SKYX Platforms Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 1, 2024

There are 7 speakers on the call.

Operator

Good day, and welcome to the Skyx Platforms Corp. 4th Quarter 2023 Investor Update Call. Today's webinar is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information.

Operator

At this time, I would like to turn the webinar over to Ronnie Cohen, Executive Chairman of Skyx Platforms Corp. Sir, please go ahead.

Speaker 1

Good afternoon, everyone. Thank you for joining us. Happy to be with you here and to share with you some highlights from last year and last quarter. And I will now have our President, Steve Schmidt, move ahead and start with our session.

Speaker 2

Hey, Ronnie, thank you very much. I joined Sky because I believed in the management, the products, the strategy and the huge opportunities that were before this company. And I'm really excited today to be able to share with you the significant progress and momentum that we are achieving. It really is truly exciting. Like any company, it really starts with our people and we continue to do an exceptional job on bringing leaders to this organization.

Speaker 2

And you can see by this chart, Bob Nardelli, former CEO of Home Depot and Chrysler and Jiggy Power Systems, Al Wise, former President of Disney Worldwide Parks and Hotels and Resorts, Governor Tom Ridge, Head of Homeland Security, 2 time Governor of Pennsylvania is on our Board Mark Early, really the National Electric Code headed that up and joined us because of his belief in where we're going and what this company has to offer. Eric Jacobsen is a former President and CEO of the American Lighting Association. He's joined us after retiring after a 30 year career. Khadija Mustafa, really headed up Microsoft's Global AI Business Leader, and we're excited to have her joining us. Paul Chernowski, chairs our Sky Insurance Advisory Board, and then Lance Shaner heads up our Hotel Advisory Board, owner of over 60 Marriott Hotels.

Speaker 2

So a very impressive group of leaders that continue to help and build our brand. Our mission, we talked about this is really to make buildings and homes safe and smart That's really the new standard. But the key part of this chart is, as you think about any company that has based itself on saving lives, saving cost, saving time and simplicity. And many companies have been successful simply by one of these areas. But we at Sky have all 4 of these areas behind our products and technology and it's really the excitement that we feel.

Speaker 2

We strongly believe that based on these aspects, we really are positioned to revolutionize both the lighting and smart home industries and could become a safety standard in homes and buildings in the U. S. And globally. We now have over 77 U. S.

Speaker 2

And global patents and patents pending with applications with 23 issue patents in the U. S. And globally. Our addressable market is huge over $500,000,000,000 expanding and really spanning almost every room that you can think about. And our expected revenue streams include product sales, royalty and licensing, subscription monitoring and the sale of global country rights.

Speaker 2

So when you think about Sky X and early technologies and how we're advancing key sectors, it really is very special. I In the electrical safety regulators, they're going to advance home and building safety. Insurance companies, huge dollar savings for the insurance companies because of the safety aspect around our products. The lighting industries will save costs and significantly increase sales and profits. The smart home industry will save significant costs and increase adoption.

Speaker 2

And then electrical outlet box manufacturers, they'll significantly increase their sales and profits. On the right here, building safety regulators. They're going to advance both home and building safety. And then when you think about builders, apartment buildings, hotels, the cruise industries, in every single case, there are significant cost and time savings, which are going to enhance safety. So we're pleased to announce as we talk about our revenue and the momentum we start to build here and we really think about the Q4 2023, we've generated a record $58,800,000 in revenue in 2023, including e commerce sales, smart home products, advanced plug and play products as compared to $32,000,000 in 2022.

Speaker 2

We generated a record $22,000,000 in revenue in the Q4 of 2023. We reported $22,400,000 in cash, cash equivalents, restricted cash, available cash and investments available for the sale as of December 31, 2023 as compared to $16,800,000 as of December 31, 2022. And we anticipate that the company will become cash flow positive during 2025. And the reason for that optimism is really the incredible progress that we're making and the momentum we have in so many areas. And I now want to kind of talk to you about that progress and momentum that we have.

Speaker 2

So think about this. We started sales to builders and pro segments and opened over 100 builder and Pro accounts during Builders Show in Las Vegas. During 2023, we've already shipped its products to thousands of U. S. Homes.

Speaker 2

Products include both advanced and smart home plug and play products. Many orders to home have included multiple units. We expect our products to be in tens of thousands of homes during this calendar year. We've begun selling in the Canadian marketplace. We continue to enhance market penetration of our advanced and smart platform technology products to both retail and pro segments to our e commerce platform of over 60 websites for lighting and home decor.

Speaker 2

We entered into an agreement to supply approximately 1,000 homes with this advanced smart home platform technologies and are expected to deliver approximately 30,000 units representing a variety of our advanced and smart platform technology products to the developers' upcoming projects. And then last, the company won over 7 awards at the CES, the Consumer Electronics Show, including our most recently 2 awards for our all in 1 third generation and Sky platforms. Continuing with the progress and these really are significant, we have just signed a 5 year global licensing partnership agreement with GE to license Skyx patented advanced and smart home platform technology, including our ceiling outlet, receptacle related products, as well as our all in one smart home platform technology. We've announced a collaboration with world leading lighting company, Kichler, which will include Sky Advanced Smart and Standard products for online, retail and professional channels. We've announced a collaboration with U.

Speaker 2

S. Leading manufacturer Quisel, a U. S. Leading lighting manufacturer for nearly 100 years, which will include Skyx advanced smart and standard products for online, retail and professional channels. We also announced the collaboration with U.

Speaker 2

S. Leading elegant lighting company, Golden Lighting, which will include Skyx advanced smart and standard products for online, retail and professional channels. And the company is in the process of working on significant additional collaborations with leading U. S. Companies and expect to announce them in the upcoming months.

Speaker 2

The last area of progress is really around the whole area of safety mandated filings. So we have filed for a mandatory safety standardization with the National Electric Code for our ceiling outlet receptacles for ceilings at homes and buildings with Sky X co team, which is led by Mark Early, former Head of the National Electric Code and Eric Jacobsen, the former President and CEO of the American Lighting Association. Mr. Early and Mr. Jacobsen obviously, were instrumental in numerous code and safety changes in both the electrical and lighting industries.

Speaker 2

We believe that after 12 years of standardization process, including its product specifications approval, which was voted on for by ANSI and NEMA, which is the National Association of Standard Institute and the National Electric Manufacturing Association, we have met the necessary safety conditions for becoming a ceiling safety standardization requirement for homes and buildings. In the past 12 years, the company's products were already voted into 10 segments in the national code book, but we do have to say that obviously voting decisions are at the discretion of the NEC voting members. So hopefully that gives you a good sense and a good feeling for the significant momentum that we have going on and the progress we're making. I now want to turn the call over to Len Sokolow, our Co CEO, to talk you through more of our financials and achievements. Len?

Speaker 3

Great. Thank you very much, Steve. I appreciate it. I'd like to discuss first the our 2023 financial results. Revenue in 2023 increased to a record $58,800,000 which included a record 4th quarter sales of 22,200,000 dollars which we realized.

Speaker 3

These include, as stated before, e commerce sales, smart home products and the advanced plug and play products. Our gross profit in 2023 increased to $18,000,000 or 31 percent of revenue. Gross profit was positively impacted by the gross profit from the acquisition of the Bellamy e commerce platform, which contains over 60 websites for lighting and home decor. Our cash and cash equivalents, restricted cash, available cash and investments available for sale amounted to $22,400,000 as of December 31, 2023, as compared to $16,800,000 as of the end of 2022. Cash used in our operating activities for 2023 amounted to $12,900,000 as compared to $13,800,000 in 2022.

Speaker 3

Our sales and marketing expenses amounted to 20 $100,000 in 2023 compared to $18,800,000 in 2022. Our net cash loss before interest, taxes, depreciation and amortization as adjusted for share based payments, which we defined as adjusted EBITDA, which is a non GAAP measure, amounted to $15,200,000 In addition to non cash basis loss of $24,500,000 we totaled $39,700,000 net loss approximately $0.45 per share in 2023 as compared to an EBITDA loss of $11,600,000 in addition to a non cash basis loss of $15,400,000 which amounted to a net loss of $27,000,000 or a loss of $0.40 per share in 2022. The management of the company

Speaker 4

wanted to

Speaker 3

discuss that our year ended 2023 was highlighted by our first full two quarters of significant revenues, including sales of our the sales and rollout of our advanced ceiling smart and standard plug and play platform products on many leading U. S. And Canadian websites. We believe we have accelerated our cadence of sales with robust gross profit, notably managing the cash burn of Skyx. Our e commerce platform with over 60 websites is expected to provide additional cash flow to the company, which when combined with our existing cash, we anticipate will be sufficient for 18 months of operations.

Speaker 3

Management anticipates the company will be cash flow positive during 2025. We are encouraged with our path to the builder commercial segments, large online and brick and mortar partners as well as to realizing incremental licensing, subscriptions and data aggregation revenue that we believe will assist in paving the way for our standardization efforts. Additionally, our e commerce website platform enhances the acceleration of marketing, distribution channels, collaborations and sales of both professional and retail segments. Some of our 60 websites that includes the company's advanced ceiling smart and standard play plug in products are disclosed on our website for those who are interested. And these websites include banners, videos and educational materials regarding the simplicity, cost savings, time savings and life saving aspects of the company's patented technology.

Speaker 3

And if I may, I'd like to turn it over to Marc Boussois and to discuss some financial data.

Speaker 4

Thank you, Lenny. Good evening, everybody. So basically, we're just going to recap some of the financial information, compare them to what we had for the year end as of twelvethirty onetwenty 22. So again, the cash position was $22,400,000 as of December 31, 2023 compared to 16,800,000 dollars as of twelvethirty onetwenty 22. The $16,000,000 also includes some marketable securities.

Speaker 4

Accounts receivable amounted to $3,400,000 as of twelvethirty onetwenty 23, that's approximately 14 days outstanding. So we collect fairly quickly. Inventory increased to 3,400,000 dollars last year. The working capital is at $3,100,000 as of twelvethirty onetwenty twenty three. The stockholders' equity, it went from $7,900,000 last year to 16,600,000 And as Lenny mentioned a little bit earlier, so that our revenues was at 58 point $1,000,000 compared to the revenues in 2022 were not meaningful.

Speaker 4

The gross profit is at 18,000,000 dollars Our operating expenses increased to $35,000,000 compared to $12,000,000 dollars There's a few components to that, but obviously, as we have sold the operations, the company we acquired, Del Ami, There's some stock based compensation decreased. There's approximately $6,000,000 increase of non cash expenses. The net loss is at $39,800,000 compared to $27,000,000 The EBITDA is at 15 $200,000 loss compared to $11,600,000 The net cash used in operating activity for 2023 was $13,000,000 and that compares to in 2022, dollars 13,800,000 dollars The net cash provided by investing activities was $3,200,000 in 2023 dollars and it was we used $8,000,000 in 2022, but it was primarily as part of the acquisition of the portfolio of marketable securities. The net cash provided by financing activities was at $22,700,000 in 2023 compared to 20.9

Speaker 2

Yes. Let's go back to Ronnie. So let's go back to Ronnie for additional comments.

Speaker 1

Thank you, Steve. Thank you, Lenny and thank you, Mark. We'll show you a few slides to better explain our activity in the market and why we had this opportunity and why we succeeded to lock some collaborations here, including GE and world leading lighting companies, Kichler, Kreisel and others. It's really as you can see in this slide, it's a razor in the blade model. Our mission is to enhance our ceiling receptacle outlet to as many homes as we can.

Speaker 1

We are doing that now. We started doing it and we are enhancing the market penetration by loading more and more receptacles into homes, while we'll create for us recurring revenues, opportunities, and to changing fixtures, as well as down the road in the future with our smart product, data aggregation, monitoring and subscription that can be key for us. We also enable builders and homeowners to make a smart home instantly once you put a receptacle in the home. If you have 20 receptacles or 30 receptacles or 10, you just plug a few fixture in, if it's smart ceiling fans, if it's smart lighting, if it's an all in one smart platform that we have here, and that once you plug it in connected to the IT, you really have a smart home and excluding wall sconces and recess lights. As Steve mentioned earlier, we're proud to say that we won a total of 7 CS awards in the past year or so, including 2 ones for all in one smart platform.

Speaker 1

And that was something that we're really encouraged of. This is the all in one smart platform. You can plug it in within seconds to the ceiling. You can still install light fixture in the center, but you have all the sensors, including smoke detectors, CO detectors, Wi Fi extenders, intercom room to room and emergency calls, emergency internet, emergency light and many, many features that Wi Fi extenders and many others into homes, where you have the packaging, we didn't start sales, but we anticipate to start sales with this product and there's a lot of demand and expectation to that product. It's a game changing product that can enable at home to become smart instantly with just plugging it within seconds to the ceiling and we're very happy and encouraged that the Consumer Electronics Show CES recognized the capability unique capabilities we have here.

Speaker 1

What we said earlier with enhancing the market penetration with the ceiling outlet here, receptacle, As you can see here, we have already 1 packs and 4 packs and now we're starting to introduce the 8 packs and the 24 packs based on builders recommendations and we can sell them. So the way it will go, a builder will buy them during rough construction or when you renovate, you put them on the ceiling. When you're ready a few months after, you will buy the ceiling and plug and play. And as we mentioned, we'll have a smart home. 2 additional products that are doing very well for us is the plug and play smart excuse me, advanced plug and play for light fixtures and the smart advanced plug and play that makes every picture become smart.

Speaker 1

And then it gives all the capabilities of smart home that you want and you can use here. Those capabilities, as we mentioned in the past, include many features, including energy saving mode and you can use it with Siri, Alexa, Google, Samsung among others. So that's happening and we're selling them on a daily basis. And here, another product they're very proud to announce and we will launch this year is our plug and play recessed light. We have a 7 inches on the right here, a 4 inches and that has a tremendous opportunity as the numbers of recessed lights are very, very high, as I'm sure all of you know.

Speaker 1

So I think for now, I think we're in good shape here, showing you the main features as we mentioned on the new stuff. As everyone knows, we mentioned we filed the mandatory application and our co team and management really believes that we are really in a good shape with this. We can't promise times. We don't know how long things like this happen. We don't have the clock, but we really feel that we delivered on the safety base what we need to and the life saving aspects are huge.

Speaker 1

As we mentioned in the past, many people risk their lives just to go and install a light fixture when there is a plug and play solution that can really prevent you touching wires. The last time something like this happened is the GFCI here in the center that is in every bathroom and in many kitchens and we followed the path with having our 10 segments at the National Electrical Code and we really expect based on the safety aspects after over 12 years that we're getting a better chance and getting closer. But again, this is not up to us. It's the regulators voting and we don't have a timetable for this. As you all know, we signed or Steve mentioned earlier, we signed a 5 year agreement with GE on December of 2023.

Speaker 1

It's quite a deja vu for gs that started with Edison base here with the wires that people installed light bulbs for many years with wires until the Edison base came and that's how GE started, became a global standard. Many that joined us, including GE and others, we believe that we have a chance to become a U. S. And then hopefully one day a global standard to have every ceiling have an outlet there, but the outlet that the platform here really enables you to create a smart platform and open a whole new world on the ceiling as we showed earlier with this slide. It's really opening a whole new world on the ceiling.

Speaker 1

We sold Christmas lights during Christmas and we expect to sell more holiday lights depends on holidays. It can be Halloween, it can be Hanukkah, it can be Valentine's and can be for kids and for sport teams and many other things that we're looking at too. And really that's where we are today. And we would like to thank everyone for participating. And if there's questions, we will try to answer.

Speaker 1

Thank you very much.

Operator

Thank you. And at this time, we'll conduct our question and answer Our first question comes from Michael Legg with Benchmark Company. Please state your question.

Speaker 5

Thanks. Congrats on all the success to date. I wanted to kind of dig a little deeper on the breakeven level for calendar 'twenty five and understand what that means. If you can give us revenue expectations alongside that. I know you mentioned it will be in 10,000 homes this year.

Speaker 5

Can we put some revenue perspective around any of that?

Speaker 1

We're careful to announce revenues and but we did say tens we believe we're already in thousands of homes and we believe that this year we're going to be in tens of thousands of homes and not 10,000. We believe we're going to be in tens of thousands of homes and it depends on what fixtures they buy. They can buy chandelier, they can buy a smaller fixture it really depends on what fixtures and how much smart is this. But we're happy with our growth and keep enhancing market penetration, but we do not provide yet guidance on exact revenues. Our President, Steve Schmidt mentioned earlier that management believes that we can be a cash flow free during sometimes early 2025, but we are not yet announcing as we have the growth that we're trying to accommodate here.

Speaker 1

We did not announce any numbers yet and what does it look like.

Speaker 5

Okay. I just assume that if you had a breakeven number, we could come within a range. But okay, so let's talk about the 18 months of cash on the balance sheet. Looking at the balance sheet, there's a lot of short term liabilities, I think 24,000,000 dollars like over $12,000,000 in accounts payable. Can we just first talk about those current liabilities and what how that cash is getting used for that?

Speaker 4

Can you repeat your question?

Speaker 1

Repeat the question, our CFO.

Speaker 5

Yes. Okay. So you have the $18,800,000 of cash on the balance sheet, of which $16,800,000 is unrestricted. And then you have short term your current liabilities, you have $12,400,000 of accounts payable, dollars 5,700,000 of notes payable, total current liabilities of $24,000,000 So I want to understand how we have 18 months of cash on the balance sheet when we have those current liabilities?

Speaker 4

Well, so on the liability side, especially with the e commerce, we get paid pretty quickly, relatively quickly. And then we don't have to pay the 3rd party manufacturers until 30 days, 45 days later. So that's probably what you may be referring to.

Speaker 5

Well, it's okay.

Speaker 4

We manage our AP.

Speaker 3

I mean, I'm just kind

Speaker 5

of on the track to stand with $12,400,000 in accounts payable and how that gets paid without dipping into cash or that way you say you have 18 months of cash. We could talk offline if you want, but I just kind of want to understand where we are cash wise and liability wise and just trying to mesh with what was said. Okay, we can talk offline if you want to on that. But second piece then is cash is up this year. Obviously, you raised some capital.

Speaker 5

Can we talk with where the share count is? I know it's $93,500,000 on issued and outstanding, but we're now in March 3 months later, have you utilized your ATM and where's cash today and where's share count today?

Speaker 4

So what we for now, we're just limiting ourselves to publish the twelvethirty onetwenty three numbers.

Speaker 5

Okay. So there won't be a There

Speaker 4

won't be a

Speaker 5

different secret event filed with the 10 ks on an ATM usage?

Speaker 4

No, there will be. So we raised some money through the ATM.

Speaker 5

Okay. Okay. I'll see it on the K. Okay. That's all I have.

Speaker 5

Thank you.

Speaker 1

Okay. I think we have Paul Cooney.

Operator

Yes, sir. Next question comes from Paul Cooney with The Benchmark Company. Please state your question.

Speaker 6

Hey, guys. Could you please just comment on your manufacturing capabilities? Like how much could you manufacture if you had the orders?

Speaker 1

Yes, definitely. We are we currently have a few agreements with GE approved manufacturers and usually those factories not usually, they're always abide by the 6 Sigma quality control for quality and highest level of quality with the 6 Sigma, but also a key aspect is the quantities that those manufacturers, that's a key element for GE approving a factory. So we are in good shape for our growth and we're enhancing and making more and more fixtures compatible to our product as we go. I believe that in June, we have 100 fixtures capable with our with our technology, and October was a few 1,000. The end of the year was over 10,000.

Speaker 1

I think now we're around over 40,000 fixtures that have the capability to use our products and we keep on enhancing this expecting to get to 100 of thousands of fixtures that are capable of our technology. So we are at that point in a good stage with production and for growth.

Speaker 6

So who's manufacturing? Are you manufacturing them or are lighting companies manufacturing them?

Speaker 1

We subcontracted to electrical and tech and smart product factories that are approved by GE. We subcontracted. Constructed. It's not we're not a manufacturer. We sub constructed to manufacturers with 6 Sigma and that approved by GE for quality control and quantity.

Speaker 6

What's the breakdown as far as what percentage of them are smart and what percentage of them are just the plug in product?

Speaker 1

The Generation 2 Smart we're selling currently I think for $140 and Generation Advanced Generation 1 plug and play we're selling around and that's retail and wholesale the numbers are different, but that's public outdoor. So we're selling between $40 to $50 So obviously, the breakdown of sales on the standard are higher than the smart. We didn't publish those numbers, but we are very encouraged for the smart as it costs 3 times more than our advanced plug and play product, the smart plug and play product with all the features. And there is a great demand for those products and the percentage of sales are really actually better than we expected when it comes to dividing between the advanced plug to the smart advanced smart plug.

Speaker 6

Okay. And the as far as the standardization process, I understand it's impossible to tell about timing and things of that nature as far as when you would get potentially the standardization go ahead. And maybe this is more of a more question. What is the process that would speed that along? And I understand you don't want to talk about exact timing on that because it's impossible.

Speaker 6

But is there a way that we can kind of anticipate when that would happen?

Speaker 1

So, yes, it's we need to be careful what we say, but we based on the safety aspects, our co team strongly believes that we provided all the answers to the safety that our product provides. And the rule is if you really save lives, it will or should happen. And we feel or our co team strongly feel that we're getting closer, but really regulators are not fast. That's the sad news. The good news is that we're already over 12 years in the process and we accommodate the ANSI, NEMA support that was tremendous in getting to where we are, where they also voted for a generic name, like in the bathroom, the GFCI stands for Ground Faults Circuits Interrupter.

Speaker 1

They dedicated the generic name for us to the position is WSCR, waste support sealing receptacle. So we really met very tough rigorous conditions to be where we are. And we'll let the regulators do their job and we're confident that we're in the right path.

Speaker 6

And is there a it sounds like there could possibly be an issue and maybe this is why you're going in the licensing room. Is there any concern about monopolistic issues and things of that nature? Or is that why you're doing the licensing with everybody?

Speaker 1

Yes, Ed, that's a great question because part of it that we can't have a monopoly and that's why we signed that's one of the reasons GE strongly believes that there's a potential for that becoming a standard here in the U. S. And if it happens here, potentially can go to many other places because of safety. So that's one of the main reasons we signed the GE agreement, but GE also believe that there is a potential for our smart platform generation 2 and 3 to be licensed in the market. So definitely that's one of the main reasons GE wanted to sign that new 5 year agreements with us as we all believe there's a huge opportunity here.

Speaker 1

In the meantime, our TAM, as Steve mentioned, is around $500,000,000,000 and we are working on the path that if we can take or capture a fraction of 1% of our TAM, a very small fraction from a stock perspective, from a company perspective, it can be a great success. And if we get this mandatory and many believe it's more when than if, but we should see that that's going to be a game changer obviously. But we are in the safe path and what we discussed today is as you see all those collaborations with many people that are here to support us, we're leading lighting companies and others. And we're working, as Steve mentioned, on some other collaborations that we hope, we will be able to share with the market if they happen.

Speaker 6

And that's the holy grail. That's what changes the game?

Speaker 1

That's the holy grail, but I think we're in very good position to keep enhancing market penetration, growing what we're doing now and that this 2 path, the code mandatory, yes, definitely, but we're working on this path. There's a code team that's doing the code and there's Steve Schmidt and all our President and all our CEO, Lenny and all our sales team, Dave Pamer, a former Head of Sales for Kichler, that's the world leading company and many good people here around us and our e commerce team doing tremendous job. So we have a path that's growing slowly, but surely and I think it's a bit like it's surely, but it's I think happening a bit faster now. And we wanted to happen much faster than it is and working on this. So I think we're in a good place now.

Speaker 1

We started delivering to builders and we registered, Steve mentioned over 100 new builders opened accounts with them and as they're going to start construction, they started ordering already and we expect and hope that we'll have more orders down the road.

Speaker 6

Okay. All right. Very impressive. Thank you, guys.

Speaker 1

Thank you very much, everyone. And looking forward to talking to you with more updates in the next quarter. Thank you very much everyone.

Operator

Thank you. And with that, we conclude today's conference call. All parties may disconnect. Have a good evening. Thank you.

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