SKYX Platforms Corp. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter report. The audited statements received an unqualified opinion; the auditor highlighted substantial doubt about the Company’s ability to continue as a going concern.
Business context
SKYX develops patented plug-and-play installation and smart-home technologies for lighting, ceiling fans, and buildings. In April 2023, it acquired Belami, an online retailer of lighting, ceiling fans, and home furnishings. Belami’s results are included from the acquisition date, so FY2023 revenue is not directly comparable with 2022. The Company says e-commerce was its principal revenue source in 2023; it was also transitioning away from older standard products toward advanced and smart offerings.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $58.8 million | $32,022 |
| Cost of revenue | $40.7 million | $18,913 |
| Gross profit | $18.0 million; approximately 30.7% gross margin | $13,109 |
| Selling and marketing expense | $18.8 million | $8.0 million |
| General and administrative expense | $37.1 million | $18.6 million |
| Operating loss | $(37.8) million; approximately (64.3)% operating margin | $(26.6) million |
| Net loss | $(39.7) million; $(0.45) per share | $(27.0) million; $(0.40) per share |
| Adjusted EBITDA (non-GAAP) | $(15.3) million | $(11.6) million |
| Net cash used in operations | $(13.0) million | $(13.8) million |
Revenue and gross profit rose primarily because of Belami. The increase in losses reflected higher operating expenses, interest expense, and costs associated with the acquisition and expanded operations. FY2023 cost of revenue and gross profit largely reflect acquired retail activity; the prior-year revenue base was minimal. Margins above are calculations from reported figures.
Liquidity and debt: At year-end, cash and cash equivalents were $16.8 million; restricted cash was $5.6 million. Current assets were $27.3 million and current liabilities $24.2 million; reported working capital was approximately $3.1 million. Operating activities used $13.0 million, investing activities provided $3.2 million, and financing activities provided $22.7 million. Debt principal was $18.3 million, with a reported net carrying amount of $13.7 million after unamortized discount. Reported future debt principal payments are $6.9 million in 2024 and $10.6 million in 2026. The Company also reported $24.2 million of minimum operating lease obligations and approximately $3.9 million of GE royalty obligations.
Material changes and unusual items
- Belami contributed substantial new revenue and brought goodwill of $16.2 million and acquired finite-lived intangible assets. The purchase-price allocation was provisional and subject to adjustment through April 2024.
- SKYX raised $19.6 million during 2023 through convertible notes and equity offerings, and obtained $6.5 million in credit facilities and term financing. It also repaid approximately $6.2 million of prior debt using $2.0 million cash and 574,713 shares, recording a $1.2 million gain on extinguishment.
- Noncash share-based compensation was $18.0 million, up from $14.0 million. A $1.3 million inventory measurement loss was recorded in 2023.
- Stockholders’ equity increased to $16.2 million from $7.9 million, while the accumulated deficit grew to $145.8 million. Common shares outstanding increased to 93.5 million at year-end from 82.9 million.
- Subsequent to year-end, Belami sellers agreed to replace $3.1 million of cash consideration due in April 2024 with 10% convertible notes due May 2025, convertible at $3 per share. The Company also agreed to issue additional acquisition shares; the share count was subject to adjustment.
Outlook, management commentary, and risks
- Management expects 2024 revenue to exceed 2023, principally because Belami will be included for a full year and from anticipated sales of advanced and smart products. It also expects cost of revenue, selling and marketing expense, and operating expenses to increase. No numerical guidance is provided.
- The Smart Sky all-in-one platform was expected to become available in 2024; management also planned to begin subscription and monitoring services, but gave no assurance of timing or launch. These plans depend on product readiness, customer acceptance, manufacturing, distribution, and financing.
- Management states that recurring losses and operating cash outflows create substantial doubt about the Company’s ability to meet obligations over the year following issuance of the financial statements. Its plans include growing revenue and margins and raising additional capital through ATM, equity, or debt financing. The filing gives no assurance that financing will be available.
- Key risks include dependence on third-party manufacturers and suppliers, many in China; component shortages and shipping or geopolitical disruption; execution and integration risks at Belami; competition and uncertain smart-product demand; debt repayment and dilution; and cybersecurity, privacy, certification, and intellectual-property risks. The Company also identified potential disruption to product development from the Israel-Hamas war; it said operations had not been adversely affected to date.
- The Company reported effective disclosure controls and internal control over financial reporting as of year-end. The auditor did not provide an ICFR attestation. No material legal proceedings were reported as of the filing date.
Investor verification priorities
- Confirm current unrestricted cash, near-term cash burn, and funding availability; distinguish restricted cash from funds available for operations.
- Review debt and maturity terms, collateral, interest, conversion prices, and dilution exposure, including the post-year-end seller notes and note extensions.
- Track Belami’s operating performance and integration, the final acquisition-price allocation, working-capital adjustments, escrow release, and remaining share consideration.
- Verify commercialization timing, certifications, production capacity, realized demand, and gross margins for SKYX smart products and the Smart Sky platform.
- Assess whether the stated 2024 revenue outlook and planned subscription services are supported by disclosed orders, distribution agreements, and funding.