SKYX

Good afternoon, ladies and gentlemen. Welcome to SKYX Platforms Corp.'s Earnings Conference Call. Before we begin, I would like to remind everyone that statements made during this call may include forward-looking statements within the meanings of the federal securities laws. These statements are based on current expectations and assumptions and are subject to the risks and uncertainties that could cause actual results to differ materially. Please refer to the company's SEC filings, including its most recent Forms 10-Q for a discussion of these risks and uncertainties. The company undertakes no obligation to update any forward-looking statements except as required by law. In addition, the company may discuss certain non-GAAP financial measures during today's call. Reconciliations to most directly comparable GAAP measures are available in the company's earnings press release. I would now like to turn the call over to Founder and Executive Chairman, Rani Kohen.

Please go ahead, sir.

Thank you very much. Good afternoon to all. We welcome you to our Q1 2026 earnings call, and I'll pass it to our President, Steven Schmidt. Thank you, Steve.

All right, Lenny. Excuse me. I'm sorry, Rani. Thank you very much. First of all, good afternoon to everybody. Let me start by saying that we are happy to share that we are continuing our progress and growing our market penetration, and remain focused on our razor and blade model through B2B segments for hotels and builders, as well as on the retail aspects through our e-commerce platform and big box retail. As we previously have discussed, we are continuing our growth despite the slow new build market that is affecting smart home, lighting, and home decor segments. Let's start with 4 key financial points demonstrating our positive progress.

First, we're pleased to report 9 consecutive quarters of growth year-over-year, with a 10% increase in record revenues for Q1 2026, with $22 million compared to $20 million in Q1 2025 as we continue to grow our market penetration. Next, our cash position improved significantly to over $32 million in cash and cash equivalents as of March 31, 2026. We believe we have sufficient cash to achieve our goal of becoming cash flow positive in 2026. Our gross profit improved by 16% to $7 million in Q1 2026, compared to $6 million in Q1 2025. Finally, our gross margin improved to 30% in Q1 from 28% in Q1 2025. Leonard Sokolow will be providing additional insights shortly on these financial results. Let's talk about the business front.

We've entered into a strategic partnership agreement with prominent European hotel and real estate developer Group OTT, or OTT Group, to deploy our advanced smart and AI platform technologies as a brand standard throughout its our hotel and building segments. Group OTT has developed over 250 hotels and buildings across Europe. We just announced that we will be deploying our advanced and smart technologies to its first European hotel, master renovation of a historical architectural preservation hotel, the Grand Hôtel de Bordeaux, formerly the Grand Medesis in Bordeaux, France. We have signed an additional agreement with the Group OTT Heritage Hospitality Group to deploy and market our technologies to the vast European hotel market over 132,000 hotels.

We expect to supply our advanced smart home technologies to upcoming and future key projects in the U.S. and globally, including New York, North Carolina, Austin, San Antonio, South Florida, including Miami's new $4 billion smart city, Europe, Saudi Arabia, and Egypt. Our technologies reduces up to 90% of the time and cost of buildings and hotel renovations and installations or new builds. We continue our discussions with additional hotel groups and owners regarding utilization of our game-changing advanced and smart platform technologies. We expect to deploy over 1 million units of our products, including an advanced smart home plug-and-play technologies during these projects and to over 100,000 units and homes by the end of 2026 through our pro and retail segments.

Despite warmer weather, our sales of our patented turbo heater fan are continuing to grow, and we are expanding the category of the all-season ceiling fan, heat in winter and cool in summer, and we are working on additional products in new designs and larger sizes. In Q1, we announced the beginning of our collaboration with NVIDIA AI Ecosystems Connect program. We expect to grow our collaboration with NVIDIA into future smart home projects. Our technology expansion provides additional opportunities for future recurring revenues through interchangeability, upgrades, AI services, monitoring, subscriptions, and more. Finally, our enhanced safety code standardization team continues its progress towards its goal of a safety-mandated standardization in homes and buildings of our life-saving ceiling outlet receptacle technology. A lot of great progress. It's my pleasure now to turn the call over to Leonard Sokolow, our CEO, who will provide additional insights. Leonard.

Thank you very much, Steven. Appreciate it. I'm very pleased to announce, you know, strong financial and operational results for the first quarter and most recently. This reflects our continued momentum in revenue growth, operational execution, and market expansion. As we have referenced, we generated the greatest increase in year-over-year revenues of 10%, with a record $22 million in revenues in the first quarter of 2026, compared to $20 million for the first quarter of 2025. This reflects nine consecutive year-over-year quarters of growth. As of March 31, 2026, we reported $32 million in total cash equivalents, and restricted cash, compared to $10 million as of year-end, December 31, 2025. We continue to leverage the rapid conversion of our e-commerce sales into cash, advancing our cash position.

This is often referred to, as we've mentioned before, the Dell working capital model, lowering our cost of capital along with it. We believe we have sufficient cash to achieve our goals of becoming cash flow positive exiting 2026. Our gross profit for the first quarter ending March 31, 2026 increased comparatively by 16% to $7 million as we compare it to the first quarter ending March 31, 2025. The gross margin for the first quarter ending March 31, 2026 increased comparatively by 2% to 30% compared to 28% in the first quarter ending March 31, 2025. Net loss decreased. This is a net loss per share decreased by $0.02 to $0.07 per share in the first quarter of 2026, compared to $0.09 in the first quarter of 2025.

Our adjusted EBITDA loss per share, which is a non-GAAP measure, decreased to 3% to $0.03 per share in the first quarter of 2026 as compared to $0.04 per share in the first quarter of 2025. If I could turn it over to Rani Kohen.

Thank you, Steve. Thank you, Lenny. We will open in a minute our phone for Q&A. We would like to emphasize, as Steve mentioned, that we're laser-focused in our razor and blade model and on the B2B segment through hotels and builders. Reaction is actually very strong and very positive. We hope we can announce more on this front in the near future. We're also happy with the growth of our retail segment. As Steve mentioned, despite warm weathers now around the country, we are continuing to see growth in our turbo heater. That's one of many products we intend to offer on the razor and blade model.

As we mentioned before, we are going to expand that category to create an all-season ceiling fan. As you all know, ceiling fans is a product that's mainly focused for summertime and warm weathers. We strongly feel that this can open a whole new category, especially based on the demand we have for that product. In the next coming months, this year, we believe it's gonna be a strong aspect of our razor and blade model, showing additional types of ceiling fans in sizes of 18. As we have now 24 inch, it's gonna be 18, a bit smaller, but also a large one with 28 inches.

We're also going to do for much bigger rooms, starting with 42 inches, a new model, new design with the same turbo heater with 3 blades at 42 inch, 54 inch, as well as 60 inch. We really think that this is a category that with time we can create a lot of demand to those different type of heater, turbo heater fans. We're going to offer them in 5 colors and we intend to expand this. In the next coming months, you will see more announcements and additional products in hopefully additional places that we'll be able to announce. With that being said, we're also progressing with the standardization aspect. We also hope to introduce our products this year to insurance companies.

We believe, strongly believe that that can have another angle of standardization as we hold many products that have strong aspects when it comes to life saving and eliminating the need to touch hazardous wires, long time on ladders, with heavy or large size devices. With the launch of our Generation 3 All-in-One Smart Platform hub, adding the smoke detectors, CO detectors, emergency light, 911 calling, night light, and many other safety features, we have strong indications that we will cooperate with insurance companies that are quite excited towards our launch in the second half of 2026. With that being said, thank you again, and we will pass it to Q&A here.

I think we have Jacob from Lake Street, first in line.

Yes, thank you very much, sir. Ladies and gentlemen, we will now be conducting the question and answer session. For the participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the star keys. If you'd like to ask a question, please key in star and then one on your telephone keypad. A confirmation tone will indicate that the line is in the question queue. You may key in star and then two to leave the question queue. The first question comes from Jacob Stephan of Lake Street Capital Markets. Please go ahead.

Hey, guys. Congrats on a nice quarter. Thanks for taking the questions. Maybe just first, wanted to touch on the construction project pipeline here. I know you got 12 major projects over the past year, 1 million total units, and obviously Group OTT. I guess how many of these projects so far have moved from kind of the signed agreement to, I would guess you would call it like an active supply order? Maybe if you could give us any sense of updated timing on the Austin, N.Y., or Miami smart city projects, that would be great.

Yes. Thank you, Jacob. We are actually a few projects already have moved to purchase orders. We expect to start supplying products in the next coming months to several places, including in Texas, I believe Austin, as well as I think New York, San Antonio maybe, and hopefully even to one of the European hotels we announced. The first European hotel we announced.

Okay. Maybe, I guess if you could give us an overview of the developer pipeline, just beyond, you know, what you already have, signed and purchase order. Maybe you could give us a sense of, you know, what the future pipeline looks.

We can say that we're entertaining discussions with several developers on new projects as well as hotel developers. We're confident that this is a strong path for us, the B2B segment, as Steve mentioned, for hotels and builders. The value proposition with saving almost up to 90% of time and labor costs of those renovations and installations is quite significant. The razor and blade model opens the door to start with maybe something simple, but to upgrade down the road, the subscription model, AI services and recurring revenues can be quite significant for us down the road as we penetrate.

Our goal is to focus on the razor and the blade, penetrate buildings, and then once we penetrate a property and deliver our receptacles, we kind of quote-unquote, "Have an ownership" on that electrical and electronic real estate that we strongly believe will be fruitful down the road.

Got it. Maybe just moving on to big box retail. You now have the turbo heater at Home Depot, Target, Walmart, Lowe's. Maybe if you could kinda quantify, you know, what a single in-store SKU order from one of these big box retailers could be, that would be helpful. Maybe if you have any, you know, comments on the pipeline there.

Steve mentioned, and I repeated that despite that warm weather's now, we expect that slowdown with that product, but we're happy to announce that we're actually seeing continuing growth. I think word-of-mouth, people now recognizing they can buy a fan that also has a heater, all in one. That opens the doors to really really good customer reviews in addition to word-of-mouth product, and we see that growth. As you know, dealing with big box retail, such as Home Depot, Target, and Lowe's and others, if you penetrate those stores and if you penetrate significantly, beyond a few stores or a few hundred stores, that can be even a few hundred stores can be significant revenues.

Obviously, when you go over 1,000 or 2,000 stores, that can be a major turning point for us, and it looks promising. You know, we hope towards the winter or hopefully earlier, to get to be able to talk about it in more detail.

Got it. Understood. Appreciate you taking the questions.

Thank you, Jacob.

The next question comes from.

I think, we have.

Next question comes from.

Please.

Tom Hayes of Roth Capital Partners. Please go ahead.

Good afternoon, guys. Can you hear me okay?

Hi there.

Hey.

Tom.

Hey.

Good afternoon.

Hey, Rani. Can you hear me? Good afternoon.

Yes, Tom from Roth Capital. Good afternoon, Tom.

Good afternoon, Rani. Just wondering about the strong Q1 gross margin performance. I was just wondering if you could kind of talk about what was the drivers on the year-over-year growth.

I think that, you know, our focus in implementing more new products in our e-commerce and other big box retail, in a combination of our some of our a new software, AI-driven that's already almost I would say in a third of our e-commerce platform. Combined, you know, products for lighting, the heaters, the home décor products, a combination of our strong emphasis and growth is starting to show, and we hope to continue to show that in the next coming quarters.

Okay. Appreciate that. Maybe appreciate all the color that you gave us on the turbo heater fan. I was just wondering, now that it's really gonna become a all-season fan, do you see more opportunity in the winter or the summer for the unit?

We believe that in the winter, it would provide more emphasis with the and purchases, based on in addition to decorating a home and impulse buy, 'cause many people don't think about a ceiling fan or if they see one, if it's not urgent, will probably not buy it during the winter. If they're aware of it and there's a new category that can serve winters as well as summers, I think we strongly believe that we can continue seeing additional growth in winter times. The data shows that most of the space heaters are very strong from October through February. Those 5 months are probably 3 quarters of the market, and then March through August is really only 20%.

I would say 75+% through October through February and then 25% between March and August. We think that this coming winter could be quite significant for that product. Although, as we mentioned, we're already seeing growth in the summer, and that's a pleasant surprise.

Okay. Appreciate that. Maybe one last one. Just wondering if you could give us an update. I know you'd been working on updating your 60 websites. I was just wondering kind of where you are in that process and then kind of when you expect to have that all wrapped up. Thank you.

Yes. I think we were around a third into it now. I think last call we were around 20% plus, and now I think we're 30% plus of websites that merge into the AI-driven software. I think we'll continue our progress this quarter, and we hope and believe that Q3, during Q3, we can finalize that product project. That's our anticipation.

Thank you very much.

Thank you, Tom.

The next question comes from Barry Ben-Zion of Litchfield Hills Research. Please go ahead.

Hey. Good afternoon, gentlemen. I wanna follow up on that last question, where we talked about the website upgrades. Obviously, you had a very strong quarter, revenue up 10%. Could you know, give us some sense how much of that is coming from the website upgrades, you know, the contractor shipments and then obviously the SKYFAN & Turbo Heater? Sales were very strong, both through your website channels as well as through retailers. If you could give us a little color on what drove the growth in the quarter, please.

We really think, as I mentioned earlier, it's all the above. We think we're emphasizing on growth in all aspects. Obviously, the SKYX and the SkyPlug products, as much as we can, the turbo heater and definitely the new AI-driven software that we're implementing on the websites that we already completed the implementation, we do see this. It's a combination of all the above and our e-commerce home decor and lighting products, as well as we mentioned, our own products, including the turbo heater fan. It's a consolidated effort here to continue our growth on all fronts.

Okay. Just on the website upgrade, maybe you could give us a little more detail. What exactly are you doing with the websites, and why has that been so successful? What is causing consumers to spend more through your websites?

Today, you know, the older softwares, and I can say even 5 years ago, someone implemented the new software, today it's aged 5 years afterwards. Any improvement you have by AI identifying customers that have more, more focused on customers that are able to acquire or purchase our products within lighting, smart lighting, home decor, et cetera, that can identify better, faster turnaround of this customer, easier maneuvering through the sites. As the AI would show you go to one place, you're interested in a certain area. Today, the AI is really able to profile you much faster as what type of customer you are and what type of products there are higher chances for you to acquire.

All of this AI-driven software today, they are, as we all know about AI, way more advanced than what you had the newest software 5 years ago. The difference is, as we all know with AI, is quite significant and AI attacks all fronts at once. This is just the beginning. We believe as we fully implement the entire AI-driven software in our platform, we will see towards the end of the year, and the learning and the data that we can get is quite significant compared to what we had in our own software. It's all the above that really helps us to grow our business on the e-commerce site.

Okay. My last question on the regulatory front. Could you give us a bit more detail on what actions you took in the most recent quarter in terms of, you know, getting governed entities to do some type of a mandate, you know, whichever entity that might be, you know, how many meetings were there and so on, really feedback? A similar question with the insurance companies, because it just seems obvious the insurance companies should be requiring this, you know, for projects where they're covering workmans comp on the job site.

Barry, thank you. That's a great question, actually. You know, as we mentioned, it's a slow process. That's the bad news. The good news is we started that process over 14 years ago and achieved a lot here. We're on the final stages, we believe. We're working on all fronts. As we mentioned there, NFPA and NEC, then there are other bodies that report directly to the government, and the government bodies that all have this clear criteria of saving lives, mitigating injuries and property damages. They were established in the past 50-100 years for that purpose, okay, of saving lives. They really need to find products like us and bring them to the finals. Obviously, we're helping them not to find us and we finding them.

That's part of, you know, that's part of that type of organizations that we need to help. Our code team, led by Mark Earley, the former Head of the National Electrical Code, the Chief Engineer of the National Fire Protection Association, together with Eric Jacobson, the former President CEO of American Lighting Association, those two gentlemen are leading our team here. They're having meetings almost every month now or even more than once a month. We're stepping it forward. We're working on some other aspects.

We got some more help with hopefully with government agencies and also experts on ladder falls that joined us to emphasize how significant our safety aspect or how much we can reduce ladder falls is quite significant. In a quite significant way. As you know or people know, most of the ladder fall happens close to 80%, according to data we saw, are in homes. Many of those ladder falls happen when you have heavy or big obstacles in your hand and/or your unstable movements that you have with trying to twist wires. Reducing that time by up to 95%-99% can be quite significant in reduction of ladder falls.

With that being said, Steven Schmidt and myself with other members are actually focused now, and Steve is leading it with insurance companies. We, we think is, as you mentioned, that insurance companies, if you look at their history, they mandated or required or promoted safety products, starting with smoke detectors, CO detectors, emergency lights in commercial buildings and other products that we're working on that we didn't disclose yet. Ethan, we have, you know, so many of them together that our initial discussions now are looking quite well. We hope that once we have the All-in-One Smart Platform in the market, that we will hear some. We're confident Steve had, and our team had some good discussions.

We're confident on that we have a significant play that we strongly believe that can save many billions of dollars on an annual basis to insurance companies. We're progressing on this front as well.

Well, that's great. Thank you very much.

Thank you, Barry.

Thank you.

Jack.

Our next question comes from Jack Vander Aarde of Maxim Group. Please go ahead.

Okay, thanks. Congrats on the momentum. It seems like progress is accelerating. It's great to see. Rani, just it sounds like there is progress being made on the standardization front. It sounds like your new smart plug and plug-and-play product rollout's ramping. Can you maybe just remind us of the vision and provide an update on your General Electric, your GE? I think you signed a 5-year global licensing partnership agreement back in, at the end of 2023. Is GE still in the cards here? What's the vision there with them if so?

As you know, yes, we have this contract, and as you know, GE merged some of those divisions. Our licensing division is merged with Dolby. We are in connection with the GE former, not former, but they're part of Dolby or a collaboration with Dolby on this. Yes, they're in the game. We expect that as we progress with the standardization, in the mandatory, the licensing will become a major thing for us. I think this licensing segment will become quite significant for us. It's also with insurance companies that can be, if you heard our other answer. Those are two things we expect can help us significantly on the licensing aspect.

Okay, great. Maybe a question for Lenny or Rani as well. I think last quarter, I believe the Generation 3 All-in-One Smart Platform was on track for maybe a third quarter or fourth quarter launch this year. 1, just an update there. I have a follow-up.

Yeah, thanks, Jack. I think we are on track. You know, we think by mid to third quarter, we should be on track for generation, the All-in-One Platform. We called it our Generation 3.

Okay.

For, you know, getting production. We're in, you know, so far we're, we believe that's the, you know, the, in the, in our projection.

Excellent. Just a quick follow-up there. Is this the product you foresee this product being what unlocks a recurring revenue stream for you? I don't know, is there any color you can provide on what that might look like in terms of a recurring revenue stream from this product? Thanks.

Yes, Jack. That's a great question. Thank you. The All-in-One Smart Platform hub is actually a product that helps several industries or segments into all in one. We have the home security industry that will have our safety, home security, excuse me, home security sensors for burglars, etc. We will have also the home safety segment in this platform, as we discussed earlier with for insurance companies, etc. That's another segment that will be inside. We have the smart home features that will be part of this. We have the communication features, Wi-Fi extenders and Wi-Fi communication. Any type of communication. We will have also hospitality sensors, that's another industry.

We can do the same for the cruise industry with that platform, and that can go also to elder living and facilities. Also there's a growing market of home elder living, that people stay in their homes, but they have visits and monitoring in their own homes. That can be quite significant market for that product, as well as hospitals. That's also a significant aspect for us. As you can see, there's several segments and industries that our All-in-One Smart Platform can serve.

As it comes for what we can generate, first of all, significant data aggregation that we have and precise data that will help us in many aspects in learning and studying and very strong knowledge of those industries and where the platform, All-in-One Smart Platform hub will be implemented in. Obviously, that's gonna generate, depends on what industry, but it's gonna generate monitoring subscriptions, AI services that are definitely down the road we expect to see. To answer your question, that's definitely this product is where we expect that to open doors with the recurring monitoring subscription opportunities to come in all of those industries.

Okay, excellent. Great to hear. Congrats on the continued momentum. Thank you.

Thank you.

Thank you.

The next question comes from Sam Movish with a private investor. Please go ahead.

Yes. Hello, everyone. Again, congratulations on a stellar quarter. Lenny, I don't know if you remember, we talked probably about 6 months ago or so. Thanks again for having me, congratulations on a good quarter. A few questions. Starting off first, about this time last year, you had announced a partnership with Profab, a local manufacturer. Was just looking for an update on your partnership with Profab, and kind of a guidance on what percentage of your products are now made in the U.S., versus what percentage of your products are made in the non-U.S., and where kind of Profab fits within that.

I'll answer that product development question. Thank you for that question. Profab is a leading electronic sophisticated PCB, electronic boards manufacturing with the industries like our military, aviation, hospitals, and other sophisticated industries. They're investors in our team, and they're also long-term partners of ours. We expect, as we grow the All-in-One Smart Platform opportunities here in the U.S., to have a Made in U.S. opportunity. Part of our product development, and all the testing and manufacturing and Six Sigma process is done together with them. They're a great partner to have and really a leading manufacturer in here in South Florida now where the tech is growing. It's a growing company not related even to us.

Great to have them as a partner and we're looking forward to manufacture together with them some of the products here with a goal to have a strong U.S. manufacturing channel. That's in development, and once we start production of the All-in-One Smart Platform, we will look into how to start making some of this product made in the U.S.

Great. Thank you. That sounds like a bright future. Do you anticipate costs being relatively manageable as you migrate the manufacturing, especially with the All-in-One platform? Are the margins, do you plan on those being able to be sustained or continue to grow as we've seen in the past few quarters?

Yes, that's a great question. Not like in the car industry. That's still a few years away, but it's happening with Tesla and others to become fully automated or 80%, 90% fully automated with robots that are being manufactured by leading with Tesla and other companies. The electronic board, the PCB, is actually already in a mode that can be fully automated. By that, you don't have the 5x-10x labor situation that U.S. has compared to other places in Far East and Asia or Mexico and other places.

Therefore, the U.S. government today is really looking into manufacturing anything that can be fully automated made in the U.S. Has a great chance to be manufactured in the U.S. because the differences will not be as significant because the labor is not a big factor during these type of productions.

Understood. Thank you for shedding a little bit more light on that. Few more questions just as we think about the manufacturing for the next All-in-One Smart Platform, as we think about the pipeline of these major projects that you have. Do you have any concerns about meeting the future demand, especially for those B2B contracts and, kind of as you look forward to meaningfully scaling the production of your products, do we think we can really kinda take that jump from where we are now to, say, a year from now as we're meeting, you know, kinda millions of products being deployed?

As we stated this several times, including, I think, I believe in our latest press releases, including today, we are collaborating with manufacturers all around the world. In addition to China, we have Taiwan, and we have Cambodia, Philippines, U.S. and Vietnam options. We're in discussions with all of them because we did not want to rely on one area of the world or one country. All the manufacturers we associate ourself with are all mass production and are each one of them able to produce millions of units. It's a combination of cost and quantity. Quantity, we're okay, and we strongly believe those manufacturers are part of the validation, are capable to do the products in the million, each one of them.

It's really the cost factor, where will be the best place to manufacture. When it comes to quantities, we think we're in very good shape.

Great. Thank you. Sounds like you're quite nimble as needed. Last question here, hopefully it's an easy one, just have seen this in other parts of kinda my coverage. You know, we've seen some disruption to Middle East funding and projects just during the recent conflict. I know that you have a few Middle East projects. Notably, you've got Egypt, you've got some Saudi Arabia plans. Are those relationships continuing to kinda stay steady? Have we seen any disruption or, say, trepidation about moving forward from those parties?

No. We are actually in discussions with those parties, and they're moving ahead with their projects. This is expected to happen. We hope to start something and be able to announce something even this year. We have discussions towards that. It's those projects, Middle East has tremendous growth. Obviously, there was some issues with the war that probably didn't help anyone. As those projects are long-term and in planning stages, there's no interruption to what they're doing, and we're in discussions with those groups, and looks like everything is moving forward according to plan.

Fabulous. Thank you for the clarity there and thank you for taking my questions. That's all I've got. Congratulations again on a stellar quarter. Thank you, everyone.

Sam, if you have anything else in the future, feel free to call. Happy to answer any more questions.

Thank you very much, Lenny. I appreciate that.

Okay. All right. All right, take care. Bye.

Thank you very much.

Thank you.

I think-

Ladies and gentlemen, with no further questions in the question queue, we have reached the end of the question and answers. I will now hand back for closing remarks.

Thank you again for all the participants. We look forward to continue our progress and sharing it with you in the near future and our next earning call, hopefully sooner than that in some aspects. We will be happy to announce if we have something to share with the market. Thank you and good evening to all.

Thank you, sir.

Thank you, Steve.

Ladies and gentlemen.

Thank you, Lenny.

Ladies and gentlemen, that concludes today's event. Thank you for attending. You may now disconnect your line.

Good day, and welcome to SKYX Platforms' fourth quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 report on Form 10-Q. We undertake no obligation to update any forward-looking statements except as required by applicable law. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. 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, Steven Schmidt, and then moving forward to our CEO, Leonard Sokolow. Steven, please go ahead. Thank you.

Great. Hey, Rani. Thank you very much. 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 home building, have been in decline for the past few years. Despite this, SKYX, through our technology and versatility of products, continues to grow. Let's talk about the growth that we continue to demonstrate. First, on the financial side. First, we're 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. As we've announced prior, we have raised $29 million in Q1 2026 through investments from fundamental institutions. 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 Sky-Fan & Turbo-Heater on our e-commerce platform with 60 websites, 1stoplighting.com, and U.S. leading retailers, including Home Depot, Target, Lowe's, 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, we expect to continue this to grow all of this in 2026 to advance our path to becoming cash flow positive. As we've mentioned in prior calls, we're very excited on the hotel and building area, and we hope to share more on this in the next few quarters.

Our enhanced safety code standardization team continues its progress towards its goal of a safety mandatory standardization in homes and buildings of its life-saving ceiling outlet receptacle technology. We expect to supply our advanced and smart home technologies to upcoming and future key projects in the U.S. and globally, including in New York, North Carolina Smart Home Community, Austin, Texas, San Antonio, Texas, South Florida, including Miami, Florida, the new $2.4 billion smart city, Saudi Arabia, Egypt, among other areas. We expect to deploy over 1 million units of our advanced and smart home plug-and-play technologies during the course of these projects. We continue to grow our market penetration and expect to deploy over 100,000 of our products into homes and units by the end of 2026 through the retail and pro segments.

Our technologies expansion provides additional opportunities for future recurring revenues through interchangeability, upgrades, AI services, monitoring, subscriptions, and more. Finally, we'll be launching a new AI-driven software in 2026 for our e-commerce platform of 60 websites, which is expected to increase our conversion rate in sales up to 30%. A lot of progress on all fronts and a lot more to come. With that, let me turn the call over to our CEO, Len Sokolow, who will give you more clarity on the financials and some other business details. Len, over to you.

Great. Thank you very much, Steve. Appreciate it. We're very encouraged, as Steve mentioned, we've had growth in revenues eight consecutive quarters, so year over year. To reflect also over the last three years, we've had three years of consecutive growth in annual revenues. Again, to reiterate, all while the building, lighting, and home decor markets have been in a significant slowdown 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%. You know, 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 the 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 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. The concept of our plug-and-play and the 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.

This lighting all season ceiling fans and our all-in-one platform and hub are reflective of this. All of this is all quite promising as we are well-funded to accelerate our growth. 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. In the past 10 months, we showed significant growth in the builder segment and we expect and hope to keep on growing on the builder segment, and we hope we can share more things on this in the near future. Very important also, we believe, we strongly believe that 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 a Marriott renovation demo. We had an investment of $60.5 million led by the Shaner Group that own 80 hotels with over 60 Marriotts. Our goal is to grow in this hotel segment. As Steve mentioned, we were 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. 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. As Lenny mentioned, we hope to start production and launch it around mid to Q3 of this year. We're making some progress on all fronts. Again, it's a razor and the blade model. Sometimes we'll supply the razors before the blades. Obviously the blades provide more revenue than the razor, but the razor sets the stage. If Tesla had to put billions of dollars of charging point stations, thank God it doesn't cost us too much to put our razors out there.

It's a program and it's a model that we believe is working well for us and will work even better. As Lenny said, it opens the door to create new categories like the lighting categories, now the ceiling fans and the heater, all season ceiling fan that provides a solution for both winter and the heater. We're happy with the indications and the first sales we had, and we're growing nicely. Now it's already March and it's getting warm, but we still see nice sales here. We expect to grow this category significantly, add designs, and add different sizes based on feedback and demand. We currently have the 24-inch that we launched.

We expect to have the same version in 30-inch based on demand, and we expect to come with actually other designs that will provide totally different looks, but are gonna be more powerful for larger homes and rooms and up to 60 inches too, in some models that we expect to and we hope we can share soon and launch. With that being said, I can turn it to Q&A. I think we have here, let's see who's on the list. We have yes, Jacob Stephan here with us from Lake Street. So please, Jacob, go ahead.

Hey, guys. Thanks for taking the questions. Just first, in the press release, you guys talked about a significant prominent leader in the safety code standardization timeline. I'm wondering if you could kinda touch on that a little bit. You know, what kind of specific milestones kinda remain to the overall kind of standardization?

Yeah. We're happy to do so. As we all know, we have leading our code division Mark Earley, who's the former head of the National Electrical Code and Chief Engineer of the National Fire Protection Association that really wrote the code books for 33 years here in America with safety for electricity. Joined him a couple of years ago is Eric Jacobson, who was the former president and CEO of American Lighting Association. Those are great leaders to have with our entire team here. 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 as specified that our receptacle specifications are the standard.

As we said, we're one step away from the mandatory. 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. 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. We believe that there are some of them are independent and nonprofit, but some of them are actually a part of the government and getting budgets of billions of dollars to literally find technologies like ours with the life safety and aspects and bring them to fruition to save lives.

Remember, again, to remind everyone, there's approximately 500 million installations annually in the U.S. when people really risk their life to go on ladders, touch electrical wires, and hazards happen, including ladder falls. We also got some indications that ladder falls tend to happen more often when you have big obstacles in your hands or you're doing unstable movements. We're encouraged about this opportunity, and therefore, we have engaged a very senior member that can help us with, hopefully, some government safety organizations. To remind everyone creating safety is key, but in our case, that's also gonna enhance and help growth of products. Everything can be made here in the U.S., and our technology can be fully automated here in the U.S.

There's no labor factor. Therefore, it's not only saving lives, it's enhancing an economy, creating many jobs. We have some people that strongly believe that we can expedite this through other agencies. Jack Vander Aarde, you know, I gave you a long answer here, but I know you like detailed information, so I hope that covers.

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

I wanna be careful with the numbers 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 Lowe's and Walmart, and we expect to go to other channels here. If we land one product, okay, one SKU out of those many SKUs we're coming up with in one of the big box retailers, that can be a game changer towards an expedited very fast path to cash flow positive.

Meanwhile, as we're launching the new AI-driven software in our e-commerce platform, it also we mentioned 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. We do see the results there, an increase of not only conversion, in some cases increases of gross margin. We have several ways we're looking into this, and we expect to launch additional products this year that will enhance. I'm giving you a big picture. I wanna be careful what number we need to provide quarterly. We actually I think it will be lower than $35 million, but I just wanna quite lower than $35 million a quarter because the We're actually blending in more and more products that have higher gross margins. We're doing it through joint ventures that we announced last year globally, and that provide us a much higher gross margin. That's why you saw a jump Lenny mentioned from 28% gross margin in 2024 to 30%. We hope to, as Lenny mentioned, continue, and we're very focused on continue that path. 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 gonna turn our burn to a cash flow positive.

Okay. Very helpful. Just one last one kinda quickly here. The overall kinda hotel channel, I know that's kind of an exciting opportunity for you guys, but from a 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 gotta imagine the builds are financed and just any kind of color you have there.

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

Yeah. Yes.

I'm sure our product the time saving aspect, if you're talking about the hotel segment, right? That's where-

Yeah. Correct.

The time saving aspect creates a major labor cost saving aspect. We're having great reaction from that segment. As Steve and Lenny mentioned, we're progressing there. They didn't tell us specifically it's 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. I'm sure it doesn't hurt us, but I didn't hear anyone in specific mentioning that in related to our products.

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

Thank you. We have here, Barry Sine from Litchfield. Hi, Barry.

Hey, good afternoon, gentlemen. A couple questions, if you don't mind. First, if you 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?

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. 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. 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.

You've announced a number of major construction projects, either in new housing or hotels, and I'm having trouble keeping track of, there's 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? Where are we in terms of construction? Which ones are actually ready to start taking smart plug products?

We have I think we announced around 12 projects in the past 10 months. 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. That's probably towards the end of the year, we hope we can start supplying some of it. There are other projects that we're working around South Florida. There's the Saudi project that is the joint venture we have with the U.S. group that's involved with the Saudi venture. That can also be significant number of units for us.

That we hope will start also towards the end of this year in some capacity. That can include hotels, buildings, homes and much more. We also announced a few projects in Texas and Austin. Actually the Austin, Texas, we hope to start supplying very soon. Then afterwards, the San Antonio, Texas, is another project we hope to supply in the second half of this year, or it may be even second quarter, depends. In the building arena, you have delays at times. We also announced a New York project recently that actually we believe that that's gonna be also supplied very soon.

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.

Well, that's fantastic. 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 gonna increase very dramatically this year, and then the implications for margins are quite positive. The financial outlook for 2026, to me, looks very different than 2025. Is that a fair characterization?

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

Okay, my last question. In the press release, the second page, there's a bullet point on the bottom about insurance companies. You have a number of ways to drive, you know, 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 and variations of the advanced plug-and-play products. What is your timeline to complete the entire range of smart plug products?

Well, we're close. I think we're 80%, and I think there's already discussions on this segment. I think the All-In-One Smart Platform with all the smoke detectors, CO 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. It's definitely a play that I think will be significant, right an insurance company can come inspect you on one day and it becomes even faster than mandatory, so that's definitely something we're looking at and working on this angle.

We hope to be more open about what exactly is going on in the very near future.

Okay. Thank you. Those are my questions. Really making great progress. Thank you.

Thank you, Barry.

Patrick.

Hey, Patrick McCann. Pat, how are you? Noble.

Hey, good afternoon, guys. Thanks for taking my questions. I was curious about with the smart heater fan from your press releases and so forth I believe it really didn't hit for the majority of Q4, so it wasn't able to have the full effect on your results. I know that was expected to be a fairly significant catalyst when it came to breaking even on operating cash flow. I was curious what how that's going so far in Q1.

How much of that will 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. Yeah, 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.

It's actually we are seeing great signs and indications, as we mentioned earlier, 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. There's other demands for much larger projects with 54 inches or 60 inches with different designs. 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 fan that, as we all know, ceiling fans are, you know, mainly a summer product, although they sell all year. The peak is definitely summertime.

What we're seeing here, 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 a all-season product, we actually are seeing good numbers for March as well. 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. We believe eventually that's gonna be one of the main catalysts for turning us to cash flow positive. The signs are, it's looking good.

I don't wanna mess with our CFOs on exact timing on cash flow positive, but we strongly believe that that's gonna be a main catalyst towards that path.

Thank you. 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.

Yeah. As mentioned in the past, first of all, with Home Depot, we got a branding page and a SkyPlug branding page, so we can include a lot of products and channel a lot of customers towards that direction. Today, as we mentioned in previous calls, 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 gonna be, if it's brushed nickel or it's chrome or it's black, or gold, or you never know. The indications on colors are very important to the big box, so therefore we launched in the online segments.

There are already discussions in place that we're having on what colors will go into stores and we hope to. We're talking to several big boxes. Some of them we mentioned, some of them we did not yet. We feel confident that we're gonna start landing them in stores. 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. Still the big box, an order on one color for a fan can be game-changing in numbers here, and for us. That's something that's in the works and we expect to share more in the near future on this.

Thanks. That's helpful clarity. That's it for me. Thanks a lot, guys.

Okay. Thank you very much for everyone here. Appreciate your time and questions. Lenny, Steve, anything else?

No. 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. Looking forward to talk to all of you soon, and thank you for your time.

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

Good day, and welcome to the SKYX Platforms Corp. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reforms Act of 1995. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. For more details, please refer to our Form 10-Q for the quarter ended September 30, 2025, and other filings with the SEC. SKYX undertakes no obligation to update forward-looking statements, except as required by law. I would now like to turn the conference over to Rani Cohen, Founder and Executive Chairman. Please go ahead.

Thank you. Welcome to our third quarter conference call. We will start today. We have some significant things that are happening for us recently, and we're happy to be and share some of them with more emphasis. And we -- I will pass it to Steve Schmidt, our CEO -- President, excuse me; Lenny, our CEO; Steve Schmidt, our President, Former CEO, I should say, for Nielsen Data Corporation. Thank you, and please, Steve.

All right. Rani, thank you very, very much. It's great to be with you here this afternoon. I also want to welcome you to our third quarter earnings call. As you're going to hear today, we are making significant progress, and I'd like to emphasize that there is more significant things to come on several fronts in the very near future. We reported record revenue of $24 million in the third quarter 2025 compared to $23 million for the second quarter 2025 as we continue to grow our market penetration. Our revenues have now increased for 7 consecutive quarters from Q1 '24 through Q3 of '25. We've signed an agreement with a prominent U.S. and international real estate developers, Global Ventures Group to deploy our advanced smart home technologies to buildings and hotels in Middle East projects, including Saudi Arabia and Egypt. We expect to deploy hundreds of thousands of units to tens of thousands of homes and hotel rooms to Middle East projects, including Saudi Arabia and Egypt. This is another major step for us as we anticipate more to come in the Real Estate segment. We will be supplying our technologies to a 278-apartment project in Austin, Texas, built by prominent developers, landmark companies, providing over 10,000 units of our advanced and Smart Plug & Play technologies. Again, another major prominent development group, and again, we anticipate more to come. As previously shared, we have established a major collaboration with a Miami $3 billion mix-use Urban Smart Home City project. We expect to supply over 500,000 units of our advanced Smart Home Plug & Play platform technologies for the entire Smart City project. After our successful demonstration of our technologies during a recent Marriott hotel renovation, we expect to significantly expand our hotel segment. We hope to share more information about our hotel channel expansion in the very near future. We can continue to grow by developing over 50,000 of our products into homes and units by the end of Q4 2025 through Retail and Pro segments. It's important to emphasize that our technologies expansion provides additional opportunities for future recurring revenues through interchangeability, upgrades, AI services, monitoring, subscriptions and data. As former CEO of AC Nielsen, I understand the importance of data and the revenue opportunity associated with it. [indiscernible] Mustafa, former Head of Microsoft AI, will be shortly expanding on this significant opportunity. Regarding our Safety Code Standardization, our team continues to make progress and is receiving significant support from a prominent leader with its government safety organization process for safety mandatory standardization in homes and buildings of our ceiling outlet and receptacle technology. We are confident with the recent progress that our team is making with our mandatory application for our ceiling receptacle. On the product front, we expect to launch our patented Advanced & Smart Turbo heater fan and variety of Plug & Play ceiling fans during this month. We anticipate it will be a major step towards our positive cash goal. In the area of AI, a significant development is our upcoming launch of a new AI-driven software for our e-commerce platform of 60 websites expected to increase our conversion rate in sales by 30%. The AI native e-commerce platform designed to elevate B2B and B2C experiences through our innovative and smart product line. In the area of cash, as of September 30, 2025, we reported a total of $13 million in cash, cash equivalents, restricted cash and receivables. And the company has recently raised $5 million in additional capital from 2 of our leading shareholders. This is another proof of confidence from our lead investors and in continuation of our path of raising funds from strategic long-term investors and shareholders as well as from insiders, including myself. Before I pass it to Lenny Sokolow, our CEO, I'd like to emphasize again, like I did in our last call, that we are making significant progress and are working on additional significant business opportunities, and we hope to be able to share a significant amount of this more in the very, very near future. So with that, let me turn the call over to Lenny Sokolow, our CEO. Lenny? Just pass it to Lenny and Lenny Sokolow is going to talk now our CEO. Afterwards, I'm going to talk, and last but not least, we have with us today, Khadija Mustafa, the former Head of AI for Microsoft and also that has a relationship with the G42 Emirates well-known global AI and development firm. So please, Lenny.

Great. Thank you, Rani, very much, and thank you, Steve, for that update. Just to reiterate is that -- what we've reported is a year-to-year and sequential growth. I mean this is a material for us, and it's a very positive trend that -- our expectation is that we're able to continue. In addition to the $5 million that in terms of recently raised capital, again, it's important to understand these are from 2 leading shareholders of ours. And of even greater importance is the fact that these were reflected in notes approximating $11 million, and they're now have been restructured and coming due with a maturity date out 5 years to 2030. It's very reflective of their understanding of where we are, their belief in what we have and their confidence in our strategy and our development. So -- and I think that will be reflected as we'll see in this quarter's disclosures coming into the end of the year. The -- we continue to use our -- and leverage our cash position through the e-commerce platform of our 60 websites among other methods, including the support from leading strategic investors and insiders. And of interesting note is that we have a growth we're showing in our deferred revenue, which is our revenues that are of sold product primarily from our websites that are in transit for a day or 2 until the customer receives that. That growth is showing an acceleration of our revenues primarily from our e-commerce platform. So the -- as common with a company such as ours when we have sales that are converted into cash rapidly, this is often referred to as the Dell Working Capital model. We leverage our trades payable to finance our operations and to enhance our cash position in effect, lowering our cost of capital through the support of our vendors. This is -- this opportunity and this structure is one that we've rolled into some of our key manufacturing partners that can give us the same mechanics of the Dell Working Capital model to help finance our purchases and support our inventory needs. So I think it's important to understand that we're very focused on multiple levels with respect to cash leverage and cash conservation. The gross profit for the third quarter ending in September 30 increased sequentially by 8% to $8 million compared to $7 million in the second quarter ending June 30, 2025. And this also concurrent with this is the fact that we had a small decrease in our cash from operating expenses that we've used. So this is -- we're not generating additional expenses as we generate more gross profit. And the gross margin for the third quarter ending September 30, 2025, increased sequentially by 4% to 32% compared to 30% in the second quarter ending June 30, 2025. And our net loss per share decreased by $0.01 to $0.07 per share in the third quarter as compared to $0.08 in the second quarter. Adjusted EBITDA loss per share, a non-GAAP measure, remained at $0.02 per share in the third quarter as compared to $0.02 per share in the second quarter of 2025. So we're showing a small decrease in our EBITDA loss, which is a good indicator, positive indicator for us. So with that, I like to pass it on to Rani, if you want to go ahead?

Yes. Thank you, Steve and Lenny to give [indiscernible] here. Again, to emphasize some of the things that Steve mentioned, we're experiencing great progress with developers starting with the Smart City and projects prior to that in Miami and went with the project in Austin from another prominent developer, Landmark. And now the collaboration and a signing agreement with Global Ventures that are major and prominent developers that are expanding towards the Middle East, including Saudi, Arabia and Egypt. And we're optimistic about the future towards those regions and others that we hope down the road that we'll be able to share with you. Also, we are experiencing, as Steve mentioned, after our Marriott demo, a successful demo that we shared the video online, it's still there somehow, but this is -- this opens some doors for some significant business that we believe will happen. And we hope, as Steve mentioned, to announce it sooner than later, but we're working and we expect to open some more doors towards those channels. Also, when we are supplying to the Builder and the Hotel segment, as Lenny mentioned, we're leveraging our relationships with the manufacturers that want to join our ride here and participate in places like the Smart City in Miami or the buildings we're doing here in the U.S. or hopefully the Hotel segment as well as the Global segment in the Middle East, and we're leveraging that to get funding from them. So that's another way we're leveraging what we're doing and the penetration we have, thanks to our technology that opens doors with builders, with hotels and other projects internationally. And vendors do want to participate with us and are helping us here to fund it. And as Lenny calls it the Dell Model and the concept is that we are supplying, getting paid and pay the vendors after. So that's quite significant when it comes to continuing managing our cash flow here. And last but not least, before I move it on to Khadija Mustafa, the former Head of AI for Microsoft and also former Global Head of Sales for Microsoft is that, as Steve mentioned, we're making progress with the mandatory. We see some significant steps that are taken behind the scenes, and we hope that we're getting closer to that day. There's people -- to remind everyone, people are dying, people -- many injuries, many fires, significant number of ladder falls and everything here on a daily basis and our products can prevent most, if not all of these. And I think we're getting some attention from very high levels, and we hope that we will be able to share more in the near future. So with that, I'll pass it to Khadija Mustafa. Please, Khadija.

Thank you, Rani. Delighted to be here. So I think as you've already heard from the team, SKYX is gaining solid traction and expanding very fast. So everything from Miami Smart City initiative all the way to the partnership with Global Ventures, that's opening doors for projects in Saudi Arabia, Egypt and sort of expanding into other parts of the Middle East. I just wanted to sort of call that out and mention that it's not just about growth, it's about progression towards really going into the global space and scaling out. And that's so important because if you look at what's happening in Saudi alone, if I take that as an example, I'm sure you've been watching the pace of innovation is extraordinary. Every sector there is rethinking itself, adopting advanced next-generation technologies to leapfrog what the rest of the world has done or is doing. So they've got a lot -- they have very big appetite. So -- and that's just one country out of the different areas where SKYX is expanding. So this is where SKYX fits perfectly. And when you combine that also with the population and urbanization trend that's happening across emerging markets, getting in now means that SKYX is going to be helping set the foundation for how people are going to live and work in the years ahead and also the decades ahead, which is very important. Now just for me personally, having had a front row seat in the tech industry for 27 years, there are a few observations that have sort of made me even more excited about the opportunity and how SKYX is well positioned. There isn't a single company that's yet unified the smart home or, call it, smart building space. It's still fragmented. There's sort of a long tail of devices and ecosystems across different tech companies as well as lots of sort of unbranded technologies that don't seamlessly talk to each other. And this is where SKYX has the potential to change that by starting where others have been less focused or not focused because if you think about the tech world, right, they're thinking about technology. But what SKYX is doing is it's thinking about the integrated physical layer, which is going to enable the technology. So through its standardized all-in-one smart ceiling platform, SKYX is really creating the infrastructure that can connect everything else. And again, this is what makes it so strategic because it completes the ecosystem, not only for the sort of mega cap big tech companies, but also for the next wave of start-ups driving smart space innovation. And sort of right now, I think everyone is scrambling and getting in because we have this opportunity to really drive a lot of innovation with AI. So whether it's innovators, like I said, big or small companies, there's an opportunity to build an entirely new AI-driven set of services. And we all know that AI integration, AI incorporation is pretty much the focus of every organization and government on earth, not to talk of all the individuals in the mix who are trying to figure out how they can sort of rescale and really take the power of this technology and apply it to everything they're doing. So just to give a few examples, obviously, I think SKYX's opportunity is much greater. But think about adaptive lighting that response to presence and mood, predictive safety systems, Rani just talked about, unfortunately, people have big safety issues in the space, but predictive safety systems that detect electrical or environmental issues before they become hazards. I'm sure you've all been watching those -- the pollution issues that are happening in a lot of cities, real-time energy optimization tied to grid demand. Think about wellness and productivity insights drawn from the spaces we occupy every day. So I'd like to think of this in terms of sockets or nodes of intelligence. So the first was the smartphone. It was connecting the individual. So much of that data is now being used for all these smart services. The second is the car. I mean, it's connecting mobility. And in fact, we haven't even mastered the car space, but it's happening. But now SKYX is defining the third socket or the third node. And this is about the spaces where we live and work, turning them into these active intelligent nodes in the broader connected ecosystem. So Steve mentioned this incredibly rich source of data. Now what makes us even more significant is that it's not just about the home, right? Because smart home is definitely a key place. It's transformative in its own way. But it's about every kind of built environment. So the team was talking about hotels, hospitals, offices, retail spaces, you name it, the list goes on. So each of those becomes a new opportunity for SKYX's platform to enable a wide array of AI-powered services and capabilities, again, at scale and globally. And this is an opportunity both for SKYX to build on it, but the entire ecosystem is going to want to get on to the bandwagon leveraging that information and then creating their own set of services.

Great. Khadija, thank you so much. That is well needed here because we're getting a lot of questions and our expansion and what type of products we bring, and we put it usually as a general title of AI services and AI ecosystem, but I think you brought a lot of color here. So we want to thank you very much for this. And before we move to Q&A, I would like also to emphasize one of Steve's points here. We're getting very close to launch our heater fan, Turbo heater fan and ceiling fans Plug & Play. And we anticipate that, that's going to bring us here to -- very close to our goal here very soon of cash positive. So we're looking forward to launch those products really in the next coming weeks now. It's all in production. It's all in enroute near. So we hope to have some announcements on this as well very soon. So thank you again Khadija and team, and then we'll take some Q&A here. Barry?

Can you hear me?

Yes.

Okay. A couple of questions, trying to get a better sense of the near-term revenue outlook, if you don't mind. So you mentioned that you expect to deploy over 50,000 of your products by the end of Q4. I assume that's the total unit sales in the fourth quarter. And if so, how does that compare to 3Q? And what kind of average selling price might we be thinking of? I assume that's expensive lighting fixtures, just simple sky plugs. Can you give me a little more color on that number?

I'll give you more color to that segment or that question in a way is to remind everyone, we always emphasize our Razor & Blade model where our razor is a ceiling receptacle that opens the door for a simple fixture that can cost $50 or for a fancy fixture that can cost $500 or $1,000 or as Khadija mentioned, to our future all-in-one smart platform. So you do not -- we can't anticipate exactly what consumers will put in when they buy the receptacles. And our growth is with the number of units, we anticipate, correct, to be approximately 50,000 by the end of this year. But our mix is more as we get to the market, for example, we are in lighting chandelier for a while. We started wall sconces. We're starting now downlights and recess lights, and we will start ceiling fans and the heater fan this quarter. And those are revenue makers, a higher ticket per item. So once we land them, we will have a better picture, but we think that as we land those significant items here, and we expect to have a variety of Plug & Play ceiling fans and a variety of the heater fan in several colors, and we anticipate and we hope to get them to several places that we're working on now, and we'll let everyone know once we launch in each segment in each channel as well. So the big picture is -- and also we are actually landing soon the EXIT signs, emergency lights, they are supposed to land very soon. So together with our Turbo heater fan and the Plug & Play and the more we add products into the mix and the smart products that are going to come here, I think that the razors are going to start accepting their blades and the blades, the more we have variety and higher ticket items, the revenues should improve. We also, as you all know, and we announced that we're working on a unique software that we're working to launch in our websites that we believe will increase our conversion rate and sales overall. So we're optimistic for the future. We just want to try to be careful with what we say on numbers. But as you can see from our press releases, and we do everything we say we will, and we're landing products step by step, and we anticipate that the numbers will come as we land more and more products.

And if I can follow up, please. You just mentioned the software upgrade in the website. Maybe you could talk a little bit more exactly what you're doing? How do you increase revenue by 30% with the software upgrade? That sounds like a great upgrade. And more importantly, when might we see that the effects on revenue, my sense is that's probably a product or an upgrade that goes through to early 2026. So it's not an immediate. It's not like fourth quarter is going to be up 30%. What are you doing more specifically? And when would investors see the results of that upgrade?

So we're in the process of merging the software in, and we're very careful as we're merging in because we want to be secured with what we're selling today and not rush it. And we expect to have it hopefully done by Q1 or latest Q2 of 2026. And once fully merged in combination with the new products we have, we do anticipate to increase conversion rate by all kinds of AI methods to -- that have better, if we say, radars on how -- what type of consumers are better chances for them to -- for us to convert them and bring them more to our website as well as a better experience overall in the website itself. But those softwares are quite sophisticated. And with the AI today, there's many tools and especially when you have unique products, you have a better chance to drive people into your website because of your uniqueness. So it's a combination of all. Our e-commerce team is led by Huey Long, former Amazon that worked with Bezos and actually created the brand Basics and him and his team and together with our Executive Chairman, Todd Johnson, that is an extremely capable person in the e-commerce arena, we are working with some key engineers that joined our company to maximize that potential. And the softwares that were good 5 years ago, 10 years ago are nothing to compare to the type of software you have today, and that merge is expected to really take us to the next level of e-commerce.

Okay. And my next question, you guys have announced...

One thing we're going to also emphasize, I'm sorry, to answer your question complete is we're -- as we stated, we're going to have focus on the B2B segment and the Pro segment that are currently through our website are not -- most of the stuff we do today is direct to builders as we -- on the B2B segment. But today, we feel and see that even the Pro and Builder segment are joining more online and that's an additional factor that we're focusing on.

Okay. And my next question, you guys have announced so many customer announcements, builders and so on in so many different places, Saudi Arabia, Egypt, Miami, Marriott Hotel. Which of those -- it looks like the Marriott Hotel is done from the videos. The Miami project looks like it's still getting permit approvals. Which of those are currently shipping and which of those are yet to come?

So we are -- the Marriott demo was an important demo to showcase and to open the door to much more business that we hope we will be able to expand soon. We have some local projects that we're supplying. We're starting to supply very soon to Austin, Texas as well as some projects here in Florida. And we believe the smart city in Miami and the Saudi are more next year to start supplying. But again, it's a Razor & Blade model. So there's some time, but we are working on other projects that hopefully we will be able to share with the market soon.

And then finally, you mentioned that your product will -- the Smart Plug will reduce injuries. So I just yesterday installed a light fixture, and I cut my finger and almost fell off the ladder. So I can attest to what you're saying, your products can't become mandatory fast enough. That's all my questions.

Thank you. I wish you know how sad it is and the data that we have here. And one day, we'll publish it. It's really shocking. We think there's 500 million U.S. installations. And if you take the best example, let's say, in a perfect world that 99% of those installations go perfect. Unfortunately, it's not the case, but that leaves you from 500 to about 5 million that go wrong. And it doesn't mean that everything goes wrong, someone gets injured or dies, but I can tell you there's a significant number out of those that cutting your hand is really -- you're really in a good spot with this. Next time you'll be here, we'll show you a bit more data. But thank you, Barry, for your questions. Good questions. Thank you. Okay. And Pat McCann from NOBLE Capital. Please, Pat.

First, I was just curious with regard to the upcoming launch of the ceiling heater fan. I was wondering, do you have -- is there a level of visibility you already have in terms of billings for that, that you can expect in Q4 to kind of give you that visibility towards adjusted EBITDA breakeven in Q4? Or is it more just kind of an expectation of what will happen once they become available?

We have some visibility. But again, we want to land them here, and it's coming very soon. And we need to supply them in certain times, and we just -- that's our main focus. But I think today, in our press release, we did say that we anticipate things to start landing this month of November. So once they land, we have some ideas, but we want to be careful here. And it looks like we're landing also a variety of ceiling fans. So sometimes you have delays and everything comes together. I think that's what's happening here, we hope. And once we land them, we'll have a better picture, but there is some anticipation here.

Got it. And then my other question was just in terms of revenue mix looking ahead to 2026, do you have a sense of how you think things are going to play out in terms of the mix between consumer sales on the websites and so forth versus these builder partnerships starting to take a little more effect? And do you have any sense of a general mix between those 2 revenue types?

The mix is -- currently, our revenues for this year are mainly retail, but we anticipate a big growth on the B2B starting in 2026. We already see some signs of it, but major growth will start in 2026. And you're asking, I think the future of next year or the following year, we'll definitely see much more significant numbers coming from B2B and eventually, I think B2B. But you never know what retails because we have some partnerships we announced with some big box like Home Depot. So that can generate major numbers, too, but that can also generate major numbers with the B2B because Home Depot is growing that segment as well. So we can't really come with what's going to sell first, what segments are going to come, but we can definitely tell you that we are anticipating to grow significantly with the B2B segment.

Congrats on the quarter.

Thank you, Pat. And we have Jack Vander with us. Please, Jack.

Okay. Great. I appreciate the update. Clearly, progress on all fronts. A lot of moving parts. You're tackling a lot. Good to hear. So where do I start? Rani, maybe just if you could touch on -- and maybe this is for Lenny as well. With the gross margin and the recent move with the websites and the new software to boost conversion rates. Is this -- what am I looking at here in the third quarter? This is a record gross margin historically on any quarter. Where does this go from here, I guess? Maybe there's some noise in the near term, but are we seeing -- are we going to see a big uptick in benefits? Was this just product mix? I mean it seems like you have all your next-gen products coming out, which I presume are higher margin and you're also boosting margins on the e-commerce front. So just love to get your thoughts where are we in the big picture of further upside there?

Yes. In the big picture, and maybe Lenny explained it nicely with the numbers practically. But the big picture, we -- the more we merge our own products, the higher gross margins we expect to see, and that's what's happening with our websites, including a combination of our new software that's going to kick in, I think we're quite optimistic to gross margins growing here. And it's like to blend more and more in our products into that. And obviously, for success many reasons. So the new software will definitely help on this front as well. So the mixture of our products into the market, the more we have our own products and the new software are both -- because the new products is also to the Builder segment. And with the software, it's to retail and to builders, we see that our test shows that we have an opportunity to significantly continue growing our gross margins. And what you see this quarter is really an example of what we said quarters before. Lenny, do you want to emphasize a bit more?

As we talked about, it's all about the margin blend. And as we land and sell more of our own product, even now on the website, e-commerce, we've got product we're landing Plug & Play ready. So that supports the margin blend increase. So then you've got even a different margin profile when we go through, let's say, in the direct to retail channel like a Home Depot. So we're not on the website itself, but we have a different margin profile. It's not blended with the e-commerce. So actually, as the e-commerce site grows, we're going to grow more B2B, which I think impact the top line and the margin as well. So we've got a lot of positive features, B2C, B2B with respect to margin profile. And we haven't yet experienced, although we're very focused on licensing, which has a margin potential of 85% or more. So that's to be realized in the future. Any other questions?

Yes. I have one more. I appreciate all the color there, and that's very encouraging to hear. I guess 2 more questions. Just real quick, I wanted to ask because of the drama with the recent U.S. Government shutdown extended ongoing and now we're at the end of it here. But just what does this do in terms of your guys' progress in seeking the application for standardization of your product, you're ceiling receptacle. Is there any impact at all? Is this behind us? Just want to know if this has any implication but if you -- I know you only want to share so much information, but just like to hear an update there?

So generally, with all the tariffs, what it did is, and it's still -- it's not completely settled, but it looks like it will be, those are the signs. But that really made a lot of manufacturers much more creative, and they went over to Taiwan and Vietnam and Cambodia, we're dealing, and we announced, as you recall, a U.S. source. So actually, it gave us more options of product. And sometimes it's the same manufacturers that just open facilities in different countries and sometimes it's new manufacturers. So that actually -- hopefully, it ends this way. At the end of the day, it might be a benefit that opened more doors and more channels for us to import and collaborate with additional manufacturers. When it comes to the standardization, I think one thing that's very unique to our product, you can see that U.S. is now pushing -- the government is pushing for manufacturing in the U.S. So we can tell you that what we do when it comes to the plug and receptacle and even the smart boards can be done here, but not only can be done here, the biggest problem U.S. has with manufacturing is the labor cost is 5 to 10x compared to other countries. But when it comes to products like what we do, the receptacle, the plug or the smart boards and even the all-in-one smart platform can be fully automated production, and that's what we will do. And that opens the door to U.S. manufacturing. So we're definitely leveraging that. And I think a mandatory will significantly improve U.S. businesses and make America safe and maybe make America smart, too because really in our products, and it's a great question, standardization can be contingent on the U.S. manufacturing, and we actually can meet the criteria. For example, car manufacturers will take them 3 to 5 years until they get all the robots in place. But our technology is fully automated and manufacturing, and that's something that U.S. expects to grow. You saw probably that Apple is committed to do manufacturing here because laptops and phones, those industries can do to be manufactured today fully automated. So hopefully, we'll get closer to standardization, and that's going to open the door for more business here in the U.S. for us.

Excellent. Just one more quick follow-up for clarity. The target kind of for -- I think you're trying to track towards 50 -- was it 50,000 homes by the end of this year. Is that -- can you just maybe tie that to any of the more specific larger projects like Smart City projects, the hotels, all of these moving parts? Are you going to receive orders in advance of the actual installation that are going to be -- is that 50,000 including any orders from any of these major project developments?

Not from the Miami City yet and not from the hotels yet, but I think there's a couple of products -- projects that we are starting to supply. So Yes. The end of the year is really around the corner. So in 45 days and the Builder segment, we are -- I think we are supplying some products, and we did supply already, but really looks like 2026 will start really to be a significant part of our business, the builder and B2B and hopefully, the Hotel segment, we're working on some interesting things there. And hopefully, we'll, as Steve said, be able to share some of it. Okay. Yes, we have Tom Hayes from ROTH. So please, Tom.

Appreciate the time and appreciate all the color. I apologize if I missed it. I just want Rani, can you talk a little bit about the Middle East opportunity? I think one of your speakers discussed the opportunity there that the Middle East seems to be fast adopters of this changing technology. Just can you talk about, is it going to be the opportunity with commercial development, retail development or residential development? Just kind of broadly speaking, how do you kind of see that -- your new program working out?

So yes, Middle East, as many know, are really a lot of emphasis there on development of advanced technologies. And I think that, that's what really opened the door for us to sign that agreement with Global Venture Group that are expanding towards that region. And what they feel is that our technology can increase what they're doing, the value of what they're doing, provide better homes and hotels, but they also anticipate to collaborate with other builders there and introduce our product because as Khadija Mustafa mentioned earlier that, that region is really massive growth now. I think Saudi, in particular, people say that they want to be Dubai and [indiscernible] there. So that's what we hear from people and developers and the more advanced buildings want to be, I think the better fit we have into those areas. But we're here in South Florida and Austin, Texas. We see it locally, and we're talking to other developers here in that area and nationwide. And hopefully, we're working on some global -- additional global segments. So definitely, I think the world is trying to get more advanced when it comes to construction, smart home. And obviously, safety is always a significant item.

I appreciate that. Maybe just one follow-up from me. On the Turbo Heater Fan, it sounds like it's shipping this month or certainly this quarter. Just was wondering, is it -- I'm assuming it's going to be selling through your websites, but is that also going to be a Home Depot item as well?

Yes, we anticipate that to be in our website, and we anticipate that to be in several accounts, and we believe Home Depot is going to be one of them, but we'll announce it when we can. We're doing -- we have a relationship, so that's public records. And our Razor & Blade model is the way to expand. And I think the Turbo Heater Fan can be a significant item for us once landed here. And hopefully, we'll have more accounts and retailers to announce the usage of it. We're working on this, and we hope to be able to announce more than Home Depot, but we still need to see. Yes, that concludes. Please go ahead.

That concludes the question-and-answer session. I would like to turn the conference back over to Rani Kohen for any closing remarks. Please go ahead.

Thank you, everyone, for joining our call. As you see -- as you saw, hopefully, that we're making some progress. And as Steve said, we're optimistic to continue that progress and talk to you soon in our next call and maybe before if we have interesting things to share. So thank you very much again, everyone. Looking forward to talking to you again soon.

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