SKYХ Platforms Corp. (filing registrant: SQL Technologies Corp.) — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The filing identifies the registrant as SQL Technologies Corp., trading under ticker SKYX; it describes smart electrical installation and home-platform products.
Business context and outlook
The company was transitioning away from discontinued products toward its patented smart platforms. Management said it had working prototypes and expected commercial manufacturing and marketing of advanced products, smart universal power-plug products, fans and lighting, and the Smart Sky Platform to begin in the second half of 2022. It holds more than 60 U.S. and global patents and patent applications.
Management stated that March 31 cash was expected to support working capital and capital expenditure needs for at least 12 months. No revenue or earnings guidance was provided. A New York office sublease signed April 28, 2022 carries starting base rent of $26,893 per month for its first year, subject to landlord consent.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $6,971 | $100,185 |
| Gross income (loss) | $(24,166) | $17,677 |
| SG&A expense | $11,921,943 | $867,680 |
| Operating loss | $(11,946,109) | $(850,003) |
| Net loss | $(11,858,364) | $(986,939) |
| Net loss per share, basic and diluted | $(0.23) | $(0.02) |
| Operating cash used | $(3,358,486) | $(764,095) |
Revenue fell 93% year over year as the company reduced sales of discontinued inventory. Gross margin was negative in Q1 2022; given the very small revenue base, it is not a meaningful indicator of an established product-line margin. SG&A rose by about $11.1 million, primarily due to an $8.6 million increase in stock-based compensation and $1.5 million in additional marketing and product-development spending. Q1 2022 net loss included $178,250 of PPP loan-forgiveness income.
Cash and cash equivalents were $27.6 million at March 31, 2022, up from $10.4 million at year-end 2021. Financing activities provided $20.7 million, mainly from the February IPO: $23.1 million gross proceeds and approximately $20.5 million net proceeds. Investing activities used $239,578. The company reported total debt principal of $7.0 million, including $1.3 million of convertible notes, and total liabilities of $13.2 million. GE minimum royalty obligations totaled $3.538 million, due through 2023. Current assets were $29.9 million and current liabilities $4.7 million.
Material changes, risks and contingencies
- Common shares outstanding increased from 66.3 million at December 31, 2021 to 79.2 million at March 31, 2022; the cover reports 80.7 million issued and outstanding as of May 6, 2022. The quarter included IPO shares, preferred-stock conversions, service-based stock issuances and anti-dilution issuances.
- Non-cash equity compensation was $8.8 million in Q1. Outstanding options totaled 32.7 million shares at quarter-end, a substantial potential source of dilution.
- One customer accounted for 100% of revenue and accounts receivable; two vendors accounted for 100% of cost of sales. The company also depends on third-party manufacturers and suppliers, including operations in China.
- Cash deposits uninsured by the FDIC were $27.2 million. GE licensing rights depend on meeting manufacturing and quality conditions; the license expires November 30, 2023. GE royalty minimum payments remaining were $1.725 million for 2022 and $1.813 million for 2023.
- Management cited risks around product launch and market acceptance, revenue generation, financing, debt repayment, COVID-19 and supply/manufacturing disruption, competition, and economic uncertainty. It reported no material change in previously disclosed risk factors, no pending material legal matters, and no subsequent events requiring financial-statement adjustment or disclosure.
- Management concluded disclosure controls and procedures were effective as of March 31, 2022 and reported no material change in internal control over financial reporting during the quarter.
Key facts for investors to verify
- Whether manufacturing and commercial launches began on the stated second-half 2022 timetable, and whether customer orders converted into material revenue.
- Cash burn and the assumptions behind management’s at-least-12-month liquidity assessment, including planned hiring, marketing, development, and office costs.
- Actual and potential dilution from options, preferred stock, warrants, anti-dilution rights, and other equity awards.
- Repayment capacity and terms for the secured NBG note, convertible notes, and GE royalty obligations, including the 2022–2023 payment schedule.
- Customer and vendor concentration, supply-chain continuity, and the company’s ability to satisfy GE license conditions and maintain the license.