Improved Air Purification Market
Trends
US Government Announces “Clean The Air” and
“Improving Indoor Air Quality” Initiatives and Guidelines
Applied UV, Inc. (NasdaqCM: AUVI) (“Applied UV” or the
“Company”), a pathogen elimination technology company that applies
the power of narrow-range ultraviolet light (“UVC”) for surface
areas and catalytic bioconversion technology for air purification
to destroy pathogens safely, thoroughly, and automatically,
announced its financial results for the fourth quarter and full
year 2021.
The Company is also providing key operational metrics on results
of operations for the three and 12-month periods ended December 31,
2021.
Recent Business
Highlights
- Expanded distribution capability of Airocide® with three-year
distribution agreement with one of Europe’s largest Distributors,
Plandent Division, a wholly owned unit of Planmeca Oy, initially
targeting 21,000 dental providers in Scandinavia with the potential
to expand into Europe
- Further penetrated high-growth cannabis market with large order
from U.S. distributor
- Entered Prison and Correctional Facilities vertical market with
initial and follow-on orders from Tennessee Department of
Corrections
- Bolstered balance sheet with $19.3 million in net proceeds from
public offerings in 2021
- Announced a common share repurchase program through September
2022 to repurchase up to one million shares in open market
transactions
- Subsequent to the end of the first quarter 2022, completed the
acquisition of Visionmark, expanding our product offering beyond
fine mirrors to include furnishings allowing Munnworks to compete
head-to-head in new construction and remodeling in the luxury
hospitality market
Strategic Positioning and Market
Strategy
- Improved margins due to air purification products being
excluded from 25% China Tariff and improved product mix
- Backlog and pipeline building across multiple verticals
including, Dental, Long-Term Care, Hospital, Wine and Schools (EANS
II)
- Launching targeted sales and marketing initiatives in the
second quarter of 2022 to coincide with recent Government “Clean
The Air” initiatives aimed at cannabis, schools food preservation
and transportation, schools, long-term care (CMS), hospitality and
dental verticals. Programs will include digital, radio, a
promotional dealer portal, new web, consolidated and targeted
social media with the goal of driving sales in the U.S.
- Exploring joint venture and strategic partnerships offering
product placement pilot programs with established companies in long
term care, hospitality, logistics food preservation and
transportation as well as floral verticals providing a first to
market competitive advantage with market leaders (consumer &
commercial)
- Strengthening of the Senior Executive Team with CEO
announcement expected.
Max Munn, Applied UV's President and Interim Chief Executive
Officer commented, "2021 was a year of strategic acquisitions that
diversified our business and enabled us to quickly build a highly
effective air and surface pathogen elimination platform backed by
independent clinical research. We have made substantial progress in
identifying ways to further leverage the portfolio of assets that
we believe will enable us to address the growing global demand for
solutions that safely and effectively stop the spread of contagious
airborne diseases and are easy to implement. Key wins with
high-profile customers that serve large venues such as the Palace
of Versailles in France and Uruguayan School Systems, Armed Forces
Research Institute, US Army Aberdeen Proving Grounds, which further
validate both our strategy as well as provide referenceable
installations for new business pursuits validating our air
purification technology efficacy, effectiveness, and ease of
use.”
Munn added, "Globally, scientists, governments and healthcare
experts have been advocating for improving air quality to control
the transmission of airborne pathogens. Now, Governments are
mandating, and more importantly, funding and, driving, the
implementation of solutions that are proven to improve air quality
and protect its populations. There were four government initiatives
announced in the first quarter of 2022 including CMS’ (Centers for
Medicare and Medicaid) $3,000 reimbursement program for long-term
care facilities, the $2.5B EANS II grants for non-public schools
which provides funds for mobile and installed air purification
technology, the EPA’s new Clean Air Guidelines and lastly, the
White House’s Clean Air Initiative. Our go-to-market plans include
the selective pursuit of opportunities that are benefiting from
these market tailwinds. We have a solid balance sheet, a growing
pipeline and are on strong footing from an operational perspective
to execute our strategy and deliver value for our
shareholders.”
Financial Results
Segments
The Company has three reportable segments: the design,
manufacture, assembly and distribution of disinfecting systems for
use in healthcare, hospitality, and commercial municipal and
residential markets (Disinfection segment); the manufacture of fine
mirrors specifically for the Hospitality industry (hospitality
segment); and the Corporate Segment, which includes expenses
primarily related to corporate governance, such as board fees,
legal expenses, audit fees, executive management, and listing
costs.
Net Sales
Net sales of $11,667,579 represented an increase of $5,934,845,
or 103.5% for the year ended December 31, 2021 as compared to net
sales of $5,732,734 for the year ended December 31, 2020. This
increase was primarily attributable to the addition of the
Disinfection segment in 2021 as a result of the strategic
acquisitions of Akida, KES, and Scientific Air. The 2021 net sales
for Disinfection of $5,723,915 includes close to 11 months of
Akida-related sales (acquisition closed February 8, 2021), one
quarter of KES-related sales (acquisition closed September 28,
2021), and just over 2 months of Scientific Air-related sales
(acquisition closed October 13, 2021). The Hospitality segment
began to rebound from the slowdown caused by the pandemic and
finished the year ended December 31, 2021 with net sales of
$5,943,664, which represented an increase of $210,930, or 3.7% as
compared to the year ended December 31, 2020.
Gross Profit
Gross profit increased $3,089,050, or 306%, for the year ended
December 31, 2021 as compared to the year ended December 31, 2020,
driven by both volume growth and the higher margin contribution
from the Disinfection segment. The Disinfection segment’s gross
profit for the year ended December 31, 2021 was $2,643,374, or
46.2% as a percentage of net sales. The Hospitality segment’s gross
margin for the year ended December 31, 2021 was $1,455,012, or
24.4% as a percentage of net sales, as compared to $1,009,336, or
17.6% as a percentage of net sales for the year ended December 31,
2020. The Hospitality segment’s gross profit was impacted last year
by the sales slowdown caused by the pandemic, as well as higher
overhead cost absorption as the company kept many of their direct
labor employees in compliance with the payroll protection program
forgiveness requirements. The company is focused on realizing cost
synergies from consolidation and streamlining of manufacturing
operations to help offset increases in material and logistics
costs.
Operating Expenses
Selling, General, and
Administrative – SG&A costs, excluding stock
compensation expense of $1,549,787 for the year ended December 31,
2021 and $687,505 for the year ended December 31, 2020, were
$9,791,925 for the year ended December 31, 2021, which represented
an increase of $6,467,874 as compared to the year ended December
31, 2020. This increase was driven primarily by the expansion of
the Disinfection segment. The infrastructure to support this
segment was initially implemented in the fourth quarter of 2020,
and additional investments were made during 2021 to support the
three strategic acquisitions of Akida, KES, and Scientific Air.
Payroll costs increased $2.4 million year over year as headcount
increased from 33 at December 31, 2020 to 61 at December 31, 2021.
Consulting costs increased $0.7 million and legal expense increased
$0.4 million, mainly due to acquisition-related expenses.
Amortization expense, mostly related to the intangible assets
associated with the acquisitions, increased $1.0 million, and
depreciation expense increased $0.1 million. Additional increases
were due to advertising $0.3 million, product certification and
testing $0.3 million, insurance $0.2 million, and rent $0.1
million. We anticipate efficiency gains in the coming year as we
fully integrate all 3 acquisitions and leverage synergies where
practical. The Corporate segment includes expenses primarily
related to corporate governance, such as board fees, legal
expenses, audit fees, executive management, and listing costs,
allowing for a better reflection of operational measurement of each
of the two operating segments.
Net Loss
We recorded a net loss of $7,390,355 for the year ended December
31, 2021, compared to a net loss of $3,368,810 for the year ended
December 31, 2020. The increase of $3,807,244 in the net loss was
mainly due to the investments made to grow the Disinfection segment
and loss on contingent consideration, offset by the increased
revenue and gross margin from that segment, as discussed above,
plus an increase in corporate governance costs.
The Company had approximately $7.9 million of unrestricted cash
available on its consolidated balance sheet as of December 31,
2021.
Conference Call/Webcast Information
Applied UV's management team will host an investor conference
call and live webcast on April 7, 2022, at 9 am ET. Investors can
access the live webcast via a link on Applied UV’s web site at AUVI
Events and Presentations. For those planning to participate on the
call, please dial +1-877-545-0523 (for domestic calls), or
+1-973-528-0016 (for international calls), passcode 651204. A
replay of the conference call will be available online on the
Applied UV web site, and a dial-in replay will be available for one
week following the call at +1-877-481-4010 (for domestic calls) or
+1-919-882-2331 (for international calls), replay passcode
44897.
About Applied UV
Applied UV is focused on the development and acquisition of
technology that address infection control in the healthcare,
hospitality, commercial and municipal markets. The Company has two
wholly owned subsidiaries – SteriLumen, Inc. (“SteriLumen”) and
Munn Works, LLC (“Munn Works”). SteriLumen’s connected platform for
Data Driven Disinfection™ applies the power of ultraviolet light
(UVC) to destroy pathogens safely, thoroughly, and automatically,
addressing the challenge of healthcare-acquired infections
(“HAIs”). Targeted for use in facilities that have high customer
turnover such as hospitals, hotels, commercial facilities, and
other public spaces, the Company’s Lumicide™ platform uses UVC LEDs
in several patented designs for infection control in and around
high-traffic areas, including sinks and restrooms, killing
bacteria, viruses, and other pathogens residing on hard surfaces
within devices’ proximity. The Company’s patented in-drain
disinfection device, Lumicide Drain, is the only product on the
market that addresses this critical pathogen intensive location.
SteriLumen’s Airocide® air purification devices are research
backed, clinically proven and developed for NASA with assistance
from the University of Wisconsin. Airocide® is listed as an FDA
Class II Medical device, utilizes a proprietary photo-catalytic
(PCO) bioconversion technology that draws air into a reaction
chamber that converts damaging molds, microorganisms, dangerous
airborne pathogens, destructive VOCs, allergens, odors and
biological gasses into harmless water vapor and green carbon
dioxide without producing ozone or other harmful byproducts.
Airocide® applications include healthcare, hospitality, grocery
chains, wine making facilities, commercial real estate, schools,
dental offices, post-harvest, grocery, cannabis facilities and
homes.
For more information about Applied UV, Inc., and its
subsidiaries, please visit the following websites:
https://www.applieduvinc.com/; https://sterilumen.com/;
https://www.airocide.com https://kesscience.com;
https://scientificairmanagement.com and,
https://munnworks.com/.
Forward-Looking Statements
The information contained herein may contain “forward‐looking
statements.” Forward‐looking statements reflect the current view
about future events. When used in this press release, the words
“anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,”
“plan,” or the negative of these terms and similar expressions, as
they relate to us or our management, identify forward-looking
statements. Such statements include, but are not limited to,
statements contained in this press release relating to the view of
management of Applied UV concerning its business strategy, future
operating results and liquidity and capital resources outlook.
Forward‐looking statements are based on the Company’s current
expectations and assumptions regarding its business, the economy
and other future conditions. Because forward–looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict.
The Company’s actual results may differ materially from those
contemplated by the forward-looking statements. They are neither
statements of historical fact nor guarantees of assurance of future
performance. We caution you therefore against relying on any of
these forward-looking statements. Factors or events that could
cause the Company’s actual results to differ may emerge from time
to time, and it is not possible for the Company to predict all of
them. The Company cannot guarantee future results, levels of
activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States,
the Company does not intend to update any of the forward-looking
statements to conform these statements to actual results.
Applied UV, Inc. and
Subsidiaries
Consolidated Balance
Sheets
As of December 31, 2021 and
2020
2021
2020
Assets
Current Assets
Cash and cash equivalents
$
7,922,906
$
11,757,930
Restricted cash
845,250
—
Accounts receivable, net of allowance for
doubtful accounts
986,253
232,986
Inventory
1,646,238
156,290
Vendor deposits
992,042
40,800
Prepaid expense and other current
assets
419,710
158,498
Total Current Assets
12,812,399
12,346,504
Property and equipment, net of accumulated
depreciation
196,611
112,804
Goodwill
4,809,811
—
Other intangible assets, net of
accumulated amortization
18,976,556
178,088
Right of use asset
1,730,615
481,425
Total Assets
$
38,525,992
$
13,118,821
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses
$
1,642,108
$
1,398,073
Contingent Consideration
1,460,000
—
Deferred revenue
788,776
841,636
Income tax payable
—
173,716
Warrant liability
68,263
—
Financing lease obligations
7,671
6,648
Lease liability
389,486
139,908
Payroll protection program loan
—
69,927
Loan payable
97,500
67,500
Total Current Liabilities
4,453,804
2,697,408
Long-term Liabilities
Financing lease obligations - less current
portion
—
8,240
Note payable-less current portion
60,000
90,000
Lease liability-less current portion
1,346,428
341,517
Payroll protection program loan-less
current portion
—
226,900
Total Long-Term Liabilities
1,406,428
666,657
Total Liabilities
5,860,232
3,364,065
Stockholders' Equity
Preferred stock, Series A Cumulative
Perpetual, $0.0001 par value, 19,990,000 shares authorized, 552,000
issued and outstanding as of December 31, 2021, and 0 shares issued
and outstanding as of December 31, 2020
55
—
Preferred stock, Series X, $0.0001 par
value, 10,000 shares authorized, 2,000 shares issued and
outstanding as of both December 31, 2021 and 2020
1
1
Common stock $.0001 par value, 150,000,000
shares authorized; 12,775,674 issued and outstanding as of December
31, 2021, and 7,945,034 shares issued and outstanding as of
December 31, 2020
1,278
795
Additional paid-in capital
42,877,622
11,973,051
Accumulated deficit
(10,213,196
)
(2,219,091
)
Total Stockholders' Equity
32,665,760
9,754,756
Total Liabilities and Stockholders'
Equity
$
38,525,992
$
13,118,821
The accompanying notes are an integral part of
these consolidated financial statements.
Applied UV, Inc. and
Subsidiaries
Consolidated Statements of
Operations
For the Years Ended December
31, 2021 and 2020
2021
2020
Net Sales
$
11,667,579
$
5,732,734
Cost of Goods Sold
7,569,193
4,723,398
Gross Profit
4,098,386
1,009,336
Operating Expenses
Research and development
53,408
310,672
Selling, General and Administrative
Expenses
11,341,712
4,011,556
Total Operating Expenses
11,395,120
4,322,228
Operating Loss
(7,296,734
)
(3,312,892
)
Other Income (Expense)
Change in Fair Market Value of Warrant
Liability
66,862
—
Forgiveness of paycheck protection program
loan
296,827
—
Loss on contingent consideration
(574,000
)
—
Other Income
24,871
10,936
Total Other Income (Expense)
(185,440
)
10,936
Loss Before Provision (Benefit) for Income
Taxes
(7,482,174
)
(3,301,956
)
Provision (Benefit) from Income Taxes
(91,819
)
66,854
Net Loss
$
(7,390,355
)
$
(3,368,810
)
Net Loss attributable to common
stockholders:
Dividends to preferred shareholders
(603,750
—
Net Loss attributable to common
stockholders
(7,994,105
)
(3,368,810
)
Basic and Diluted Loss Per Common
Share
$
(0.86
)
$
(0.59
)
Weighted Average Shares Outstanding -
basic and diluted
9,273,257
5,733,591
The accompanying notes are an integral part of
these consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220406006022/en/
For additional Company Information: Applied UV
Inc. Max Munn Applied UV Interim CEO
max.munn@sterilumen.com
Applied UV Investor Relations Brett Maas, Managing
Principal Hayden IR brett@haydenir.com (646) 536-7331
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