All right, hello everyone and welcome back. For the next fireside chat, we welcome SKYX Platforms, ticker symbol SKYX, on the NASDAQ. My name is Robert Blum, Managing Partner here at Lithium Partners. For this next fireside chat, we're going to switch things up just slightly. I'm going to turn the reins over to Chris Abbott. Chris is a portfolio manager at 1035 Capital Management. For those not familiar, Chris and I have had a few discussions in the past at a few of our events focused on the broader microcap markets and trends. If you have a chance or haven't had a chance yet to view some of those, I would encourage you to find those either on YouTube or on our corporate access portal.
Fast forwarding, Chris and I ran into each other at a conference here the other day and talked about having him moderate this panel. Here we are today. Chris, thank you so much. Of course, Lenny, thank you so much for your participation as well. I'm going to move aside and turn the floor over.
Thanks, Rob, for the opportunity. Today I've got the pleasure of sitting down with Lenny Sokolow, Co-CEO of SKYX. I think the company's really at a pivotal moment as it accelerates adoption of its innovative SkyPlug and smart home platform, which was why I was interested in doing this fireside chat with you today, Lenny. With that being said, welcome and it's great to speak with you.
Thank you. Thank you very much, Robert, and the Lithium team. I appreciate your moderating, Chris.
My pleasure. Maybe we should start at the beginning. What's the core problem SKYX is solving and how does your solution uniquely address it?
We're addressing probably the oldest problem that hasn't been solved and hadn't been solved until we came along in the home and buildings with respect to putting in fixtures that have any weighted kind of device attached to it, like a light or a fan. You know, we have so many technological developments in the last 100 years, but this is the last bastion of old school technology where you had to wire from the junction box three wires and twist them to install any kind of fixture in the ceiling to get power and to get the best location for light and for fans, et cetera. We've developed a very elegant receptacle and plug that, once the receptacle is put in with three wires, easily installed probably within a minute and screwed into the junction box.
Anything to plug into it really takes a minute or so just to click in and you've totally lit up your appliance, your fixture, or fan, whatever it may be in the future.
I always think about it as the GFCI outlet for lights as opposed to the wall outlet, right?
Exactly. Exactly. With respect to, as you discussed, the GFCI, which was about 40 years ago, became a standard for homes or buildings with respect to wet areas and kitchens now and basements and bar areas. That became mandatory because it was all about safety. The reason why we're now in 10 paragraphs in the National Electrical Code and we've become a standard is because of safety and the fact that according to the National Fire Protection Association, which is the umbrella organization to the NEC, you know, there are hundreds of deaths a year just caused by fires that started in the ceiling from fixtures that weren't put in correctly. We know that the hazardous incidents are a lot more. They're not recorded: ladder falls, electric shocks, et cetera.
We've solved not only an age-old problem of installation, but we've solved a very big safety issue. You know, that's what makes it very exciting.
Absolutely. I was going to come to this later, but since we kind of stumbled into it, you guys are one vote away from making this not only a standard, a mandated NEC standard, which would mean like the GFCI, you'd have to be installed in all new homes as well as all regulated, I guess, renovations at a home. Can you discuss what's left in your process to become mandated, how much you've put into that? I think on your most recent earnings call at the end of the year, you also discussed a potential additional pathway for NEC approval.
Sure. Sure. Our process, this process has been over 12 years. You know, for a company to go through this and come up with a solution and get into the National Electrical Code as we are already, it's been a 12-year process. Getting 10 paragraphs and then subsequently we've gotten the approval by ANSI, which is the American National Standards Institute. That has to do with buildings and standards like rebar and concrete that go into buildings. We've been approved as a standard by ANSI as well as NEMA, the National Electrical Manufacturers Association. We've checked all the boxes. The last one with respect to the NEC has been mandatory.
Right now, as we speak, what we've accomplished is one historical result of having the definition of a receptacle being changed, not only from a wall outlet where you plug in your lamp or your charger, which is the original definition of a receptacle over 100 years ago, to now a second defined receptacle in the National Electrical Code being our receptacle, our receptacle that the plug goes into. When we redefined that, and that has allowed us today to get for a builder to get the certificate of occupancy just by having the receptacle in our receptacle as well, our outlet, as well as like a wall outlet. The next thing is one of the committees on the National Electrical Code approving us for mandatory. We know we've checked all the boxes and now we're going through the process.
What's been an interesting development recently is that we've gotten some very senior level, high level assistance from a very influential and knowledgeable professional who has opened the opportunity where we now understand there's about four other avenues for getting mandatory that is available to us. Any one of those could be a factor. You know, that is a change. Also, one avenue could be having influence on the NEC itself, let alone other organizations that have the ability to grant mandatory. We've achieved what we needed to. We've proven what we needed to do. Now we've kind of got to get through the bureaucracy of this. The industry is generally given about two years to adopt.
Once it's formulated as mandatory, all of the manufacturers, et cetera, have to start getting ready and getting, you know, acquiring supplies and, you know, of course, you know, perhaps licensing our technology. It'll be, we'll feel it immediately, even though let's say the mandatory date may be deferred. We're very excited about this development. There's precedent for this. It's been a new development for us in a really positive way. It's increased our likelihood. You know, for us, we believe it's a question of when we get mandatory, not if. Now our pathways for that have been multiplied.
It's great to have more shots on goal to use the opportunity.
Exactly. Exactly.
Maybe I'll parlay the regulatory side and say, maybe you can walk us through kind of your go-to-market strategy. I know you guys acquired the Belami Lighting websites and then obviously the retail partnerships with Home Depot and Wayfair recently. Maybe we can touch on that.
Sure. You know, it's the multiple channels that we've targeted and that we're executing on. We started with the websites and where we have over 60, you know, lighting and home decor websites. It gave us a platform to be able to market and educate what our product is, how it works, how it gets installed. You know, using that model of, we call it lead and seed. We're leading the market and we're taking third-party manufacturers' product and we're enabling, you know, consumers initially to buy with our retrofit kit and make it plug and play. We've accelerated those sales and we started to just do it with the high-end items. As we're landing more and more product now, you know, ready to go and ready to be installed. Those websites primarily have been serving the B2C market to the consumer.
We just hired Huey Long, who worked at Amazon e-commerce. He had started actually Amazon Basics, Walmart, Ashley Furniture that went online. They're very big in wholesale, not just retail. He has built a billion-dollar business with Ashley Furniture. We're going to be using our websites to support our B2B model. As we go traditional way to builders and developers where we could supply product directly, et cetera, there's a very big and a growing trend for builders and the professional to be buying these products online. Home Depot is seeing that as well, not just consumers, but builders and the developers buying it online. Our plan is to continue to build out our websites, our 60 websites to support the B2B and the B2C. That's a really important aspect. As a channel, the builder, the pro is important.
We've targeted it not just when we announced many projects that we've launched and we'll be launching to include, you know, the commercial and real estate development and builders and also to hotels, which we've already begun to supply as we plan to help hotels because they're required to renovate every seven years, five to seven years, some earlier than seven. You know, we think that that's a great channel, you know, on the commercial development side. Then we go to the big box where we're doing retail.
I can only imagine there's quite the backlog in the hotel upgrades via COVID.
There is. With COVID, even more delayed with some of these hotels. We have the big box where we're selling to already Home Depot and others, you know, that will come online, we believe. As well as the, you know, as we then we get to the other websites like a Wayfair, which we've announced the collaboration so that, you know, they all have seen how we're selling online, you know, with our plug and play solution. They're very much, you know, part of that growth and our growth strategy.
They're feeling the lighting companies are realizing that the velocity of their lighting sales, a turnover, people easily replacing their fixtures by clicking them in and clicking them out, it becomes more fashion-oriented and that their time for replacing fixtures, you know, is going to move, you know, below 10 years to, you know, where today may be 10- 12. You know, we think it's going to, you know, be much lower. It becomes more of a fashion. I'm tired of these outdoor lights or these sconces and you're just replacing them because it's so easy. You don't need an electrician, et cetera. You just click them in and click it out. What we're doing is in all these sales initially, we're getting the receptacles out there. That's why we call that our razors, right?
We've announced that by the end of this quarter, the Q1 of 2025, we will have about 20,000 out there in the U.S. and in Canada.
Yeah.
Right? We think that throughout the year, we'll be adding tens of thousands more. Once you have the receptacle in, then it becomes very interchangeable. It's because we know that anything that plugs into that is our technology as well. You know, anything that's smart or a sensor or a chip or a sound that connects to either side, the receptacle or the plug, is our patents. I'd like to say all roads lead to Rome. We know that no matter what gets plugged into it, you know, we're going to benefit from it from a revenue perspective.
All roads lead to SKYX.
Exactly. Exactly.
You know, that was a great overview of your multi-pronged sales strategy. I think it's one of my favorite things about the company is just the strategy into how to lead and enter into the market has been really quite sound, in my opinion. I noticed you forgot one of the most exciting parts, which is the GE licensing deal.
Yeah. Well.
That as well.
Right. That's a really good question. I didn't forget it, but it's never due. It's ultimately, you know, once we're mandatory, by the way, this will be global because 20-30 countries automatically follow our National Electrical Code, the code provisions. The way we scale and the way we enable other manufacturers and distributors is to license our technology. That's really an important part of our strategy. It gives us leverage. You know, we're not manufacturing and supplying the world. It's an open platform. We know that from models of Apple and what we learned about the Sony Betamax and the VHS tapes that, you know, it doesn't pay to keep everything in your pocket with respect to intellectual property. The licensing that we're working with with GE is not exclusive.
There are opportunities for us to license, you know, with or without GE to third parties around the world. We are very excited about that. We think that the margins are great. You know, we target about 85% margins. You know, it is our intellectual property. We have global patents. We feel very good about this part of the business as we scale. Thanks for asking.
Yeah, of course. It's funny, you know, I talked to so many small companies and in many cases, that would be all we would talk about. In this case, we've got so many different partners, so many big names, so many different things going on that's, you know, I had to remind you about the GE.
No, that's fair. Fair enough.
That's great though. I mean, obviously so much going on. One of the big milestones I've been looking for for a long time and I think we're almost there is broadening the assortment beyond just the pendant lights into the wall sconces, the exit signs, all the other interesting lights that make this a program that then the builders and the hoteliers could use and maybe the insurance guys get involved with. Where are we in kind of broadening that category coverage and how do we think that rolls out over the next?
That's been a critical element to, you know, supplying the hotels and the big developers. We have the fairly broad range already of the pendants and indoor lighting. We've landed already the wall sconces for indoor and outdoor where they're ready to go. In production are our fans and then the surface mount, the high hats, the spots, which we have global patents on. Those are in that market, billions of units. Those are also standard and smart. Exit signs because the hotels and the developers need those and the emergency lights. Just take an exit sign, for example. Those have to be maintained and inspected at least once a year because there's a battery, backup battery in those. It's like put in like an old school fixture.
You have an electrician come, there's wires, you got to cut off the power. With our solution, you know, a maintenance person could come and click out the old exit sign and click in the new one, bring the old one back to the warehouse and check the battery. You know, they get damaged quite often in some of these buildings and hotels. Same thing with the emergency lights. The solution, the big developers and the hoteliers really, you know, like the whole idea. You can imagine how many high hats they have and spots in those big buildings and ballrooms, et cetera. The overall LED, you know.
I've recently gotten into the habit of counting lights whenever I go into a room, and it's surprising how many lights there are.
There is a compared to wall outlets, people don't realize that it's a 6-10x times.
Yeah.
You know, and so it's really, you know, really amazing on that. As we speak about the hotels, you know, one of our, we raised in a preferred round at a $2 conversion price above market or premium to market. We raised $11 million, now $12 million with Lance Shaner, the Shaner Group that owns 60 Marriott's and 20 Hilton's to invest in, you know, what does he know that we don't know? He knows he's number one going to be a consumer buyer of our product. And he obviously believes in what he does. And his hotels, you know, he's got renovations happening, you know, all the time, right, and cycles. So there's a great, there's another validation. We've got a lot of major developers that are shareholders that have put in strategic capital.
We, you know, they all get it and they all see that this is a great solution for what they have. This is all before mandatory. Our opportunity in terms of getting to our TAM, our total addressable market, is huge without mandatory. With mandatory, it becomes kind of astronomical. That, you know, from an accomplishment perspective.
You sort of stole my next question out of my mouth, which was, do you need NEC mandatory for this to be successful? Clearly not. This is great. The next thing I'm really excited about, specifically a product that you guys have that I think is really unique, is the turbo fan slash heater. I plan on doing a renovation, so maybe you can give me some sort of idea when to start it, when that's going to hit stores.
Sure. Sure. And you know, we have a, it's a unique, one of a kind. We have the global patents for a four-season all-in-one fan that has a turbo heater underneath it, under the fan. It's part of the fan. So you're getting the heater that everyone has on the floor that's a fire hazard because this is all about safety as well. And it's now part of the fan, you know, so you use the fan in the winter and the heat, you know, the fan in the summer and the heat in the winter. And you know, you've got a, you know, not only a four-season, but one that people could save energy because they could just heat the bedroom and not the whole house, right? So in a very safe way.
We are looking at the second half of 2025 to actually start selling those. We think we know the margins are strong on those. We target over 50% or more. It is part of the component where we believe it will get us to cash flow positive in the second half of 2025, which has been part of our expectation that we have put out publicly. It is an important part and no one else has it. It will be smart as well. It will have the smart features. You could use Alexa, Google, you could talk to it. It will have an emergency light, just like our generation two. We also have another product, which you may not have seen, Chris, called the Fandelier. It is beautiful. It is a light, it is a light, round light. It has got a fan in the middle of it.
It's a fan and a light. It's very, very, very attractive. That'll be another product that we're getting really great response from and that we've, it's our invention as well. Again, works in the, you know, with the smart part, smart option.
Plenty breaking news at Lithium here.
Yeah, the Fandelier. It'll be really exciting. As we start to open up the minds of other developers, you know, the fact that we will license this, that we'll have the receptacles in the ceilings and sconces ready to go and all you need is something else to plug into it, like a light or a fan. Someone else is going to invent something and they're going to license it so they could plug it into our outlet.
It's a whole ecosystem on the surface.
It's an ecosystem. Could be a, you know, could be anything. We'll have in our generation three, you know, we'll have a lot of other features, you know, because it's voice activated. We could have 911, different things.
When should we expect generation three to be available? Now that we've just got a couple of minutes, I'll leave it with that one.
Yeah. You know, I think to be conservative in terms of actual sales, I think we're looking at, you know, maybe, you know, 2026, early 2026.
That's fair. It sounds like you've got a lot on your plate with expanding the product lineup and then you've got the turbo fan heater and the Fandelier coming that it's a lot for the second half of 2025.
Yeah. That's really where our, you know, it's all about focusing on the product and landing it. You know, that's really, if there's any, you know, shifting of deliveries or et cetera, it has an impact on revenues, but it's not a catastrophic one. It may, you know, sales may be in the quarter earlier or quarter later than we thought. You know, we're confident that it's, we're going to benefit.
As a guy who's followed the company for a long time, I've been pleased with the progress you guys have made. Yes, certainly there's been delays that have come along from kind of things that have happened outside of your control, chip shortages, COVID, et cetera. Now we're kind of staring down tariffs. I think you guys have done a good job of executing to your goals. The vision of the company is just fantastic. I can't wait to see where it goes.
Yeah. Thank you. It's exciting.
All right. With that, I'll turn it back over to Rob and let him wrap up.
Fantastic. Chris, thank you so much for stepping in and moderating, lending. Of course, thank you so much for your participation here in the event. Appreciate it as well. I'll say to everyone watching here, if you have any questions, I would like to schedule a meeting here with SKYX. You can shoot me an email, Blum, blum@ lithiumpartners.com. I'll go ahead and route that over to the company here. We have additional presentations and fireside chats coming up next. Please stick around for more. Again, Chris, Lenny, thank you so much.
Thank you.
Thanks, Rob. Thanks, Lenny. Bye.
Bye.