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, smart, and advanced as the new standard. And our products significantly do four things. We save lives, we save costs, 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 total addressable 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 addressable market. And our expected revenue streams include product sales, royalties and licensing, subscription monitoring, and the sale of global country rights. As you know, we have three generations of ceiling platform technologies. First, our plug and play lighting and ceiling fans; next, our smart plug and play lighting and ceiling fans; and finally, our all-in-one smart home plug and play products. All of these really represent significant growth opportunities in terms of market penetration and significant future licensing programs. Let's now move on to the business and financial highlights. We are in the beginning of opening a new world on the ceiling for advanced and smart home plug and play products, and we strongly believe that we can revolutionize the lighting, ceiling fan, smart home AI industries, among others. In 2023, we achieved a record revenue of $58 million through our 60 websites, which included sales of our advanced and smart home plug and play products. We reported record second quarter sales of $21.4 million, an increase from $15 million in the second quarter of 2023, as we continue to enhance our market presence in the US and Canada for advanced and smart platform products. It is noteworthy that we are maintaining and even increasing revenues in this market, especially since the lighting and home decor segments are experiencing significant declines due to two main factors: the slowdown in the real estate market and the impacts of COVID, which led many people to renovate their homes while staying at home. As highlighted by the Wayfair CEO, the home decor and home improvement sectors are currently facing challenges. As of June 30, 2024, we had $15.6 million in cash, cash equivalents, and restricted cash, down from $19.8 million as of March 31, 2024. As is common for companies like ours, when sales quickly convert into cash, often known as the Dell Working Capital Model, we use our trade payables to support our operations, enhance our cash position, and reduce our cost of capital. Additional business and financial highlights, we continue to grow our market penetration of our advanced and smart plug and play products as our products are in nearly 10,000 US and Canadian homes and are expected to be in tens of thousands of homes in 2025. We continue to utilize our e-commerce platform of over 60 websites for lighting and home decor to educate and enhance our market penetration to both retail and professional segments. We expect to significantly enhance our market penetration to the builder markets in the coming months. We believe the company will continue to become cash flow positive during 2025 through our product collaborations that are expected to significantly increase our gross margin sales and our distribution channels. Let me now shift gears to some of our key collaborations. We have just recently announced Home Depot. And what we've done with Home Depot parallels to many products going into Home Depot's website, some of our products are expected to go into some stores. As we are the only products that include smart plug and play technology, it's important to emphasize that from the many products, including smart lighting and smart ceiling fans that are expected to go in on Home Depot's website, those products that perform well will have a good chance to go into their stores, bringing an opportunity to potentially significantly increase our revenues, with over 2,000 Home Depot stores, any product that goes into those stores can potentially generate substantial revenue for us. Next, our collaboration with GE Licensing continues to make progress with initiatives related to our recently signed five-year licensing partnership agreement for the US and global markets. SKYX and GE's goal is to make SKYX's game-changing ceiling outlet/receptacle the standard for homes and buildings by licensing it and its related products, including SKYX's advanced and smart home platform technologies to various industries including tech, smart home, AI, lighting, ceiling fans, and electrical. Next, our collaboration with the world-leading Chinese lighting supplier and manufacturer Ruee Appliances for the US, Chinese, and European markets. This collaboration provides SKY substantial backing in several areas including financial, mass production, manufacturing capabilities, and distribution to the global markets. And then, as we have announced prior, we've got collaborations with world-leading lighting company Kichler, collaborations with US lighting leading company Quoizel with over 100 years in the lighting industry, collaboration with the US leading lighting company Golden Lighting, and all of these collaborations will be including SKY's advanced, smart, and standard products for online, professional channels and retail. As I mentioned prior, when it comes to our patents, we're making significant progress. We started production of our new global patent advanced smart plug and play recessed lights. The global recessed lights market is a multibillion-unit market. SKY's new plug and play recessed lights global patents include the US, China, Canada, Hong Kong, and Mexico, as billions of recessed lights are installed globally with hazardous electrical wires. SKY's recessed light solutions enable an advanced, simple plug and play installation that saves costs and lives. SKYX's plug and play recessed lights can be controlled through SKY's app, voice control, phone and works with Apple, Siri, Amazon Alexa, Google Home, and Samsung. New Google Smart Home and AI-related patents SKYX new and existing patents, including the new global patent advanced smart and plug and play recessed light, enable enhanced performance of smart home and AI sensors in addition to home safety sensors, bringing the company's intellectual property portfolio to a total of over 97 issued and pending patents, 36 of which are issued patents covering SKY's advanced plug and play and smart home platform technologies for the smart home, AI, electrical, and lighting industries in the US and internationally, including China, Europe, Mexico, and two patents in India. It also includes the recent issuance of six additional patents in the US and internationally in China, India, Europe, Canada, and Mexico for advanced smart and plug ceiling fan and heater.

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, and 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 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, Dell 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 ten 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 $2.5 million reduction in our net cash loss before interest, taxes, depreciation, amortization as adjusted per share based payment, which we call 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 a 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 which totaled 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 metrics are extremely favorable quarter to quarter. 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 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 filings. So, if I could turn it over to Rani. Rani, please.

Thank you, Steve, and thank you, Lenny. It has been a great month for us, and the quarter was strong as well. I want to highlight a few points as shown in the slide. We are using what we refer to as the razor and blade model to enhance our market penetration. We are currently in nearly 10,000 homes and expect to reach tens of thousands within a year or less. This will allow us to offer a wide variety of products, including smart light fixtures, smart chandeliers, smart ceiling fans, all on one platform. Additionally, we have just announced a new patented recessed light, often referred to as hi-hats. This small fixture, while still requiring people to climb ladders and handle hazardous wires for installation, can take about 30 minutes to install traditionally. Now, with our plug-and-play design, it becomes much easier to set up. As mentioned in our press release, this represents a multibillion-unit market, and we are very excited to have commenced 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 lights 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 not only round four-inch size and seven-inch size, it also provides for square four-inch and seven-inch and those are huge markets and definitely good for the US market but has a great potential globally. We're also showing here a taste of some of the products that are capable compatible with the lighting products and fan products that you can see here down the road. In addition to recessed lights that we'll have the chandeliers, smart chandeliers will have for kids' rooms, we'll have holiday lights, that we expect also with all of this to go to Home Depot. We will have ceiling fans, smart ceiling fans. We have the patented all-in-one heater and ceiling fan. We'll have wall sconces, we'll have exit signs, emergency lights, variety of products that we expect to launch not only on our 60 websites, but now, as announced, on the Home Depot website. And as Steve mentioned, parallel to launching on the Home Depot website, we will also be going to stores with some products and products that perform well online have a good chance to go to stores. And as Steve mentioned, even the product, one product that goes into such a big company's Home Depot 2,000 stores can be quite significant in substantial revenues for us. The packages of them, we also continue to sell and will sell in Home Depot. The one pack, four pack, eight pack, and 24 pack of the stealing outlet, what we call Razor and other products to be with this. All our products to remind everyone we got the 7 CES award and we are really going after a market with an addressable market of over 4.2 billion applications, US and homes and apartments, and that's residential only. Obviously, the smart home market is also a big play with this, but we can also go to commercial as expected, to do our all-in-one smart platform as we're getting close and we hope to start production this year, as we said, and the sooner the better. And there's a lot of excitement around this product. And as we said, so many capabilities in one product and the CES awards we won and enhancing performance of so many things, including WiFi, AI, performance of chips or software, as well as smoke detectors, geodetectors, sound, voice and many other things you can put here. And you know, we can really believe we can transform buildings and homes instantly to smart. Rather than spending weeks on homes, it can happen within minutes or an hour. And large buildings, rather than spending millions of dollars in a one-year span, we can do it, as we mentioned, quite fast, within days or hotels, et cetera. And as Steve mentioned, we're doing great progress here on some GE initiatives with GE Licensing. And we have addressed the whole licensing packages to various industries and as Steve mentioned earlier, we're going to license not only the standard plug and play, but we'll also license and hope to license the smart technologies and capabilities, including the electronic real estate that we have. We can provide to enhance performance in smart homes. Other companies can utilize our patents, our code achievements here, and also license our capabilities to do it in every home. As to the code application, we have filed, as you know, last year to mandatory. After a long time, our team members Mark Earley and Eric Jacobson, that lead the application, are confident that we have everything that's needed to become mandatory. Again, as I always said, it's a very long process. We're already over 12 years in this process. So, that's the good news. It's still a slow machine, but we're making progress, and we hope to share more things about this with you as time comes. In the meantime, we did get approved, as you can see here, the WSDR as our generic name. That that's a major condition. We got 10 segments voted into the national electrical code in the past 12 years, and we got this historical approval by ANSI, American Standardization Institute, and NEMA, National Electrical Manufacturers, that actually create the standards in homes and buildings when it comes to safety. So, our code team is optimistic, as we said, and we really think that we're in the beginning of, as Steve said earlier, to open a new world on the ceiling with a variety of products that we shared with you. And we really feel that this beginning is really starting to happen with major collaborations like Home Depot and other leaders, including GE and leading companies. So, with that being said, we hope that we will be able to share additional things that we're working on and if they prevail, we will definitely. But I think we can conclude now the first part of this call and start addressing Q&A. If there is some Q&A here. So, I'll turn it up to the host and please guide us with the Q&A.

Thank you. We will now begin the question-and-answer session. Our first question comes from Michael Legg with the Benchmark Company. Please go ahead 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 a 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 types of financial backing, as well as in opening and helping us to open distribution channels and with a 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 has 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 in 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 engaged in the builder channel and have a lot of information that we hope to share. Regarding the previous question, part of our collaboration with vendors and manufacturers, including Ruee, focuses on the diverse range of products. Currently, our revenues primarily come from our smart chandeliers and plug-and-play options. However, we are now expanding to include recessed lights, wall sconces, ceiling fans, flush mounts, and downlights, as well as future products like exit signs and emergency lights, which are important to builders. As we continue to develop these products and have begun production, we look forward to sharing more updates about the active builder channel from our side.

Great, thanks. My other question is about your cash burn. I believe you mentioned in your prepared remarks that you aim to achieve positive cash flow in 2025 and that you've reduced cash burn in the last quarter. I'm curious about any updates regarding your funding needs. Do you expect to require additional funding, or do you feel confident that you can reach positive cash flow without it if necessary?

I believe, as Lenny Sokolow, our CEO, and Steve Schmidt mentioned, that the Michael Dell model, because we are selling with cash, really supports our position. We are fortunate to have our 60 websites and the 21.4 million we just announced, which we can consider all cash, and that is beneficial for us. Our collaborations with those vendors also alleviate the need for significant expenditures. We are confident that we have a path to become cash positive. Thanks to these collaborations and favorable terms known as the Michael Dell model, we are optimistic that we can achieve cash positivity by 2025 as we begin to expand our operations, grow our gross margins, and introduce more products into the market.

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?

Our expectation is to begin production in the second half of this year, likely towards the end of this quarter or in the next quarter. The platform is functioning well, and we are fine-tuning it to meet regulatory requirements, including UL smoke detection and FCC communication, which need some adjustments. We are also focused on completing our six-sigma quality control manual, which is very important to us. With our first generation of smart products, known as generation two, we could have launched earlier. However, we chose to conduct additional testing to avoid any surprises at launch, and we are pleased we did because we are now ready to bring that product to market. We are taking the same responsible approach with our all-in-one smart platform, which has strong demand and has performed excellently in our tests. We are in the final fine-tuning stage and feel comfortable enough to start mass production. We believe we have a good chance to begin production in the next couple of months after we complete the quality control manuals and regulatory 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 year? Thanks.

Certainly. Ruee brings a lot to the table in various ways. They manufacture products for markets in the US, Europe, and China. With our collaboration and financial partnership, we can take advantage of their model, which includes a favorable cash conversion cycle, akin to the Michael Dell cycle. Additionally, they offer flexibility and possess valuable knowledge about large retail stores and our sales channels, which enables them to meet our needs effectively. Their expertise in lighting products for major retailers makes them a strong partner for us as we aim to grow our market presence and expand alongside them.

No, I think that pretty much covered it. I was just looking to get your latest thoughts on that, and it sounds encouraging. Maybe I will follow up with a question on the GE relationship. Can you speak to the latest with your GE arrangement, and 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 see as 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 in 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.

Well, thank you, everyone on the call. Thank you, Steve Schmidt. Thank you, Lenny Sokolow. Our team members here, thank you to Marc for 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 to our next earning call. And hopefully, we believe you'll hear from 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.