Good day and welcome to the SKYX Platforms Corp. Fourth 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. At this time, I would like to turn the webinar over to Rani Kohen, Executive Chairman of SKYX Platforms Corp. Sir, please go ahead.

Good afternoon, everyone. Thank you for joining us. I'm 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.

Okay, Rani, 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, and you can see by this chart, Bob Nardelli, former CEO of Home Depot and Chrysler and GE Power Systems, Al Weiss, former President of Disney Worldwide Parks and Hotels and Resorts, Governor Tom Ridge, Head of Homeland Security, two-time Governor of Pennsylvania, is on our board, Mark Earley, really the National Electric Co., headed that up and joined us because of his belief in where we're going and what this company has to offer. Eric Jacobson is former President and CEO of the American Lighting Association, and he's joined us after retiring after a 30-year career. Khadija Mustafa, where he headed up Microsoft's global AI business leader, and we're excited to have her joining us. Paul Chinowsky, Chairs our Sky Insurance Advisory Board, and then Lance Shaner heads up our Hotel Advisory Board, owner of over 60 Marriott hotels, so a very impressive group of leaders that continue to help and build our brand. You know, our mission, we talk about this as really to make buildings and homes safe and smart. That's really the new standard, but the key part of this chart is you think about any company that has based itself on saving lives, saving costs, saving time, and simplicity, and many companies have been successful simply by one of these areas, but we at Sky have all four…

Great. Thank you very much, Steve. I appreciate it. I'd like to discuss first our 2023 financial results. Revenue in 2023 increased to a record $58.8 million, which included a record fourth quarter sales of $22.2 million, which we realized. 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 million, or 31% 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 $22.4 million as of December 31, 2023, as compared to $16.8 million as of the end of 2022. Cash used in our operating activities for 2023 amounted to $12.9 million, as compared to $13.8 million in 2022. Our sales and marketing expenses amounted to $20.1 million in 2023, compared to $18.8 million 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 $15.2 million. In addition to non-cash basis loss of $24.5 million, we totaled $39.7 million net loss, approximately $0.45 per share in 2023, as compared to an EBITDA loss of $11.6 million, in addition to a non-cash basis loss of $15.4 million, which amounted to a net loss of $27 million, or a loss of $0.40 per share in 2022. The management of the company wanted to discuss that our year-ended 2023 was highlighted by our first full two quarters of significant revenues, including 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 profits, 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. 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, subscription, 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 include the company's advanced ceiling smart and standard play plug-and- plug-and-play platform are disclosed on our website for those who are interested. And these websites include banners, videos, and educational materials regarding the simplicity, cost-saving, time-saving, and life-saving aspects of the company's patented technology. And if I may, I'd like to turn it over to Marc Boisseau to discuss some financial data.

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 12-31-2022. So again, the cash position was $22.4 million as of December 31, 2023, compared to $16.8 million as of 12-31-2022. The $16 million also includes some marketable securities. Accounts receivable amounted to $3.4 million as of 12-31-2023. That's approximately 14 days outstanding. So we collect fairly quickly. Inventory increased to $3.4 million from $1.9 million last year. The working capital is at $3.1 million as of 12-31-2023. The stockholders' equity, it went from $7.9 million last year to $16.6 million. And as Lenny mentioned a little bit earlier, so our revenues was at $58.8 million compared to the revenues in 2022 were not meaningful. The gross profit is at $18 million. Our operating expenses increased to $35 million compared to $12 million. There's a few components to that, but obviously, as we absorb the operations, the company acquired, Bellamy, there's some stock-based compensation decreased. There's approximately $6 million increased of non-cash expenses. The net loss is at $39.8 million compared to $27. The EBITDA is at $15.2 million loss compared to $11.6 million. The net cash used in operating activity for 2023 was $13 million. That compares to 2022, $13.8 million. The net cash provided by investing activities was $3.2 million in 2023. And it was, we used $8 million in 2022, but it was primarily as part of the acquisition of the portfolio of marketable security. The net cash provided by financing activities was at $22.7 million in 2023 compared to $20.9 million in 2022. And now, Steve, I'll turn it over to Rani.

Yes, we'll go back to Rani. Let's go back to Rani for additional comments.

Thank you, Steve. Thank you, Lenny, and thank you, Marc. 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, QUOIZEL, 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. We are doing that now. We started doing it, and we are enhancing the market penetration by loading more and more receptacles into homes. What we'll create for us, recurring revenues, opportunities, interchanging fixtures, as well as down the road in the future with our smart products, 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 fixtures 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. Once you plug it in, connect it to the IC, you really have a smart home, and it's including wall sconces and recessed lights. As Steve mentioned earlier, we're proud to say that we won a total of seven CES awards in the past year or so, including two ones for all-in-one smart platform, 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 a 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…

Thank you. [Operator Instructions] Our first question comes from Michael Legg with Benchmark Company. Please state your question.

Thanks. Congrats on all the success to date. I wanted to kind of dig a little deeper on the break-even level for calendar '25 and understand what that means, if you can give us revenue expectations alongside that. I know you mentioned you'll be in 10,000 homes this year. Can we put some revenue perspective around any of that?

We're careful to announce revenues, 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 pictures they buy. They can buy a chandelier, they can buy a smaller fixture, and 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 did not provide yet guidance on exact revenues. Our president Steve Schmidt mentioned earlier that management believes that we can be cash flow free sometimes during 2025, but we're not yet announcing as we have the growth that we're trying to accommodate here. We did not announce any numbers yet and what does it look like.

Okay. I just assumed if you had a breakeven number. We could have 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 million, like over $12 million in accounts payable. Can we just first talk about those current liabilities and how that cash is getting used for that?

Can you repeat the question?

Repeat the question, our CFO.

Yes. Okay. So you have the $18.8 million of cash on the balance sheet, of which $16.8 is unrestricted. And then you have short-term, your current liabilities, you have $12.4 million of accounts payable, $5.7 million of notes payable, total current liabilities of $24 million. So I want to understand how we have 18 months of cash on the balance sheet when we have those current liabilities.

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 third-party manufacturers until 30 days, 45 days later. So that's probably what you may be referring to.

I mean, I'm just trying to understand these 12.4 million accounts payable and how that gets paid without dipping into cash, where you say you have 18 months of cash. We can talk offline if you want, but I just kind of want to understand where we are cash-wise and liability-wise. And I'm just trying to mesh with what was said. Okay. We can talk offline if you want on that. But second piece then is cash is up this year. Obviously, you raised some capital. Can we talk where the share count is? I know it's $93.5 million on issued and outstanding, but we're now in March, three months later. Have you utilized your ATM and where's cash today? Where's share count today?

So for now, we're just limiting ourselves to publish the 12.31.23 numbers.

Okay. So there won't be a [indiscernible] filed with the 10-K on an ATM usage?

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

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

Okay. I think we have Paul Cooney.

Yes. So next question comes from Paul Cooney with the Benchmark Company. Please state your question.

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

Yes, definitely. We currently have a few agreements with GE approved manufacturers and usually those factories, not usually, they're always by the Six Sigma quality control for quality and highest level of quality with the Six Sigma, but also a key aspect is the quantities that those manufacturers, that's a key element for GE approving the 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 technology, compatible to our technology. In October was a few thousand. The end of the year was over 10,000. I think now we're over 40,000 fixtures that have the capability to use our products and we keep on enhancing this, expecting to get to hundreds of thousands of fixtures that are capable of our technology. So we are, at that point, in a good stage with production for growth.

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

We subcontracted to electrical and tech and smart product factories that are approved by GE. We subcontracted. We're not a manufacturer, we subcontracted to manufacturers with Six Sigma and that approved by GE for quality control and quantity.

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

The generation two smart we're selling currently, I think, for $140 and generation advanced, generation one plug-and-play we're selling around. And that's retail and also the numbers are different, but that's public out there. 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 about 3x 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 advanced smart plug.

Okay. And 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 Marc 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, but is there a way that we can kind of anticipate when that would happen?

So yes, you have to be careful what we say, but based on the safety aspects, our code 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 code teams 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. They also voted for a generic name, like in the bathroom, the GFCI stands for Ground Fault Circuit Interrupter. They dedicated a generic name for us to the condition. It's WSDR, Weight Support Ceiling 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.

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

Yes, that's a great question because part of it is 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 it can go to many other places because it's safety. So that's one of the main reasons we signed the GE agreement, but GE also believes that there's a potential for our smart platform, generation two and three to be licensed in the market. So definitely that's one of the main reasons GE wanted to sign that new five-year agreements with us, as we all believe there's a huge opportunity here. In the meantime, our TAM, as Steve mentioned, is around 500 billion and we are working on a path that if we can 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's going to be a game changer obviously. But we are in a safe path and what we discussed today is, as you see, all those collaborations with many people that are here to support us, the world 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.

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

That's the holy grail, but I think we're in a very good position to keep on enhancing market penetration, growing what we're doing now. And, there's two paths, 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 presidents and all the CEO, Lenny and all our sales team. Dave Tamer, 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 jobs. So we have a path that's growing slowly but surely, and I think it's happening a bit faster now. And we want it to happen much faster than it is, and we're working on this. So I think we're in a good place now. 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've started ordering already, and we expect and hope that we'll have more orders down the road.

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

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

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