SQL Technologies Corp
NASDAQ:SKYX
Earnings Call Analysis
Q2-2023 Analysis
SQL Technologies Corp
In the narrative of SKYX Platforms Corp.'s second quarter for 2023, a tale of expansion and strategic deployment unfolds. The company, which has designed smart and standard plug & play products poised to redefine safety standards in residential and commercial structures, generated $15 million in revenue during this partial quarter of sales. The report showcases a company on the move, strategically reducing its net cash used in operating activities by $2.5 million, while bolstering its cash position significantly from $16.8 million at the end of 2022 to $23.7 million by June 30, 2023.
SKYX Platforms Corp.'s growth story is also marked by key acquisitions and influential leadership additions. The company successfully integrated Belami E-commerce, a conglomerate with a network of 64 websites specializing in lighting and home decor, enhancing its cash flow, market reach, and educational leverage. Moreover, the leadership team has been reinforced with strategic advisors from esteemed backgrounds such as Khadija Mustafa from Microsoft and Eric Jacobson from the American Lighting Association, positioning the firm for innovation and industry standardization.
The company stands at the precipice of a monumental achievement; attaining a building safety standardization requirement with the National Electrical Code (NEC) for its ceiling outlet receptacle is in the cards. This milestone, supported by over a decade of work culminating in product inclusion in 10 segments of the NEC Code Book, can be a game-changer in elevating the safety quotient of homes and buildings.
Fiscally, SKYX Platforms Corp. exhibited a robust gross profit of $4.7 million woven within its revenue tapestry for Q2 2023. Despite its operating expenses totaling $17 million—with a significant portion being non-cash share-based payments leading to a quarterly net loss of $12.3 million—the company maintains a strong market position with a clear plan to manage its liabilities, including future payments for the Belami transaction.
Fueling SKYX Platforms Corp.'s ascent is its asset of proprietary technology, underpinned by patents granting exclusivity in the lighting industry. This gives the company leverage in its quest to disrupt and dominate several categories with innovative, patented solutions—a promise that both excites and solidifies investor confidence.
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Good day, and welcome to the SKYX Platforms Corp. Investor Update Call. Today's webinar is being recorded.
Before we begin the formal presentation, I would 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 maybe subject to 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'd like to turn the webinar over to Rani Kohen, Executive Chairman of SKYX Platforms Corp. Sir, please go ahead.
Hi, everyone. Good morning. Thank you for joining us, and I hope everyone can see our screen. Luke, do we see our screen? I guess that's a yes.
We just see your face right now.
Okay. So no screen sharing. So we will share screen. Just one second, our screen here. We would like to share our screen. Make sure we have. Here we go. Okay. Now, I believe we can see our screen. Thank you again, everyone. Thank you for joining us this morning. We have our second quarter investor call and update.
With me here, I have our CEO, John Campi; and then we have Steve Schmidt, our President, former President of Office Depot and CEO of Nielsen Corporation; and we have our CFO, Marc Boisseau. Thank you, again.
What we will do today is we will go over some, management commentary about financials second quarter, we will demonstrate a video to the ones that don't know our three generation products or Generation 1, 2 and Smart. And we will also have a live demo to some of the 64 websites that we acquired at Belami. And we will have a live demo to show you what we're doing there and to demonstrate.
With that being said, we would like to say that our mission is to make homes and buildings become safe and smart as the new standards. Our products significantly save lives, save costs, save time and simplify, one of those reasons by itself is a major reason can be for huge success. We have all of them in a significant way. Therefore, we strongly believe that we can revolutionize at least one or maybe two industries, with our patented plug & play technology.
So with that being said, we will move the screen now and share it with our CEO, John Campi, that will, read his commentary.
Good morning, everyone. Second quarter 2023 and subsequent operational highlights.
We generated $15 million in revenue in the second quarter of 2023, reflecting a partial quarter of sales, including commencement of sales of its -- of our smart and standard plug & play products. Sequentially, reduced net cash used in operating activities by $2.5 million in the quarter. Cash and cash equivalents, restricted cash and investments available for sale totaled $23.7 million, as of June 30, 2023, as compared to $16.8 million as of December 31, 2022. We've appointed several strategic advisors including Khadija Mustafa, former Microsoft AI and Global Business Leader as a senior tech AI and global business advisor; Eric Jacobson, former President and CEO of the American Lighting Association, the ALA, as a Senior Product Standardization Advisor; Al Weiss, former President of Worldwide Operations at Walt Disney Parks, Resorts, and Cruises, as a Senior Business Development Advisor.
Joined the broad-market Russell 2000 and Russell 3000 indices at the conclusion of the 2023, resulting Index's annual reconstitution. Successfully acquired Belami E-commerce, a profitable conglomerate with 64 websites for lighting and home décor. The acquisition was primarily funded using the Company's stock, while the cash portion was funded by two major Sky investors. The E-commerce acquisition is expected to enhance the Company's cash flows, speed up time to market for Sky’s ceiling safe plug & play smart and standard products, as well as expand distribution across professional and retail segments, while concurrently serving as a marketing and educational platform.
The Company is eligible to apply for a building safety standardization requirement with the National Electrical Code, NEC, for its ceiling out outlet receptacle and is expected to file its application within the next few weeks.
Management believes that after over 12 years of its standardization process including its product specification approval voting for by ANSI and NEMA, American National Standardization Institute and the National Electrical Manufacturing Association, it has met the necessary safety conditions for becoming a ceiling safety standardization requirement for homes and buildings. In the past 12 years the Company's product was voted into 10 segments in the NEC Code Book. Voting decisions are at the discretion of NEC voting members.
Our code leaders are Mark Earley, former head of the National Electrical Code, and Eric Jacobson, former President and CEO of The American Lighting Association.
Thank you, John. We will move now to our CFO, Marc Boisseau, former Chief Accounting Officer of Citrix. Please, Marc?
Good morning. Thank you, Rani. Good morning, everybody.
So, basically, for Q2, as John mentioned earlier, the revenues amounted to $15 million for Q2 2023. The gross profit amounted to $4.7 million. So, both of those figures include the operations of Belami, which was acquired in late April 2023.
The cash, restricted cash amounted to $23.7 million as of June 30, 2023. And if we add the marketable securities, that figure, compared to $16.8 million as of December 31, 2022. Our cash used in operating activities for the quarter amounted to $2.5 million compared to $2.8 million for the same prior year comparable quarter.
A quick note to mention that our current liabilities include $5.6 million of fair value for the shares of our common stock, which is payable to the sellers of Belami in April of 2024.
And a little breakdown of the operating expenses for the quarter. So, the operating expenses amounted to $17 million. There's $8.2 million, which were non-cash share-based payments. And depreciation and amortization, there's -- of that number, there's $2.2 million in share-based payment that were granted to all the newly hired Belami employees. And it includes about $5 million for Belami SG&A and about $3.7 million for SKYX SG&A. And for the net loss in the second quarter of 2023, that includes -- so the net loss was $12.3 million. That includes $8.7 million in non-cash share-based payment, depreciation and amortization, and another $3.6 million in cash-based expenses. So the net loss per share was $0.14 per share last quarter and the comparable prior year quarter was $0.06 a share. Rani?
Thank you, Marc. And now, we are going to move to Steve Schmidt here, our President. Please, Steve.
Hey Rani, thank you. And good morning to everyone, and it's my pleasure to be on the call with you this morning.
Before I talk about the management commentary, I just want to share a few thoughts with you. I joined this company several years ago for really five or six reasons. And I think what's really exciting to me is the five or six reasons that I joined this company have come to fruition, or will be coming to fruition very shortly.
It starts every company with a leadership team. And Rani Kohen with his leadership role of both being the inventor but also the strategic aspect that he brings to the table and his ability to get things done, really makes a significant difference.
The second thing is the leadership team. We have one of the smartest leadership teams I've been around. We've got expertise across the entire organization. And what speaks volumes around their commitment to this company is the fact that the majority of them, or a lot of them are taking stock and have purchased individually into the Company, which helps us reduce cash flow, but also shows their commitment to the Company.
Three is our global partnership and global opportunities. This is not just a U.S. opportunity. This is a global opportunity, when we get the standardization of our products and services.
Fourth, we really believe we have the ability to revolutionize several categories in the lighting industry. And when you have a company like this, what you want is proprietary products and services and technology. And with our patents, we have exclusivity. We have patents. We have the ability to protect the intellectual property of this company which we believe is absolutely critical.
And then, finally, General Electric. We have a global partnership with one of the leading companies in the world, and they believe in what we are doing and believe in the products and services that we have to offer.
So, it's an exciting time for this company. It's an exciting time, as we roll out the majority of our products. And what you are seeing today is really the fruit of that labor. So, it's really exciting.
So from a management perspective, the second quarter of 2023 was highlighted by our first significant revenue that included sales and rollout of our ceiling smart and standard plug & play products that are now on 16 leading U.S. and Canadian websites. Despite being a partial quarter, it showed that we believe in a promising cadence of sales and robust gross margin profile, notably reducing the cash burn of SKYX on a sequential basis. In addition to the acceleration of marketing, distribution channels, and sales to both professional and retail segments, the websites are expected to provide additional cash flow to the Company, which when combined with our existing cash, should be sufficient for at least 18 months of operation.
We are encouraged by our commercial journey's momentum, which I have already spoken a little bit about, paving the way for our standardization efforts. The 16 leading websites that include the Company's ceiling smart and standard plug & play products are 1stoplighting.com, Lightingdesignexperts.com, Canadalightingexperts.com, Americanlightingstore.com, Homeclick.com, and Lunawarehouse.com among others. The websites include banners, videos and educational materials regarding the simplicity, cost savings, time savings and lifesaving aspects of the Company's patented technologies.
One other key point that I want to cover is this chart right here, and Rani touched on this briefly. But when you look at what really makes this company special is that our products significantly have four huge benefits: saves lives; saves cost; saves time; and simplicity. And there are many companies that have been tremendously successful if they simply only have one of these around saving lives or cost savings and saving time. But we have products and services that do all four. And when you talk about the fact, the safety factor that's around our products and services, every media outlet, every association, every government agency, everyone that you can think about has a fiduciary obligation to report on that, when things are involving lifesaving opportunities. And so combining the fact that we can offer all four of these things in our products and services really puts us in what I believe is a very unique position for future success of this company.
So with that, let me turn the meeting back to Rani, and we’ll continue with the call.
Thank you. We are going to show the video to emphasize, those key points that Steve just mentioned. This is a 4.5-minute video. And afterwards, we’re going to take you live and explain to you exactly what those websites do and show and why that is key and significant for us.
[Audio/Video Presentation]
Thank you. As we mentioned, we have won five CES awards. We have UL, FCC, NEC, ANSI/NEMA, and AIA, American Institute of Architects Vote, and endorsements by other many organizations. What we believe strongly on the global market, there's billions of installations; in the U.S. there are hundreds of millions. We strongly believe that we can take a nice piece and a percentage of this market, if it's --down the years, 5%, 10%, 20% or 30%. If it's mandatory, obviously it can be much bigger, but we also will be satisfied with 1% of the market. Should be a huge number based on the number of installations in the U.S., and we'll talk about hundreds of millions. The reason we applied for the mandatory -- we're applying for that application for standardization as this is the situation today.
What you see on the left is in every ceiling in the U.S. and what we propose is the end of wires, the end of risk. You do not need to risk the life every time you go install a chandelier. This happened before. If you see the Edison bulb, Edison bulb had wires and it was installed to the ceiling for many, many years with wires. And for safety reasons, Edison invented the Edison base would became a world standard. And we strongly believe we have an opportunity to lead the standard here in the U.S. and possibly go around globally with this.
We already have those major achievements in the NEC as we mentioned, and it's -- one of them is the most significant addition to the NEC in the past 40 years. We also changed the definition of the receptacle after 120 years. This is our goal for every house, and to have a ceiling receptacle that can enable us installing many fixtures. We have those specific approvals already voted by 10 segments, voted by ANSI/NEMA, voted by American Institute of Architects for the continuing education for, and voted as a generic name WSCR. As you can see here, the GFCI in your wall, in your bathroom has a generic name. It's Ground-Fault Circuit Interrupter and shortcut is GFCI. For us, WSCR, Weight-Supporting Ceiling Receptacle was already voted.
This is what we achieved in the past 12 years, and this is what we achieved in the past 12 months. It's the ANSI/NEMA approval. It's the American Institute of Architects approval, the five awards, acquiring the company and having key members joining us.
We also presented this year in several shows and the CES, as we mentioned, Consumer Electronics Show. We won five awards. But actually the best show I think we presented this year was the Builder’s Show and we got tremendous, appreciation for our product and demand. And what we are doing now is loading our products to our websites. And what we also presented in the AIA, American Institute of Architects annual conference that was very successful. Again, many of architects and builders that approach us are waiting on our products, and that's what we are doing now. We are moving to 64 websites with our products, and we are going to go live to a demonstration.
Every product you will see in our websites will be -- can be purchased in three ways. Okay? And we're starting now to implement those integration. First way is the traditional way of wires. The second way is the plug & play, and the third way is a smart plug & play. Obviously, each of those options is revenue for the Company but obviously the two better options, as even more revenue for the Company. And we are now converting more and more fixtures to be integrated with those better two options we have here. So with that being said, we will go now and show you a live demo, of our websites.
This is one of our leading websites and one of the U.S. leading websites, 1stoplighting.com. It's a website that is there for over 16 years and is one of the top U.S. websites. If you can see here on the right, there is a banner. When you click on the banner, if the internet works, obviously. Yes. It does. Okay. You go to our page here. You can see the lady plugging the fixture on the right. You have a demonstration video of a woman installing fixtures. And as you saw here, and if you scroll down, you see -- by the way, our logo here on the left SKYX Platforms, our Sky Plug logo, the plug here. And if you scroll down, you start seeing fixtures integrated with our products. So here, for example, we are clicking on a fixture now, and you can see here a fixture. As you go to the homepage of the fixture, you will see additional information, additional bannering, additional videos, and you have three options as I showed earlier to purchase.
So, the hardwire installation here. If you hover on it, you can see, it explains you what hardwire means and the risk involved. The second one is the plug & play, and the third one is the smart one. Okay? Then you can purchase each of those options and you click on each one you want, and then you go out. If you click here on chandeliers, you will see again a Sky, Sky Plug banner here. Okay? And think about those banners, if you would go to any website in the U.S. and want to take over those banners, how many millions of dollars you will have to take -- to pay to take over banners on websites. We are going to have banners like this and tens of websites in the next coming months. We will announce them. We are implementing in more websites, not only our websites, by the way. We are trying to collaborate with other websites and in discussions. And when something materials, we will report on this as well. But this is changing an industry from hardwire, risking to plug & play.
When you plug here again, you will go again to our page and having this. So, this is 1stoplighting, one of the websites -- one of the U.S. leading websites. And we will take you live now to another website, one of the Canadian leading websites, Canadalightingexperts. We click here. We're in a new website now, the same here. As you can see, same banner here. Okay. Same information here. If you can see on the right, the plug & play lady, our logo on the left, our Sky Plug logo. And if you scroll down, you'll see fixtures.
Now, some different fixtures based on the markets. We have our data. We have tremendous data that we know what fixtures go in what market, what colors, what designs, and that's how we are staging. And that's how we're selecting what fixtures go where. So, as you can see here, again, the product, the homepage, and you can have the three options to buy, as you can see down on the right here, hardwire, plug & play, okay, or smart Plug & play. So we're very excited about this. Again, we click here, chandeliers, we'll see again big banners. So, we'll have a lot of education on every page of those products. And as we go, we'll educate more and more. And that's going to be in 64 websites. As John Campi, our CEO mentioned, we are currently in 16 websites and very excited about this. So, that's a small briefing on this segment.
And last and not least, before we go to the Q&A, we will have here one more slide to show you. Okay. That's not what we wanted to show. Okay. I believe that's what we wanted to show. Okay, here we go.
So again, here, as we saw the three options, the products we're selling them are light kits that have smart light kits and won the CES award. So if you see here a fixture, and then you see the base here on the fixture, we can move it aside or retrofit it on a brand new base. We'll have the standard plugs and the smart plugs on every fixtures. As we showed you, we're going to have ceiling fans, we're going to have all kinds of ceiling fans with heaters, other products. And we're going to emphasize on the safety aspects of our products.
In Generation 2, as we showed you, it's a concept of an iPhone or a smartphone, the all-in-one concept. You have a smart platform, a personal platform and whatnot -- why not to have a smart platform in every room? You take all the smart home products and put them on one platform to create this. All the reds like smoke -- smart smoke detectors, smart CO detectors that you saw in the video. It’s very important and significantly lifesaving, time saving, cost saving. We’ll demonstrate this very quickly.
Now, as you see on the left, if you need to make a one room become smart, it would take you probably a couple days just to wire that room. Okay? And the price you'll pay the electrician without the price you already paid for the product will probably cost you twice or 3 times more than paying our product. So not only you save 99% of time on installation, you probably save two thirds of the cost of the entire fixture. And we believe, strongly believe that our fixture installed in your ceiling will cost probably -- and paying for the fixture will cost two-thirds less than what you pay today to just install a smart home without even paying for the product. Why is this significant? Because a one bedroom can become smart within minutes rather than days. A large home can become smart within hours rather than weeks. And think about a 500-room condo or 500-room hotels would take you today to make it smart probably a year with millions of dollars. Here, potentially, we can deliver a smart home building or smart hotel of 500 rooms, let's say in a day or two. And if potentially the price is going to be around $800 a platform, a price of an iPhone, let's say. So you talk about hundreds of thousands of dollars in a day or two rather than millions in a year. So, we're very excited about this. The use cases for those things are hotel rooms, cruise ships, hospital, elder living, home care, offices, retail et cetera. So, we're extremely excited with this.
We can now close the screen. I want to thank our team here. I also want to thank lead people that join us, one of our first investors and very involved in the Company's Bob Nardelli, former CEO of Home Depot and Chrysler helps us a lot. Al Weiss, former President of Disney Parks, Resorts and Cruises and Product, that also joined us recently. And then, Khadija Mustafa, head of Global AI for Microsoft and in the past Global Sales is quite significant for us as well. And then Eric Jacobson that retired after 30 years as a president of American Lighting Association and joined us and working together with Mark Earley, the Former Head of the National Electrical Code and our applications for standardization, having a lighting leader industry that made many regulations for the lighting industry together with Mark Earley, that created many regulations within electrical industry together, leading our application in addition to our COO, Patty Barron, Amy Cronin, and Chuck Melow [ph] and many other people involved in this is significant for us and we're quite excited.
So with that being said, we will take some questions here.
[Operator Instructions]
So, I will actually read the some questions we have here. Will we have retrofit utilized for existing ceiling fans?
Yes, we're working on this. And after we release the retrofits, smart retrofits for light fixtures and smart retrofits -- standard retrofit for light fixtures, we will have standard plug & play for ceiling fans and smart plug & play for ceiling fans as well. So, that's the answer.
Someone is asking if -- Chris Abbot [ph] is asking if we intend to do quarterly calls?
Yes, we do intend to do quarterly calls.
Someone is asking if all the products in the sites are already related with plug & play products?
No, we're implementing now. We wish. We are on hundreds of items now. We're moving to thousands of items very soon, and tens of thousands is the next step, and hopefully one day soon to relatively everything, right, to hundreds of thousands and many fixtures.
And as we're integrating to more and more fixtures, we're escalating, we're very happy for the integration of fixtures and additional websites that also going to enhance sales. And the more fixtures we integrate our smart products to or our standard plugs to, are going to increase as we go and increase our sales. So, we're very happy. We started in the second quarter in June and grew it up in July to more and more fixtures. And now in August, we expect much more fixtures. And as we go, we expect to have much more fixtures with those options and continue increasing the adoption. And what's the most important if you think about it is to get the receptacles to homes. Because once you have a receptacle in your home, it's reoccurring revenues at a future plug & play, standard or smart or monitoring, data aggregation possibly for ourselves to learn a lot, including the data we can aggregate on consumers for the sites, monitoring and many options to come. So, we are very excited about this.
So I think I answered most of the questions, if not all. Hold on. Just maybe there is two more. Let’s see. Okay. I need to scroll down to see. Okay. Rodney Ronan is asking what are the margins?
We did not announce the margins. But our margins, our tech margins, we have licensing opportunities that we are exploring, and that's obviously -- if that -- something like this happens, gross margins are doing -- are higher in licensing, as everyone know. And so, our gross margins are healthy gross margins, and talking about selling directly on our websites, that even makes that position better.
Michael Legg [ph] is asking, so did we focus -- we did $15 million in sales, and what about the sales and licensing focus?
So, we are absolutely focused on licensing. And I can say -- I can tell you that Eric Jacobson that joined us is also focusing on standardization as we said, but also focusing on licensing with other companies. So I recommend staying tuned in the next coming months, we hope we can tell you more than I'm sharing now.
There is a question if we anticipate to expanding beyond our websites?
Absolutely, yes. We are in discussions with other websites. We are in discussions with retail, big box retail. And with step-by-step what we want to do is first integrate our 64 websites with all our products, but we are parallel to this. And stay tuned. You will hear that we have significant. And I also like to mention that the former Head of Sales for Kichler is one of the largest lighting companies in the world, Dave Pamer, is a significant addition to our company. He joined us full time. And he is running those sales and discussions as we talk with major builders, distributors, retailers and other as we talk. So, quite significant, Dave was also CEO of ELK Lighting, a large lighting company, and he is a significant player in the lighting industry.
Our cash position, again, so we would like to say that our cash position is quite strong. As we showed between cash and cash equivalents and other segments, we have $23.7 million. And when it relates to our current liabilities -- part of our current liabilities, as Marc, our CFO mentioned earlier are related to stock payments.
We're looking at other questions here. Some of them are repeating, so. Question here about inventory. So we're actually very happy. Our inventory is a very small inventory. And the model we have with our E-commerce is really not to hold a lot of inventory. We work with partners and they hold the inventory and we actually get paid cash, and we pay them in a dated -- weeks or months after. So, we're trying not to hold inventory, and it's a very safe model that we have here.
And the question is -- another question I see a couple of times here, are we going to provide projections? We're not providing projections. We're growing our business every day now with more integration of products. So, we're not providing yet those numbers, but we're very happy and the product integration into hundreds of items, and it's very soon to thousands and afterwards to tens of thousands. And we are very happy with the rhythm that we're doing it now.
I think all the questions are repeating now. So, I feel we answered everything. Someone is asking where can they get a list of websites? So currently, looking our press releases. And, Steve Schmidt, our President mentioned several websites already. And to that, if you can look at the press release and we will keep on announcing more and more websites as we continue to integrate products into those websites.
Someone is asking, how fast can we complete 64 websites? We believe in the next coming months we'll have a significant part of them. I don't know if all but a significant portion will be done.
Regarding the mandate application, there is questions. As John Campi, our CEO mentioned, we intend to file in the next few weeks. And after 12 years, we feel -- we strongly feel we're in a good position with this. It's not a fast machine, but I think, we did significant process in 12 years and also significant process in the last 12 months while getting ANSI/NEMA and the architects that had us joined to their continuing education program. So, we've made significant steps. And we hope, it's going to continue progressing like it did the past several months.
Okay. Gentlemen, thank you very much. Steve, you can say thank you for everyone here.
Yes. No, just we want to thank all of you for your time here this afternoon -- this morning. Excuse me. It's been our pleasure to take you through the quarterly results, and we look forward to doing this each quarter with you. So, thanks again for your time.
And John Campi, former Senior Executive in Home Depot and Chrysler, our CEO, any…?
Well, I'd also like to thank you for your participation today, and we do look forward to these quarterly reports because we can share how the progress is accelerating for us. So, thank you again, and have a great day.
With this, we conclude. Thank you very much for your questions. And we’ll look forward for our next calls. And stay tuned. When we have something to say, we will announce it. Thank you very much.
Thank you. That does conclude today's webcast. You now disconnect and enjoy the rest of your day. We do thank you for your participation today.