Good day and welcome to the SKYX Platforms Corp. Third Quarter 2024 Earnings Call. Today, all participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask your questions. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to Rani Kohen, SKYX Founder. Please go ahead sir.

Good afternoon. Thank you everyone for joining us for the third quarter update call. With me today we have our President, Steve Schmidt; and our Co-CEO, Lenny Sokolow that are going to join on this call. I will start by moving it to Steve Schmidt. I think we have here the cautionary statement first. And after you take a brief look here our President, Steve Schmidt will start with the call.

Okay, Rani. Rani, thank you very much. It's great to be with you here this afternoon. So let's get into it. We generated record third quarter revenues of $22.2 million compared to $21.6 million for the third quarter of 2023. Next prior to the completion of the $11 million equity raise in October 2024 as of September 30, 2024 we reported $13 million plus in cash, cash equivalents and restricted cash as compared to $15.6 million as of June 30, 2024. And in October of 2024, we secured $11 million equity preferred stock investment representing $2 per share of common stock with no warrants led by a Global Marriott hotel chain developer and owner of over 70 hotels plus significant insider investing by myself at $500,000; Co-CEO Lenny Sokolow at $250,000 and Co-CEO, John Campi at $250000. Let me take a second to just give you my perspective in terms of why I remain so excited about the future of SKY Technologies. I invested originally in this company at $12 at the original offering for SKY. And I remain today in fact quite frankly more excited about the future of this company based on everything that we've accomplished and everything we have yet to do that we have in the planning phases. And there were eight or nine reasons that I invested at that time and remain excited today. Rani Kohen, first of all, is a leader extremely bright visionary and inventor of this product. The company team, the management team and the Board all with tremendous knowledge of this industry. The business strategy with electricity being a standard in every home and building our mission was to make every home and building become safe and advanced and smart, wow. Safety was a key thing. Our products save lives and…

Thank you Steve, very much. And I just wanted to reiterate the level of excitement that we have, and the fact that not only do we see the future, we're living the future and we've invested and continue to invest in the company, because we believe in it a great deal. So just to go through a very high level quickly, just so everyone is very clear on the trend lines here, which we're excited about is our revenues again are up 3% to $22.2 million. Our gross profit is up 4% to $6.8 million. Our gross margin continues to increase by 1% to 30.9%. Our net cash used in operating activities, decreased 39% to $2.6 million. And an interesting note is that our interest-bearing debt net of any gross of any debt discount, decreased by $3.1 million during the quarter. So with that, I'd like to turn it over to Rani Kohen. Thank you.

Thank you, Steve. Thank you, Lenny. Brief overview on business and products. As Steve mentioned, we believe our products will significantly save cost, time and most important will save lives. And therefore, we strongly believe as you can see in this slide that once we have the entire assortment of products here with us and available, we will get started being recommended by insurance companies. The product that we're currently bringing in and in production all if not most if not all of them already, is as you can see from top right is, exit signs emergency lights, flush mounts, recessed lights and we'll talk about Recessed Lights in a few minutes again. Flushmounts here we're going to have chandeliers, holiday lights, kids lights, themes lights already here. We will have plug & play smart ceiling fans and plug & play ceiling fans and we'll have a variety of assortment of wall sconces. Once we have the entire range of products here, and we believe it's the next coming months and even hopefully, a lot of this by the end of this year so really soon, we strongly believe that we can be recommended by insurance companies, as a tremendous life-saving aspect as Steve mentioned, including reducing fires, reducing ladder falls, the most significant severe injury in homes and reducing electrocution and much more to come in the future generations, with the smoke detectors, seal detectors and emergency lights we already have. So, that's quite significant. As we said several times, we're conducting the razor and the blade model here, when the razor is our -- the razor is really the ceiling outlet, and the blades is everything that's plugging in and we intend to bring here. And everything that we put in ceilings and homes, offers intentchability of products…

Thank you. We will now begin question and answer...

Yes. We have Almas [ph] here. I'm going according to the list. So Almas is first from Freedom. And please Almas, you can ask the question. We're here for you.

Hi, everyone. Thank you for taking my questions, and congrats on the quarter. I have a few questions. Recently SKYX participated in the Real Deal Miami Real Estate Forum. Could you please provide an update on your collaboration with builders?

You're asking regarding the real deal with builders?

Yes.

Yes. So as we showed previously and I'll show it again here on the screen, if people still see those screens, we are now in production of all the type of fixtures most if not all the type of fixtures that builders use today. We are enhancing our market penetration with our ceiling outlet receptacle. And our plan is once we are ready, we can start delivering products after we supply the ceiling receptacles that you can see here, we have a one-pack a four-pack, an eight-pack and a 24-pack. As we -- I just said earlier, this is the razor and the blade model. We are supplying the razors and expect to supply them in the next coming months is starting actually even in this month, we're supplying already every month now. And then once we have the full assortment of buildings, I think you will have several announcements here that will cover our great progress with many builders as well as hotel owners. So we're very excited to that stage and production has started and we already have chandeliers and pendant here. We have holiday lights now and we started actually having wall integrated plug and play walls indoor for both indoor and outdoor and we expect to have the exit lights, emergency lights, flush mount and Recessed lights. It's a multibillion unit market as we mentioned coming soon and that we expect to deliver in the next coming months to many builders. So hopefully that answers your question. And the show was great for us with connections and collaboration.

Thank you. And I have the second question. Most of your suppliers are based in China. How do you assess the potential increase in import tariffs? For instance, considering President Trump's statement proposing a 60% tariff on all Chinese goods, how might such change affect your gross profit margin? Additionally, if new tariffs are imposed, do you anticipate being able to negotiate the sharing of these tariff costs with your suppliers?

So if we're -- so first of all we have factories that we're working with today and the manufacturers we're working today have other factories because they're thinking about their backups in case there's issues between US and China in general. So we're working already with companies in Taiwan and in the Philippines in addition -- in Vietnam excuse me, and Vietnam in addition to our Chinese manufacturers and several of them already have connections and factories in Vietnam and in Taiwan. So with this, I think we're well protected. I don't want to go to politics. No President coming here and many people say he's using it more for threats, but I really -- this is -- in case he doesn't, we have our backup factories and that's the most important. And then -- so that answered both questions?

Yes. Okay. Thank you. Congrats on the quarter.

And I think next is Jerry from ROTH Capital, Gerry Sweeney. Hi, Gerry, please ask your questions we're all here to answer.

Hey, Rani. Thanks, Steve. Thanks for taking my call. I had a couple of questions. But specifically, collaborations Home Depot, Wayfair, in particular Home Depot, have they given you a schedule for the rollout of the products into the stores and as well as connecting them on to the web. I know there are some products on the web but I think they're going to add more and more products to some others as well. Curious, if they've given you any type of schedule as to how that's going to roll out.

So we actually already rolled up – started rolling up to some stores I think over 100 at that point. We have already in the website some products, but this is really the good news and the bad news. The good news we started rolling in but the bad news is only 3%, but this is really the good news because we have started production and products are arriving the country now and we expect to start rolling them into online. And after you enter online, you can get more access to stores when it comes to Home Depot and with Wayfair, it's online always, something else to mention that the numbers show we own also 60 websites and e-commerce today is taking over more and more business and as compared to retail stores. So it's a growing business. And for us to be in both sides of the aisle, actually serves us very well from that perspective. So we're just in the beginning and product is arriving now on a monthly base. We're getting containers and containers and we're going to load more and more products into our 60 websites, many of them and into – expect to also load in more products to both Home Depot, Wayfair and other collaborations that we're working on.

Got it. So just to be clear as you ramp up production, you have more product more product websites, more product on the website more into the actual stores as well. Is that correct?

That's our expectation, as we grow online to also grow parallel in stores. And that's what – this is why we have backup from the biggest manufacturers to start rolling up those programs to both online and retail as we come with more product.

Got it. And I call it Gen 3, the platform with the WiFi, lighting, et cetera. Is that in production? And if not, what's the time line for that to hit production?

We're in final stages and just clearing out all the safety aspects between UL and FCC and smoke detector UL and electronics UL and electrical. So fine-tuning before we go to mass production, we expect mass production to start in the next coming months maybe as early as next month maybe a month after. We just here like we did with Gen 2 of the smart are acting responsible. We do not want to start production until we don't clear 100% of all the safety, not even 99%. And this is very important with smart electronics. As you know, electronics always have a small ratio of defect and we're trying to minimize it to the minimum of the minimum, especially that we're launching a new product. So we're in good space in good shape with this and we expect to start rolling very soon with that product.

Obviously, I mean you touched upon it in some of your remarks about the opportunity with Gen 3 and licensing it for a whole host of opportunities within the Home. At what point can you start to go down that path of even just discussions with people licensing some of the real estate that you're creating? And would that be you? Or is that more of the GE sort of collaboration?

That will be more the GE collaboration. That's their expertise. GE created so many standards in so many industries. I think we just showed probably the most famous standard they created globally was the Edison base that we're showing now again on the screen. But since then GE created an electrical and electrical plants and in aviation and medical equipment many standards. I always like to say, there's a standard that all of us on this call and I think every American is using on a daily basis. It's the GE standard that many people do not know they created, but it's called LED phosphor. Every time you open a computer or a TV or a MacBook or an iPad or any laptop, you have on the screen the technology LED phosphor and as long as you bought it from one of the 24 largest electronic companies, including Samsung or Apple or Dell you will -- and in the past seven years, you will have the product there. So GE has an expertise to create standards and they have a strong belief that we have a very strong case based on vast electronic real estate on the ceiling that the ceiling enhances performance of every product not only light fixtures and Wi-Fi, but AI and other smart chips, as well as smoke detectors seal detectors, and the technology we have with the strong patents with -- combined with the NEC and NFPA and ANSI/NEMA votes is a very compelling value proposition that many of the biggest companies in the world have their own software, have their own hardware but they want to enhance performance and they probably want to enjoy better performance on their product and our patents give us a lot of strength in the top center of the ceiling. And with the votes we have with ANSI/NEMA, NEC is a tremendous value proposition according to many including GE, including Khadija Mustafa that joined us from Microsoft. That's really the main reason she believes that this is a game-changing product. And Khadija spoke on the last call or one before and she'll probably join us on the annual call as well.

Got you. And then just one quick more follow-up question. Just the NSC mandatory opportunity. Any updates, I know that's a voting process, but just curious if there's been any updates or any move forward on that front?

We're still in the process. As we said it's a very lengthy process. I think that's the good news. The bad news is we're 13 years, but it's also the good news. But we're getting all kinds of additional documentations and all kind of other hurdles that we need to overcome and submitting more stuff and our team is continuing their efforts. And as we mentioned we also started to discuss based on some things that took place recently where we started discussions regarding insurance recommendation to our products and some data that we got during this code process as part of our efforts there are helping us on this angle. So we know, we strongly believe that will happen one day, but the timing is as we know is not a fast process, but we're working and we hope to have surprises on timing. But it's not a short process. It could take time but we're progressing and are in process as well with insurance companies and we hope that we have some data that will help significantly help us to enhance things we're doing here.

Got you. I appreciate it. I’ll jump back in line. Thank you.

Okay. Next question we have here Pat McCann, NOBLE Capital. And then we have Jack from Maxim Group. So please Patrick microphone is yours.

Hey, guys, good afternoon. Thanks for taking my question. I just wanted to touch on the insurance recommendation issue. I was wondering, if you could expand a little bit on what that would look like from the consumer's point of view. I guess, what I initially think of is when you get a home security system like ADT you typically can get a discount on your insurance premiums of your home insurance, or something along those lines. Is that what it would look like? Could you just talk a little bit more about what we should envision?

So as Steve mentioned here and we mentioned too, our product significantly, we believe reduces fires, reduces ladder falls. It's a major significant issue and hazard in homes and significantly reduces electrocution and being electrocuted on the ladder is worse than being electrocuted on floor. So, those safety aspects come with Generation 1 and 2 already has an emergency light and Generation 3, that's not in production yet would have much more. So, our discussions are based on a few phases, but the value proposition for insurance companies is definitely there. And as Steve mentioned, we believe we can save insurance companies' many billions of dollars on an annual base and it's going to come through recommendations or discounts or we didn't finalize all the stuff. We're waiting for all the variety and range of products to arrive what's the good news they started arriving last month and are arriving this month and the next coming months every month, we're going to have more and more product and we expect to have the entire range within a month or two. And I think that that's going to enhance those discussions. They really want to see that we have enough product in enough places. And that's as you can see we're working on. And once we show this product and there's accessibility and availability, we expect them to start encouraging the use here because there is a tremendous dollar saving for them.

Thanks for that. And then the other question I had is I wanted to double down on the Home Depot question. And just I guess what I'm wondering is in the first handful of months here you mentioned that you're in 100 stores now roughly. But I think you had also previously mentioned how the Home Depot would sort of look at the popularity or the success of your products on the website and allow that to sort of inform what decisions they make as far as how which products they bring into stores et cetera. I'm wondering have there been any surprises as far as like which products have been having the most success with Home Depot and what they want to bring into stores in the future? Any granularity there?

So, as we call it the razor and the blade model, we're currently mostly -- we don't have the variety of product yet in the store. So, everything you see on this slide that I'm showing again is not in stores yet or maybe 1% of what you see here, if at all, I think actually most of them not in stores at all yet. So, as we start getting all those products in stores, there's going to generate a program and there's going to be marketing around it and we're going to have a much better understanding on what products and what colors work better and that will help to determine what can happen with each product. So, this is -- we started with the razors here what we call our receptacles. But since there's not the blades did not arrive yet, we don't know which products and how are they going to perform. We have an indication for our website, so we know what to bring and what to show because that helps us a lot to understand. But we specifically now that's part of our collaborations landing products that we expect very soon that you can see on our website as well as Home Depot and Wayfair and other websites. And at that point, very soon hopefully, we'll start determining what products have potential to a major expansion.

Great. Much appreciated. I'll hand the floor over.

Okay. I believe Jack.

Hey Rani, can you hear me okay?

Yes, hi. Yes, we hear you fine.

Thanks for the update. A lot of my questions were taken. So, I do want to touch on the homebuilder channel. You've announced a Florida order to supply over 1,000 homes. Just wondering if you could provide any updated color on expectations for this channel. Are you getting more orders inbound? How do you expect those orders to ramp just in that homebuilder channel? That would be helpful.

Yes. Great question. We met with the builder recently and it looks like we will start supplying very early in the year the permits and delays and all kinds of fun stuff that builders go through. And that's part of our razor and the blade model. Sometimes, we can grow our penetration with our -- what we call razors here. But until the product hits the market takes more time. So we expect based on discussions we have to start supplying early next year. So that's what the builder really signed. And yes, we are in discussions with several major players including builders, including hotel owners and it's really waiting on all the products to arrive here. But there's a lot of interest here because again, we said earlier -- or I said it earlier, you can go to a high-rise today to install smart homes or light fixtures will take you months, sometimes it can take you six months a year. When our products once you have the receptacles installed the ceiling outlet, it can take days. So there's a significant cost saving on installation, obviously time saving. as well as we can supply replacement items that if something happens to a Recessed Light or emergency light what often happens with builders, they don't need to call an electrician. They have their maintenance guy go and plug and play. So there's many advantages and there's significant interest. We're talking to CEOs of major companies and key people and world-leading companies that we're talking to and we just are focused to deliver our products here. And once we do I think, you will have a lot to say on who and what products we're collaborating on.

Okay. Fantastic. And then just real quick, I just want to touch on there's some discussion around international manufacturing and sort of tariffs and stuff. But I just want to touch on just your -- the relationship you have specifically with Ruee. How is that going? Are they actively up and running now? And just how is that relationship panning out? That's it for me. Thanks.

Yes. Thank you for the question. Yes, Ruee actually is in production now -- and we believe even starting to ship very, very soon. We actually started getting some products here. So, we are -- is in production and that's expanding every day now and we believe there's going to be much more production coming from their end. So, everything is going according to plan. And the chart I showed you earlier, a lot of those fixtures are going to start landing very soon and some of them already landed based on our partnerships with Ruee and other relationships we have. Jack, does that answer your question or any other question?

That's it for me. I appreciate you have answered my questions.

Okay. Thank you. Thank you everyone. We very much appreciate your time here. And thank you Steve and thank you Lenny. And I see here that -- let me see. There is another question here that I can see. It's Paul Cooney from Benchmark. Please Paul, welcome you can ask. The microphone is yours.

Hey. Thanks a lot, Rani for taking my call. Just wondering, you said like you're in total production now of the Sky Plugs. Is most of the production with the smart version or with the planned version? And if it's the planned version, how far off are we for the smart version?

So we're producing now parallel both -- we have inventory and producing both the standard and the Smart. Obviously the Smart is a much more expensive item and not every Recessed Light or exit signs would like to have a smart product. So it's on the high-end products such as Hans and chandeliers that we see this interest because the Smart can cost more than a product. But what we have -- what we expect to have also and it reminds us that once the Recessed Light arrives here you can group those Recessed Lights and put many of them on one Smart board. So the smart is growing but the numbers of the standard are much higher and expect it to be higher. But the good news is, that we're putting -- as we sell product we're putting, and deliver product we're putting the razors on the ceiling and then people can upgrade down the road and especially we come with Generation 3 that offers many safety and necessities to homes from safety and from lifestyle including high-speed Internet that's going to be much faster. So you can still plug in a standard or a Smart fixture into the platform. So we're growing up with both of them. But obviously the advanced plug is the standard one has much more potential, because of Wall Sconces and Recessed Light and Exit Signs and Emergency Lights that also can be smart. And by the way there are discussions already with companies that want to have the exit signs and emergency lights become smart and this is really not a big change for us. So there are companies that that's a very important thing for us. But still we anticipate a majority at least two-thirds to be the advanced standard plug and play and probably third to be smart down the road. But those are rough estimates as we start production with Generation 3. Generation 3 will fine-tune and understand the numbers better.

Okay. Thank you.

Okay. We see that there's no more questions. So thank you again everyone. It was a great presenting. And hopefully our next call will continue our growth here and some more things to announce and cover. Thank you very much everyone, Steve, Lenny. And thank you.

The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.