then recently for Ashley Furniture, growing their business to $1 billion online. Ashley Furniture is not only the stores that everyone knows it's probably the biggest furniture wholesale company in America. They sell to most of the furniture names you know and projects, and they're a multibillion-dollar company and the e-commerce platform became a $1 billion business, and Huey led it. So Hey was excited from what we're doing here from the disruptive perspective, game-changing plug and play, and we wanted someone more on the offense to help us here. And we have great talented people that are running the show, Huey as CEO running the offense very strongly, very strong and defense tool, and we have Todd, our Chairman, Todd Johnson, that's there forever as supporting Huey and everything we're doing. So we really are blessed to have. We also have the founders of Belami that are working with us and also helping the company. We have really a tremendous team there and Huey here is the icing on the cake. And stay tuned with this. Hopefully, we'll have some more announcements when it comes to the e-commerce and some of the things we're doing there.

Rani, it's a pleasure talking to you.

Thank you, Gerry. Pleasure talking to you as well.

Ladies and gentlemen, that was Gerry Sweeney with ROTH Capital.

And we have now Pat McCann from NOBLE.

First, I wanted to just touch on the Parrot Uncle manufacturing partnership for the ceiling heaters and fans. And I guess I was wondering if you could talk about to what extent getting that product available. Are there any new partnerships as far as with developer. You mentioned that, that would be something that the big box retailers would want in their stores and want to be able to start selling once it's available. But I'm also wondering, are there any sort of -- any partnerships with other developers that might potentially hinge on that product becoming available? What other opportunities might that open up, if any?

Yes. So we are working on several channels that advanced and smart plug-and-play heater all in one, and including Global and that collaboration with Parrot Uncle opens markets here in the U.S., but definitely global markets. They have they have great businesses in Europe and Asia. And we think that, that can be a global product. There's many places that people don't use AC or don't have AC or don't want the central AC to heat in one room in a safe way and the same for the summer. So many seeing that product with some great potential. And yes, we are working with several big boxes and other channels. that we hope to be able to announce soon once those interface land towards the winter here. and definitely working also with some builders and developers that like our entire assortment and also very much like our the smart here fan and other products as well. So we hope to have some announcements in the coming weeks or months with projects, but with some channels, no channels we're opening up.

Excellent. And I was also wondering with regard to the smart city development. Does that collaboration serve as a bit of a proof point for other developers that maybe would not have necessarily considered working with you previously, but upon seeing you be involved in that project or you're hitting other developers' radar screens? And are you seeing any extra traction with new partnerships with builders that you might think is a direct result of making that such a large announcement and being part of such a big project?

Thank you, Pat. That's a perfect question for us because we must say we're all smiling here in the room, and we listened to you, but to that question. But yes, we are getting great interest and we're working, as Steve mentioned, Steve said, as I mentioned, wait for some good major news for us in that last quarter call. He said that and he said he came with the smart city. So he's -- as he said here earlier, we're working on some other major aspects that are related to this. And yes, we got a lot of recognition -- and a lot of good discussions, and we're exploring many opportunities based on that smart city announcement. So a perfect question for us then it's absolutely yes.

Excellent. Well, then I'll end on a high note. I appreciate all the extra color.

Okay. Okay. So let me see if there's -- can you show me, the other screen? Okay. So I think we're great with the questions here. We very much appreciate everyone's time. And we're looking forward for our next call with you guys or other updates in between those calls. Thank you, Steve Schmidt, our President; Lenny Sokolow, CEO. Thank you very much. And hopefully, we'll see you or talk to you soon in the next call. Thank you.