A Primer on SKYX Platforms

A business overview for handy reference

Introduction

• SKYX Platforms is a technology company focused on developing and commercializing advanced, safe, and smart plug-and-play electrical solutions for homes and buildings, centered around their patented ceiling outlet receptacle technology.

• The company aims to disrupt the lighting, ceiling fan, and smart home industries with products designed to be easier, safer, and more cost-effective to install.

• SKYX Platforms (SKYX) has been another winner in our portfolio, stay tuned for the Quick Take with investment implications.

Products

• Sky Plug & Receptacle: This is the foundational technology, a weight-bearing power plug that enables light fixtures, ceiling fans, and other electrical products to be safely installed in seconds without touching hazardous wires. The system consists of a fixable socket (receptacle) that connects to the ceiling's electrical box and a revolving plug (power-plug) that attaches to the fixture. This technology is available as a retrofit kit.

• There are numerous plug-and-play products that can be fitted in the receptacle:

• Smart Products (Gen-2): These products incorporate advanced smart and safety technologies, with unique designs controlled by the SkyHome App or voice control. They can be integrated with AI home assistants and other smart devices. Gen-2 products include:

  • Smart Universal Power Plug & Receptacle: This system includes a smart power plug with an electronic board that is embedded in light fixtures and a ceiling receptacle. The SkyHome App controls it and has scheduling, dimming, and emergency lighting features.

  • Smart Plug and Play Ceiling Fans: These smart ceiling fans are designed to be installed with a matching ceiling receptacle and controlled via the SkyHome App or voice control.

  • Smart Plug and Play Lighting: These smart light fixtures are also designed to install with a matching ceiling receptacle, controlled via the SkyHome App or voice control.

• All-In-One Smart Sky Platform (Gen-3): This is an advanced platform designed to enhance safety and lifestyle. It integrates various smart home features and is intended to serve as a gateway for safe and smart technologies. The platform includes features such as a smart smoke detector, a carbon monoxide detector, a Wi-Fi extender, and a backup battery. The platform is designed to be installed over existing ceiling electrical boxes.

• The Smart Sky Platform has the ability to enhance the performance of smart home products' features, including Wi-Fi and Bluetooth, as well as sensors and alarms.

• The Smart Sky Platform is an open system that can integrate with existing and new smart home devices. It also has a large electronic real estate to accommodate various software and electronic microchips, enhancing performance of the platform's features.

• Recessed Lights: The company has a patented plug-and-play recessed light that eliminates the need to touch hazardous wires and can be installed in seconds. This product is available in round and square formats in four-inch and seven-inch sizes.

• Other Products: SKYX also offers a variety of other plug-and-play products including chandeliers, holiday lights, kids lights, wall sconces, exit signs, and emergency lights.

Business Model

• "Razor and Blade" Model: SKYX utilizes a "razor and blade" model, where the ceiling outlet receptacle is the "razor," and the various plug-in light fixtures and other devices are the "blades". This strategy aims to establish the company's receptacle as a standard, with ongoing revenue from the sale of compatible "blade" products.

• Product Generations: The company has multiple generations of products that build upon each other.

  • Gen-1: The original weight-bearing power plug and receptacle

  • Gen-2: Smart plug-and-play products that include smart capabilities

  • Gen-3: The all-in-one Smart Sky Platform which incorporates a wide range of smart home technologies.

• Product Sales: SKYX generates revenue from the sale of its various products, including:

  • Standard and Smart Plug & Play Fixtures: This includes light fixtures, ceiling fans, recessed lights and other electrical products that are compatible with the Sky Plug & Receptacle.

  • Retrofit Kits: These kits allow existing fixtures to be converted to SKYX's plug-and-play system.

  • Smart Home Products: This includes smart versions of its fixtures, as well as the all-in-one Smart Sky Platform which incorporates features such as smoke and carbon monoxide detectors, and Wi-Fi extension.

• E-commerce Platform: SKYX operates over 60 e-commerce websites that sell its lighting, ceiling fans, and other home furnishings. This platform serves as both a direct sales channel and a marketing tool.

• Licensing and Royalties: SKYX anticipates revenue through licensing its technology and products in the US and globally. This includes the licensing of its patented recessed light technology and smart home platform.

• Subscription and Monitoring Services: The company plans to offer subscription services for its smart home platform, which include features such as fire alarms, home intrusion alerts, and emergency response services.

• Target Markets: SKYX targets various sectors including retail customers, builders, and professionals. The company aims to make its products a standard in homes, hotels, offices, and other buildings.

• Strategic partnerships: With the likes of GE Licensing, Ruee Appliances, EGLO, Golden Lightening and retailers like Home Depot, Wayfair, Kichler, and Quoizel.

• Global Expansion: SKYX intends to expand its sales to additional countries in Latin America, Europe and Asia.

• Focus on Safety: Management believes its products can save insurance companies many billions of dollars annually by reducing fires, ladder falls, and electrocutions among other things. Hence management expects that once the full product line is available, insurance companies may recommend or offer discounts for using their products.

Growth

• Massive Total Addressable Market (TAM): SKYX claims a TAM of over $500B in the US alone with over 4.2B ceiling applications. Management estimates that there are 1B applications globally, with potentially 10B globally.

• Multiple Revenue Streams: The company anticipates revenue from product sales, royalties, licensing, subscriptions, monitoring services, and the sale of global country rights.

• This includes, as mentioned in the 10-K, potential "subscription services as part of our Smart Sky Platform, including, among other services, communications, fire alarms, home intrusion alerts, emergency response services and monitoring services."

• E-commerce Platform: SKYX leverages its 60 e-commerce websites for lighting and home decor to drive sales and market penetration. Acquired via the Belami purchase in 2023 (per FY23 10-K).

Strategic Partnerships:

• GE Licensing: A five-year agreement for U.S. and global licensing of SKYX products. GE believes in its products’ potential to become a standard and is helping SKYX with licensing to various industries such as tech, smart home, AI, lighting, ceiling fans, and electrical.

• Ruee Appliances: A global lighting supplier and manufacturer, providing production capabilities, financial backing, and distribution.

• EGLO: a European World Leading Design and Manufacturer of Decorative Lighting and Ceiling Fans.

• Golden Lightning: a US leading elegant lighting company and manufacturer.

• JIT Electrical Supply: a leading electrical, lighting, and ceiling fan supplier to the building and professional industries.

• Retailers: Collaborations with Home Depot, Wayfair, Kichler, and Quoizel to expand distribution.

Product Development & Innovations:

• Three Generations of Technology: Gen 1: Basic plug-and-play power plug for lighting and ceiling fans.

• Gen 2 (Smart): Smart plug-and-play versions with app control (SkyHome App), WiFi, BLE, and features such as scheduling, dimming, and emergency backup.

• Gen 3 (All-in-One Smart Platform): An open platform with advanced safety and smart features (e.g., smoke detectors, carbon monoxide detectors, Wi-Fi extender, sensors, speakers, backup battery)

• Gen 3 is designed to integrate with other smart home systems.

• Recessed Lights: SKYX has developed a new patented plug-and-play recessed light solution, for a multibillion-unit market. It’s a small product but one can spend 20 to 30 minutes on the ladder while installing fixtures or recessed lights, SKYX’s versions take a fraction of that time and are a lot safer.

• Expanded Product Line: The company plans to expand its product line to include chandeliers, kids' lights, holiday lights, smart ceiling fans, wall sconces, exit signs, and emergency lights, all utilizing the plug-and-play system.

Market

SKYX Platforms Corp. is targeting multiple market segments for its products, encompassing both residential and commercial applications. The company's strategy is to make its products a standard in every home and building, and to achieve this they are targeting the following segments:

• Retail Customers: SKYX aims to sell its products directly to consumers through its e-commerce platform of over 60 websites and through retail partnerships with major retailers like Home Depot. The company's products are designed for ease of installation, making them attractive to do-it-yourself (DIY) customers.

• Builders: SKYX is targeting the builder market, offering its plug-and-play technology for new construction projects. The company's products allow builders to deliver smart homes as a standard, similar to how electricity and appliances are provided. The products also offer benefits like faster installation, reduced labor costs, and the ability to expedite the Certificate of Occupancy process. A January 2025 deal with developer Jeremiah Baron Companies for 140 commercial units representing the initial rollout of overall projects testifies to the potential.

• Professional Channels: SKYX is targeting professional installers and electricians with its products, offering time and cost savings on installations. The company is collaborating with leading lighting companies to expand its reach to professionals.

• Hotels and Hospitality: SKYX's technology is well suited for hotels and other hospitality venues, offering easy installation and maintenance, as well as smart home capabilities. The company's products can significantly reduce installation time in large hotels.

• Commercial and Industrial: The company's products are designed for use in commercial buildings, retail spaces, and other industrial applications. This includes offices, schools, hospitals, and elder living facilities.

• Other Facilities: SKYX's products are also intended for use in other types of facilities such as rental properties, cruise ships, and hospitals.

Mandatory standard?

• SKYX has filed an application with the NEC seeking mandatory safety standardization for its ceiling outlet receptacle platform. Needless to say, if this is approved, it would significantly boost sales by requiring the use of SKYX's technology in new homes and buildings.

• There is considerable progress:

  • SKYX's weight-bearing safe plug-and-play outlet/receptacle has already received NEC inclusion and is represented by ten different segments in the NEC Code Book.

  • The NEC has adopted a change to the definition of "receptacle" based on SKYX's technology, which management considers a significant development.

  • SKYX has received NEC generic name approval for its weight-bearing safe plug-and-play outlet/receptacle for ceilings (WSCR) and its ceiling plug (WSAF).

  • And, from the FY23 10-K:

During the third quarter of 2022, the Company received NEC generic name approval for its weight-bearing safe plug and play outlet/receptacle for ceilings as WSCR (Weight-Supporting Ceiling Receptacle) for its universal ceiling outlet and WSAF (Weight-Supporting Attachment Fitting) for its ceiling plug. The specifications for the WSCR and WSAF received a standardization approval vote by the American National Standards Institute (ANSI) and the National Electrical Manufacturers Association (NEMA), leading U.S. standardization organizations.

• This is no guarantee that any of the company’s products will become NEC mandatory in any jurisdiction, but this standardization approval from ANSI and NEMA signifies recognition and acceptance of SKYX's technology by leading US standardization organizations.

• There are things the company can do to increase its chances and that is for the plug to become as ubiquitous as possible (basically becoming the de-facto standard). This is where licensing and partnering come in, which accelerate market acceptance.

Financials

• Rapid growth has receded as the company is orchestrating production

• Cash flow is turning with OpEx cash outflow declining by 39% sequentially to $2.6M.

• The company had $13M in cash and equivalents at the end of Q3 and added $11M from a preferred stock sale at $2 (8% dividend) led by global Marriott Hotel chain developer/owner (of over 70 hotels) Lance Shaner, and included significant insider investing.

Valuation

• There are 48.9M warrants options RSUs and convertible notes, and 5.5M from the October convertibles for a fully diluted share count of 156.9M shares, a market cap of $282.4M (at $1.8 per share) and an EV of $258.4M with the shares trading at 2x FY25 EV/S.

• Management emphasizes that it has sufficient cash to achieve its goals including being cash flow positive in 2025.

Stay tuned for our upcoming Quick Take on SKYX where we will discuss the investment implications