SKYX Platforms Corp. (SKYX) Earnings Call Transcript & Summary

Good morning. Welcome to SKYX Platforms Corp. Shareholder Conference Call. Before we begin, I would like to remind everyone that certain statements made during today's call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include expectations regarding the announced merger. It's anticipated closing to expect benefits of the transaction, integration of businesses, anticipated synergies and the future growth and performance of SKYX. The transactions remains subject to the satisfaction or waiver of applicable closing conditions and actual results may differ materially from current expectations due to various risks and uncertainties, including those described in SkyX's filings with the Securities and Exchange Commission. Forward-looking statements speak as of today Skyx undertakes no obligation to update them except as required by law. With that, I will now turn the call over to Ronnie Cohen, Executive Chairman. Thank you. You may begin.

Thank you. Good morning, everyone. We're very excited about this call and about the merger, Skyx Deako merger. We will have today our President, Steve Schmitz, former CEO of A.C. Nielsen with us, we will have Derek Richardson, CEO of Deco, Founder and CEO of Deako and we will have Lenny Sokol, our CEO, and they will each one give some color and their aspects of the deal. Before I move it to Steve Schmitt, we would like to say -- or I would like to say the following. We are extremely excited about this merger. We strongly believe it's not only game-changing for Skyx and Deako. This is game-changing for the smart home and AI industry. If you ask yourself how come every car Today, in all cars are smart, while 90% of homes are not. The answer is that the complexity the time consuming the rigorous wiring are tremendous barriers to make homes become smart. Technologies are so advanced while homes are 90%, not smart. And globally, it's a higher number. We believe -- strongly believe that this SkyX merger with Deako will revolutionize the smart home and AI industry. What we offer here, this offering is -- eliminates all the hardwiring and weeks of making a home become smart within its or hours at maximum. Every home has about 90 outlet boxes, electrical outed boxes, we aim to control and lead all of those boxes with all in plug-and-play solutions. While it takes usually several companies to fill those 90 outlet boxes from our home companies, smoke detectors companies, Wall Swiss companies, wall outlet companies, lighting companies, ceiling fan companies. We offer the entire solution where all our competitors need a few of them to do that, 90 outlet boxes at our average per home in America, while we offer an all-in-one solution with all plug-and-play from wall outlets, all the way to the wall switches to smart home plug-and-play products and smart lighting, smart ceiling end and an entire smart home, all plug-and-play solution. So not only we're the only one that has the entire solution, we are -- our competitors that need 304 to make an entire home on 90 boxes smart are all doing it with wires. So those 2 elements the plug-and-play solution for the entire home and the fact that we can offer the entire complete solution for smart home, I think is game changing for SkyX and for the smart home industry. We for 6 months, had back and forth due diligence, we and Deako, Deako us, and we understood that our platforms are game changing. Therefore, Deako management led by Derek Richardson, Scott Vertis and their Board members and investor lead investor, Paul Jacobs, former CEO and Chairman of Qualpim; and Marwan Fawaz, former CEO of Nest all believe that our game-changing platforms are also game changing for the industry. The only aspect here of this merger, okay, our win-win situations. There's going to be huge cost savings because of consolidation of employees and software accounting and general administration, we're going to do 5x on the SKUs that Deako offers today to the builder market with all the leading builders, including DR Horton Toll Brother and many others and all of this will provide a lead position to control 100 boxes in home, all plug-and-play, safe plug-and-play solution, very important to say, safe plan-in-place solution. And by this, whoever owns those 90 outlet boxes, okay, might own the subscriptions monitoring data aggregation for our own use and study to improve AI and our products as well as open to licensing opportunities. So we are extremely excited after many, many meetings discussions and conversations. We're very happy to announce this, and this is just the beginning. We want to remind everyone this is just the beginning, stay tuned on this. because there's a lot more to say on the story. With that being said, I would like to have Steve Schmitz, our President, go over some bullet points and additional highlights. Thank you, Steve.

Ronny, thank you very, very much. As Ronnie said, we are really excited to announce the signing of this merger agreement with the leading U.S. AI Smart Home Silicon Valley back company, Deako. And we are aiming to significantly enhance our strategy to lead the smart home builder and hotel markets with our combined platform technologies. I strongly believe that our combined plug-and-play platform technologies with vast electronic real estate and endless offerings, including home, safety centers, smart home sensors, AI intelligence and much more will be game-changing for the smart home building and hotel industries. Some facts on Deako, in the past 5 years, Deako has shipped over 32 million units of its technologies, including a smart home plug-and-play switches and over $26 million in revenue in 2025. -- they are a leading technology supplier to over 50 U.S. builders, including D.R. Horton, Toll Brothers, Rise well homes, Adam Homes, Miranda Homes, Shay Homes, Schumacher Homes, among others, and is expected to fast track SkyX technologies to the vast builder market. Their lead investors, as Ronnie talked about and Board members include all Jacobs, former Chairman and CEO of Qualcomm and Board member, Marwan Fawaz, former CEO of Nest. Additionally, Deako is a smart home AI platform and intelligent lighting company with 20 U.S. and global patents and patents pending applications for plug-and-play advanced smart homes and AI activated lighting wall switches. The merger agreement between Skyx and Deco will enable SkyX to address from a the smart electronic real estate of electrical outlet boxes in homes and buildings, including wall outlets, wall switches, ceiling outlet boxes for smart homes and safety products, lighting, ceiling fans, smoke detectors, among others, all with the advanced and smart home plug-and-play solutions. Most smart home solutions today requires Roni talk time consuming and very costly wired installations and address only part of the A to Z opportunity. While the Skyx Deako merger is aiming to facilitate an entire ADC solution, all plug-and-play for advanced smart home AI platforms and products. As previously stated, the merger is expected to fast track SkyX's technologies and products into Deako vast builder market footprint of over 50 U.S. builders, including those named above. Additionally, this merger will open the door for Deako products into SkyX products including Marriott and European hotels, Miami's $4 billion smart city, among others. This merger is expected to increase Deako's SKU count to builders, hotel and Pro markets fivefold. Additionally, this merger is expected to provide deployment opportunities of millions of combined products into the builder, hotel and Pro market and future recurring revenue opportunities from plug-and-play products, interchangeability, AI services, monitoring, subscriptions, licensing, among others. This merger will enable significant cost saving synergies, including overhead consolidation in software, accounting, general administration, sourcing efficient optimization and other benefits. This merger will expand the collective patent portfolio where Sky has over 100 patents and pending applications in Deako with 20 patents and patents pending applications to over 120 patents and patent-pending applications related to platforms, smartphone, AI and plug-and-play products. Finally, I have to say in closing that working with Ronnie over these many years, I need to emphasize is this merger and its growth potential really demonstrate how Ronnie's vision and business acumen are as unique as is inventing capabilities. Great job. With that, let me turn it back to Ronnie.

Thank you very much, Steve. And we will now go to Derek Richardson, Founder and CEO of Deako.

Good morning. We're very excited to join Ronnie, Lenny and the entire SkyX team. I'm Darren Richison, Founder and CEO of Deako. Before starting Deco, I was a sales leader at BlackBerry and Cypress Semiconductor. I'd first like to mention that all of us to by half included along with our Board members, Paul Jacobs, the former CEO and Chairman of Qualcomm; Marwan Fawaz, the former CEO of Nest our Executive Chairman, Scott or Trees, are all very excited about our merger with Skyx and its game-changing platform technologies. That includes its all-in-one smart home and AI platform technology as well as its plug-and-play ceiling let receptacle, which was voted in by AnSem and the NFPA's National Electric Code based on its significant safety benefits. We view our merger with Skyx much like the way PayPal started. -- on Musson Peter the decided to merge and become PayPal instead of competing. With the Skyx Deako merger, we're not competing. -- or complementing each other. Deco leads with our plug-and-play smart wall switch platform technology is SIs with this game-changing plug-and-play sealing platform technologies. We see tremendous opportunities in combining our pad mid platform technologies here just some of those opportunities. Deako is a leading technology supplier to the builder market with over 50 U.S. builders including D.R. Horton, Toll Brothers, Rise well Homes, Adam Homes, Maranaomes, share homes and she market homes among them. In the past 5 years, Deco shipped over 32 million units of our technology including our smart home plug-and-play wall switches with over $26 million in revenues in 2025. The merger is expected to fast-track Skyx's technologies and products into Deco's vast builder market footprint of over USD 50, including those aimed above. will also open the door for deco products and disguises projects, including Marriott and European hotels and Miami's $4 billion smart city development. The SkyX Deako merger is expected to increase DECO's SKU count to the builder, hotel and Pro markets Folk. Both Smart Home solutions today require time-consuming and costly wired installation and address only part of the opportunity. The SkyXteco merger aims to deliver an entire A-disease solution, all plug-and-play for advanced smart home AI platforms and products.

Thank you, Derek. We very much appreciate and Derek Richardson will lead our growth, including builder, hotel and Pro segments. With that being said, I would like to have Lenny Sokolow address some financial aspects here. And we will go afterwards with a few additional comments and Q&A to come after. Let me please go with your highlights.

Thank you. Thank you very much, Ronnie. We have -- we think that the opportunity for this merger is an exceptional and we have a lot of huge opportunity with respect to the 2 companies because there's a lot of complementary in collective benefits to the merger, which we'll realize in terms of the bottom line. So we're excited about that, and we're excited about the teams and the collective teams together, it's -- gives us a huge dimension and a huge background and level of experience. The -- and just to reiterate, the consideration that we're skyx is issuing is 25 million shares, and they're subject to a 2-year lockup and leak out agreement. And this is really comprised of a 1-year full lockup in addition to 9 to 12 months of a leak out. The overall, these shares are subject to a 10b5-1 trading plan. When the dust settles and post merger, the SkyX shareholders will own 84.4% of the company and the Deako shareholders and their lender will collectively own 15.6%. In addition, SkyX is paying Deako's lender payment of $4 million by closing and will issue a note of $8.5 million with $2.5 million getting paid in the Q1 of 2027 and the remaining $6.25 million in Q4 of 2027. That gives you the highlights and more detail in our filings, and we look forward to following up with questions and answers the -- Again, I think that this merger demonstrates Ronnie's vision, this perseverance on this project and the focus and is his ability to creatively put together the plan and to actually be the leader in the smart home and AI market for homes, buildings and hotels. So I think this is an example of what we -- what we've seen and witnessed over these years and it's a continuation in the -- and this is not the culmination, but only the beginning of this unbelievable really game-changing and not be used as overused word, but very disruptive approach by very -- 2 unique companies that absolutely complement each other in this space. So with that, I could rather turn this over to Ronnie, and then we could go into questions and answers.

Thank you, Lenny. Again, more aspects of this deal. We also see a tremendous validation to what we put together so many years -- if you think about it, Qualcomm is a world-leading company when it comes to platforms. I want to give credit to Barry things that over a year, by in over a year, put together and said, Skys can be the Qualcomm of smart home. And Barry did a really a nice report, analyst report, great analysts, and he said it, I mean we never exchanged a word about this. But we were talking to. And what's very interesting to know if not a lot of people know, but what Qualcumdid and Paul Jacobs really this, he is the person that approached she jobs and told them cell phones is not only to talk, cell phones or platforms that you can have apps and what much more -- and really, that's how the iPhone and the platform happen, okay? And he brought it up when he saw our platform and the potential of electronic real estate we have there what homes can do and people did know our presentation for years, we put Apple phone with separate apps and then on the phone all consolidated in all-in-one personal, I would say, personal platform. We provide home platforms, room platforms, and we have 5x more electronic real estate than an iPhone so just imagine what could come. As Steve mentioned, we -- in this quote to date, there's endless offerings that we can come with over their software and electronic real estate that can provide us to enable so much in AI and home safety, stay tuned on home safety because safety was always the main foundation of our company. Every invention we have has to have the safety aspect and a large addressable TAM addressable market. And continuing with this and getting to that point with the merger of such a disruptive company with such a large market share like Deako with their smart AI and switches and plug and play in the same concept that we have, they are on the wall and we are on the ceiling. This is -- as I said in the beginning, I strongly believe and we strongly believe, I think both teams of Deako and Sky is going to be game changing not only for us but game-changing down the road to the smart home industry. It provides validation to our patent portfolio to our disruptive technologies very strong patents we have here, U.S. and global and really opens the door to recurring revenues, AI services, monitoring subscriptions and also opening the door for, as I mentioned earlier, the consolidation cost savings on software teams, okay, and also enhancing our path to cash flow positive. The terms of the deal are really speak for themselves how much value we bring for Sky and the shareholders. And we are very excited -- at this moment, there's a lot more we can elaborate, but I think we said enough, there's a press release there with some detailed information and very nice quotes from Paul Jacobs, former CEO of Qualcomm and from Marwan, CEO of Maana, CEO of Nest former CEO of nest and our President, Steve Schmitt, former CEO of Nielsen; as well as Derek Richardson, CEO of DCO and the person who's going to lead our growth and several segments here. So with that being said, we're happy to take some Q&A if people in this early morning are around, we welcome questions. Thank you.

[Operator Instructions] Our first question is from Joe Gomes with Noble Capital.

Good. I'd like to start off, maybe just if they get a little bit more of the financial details here. I don't know if you can provide what kind of adjusted EBITDA Deako did in '25 on that $26 million of revenue what was the year-over-year growth for revenue, adjusted EBITDA? What -- when you talk about significant synergies, what kind of number are we talking about here in terms of potential synergies?

So we did not publish the numbers yet at DCO for the past 5 years as a growing company, emerging company with over 50 builders, including the some of them among the biggest in the world and in the country, very good reputation to their product and reliability of the product to stay -- to get to those builders, maintain those accounts for so many years speaks for itself. The consolidations are many. We're not disclosing the numbers. We're just starting here today, but we have great plans to enhance our sales significantly without even increasing sales team because if you think about it, Deako already there sitting with the same buyers that buy smart wall switches and wall outlets, receptacles, the same buyers buy other smart home products, smoke detectors, light fixtures, ceiling fans, those are the electrical buyers for those builders. So we don't need to grow our sales team. And as we mentioned, the SKU count is going to be 5x, so that's quite significant. We see those opportunities that not only will bring much more revenue to Sky Xwith, we believe, strong margins and will help us where our process and progress is to get into -- excuse me, to cash flow positive as well. But the consolidations will be significant and the savings will be significant in software and accounting and administration in other areas. But the good news is with the sales we don't need to increase they're ready there in the places and we have -- we're already in the hotel places. So this is really a great synergy. And as Steve mentioned earlier, we can put their products -- they -- our products, obviously, in those mass builders leading builders and we can also take their products through the hotels we're doing the smart communities, the $4 billion smart city in Miami, another smart community, we do in North Carolina. We're doing other projects around the country that we announced -- so the synergies are there and the business is just going to grow with not only not growing our overhead, we believe we're going to reduce our overhead significantly and those results are going to show in the near future.

Okay. And just you talked about beginning on -- but now with the merger with you guys, we'll be able to go back to the retrofit market also to significantly expanding that addressable market. just trying to clear that, is that what you're saying?

And I'll tell you even more than that because 1 of the things that Deako has, they have an aftermarket because it's a plug-and-play to have an aftermarket upgrade division -- and we can tell you that part of our diligence, we were very impressed how when even a builder doesn't want to invest in too many switches at the beginning, and he decides to do like entire home with Deako switches and wall outlets and everything else. But on the Smart Suisses, they'll go only with a few, but what we saw very impressive with very high gross margins, how the Deco sales force goes to those homeowners and say, "Hey, you can by a 10 pack, a 20 pack and make your entire on smart switches, all you need to do is plug and plate. So they ship those 10, 20 switches. And then within 10 minutes, you plug it in, all of them and your wholly go to their app, set it and your entire home is controlled an app. So they already have this model and now they can use the same sales force they have. to increase to do the upgrades with our systems, okay? Because once you have the receptacle the way we work, our upgrades can be significant, starting with, for example, like what's popular now we see great results with the smart turbine we have, and we're coming with additional models for builders and retail for this coming winter. We're going to expand our thing, and this is going to offer much more upgrade opportunities in the market and Veeco sales team are really impressive with Derek, which has been put together there. We're really impressed about their abilities, their penetration -- and now this is going to have much more SKUs and larger gross revenues and gross margins.

Our next question is from Barry Sine with Litchfield Hills Research.

Congratulations, a very exciting transaction. Derek, on your website, you talk about how builders actively steer clients away from smart home technology due to a number of things, including high support costs I know that personally, just yesterday, I wrote a $3,000 check to a Lutron installer because the computer in my Lutron system failed, and they had to spend 3 hours manually reprogramming. So I certainly understand firsthand the value of your technology. A question on to what does artificial intelligence in a smart home system to, what features, what will it benefit the homeowner?