Good day and welcome to the SKYX Platforms Corp. Second Quarter 2024 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.

Thank you. Good afternoon to everyone. Welcome to our second quarter earning call and corporate update. We will have Steve Schmidt, our President, start with the call. So, I'll hand the microphone to Steve Schmidt. Thank you.

Thank you, Rani. It's obviously my pleasure being with you here this afternoon. And let's start off with a chart that you've seen, but one that we continue to take great pride in, and that is of our management team, our Board, our advisors, and our investors. We feel very, very proud of the individuals that have been attracted to SKY. We continue to add additional talent as the business warrants, and we think second to none relative to the overall skill and capabilities. And all of these people have joined SKY because they believe in the company, they believe in our vision, and they believe in the products and the future of this organization. So critical that we have it, and it's important for any organization. Next, let me remind everyone again of our mission. Because we think it's critical that our mission is to make homes and buildings safe and smart and advanced as the new standard. And our products significantly do four things. We save lives, we save cost, we save time, and they're advanced and simplified. And there are many industries that have been successful in just one of these areas. But at SKY, all four of these areas apply to our products. And it's why we're so enthusiastic. We continue to make significant progress on our patents. We now have accompanied 97 patents and pending applications with 36 issued patents in the US and globally, including China, India and Europe. Our TAM aggressible market is massive, over $500 billion, spanning almost every room. And you think about homes and hotels and offices and buildings in every location that we have the possibility of being in making a huge TAM market. And our expected revenue streams include product sales, royalties and licensing, subscription monitoring, and the…

Yeah. Thank you, Steve, very much. Just to reiterate, initially, the revenue in our second quarter of 2024 increased to a record $21.4 million, including our e-commerce sales, as well as smart and standard plug and play products, as compared to $15 million in the second quarter of 2023. We reported $15.6 million in cash, cash equivalents restricted cash as of June 30, 2024, as compared to $19.8 million as of March 31, 2024. And as Steve stated it's common with companies such as our as ours when the sales are converted into cash rapidly, it's often referred to as the Dell Working Capital Model. We leverage our trade payables, enhance our cash position to lower our cost of capital. And just to elaborate, as many know, the Dell Computer really revolutionized the direct sales or rapid sales to customers and they were able to collect their receivables within one to three days. And they were able to have favorable vendor payables that could be over 10 times that time span. So, it could be 30 to 60 days. And that significantly enhances the cash conversion cycle and the liquidity generated from working capital. Just to connect some dots that are in the press release also Ruee and that great relationship also enhances our cash conversion cycle. We had a EBITDA -- we had a $2.5 million reduction in our net cash loss before interest, taxes, depreciation, amortization as adjusted per share based payment, we call that the adjusted EBITDA. It's a non-GAAP measure, and that reduction went to $2.1 million in the second quarter as compared to $4.6 million in the first quarter of 2024. Our adjusted EBITDA loss, a non-GAAP measure, amounted to $2.1 million in addition to non-cash basis loss of $5.4 million. This amounted to a net loss of $7.5 million in the second quarter of 2024 as compared to a net cash loss of $2.7 million. In addition to a non-cash basis loss of $9.6 million amounted to a net loss of $12.3 million in the second quarter of 2023. And just to distill it down, to give some perspective, the key metrics that are reflected in our quarterly filings. When we compare this Q2 results to Q1 of 2024, keep in mind the following. In our view, it's very good direction. Our revenues increased 13% to $21.4 million. Our gross profit increased 18% to $6.6 million. Our gross margin increased 4% to 30.7%. Our operating expenses decreased 11% to $12.8 million, and our cash operating expenses decreased 14% to $8.7 million. So our EBITDA loss as adjusted decreased 54% to $2.1 million and then our cash used in operations decreased 32% to $2 million. So, our metrics and our trends were extremely favorable quarter to quarter. So, something that we wanted to emphasize that these numbers are, of course, reflected in our filing. So, if I could turn it over to Rani. Rani, please.

Thank you, Steve and thank you Lenny. Great cover. Great month here, a good quarter for us and month. A couple of points here as you see the slide here. And again, we're utilizing what we call the razor and the blade model. We're enhancing our market penetration, as we said, nearly 10,000 homes and expected to be in this rhythm within tens of thousands of homes within a year or less. Hopefully, this provides us a large variety of products including smart light fixtures, smart chandelier, smart ceiling fans are all in one platform and the Recessed Light that we just announced is our new patent. All of them can be controlled by smart. We announced this Recessed Light, some people call it hi-hats. No patent on plug and play people still, it's a small, very small fixture, but people still go on ladder, spend time on the ladder, touching hazardous wires and taking can take 30 minutes to someone install one of them. Here it becomes plug and play. This is -- as we said in our press release and earlier, this is a multibillion-unit market. We're very excited that we started production. Those are part of things that are going to go on homedepot.com. This potential product opens the door for many builders and other projects that we're talking to now and we hope we'll be able to announce in the next coming months. We're working on several fronts with this and there's some excitement about this product. It provides also the capability to use it as a smart product and talk to Recessed Light or talk to 20 Recessed Lights or more in one room or use your iPhone through Apple Siri, Alexa, Google Home, Samsung and other ways. As you can see, the product provides…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Michael Legg with the Benchmark Company. Please proceed with your question.

Thanks. Good afternoon. Congrats on the record quarter everyone. I wanted to touch on Home Depot as we enter the Home Depot phase, and that could obviously ramp up very fast and be very big. Can you just comment a little bit on how the Ruee Appliances relationship with the financial and the production capacity kind of ties into all that and gives you that power? Just expand on those two, please. Thanks.

Sure. Thank you. Michael, great question. Those collaborations, including Ruee Appliances and some other collaborations we have, help us from variety of products for the smart products and the advanced plug and play products, and also some of those relationships. The way it works is that we have those relationships, provide us this product in large varieties and enables us to pay after we sell, as Lenny Sokolow, our Co-CEO, and Steve Schmidt mentioned, the Michael Dell model. So, those collaborations help us in gross margins in certain type of financial backing, as well as in opening and helping us to open distribution channels and with variety of smart and advanced products and down the road, Recessed Lights and smart ceiling fans and the heater. So those are extremely strategic relationships and having the world leading home improvement company collaborating with us and the largest, I think, lighting manufacturer in the world, Ruee Appliances, it's a major factor. He's very big here, very known, he's an approved vendor, and all the biggest companies here in the US and quite large in China and in Europe as well. So, those are extremely strategic and long-term relationships that we believe we can capitalize and improve significantly range both margins and distribution channels.

Great. And then just one more question. Since you made the Home Depot announcement, obviously that's big news. Have any other retailers kind of come on board and tried to get in touch with you? And how is the whole reputation expanded because of that amongst other retailers?

I think that we're in discussions that we can't share yet, but I think that there's a different type of retailers that potentially we can discuss with, and some of them we are discussing. I think, in home improvement, Home Depot is a leading company. I'm very proud of that relationship and I think really can be a major factor for us, this new beginning for us. But there's definitely other targets around and home decor and other sectors that we're looking into and we hope we'll be able to announce some of them sooner than later.

Great. Congratulations on the quarter. Thanks.

Thank you.

Thank you, Mike.

Our next question comes from Pat McCann with Noble Capital. Please proceed with your question.

Hey, thanks for taking my questions. Just got a couple and congratulations on a nice quarter. My first question had to do with the builder channel, specifically regarding the recent announcement with Home Depot, I was wondering if there's any tangible developments that have happened since then, as far as more builders coming to talk to you or any acceleration in the builder channel as a result.

We are very active in the builder channel and there's a lot that we hope that we'll be able to share. Going back to the previous question, part of our relationship with collaborating with those vendors, manufacturers, including Ruee, is to address the variety of products. Currently, our revenues mainly go our product and plug and play, go on smart chandeliers. Plug and play chandeliers and pendants. But now we're opening the door for recessed light, wall sconces, ceiling fans, flush mounts, down lines, what we call and down the road exit signs and emergency lights. Those are definitely key to builders. And as we get product here and we're working on this and we announced -- we started production, we definitely hope to be able to share some more developments regarding the builder channel that's quite active on our end.

Great, thanks. And then my other question was just relating to your cash burn. I believe you mentioned in the prepared remarks that you would still be targeting a 2025 cash flow positive -- to turn cash flow positive in 2025 and the reduced cash burn in this past quarter. I was wondering, from a funding needs perspective, are there any updates there? Do you anticipate you would need additional funding, or do you have the tools you need to get the cash flow positive without additional funding if need be?

So, I think, as Lenny Sokolow, our CEO, and Steve Schmidt mentioned, the Michael Dell model, because we're selling with cash really helps us on this position. We're lucky to have our 60 websites and the 21.4 million we just announced. Probably what we can call it all cash, so that helps us. And the collaborations we have with those vendors also help us that we don't need to spend big dollars. So, we really feel strongly that we have a path that can bring us to cash positive. Because of those collaborations and because of those terms, we -- what we call, or our management here calls the Michael Dell model, we feel confident that we can get to cash positive in 2025 as we start rolling and bringing and growing our gross margins and bringing more products into the country.

Great. Thanks so much for the color. And again, congratulations on the quarter.

Thank you.

Our next question comes from Jack Vander with Maxim Group. Please proceed with your question.

Okay, great. I appreciate the 2Q update, guys. Great to see the big uptick in revenue and material decrease in operating expenses for sure. Question maybe for Rani. I think, I heard you mention it briefly during your prepared remarks. But can you provide an update on the overall significance and maybe just launch timing of the upcoming Gen 3 all-in-one platform product?

Yes. Our expectation is to start production second half and probably towards the end of this Q or next quarter. We're in good shape as the platform is working well and performing. We're just fine tuning towards regulations such as you have UL smoke detecting and you have the FCC communication. So that requires fine tuning. And for us is also to complete and conduct what's very important to us, our six-sigma quality control manual. We also -- with our first generation of smart, what we call generation two, our plug and play smart product, we could have launched earlier, but we decided to conduct additional testing just to make sure that as we launched, we don't have surprises. And we're very happy we conducted it because we're in the market launching that product. And really we did it responsibly and this is exactly what we're doing with all-in-one smart platform. There's great demand for that product. The product is working great on all our tests and it's a final fine tuning here, so we feel comfortable enough to start the mass production. So that's where it stands. And we think we have a good chance to start in the next couple of months, the production after we complete all the quality control manuals and regulation testing.

Okay, great. I appreciate the color there. And then maybe a follow up for Lenny. Can you provide maybe some additional color on the progress update with regard to the collaboration and sort of production timeline with Ruee Appliances and if we'll see maybe an uplift in gross margins because of Ruee later in the back half of this year, or just maybe next, by next year. Thanks.

Sure. So, Ruee, I think as we've discussed, it's multidimensional in terms of what they bring to the table. Not only are they manufacturer for global products, US, Europe, China, but their ability -- with our collaboration and partner financial partnership, we're able to leverage that model, of course, with the cash conversion cycle that's favorable, similar to the Michael Dell cycle. But it's also -- there's flexibility and they have a knowledge base with respect to the large big box stores and the sales channels we have, they have that flexibility to service it. They understand the lighting, they make lighting for the big boys. So, it's really a very good foil for us in terms of growing the market and being able to expand with them. Was there another nuance to that question, Jack?

No, I think that pretty much covered it. I was just looking to get your thoughts, your latest thoughts on that, and that sounds encouraging. Maybe I will follow up, though, with a question on the GE relationship. Can you just speak to what's the latest with your GE arrangement and are you actively -- how active are they today and how active will they be by next year as it relates to the business model? Thanks.

As far as active, we're very active with GE. We conduct weekly calls and there's a lot going on in preparation behind the scenes to what GE and us seem a great opportunity, as stated in the press release, to open a new world on the ceiling. As you all know, it's a deja vu. Edison started the GE with a light bulb and then created the Edison base. That GE created one of the most famous global standards on every ceiling, in every home, in every building in the world. And this is really our model. We're very responsible with this because we have more than creating just a receptacle, as Steve mentioned earlier, that we expect also to be able to license some smart products to the tech world. As our location significantly enhances performance of 99% of smart fixtures, we would say that go in the home will perform better in the top center of the ceiling. So, to arrange for such a big plan and all our initiatives, we're very careful using GE's great experience in that field, and we're starting to move forward towards some discussions and we hope that that will be a main factor. We hope and believe that that will be a main factor down the road as part of what we do here. And we hope we'll be able to share with you some things, hopefully the near future, but definitely in the next coming months, we will start having some serious discussions about collaborations and licensing with several industries.

Got it. Well, thank you very much. I appreciate it. Congrats on the continued strong results and momentum, guys. Thanks.

Thank you very much. Thank you, Jack.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Rani Kohen for closing remarks. End of Q&A:

Well, thank you, everyone on the call. Thank you, Steve Schmidt. Thank you, Lenny Sokolow. Our team members here, thank to Marc the great financial update here and thank you for the audience. And hopefully, we'll have some more things to share with you, looking forward for our next earning call. And hopefully, we believe you'll hear for us prior to that next earnings call. So, we're working on some interesting things and once we're able to announce them, we will, if they happen, obviously. So, thank you very much. Looking forward to talking to all of you soon.

This concludes today's virtual webinar. Thank you for your participation.