Good day, and welcome to SKYX Platform's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Before we begin, I would like to remind everyone that statements made during this conference call that are not historical facts are forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward-looking statements may include, but are not limited to, statements regarding our anticipated financial performance, growth strategy, market opportunities, product development, commercialization efforts, regulatory developments and expected future events. Additional risks and uncertainties are described in the company's filings with the U.S. Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. We undertake no obligation to update any forward-looking statements, except as required by applicable law. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Rani Kohen, Founder and Executive Chairman. Please go ahead.

Good afternoon. Thank you for joining us, SKYX Platforms. We will give you today an overview starting with our President, Steve Schmidt, and then moving forward to our CEO, Lenny Sokolow. Steve, please go ahead. Thank you.

Great. Rani, thank you very much, and it's great to be with you here this afternoon. Let me start with, as we've mentioned and most industry experts know, the lighting and home decor markets, along with the new homebuilding have been in decline for the past few years. But despite this, SKY through our technology and versatility of products continues to grow. And so let's talk about the growth that we continue to demonstrate. First, on the financial side. First, we are reporting another record quarter revenue with $25 million in Q4, demonstrating 8 consecutive quarters of year-over-year growth with annual record revenue of $92 million in 2025 compared to $86 million in 2024 as we continue to grow our market penetration. Gross profit increased to $28 million in 2025 compared to $25 million in 2024, representing a $3 million or 13% increase. Operating cash used in 2025 amounted to $13 million compared to $18 million in 2024, representing a $5 million or 27% reduction in cash used in operating activities. And as we've announced prior, we have raised $29 million in Q1 2026 through investments from fundamental institutions. So now on the business front, a lot of initiatives and a lot of key things to report. We announced collaboration with NVIDIA AI Ecosystems Connect program, which will grow our collaboration with NVIDIA into Future Smart Home Projects. We announced the launch of our advanced SKYFAN and Turbo Heater on our e-commerce platform with 60 websites, 1stoplighting.com and U.S. Leading Retailers, including Home Depot, Target, Lowes and Walmart. Based on the growing sales of our Patented Turbo Heater Fan, SKYX is expanding the category of the all-season ceiling fan heat in winter and cool in summer category, which will result in additional products in new design and larger sizes. Next,…

Great. Thank you very much, Steve. Appreciate it. So we're very encouraged. As Steve mentioned, we've had growth in revenues, 8 consecutive quarters year-over-year that to reflect also over the last 3 years, we've had 3 years of consecutive growth in annual revenues. And again, to reiterate, all while the building, lighting and home decor markets have been in a significant slowdown in these past years. Our revenues increased $92 million from $87 million. Our gross profit increased $28 million from $25 million, and our gross margin increased 2% to 30% from 28%. We're very focused and highly focused on all of these financial metrics and expect further improvements in 2026 and beyond. We're further encouraged by the indications and customer feedback on our Turbo Heater Fan and the fact that we are creating a new category of all-season fans. This is a new category that's important to understand, and this category is a precursor to the additional category of our all-in-one smart home platform and hub, which we expect to launch beginning in Q3 2026. All in all, this will be our third new category based on our plug-and-play razor and blade model. So the concept of our plug-and-play and a razor and blade model is now proving that the categories that we're creating are very impactful, have a tremendous amount of potential and a lot of unlimited opportunities. And this lighting all-season ceiling fans and our all-in-one platform and hub are reflective of this. So all of this is all quite promising as we are well funded to accelerate our growth. So with that, if I could turn it back to Rani.

Yes. Thank you, Lenny. As Steve and Lenny mentioned, we are in a slow new build lighting and home decor market. We're expanding based on our unique technologies and also versatility of products in our e-commerce platform. And we are -- I think in the past 10 months, we showed significant growth in the Builder segment. And we expect and hope to keep on growing the Builder segment, and we hope we can share more things on this in the near future. And very important also, we strongly believe that we have significant -- we add significant value for hotel renovations. We believe that with our technology, you can renovate a hotel when it comes to the Electrical Lighting segment in a few days rather than a few months. We've proven that case in the Marriott -- during the Marriott renovation demo. And we had an investment of $16.5 million led by the Shaner Group that own 80 hotels with over 60 Marriotts. And our goal is to become -- to grow in this Hotel segment. And as Steve mentioned, we're progressing on this segment, and we expect -- and we hope we can share some more on this in the near future or very near future. And we're also excited about starting to work with NVIDIA. We hope we can elaborate more on this, but we're getting great reaction with our all-in-one smart platform, smart home platform and hub. It solves many problems in one solution. And as Lenny mentioned, we hope to start production and launch it around mid to Q3 of this year. So I think we're making some progress on all fronts. Again, it's a razor in the blade model. Sometimes we'll supply the razors before the blades. Obviously, the blades provide more revenue than the…

And we have Jacob Stephan here with us from Lake Street. So please, Jacobs, go ahead.

Just first, in the press release, you guys talked about a significant prominent leader in safety code standardization time line. I'm wondering if you could kind of touch on that a little bit. What kind of specific milestones kind of remain to the overall kind of standardization?

Yes. We're happy to do so. Yes, as we all know, we have leading our code division is Mark Earley, who is the former Head of the National Electrical Code and Chief Engineer of the National Fire Protective Association that really wrote the code books for 33 years in America with safety for electricity. and joined him a couple of years ago is Eric Jacobson that was the former President and CEO of American Lighting Association. And those are great leaders to have with our entire team here. And we're progressing really nice with the 10 votes we already got in the National Electrical Code and the historical vote by ANSI and NEMA has specified that our receptacle specifications are the standard. And as we said, we're one step away from the mandatory. So in addition to this, we had recently a very senior member joining our team that's trying to help us move it through additional channels. So there are several safety organizations in the U.S. that were established in the past 50 to 100 years with a very clear criteria of saving lives, mitigating injuries and property damages. And we believe that there are -- some of them are independent and nonprofit, but some of them are actually part of the government and getting budgets of billions of dollars to literally find technologies like ours with the life safety aspects and bring them to fruition to save lives. And remember, again, to remind everyone, there's 500 -- approximately 500 million installations annually in the U.S. when people really risk their life to go on ladders, touch electrical wires and has what happened, including ladder falls. And we also got some indications that ladder falls tend to happen more often when you have big obstacles in your hands or you doing unstable movements. So we're encouraged about this opportunity. And therefore, we have engaged a very senior member that can help us with -- hopefully, with some government safety organizations. And to remind everyone, creating safety is key. But in our case, that's also going to enhance and help growth of products, everything can be made here in the U.S. and our technology can be fully automated and here in the U.S. So there's no labor factor. And therefore, it's not only saving lives, it's enhancing an economy, creating many jobs, and we have some people that strongly believe that we can expedite this through other agencies. So Jacobs, I gave you a long answer here, but I know you like detailed information. So I hope that covers.

Yes. No, I appreciate it. Very helpful. So I guess when you kind of look at the path to cash flow positive that you guys are talking to, I think looking at the cash OpEx kind of line, it looks like $13 million of kind of OpEx on a quarterly basis, assuming kind of 30% gross margins. Is a good quarterly kind of revenue number that gets you to the cash flow breakeven? Is that like $35 million, if I'm backing into the numbers correctly?

I want to be careful with the numbers and not to do a mistake here, but we have -- we're launching a few products, including the Turbo Heater Fans and others and some big box orders, we already started working with Home Depot and Target and Lowes and Walmart, and we expect to go to other channels here. So if we land one product, okay, one SKU out of those many SKUs we're coming up to -- coming up within one of the big box retail, that can be a game changer towards our -- and expedite very fast our path to cash flow positive. Meanwhile, as we're launching the new AI-driven software and our e-commerce platform, it also -- we mentioned it helps us to increase conversion rates. And we can say that we already converted, I would say, 15% of our sites towards that new software. And we do see the results there an increase of not only conversion, in some cases, increases of gross margin. So we have several ways we are looking into this and we expect to launch additional projects -- products this year that will enhance. So I'm giving you a big picture. I want to be careful what number we need to provide quarterly. But we actually -- I think it will be lower than $35 million, but I just want to quite lower than $35 million a quarter because we're actually blending in more and more products that have higher gross margins. And we're doing it through joint ventures that we announced last year globally that provide us much higher gross margins. So that's why you saw a jump Lenny mentioned between -- from 28% gross margin in 2024 to 30%. And we hope to, as Lenny mentioned, to continue, and we're very focused on continue that path. And we hope to -- if one of the products that we are trying to launch, we hope that in the right order, it can create a spike that's going to turn our burn to a cash flow positive.

Okay. Very helpful. Just one last one kind of quickly here. But the overall kind of hotel channel, I know that's kind of an exciting opportunity for you guys. But I guess, from an actual improvement standpoint, how interest rate sensitive is that market?

Repeat, how what?

Sorry, how interest rate sensitive is that market? I've got to imagine the builds are financed and just any kind of color you have there?

You're talking about the high interest rate effect here?

Yes, yes.

I'm sure our product -- the time saving aspect, if you're talking about the Hotel segment, right? That's where -- I think the time-saving aspect creates a major labor cost saving aspect. And we're having great reaction from that segment. And as Steve and Lenny mentioned, we're progressing there. And they didn't tell us specifically because of the interest rate, but definitely, the time saving will provide significant cost saving and cutting costs on labor that's quite expensive in hotels as you pay by an hour. So I'm sure it doesn't hurt us, but I didn't hear anyone specific mentioning that and related to our of products.

I appreciate it guys. Congrats on a good year here.

Thank you and then we have here Barry Sine from Litchfield.Barry?

A couple of questions, if you don't mind. First, if we could give us a rough breakdown. How much of the revenue in 2025 came from smart plug-related products? And how much from traditional lighting fixtures from all the websites you have?

So obviously, over 90% of our business is still the legacy business but we're growing month-to-month, day-to-day actually with our plug-and-play products. So we didn't publish those numbers, but it's a hockey stick chart for sure on the growth. And as we said, we hope to get into up to or maybe over, hopefully, 100,000 of our products into homes by the end of this year. So we hope to keep on growing the percentage, and that's the path. It shows -- the path is great. But obviously, as known, the legacy business is still the majority.

And then you've announced a number of major construction projects, either in new housing or hotels. And I'm having trouble keeping track of -- there are so many of them. If you could give us a recap, how many major projects are you going into now? How many units would that be? And where are we in terms of construction? Which ones are actually ready to start taking Smart plug products?

So we have -- I think we announced around 12 project in the past 10 months. And obviously, the largest one is the $4 billion -- when we started with $3 billion now, it grew up to a $4 billion smart city project in Miami. They're already starting site work there. And that's probably towards the end of the year, we hope we can start supplying some of it. And then there are other projects that we're working around South Florida. There's the Saudi project that's the joint venture we have with the U.S. group that's involved with the Saudi venture that can also be a significant number of units for us. And that we hope will start also towards the end of this year in some capacity that can include hotels, buildings, homes and much more. And then we also announced a few projects in Texas and Austin. And actually, the Austin, Texas, we hope to start supplying very soon. And afterwards, the San Antonio, Texas is another project we hope to supply in the second half of this year or maybe even second quarter, it depends. In the building arena, you have delays at times. We also announced New York project recently that actually we believe that that's going to be also supplied very soon. And in general, we anticipate around 1 million products overall on those projects during the course of those projects we announced. That's our estimate. Things like this can change, but that's a rough estimate based on those projects.

That's fantastic. So it sounds like given the visibility on all of those projects, you said a minute ago that smart plugs are about 10% of your revenue. It sounds like that's going to increase very dramatically this year and then the implications for margins are quite positive. So the financial outlook for 2026 to me looks very different than 2025. Is that a fair characterization?

That's definitely our goal. And I think we're still, as I said, 90-plus of the legacy business. But I think to get to 10% of revenue is very feasible and I think even more depends -- the path we're growing now probably can be more than that. But yes, your assumption is correct with the fine-tuning I added.

Okay. And my last question, in the press release, on the second page is a bullet point on the bottom about insurance companies. And you have a number of ways to drive mandatory usage of your products and one would be through insurance companies mandating the usage. In the release, it said that you would expect this to happen once you complete an entire range in variations of the advanced plug-and-play products. What is your time line to complete the entire range of Smart plug products?

We're close. I think we're 80% and I think there's already discussions on this segment. And I think the all-in-one smart hub platform with all the smoke detectors, seal detectors that are all in one and emergency lights and all the 911 calling aspects and everything, there's some quite significant excitement about this. And maybe we can start even working with insurance companies before the platform comes out there, but it's definitely a play that I think will be significant. And right, an insurance company can come and spec you on one day and it becomes faster than mandatory. So that's definitely something we're looking at and working on this angle. And we hope to be more open about what exactly is going on in the very near future.

Those are my questions. Really making great progress.

Patrick McCann. Pat, how are you?

I was curious about the -- with the Smart Heater Fan, from your press releases and so forth, I believe it really -- it didn't hit for the majority of Q4, so it wasn't able to have the full effect on your results. But I know that was expected to be a fairly significant catalyst when it came to breaking even on operating cash flow. So I was curious what -- how that's going so far in Q1? How much of that -- how much will that affect your path to cash flow positive here in Q1, especially with Q1 still having been in -- largely in the winter months where there would be that demand for something like that. I was just wondering if you could have any thoughts on where that stands? Is it being well received? Is it meeting expectations now that it has -- you've gone to market with it for a bit of time now?

Yes. Actually, we are seeing great signs and indications as we mentioned earlier, that -- and we're working now to expand the category. As I said earlier, we're getting feedback that some people want a larger one, the same product than 30 inches when this product is 24. And there's other demands for much larger projects with 54 inches or 60 inches with different designs. And we have a great reception on this, and we're very confident. Our team is very confident in this creating a new category of all-seasons ceiling fans that as we all know, ceiling fans are mainly a summer product, although they sell all year, but the peak is definitely summertimes. So what we're here seeing the indications we see now, and I mentioned this earlier, although we're in March, and it should be slower for heaters, but because it's an all-season product, we actually are seeing good numbers for March as well. And again, we started late. Yes, we bought a few items in Q4, and we brought a few more now in Q1, and we can say that we're bringing more products. And we believe eventually, that's going to be one of the main catalysts for turning us to cash flow positive. So the signs are -- it's looking good. I don't want to ask with our CFOs on exact timing on cash flow positive, but we strongly believe that, that's going to be a main catalyst towards that path.

And then my other question is regarding the big box retailers like Home Depot and Walmart and so forth. I was wondering if you could give -- just clarify what the current situation is between having the slate of products on their websites versus what tends to be available in store, widely available in all or many locations?

Yes. As mentioned in the past, first of all, with Home Depot, we got a branding page and SKY Plug branding page. So we can include a lot of products in the channel, a lot of customers towards that direction. And today, as we mentioned in previous calls, a lot of the big box, I think not all of the big box today rely on signals from online. And when online, you can present 5 colors. You never know what's the winning color is going to be if it's brush nickel, it's chrome or it's black or gold or you never know. So the indications are on colors are very important to the big box. So therefore, we launched in the Online segments. But there are already discussions in place that we're having on what colors will go into stores. And we hope to -- and we're talking to several big boxes. Some of them we mentioned, some of them we did not yet. And we feel confident that we're going to start landing them in stores. And once you land them in stores that can -- although online is growing all across the market, all across the Board, online keeps on growing and more and more people, including builders are buying online now. But still the big box, an order on one color for a fan can be game-changing in numbers here for us. And that's something that in works, and we expect to share more in the near future on this. Okay. Thank you very much for everyone here. I appreciate your time and questions. And let me, Steve, anything else.

We covered it.

We covered it. Okay. Thank you all for joining. We look forward for our next call. It should be exciting with our path here, and it's actually just a couple of months from now, even less. So looking forward to talk to all of you soon, and thank you for your time.

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