Improving Air Purification Market
Trends
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 first quarter 2022.
The Company is also providing key operational metrics on results
of operations for the three-month period ended March 31, 2022.
Recent Business
Highlights
- Completed the asset acquisition of VisionMark LLC, 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
- Announced Dealer Contract Award for WA State Non-Public
Schools
- Announced Model Room Order for Cleveland Renaissance Hotel
Strategic Positioning and Market
Strategy
- Backlog and pipeline building across multiple verticals
including, Dental, Long-Term Care, Hospital, Wine, and Schools
(EANS II)
- Resumed Global Trade Show Conference attendance after 3-year
hiatus due to global pandemic
- Launched targeted sales and marketing initiatives in April of
2022 to coincide with recent Government “Clean the Air” initiatives
aimed at cannabis, schools, food preservation and transportation,
long-term care (CMS), hospitality and dental verticals. Programs
will include digital, 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 John F.
Andrews announced.
John F. Andrews, Applied UV's Chief Executive Officer commented,
“The First Quarter 2022 was another quarter where we completed a
strategic asset acquisition that strengthened our MunnWorks
hospitality business that expands the Company’s capabilities in the
hospitality sector. Our resumption of global tradeshows and
conferences coupled with our targeted marketing efforts in our air
and surface pathogen elimination platform is beginning to bear
fruit as we expect to announce a contract with a market leading
cannabis company. Our ongoing efforts 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. Our key wins with our
Washington State Dealer, DA Internationals, who was awarded a
contract to provide a complete suite of solutions to non-public
schools throughout the state of Washington further validates both
our strategy as well as provides yet another referenceable
installation, validating our air purification technology efficacy,
effectiveness, and ease of use.”
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 $3,356,090 represented an increase of $1,043,475,
or 45.1% for the three months ended March 31, 2022, as compared to
net sales of $2,312,615 for the three months ended March 31, 2021.
This increase was primarily attributable to the Disinfection
segment, which increased $1,202,076, largely as a result of the
strategic acquisitions of KES and Scientific Air in Q3 and Q4 of
2021, respectively. The Hospitality segment decreased ($158,601)
primarily due to supply chain disruptions, with multiple order
fulfilments delayed into Q2 of 2022.
Gross Profit
Gross profit increased $224,833, or 24.3%, for the three months
ended March 31, 2022, as compared to the three months ended March
31, 2021, driven primarily by volume growth from the Disinfection
segment. However, gross profit as a percentage of sales decreased
approximately (5.8%) from 40.0% in Q1 of 2021 to 34.2% in Q1 of
2022, driven primarily by customer mix in the Disinfection segment
and by lower sales, an increase in factory overhead absorption, and
higher logistical costs in the Hospitality segment. As the Company
continues to integrate their strategic acquisitions, the focus will
be on realizing cost synergies from the consolidation and
streamlining of the manufacturing and distribution operations.
Operating Expenses
Selling, General, and
Administrative – S,G&A costs for the three months ended
March 31, 2022, increased to $3,101,226 as compared to $1,601,517
for the three months ended March 31, 2021. This increase of
approximately $1.4 million was driven primarily by the expansion of
the Disinfection segment with the additional acquisitions of KES
and SciAir. Payroll costs increased $0.3 million year over year as
headcount increased from 31 at March 31, 2021 to 89 at March 31,
2022. Consulting, accounting, and legal costs increased $0.3
million, and amortization expense, mostly related to the intangible
assets associated with the acquisitions, increased $0.3 million.
Additional increases were due to advertising and marketing $0.2
million, and bad debt expense of $0.1 million. We anticipate
efficiency gains in the coming year as we fully integrate our
acquisitions and leverage synergies where practical.
Loss on Impairment of Goodwill –
During the quarter ended March 31, 2022, the Company determined
that a triggering event had occurred as a result of a settlement
agreement with Scientific Air (“Old SAM Partners”) - see
explanation of Other Income/Expense below. A quantitative
impairment test on the goodwill determined that the fair value was
below the carrying value and as a result the Company recorded a
full goodwill impairment charge of $1,138,203 on the Condensed
Consolidated Statements of Operations during the three months ended
March 31, 2022.
Other Income/Expense
The Company recorded income on the change in fair value of
warrant liability in the amount of $43,828 for the three months
ended March 31, 2022, as compared to a loss of ($311,400) on the
change in fair value for the three months ended March 31, 2021.
On March 31, 2022, there was a settlement of a dispute between
the Company and Scientific Air (“Old SAM Partners”) regarding
certain representations and warranties in the purchase agreement
which resulted in a settlement and mutual release agreement where
Old Sam Partners agreed to relinquish such Partner’s right, title,
and interest in the previously issued 400,000 shares that were part
of the original asset acquisition transaction. During the three
months ended March 31, 2022, the company recorded a loss on change
in fair market value of contingent consideration of $240,000 and,
as a result of the settlement agreement, the company recorded a
gain on settlement of contingent consideration of $1,700,000.
Net Loss
The Company recorded a net loss of $1,649,872 for the three
months ended March 31, 2022, compared to a net loss of $1,032,951
for the three months ended March 31, 2021. The increase of $616,921
in the net loss was mainly due to the increase is SG&A costs
incurred in support of the expansion of the Disinfection
segment.
The Company had approximately $7.1 million of unrestricted cash
available on its consolidated balance sheet as of March 31,
2022.
Conference Call/Webcast Information
Applied UV's management team will host an investor conference
call and live webcast on May 24, 2022, at 9:00 am ET. Investors can
access the live webcast via a link on Applied UV's web site at
https://www.webcaster4.com/Webcast/Page/2626/45615. For those
planning to participate on the call, please dial +1-877-545-0320
(for domestic calls), or +1-973-528-0002 (for international calls),
passcode 867374. 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 45615.
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/;
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
Unaudited Condensed
Consolidated Balance Sheets
As of March 31, 2022 and
December 31, 2021
2022
2021
Assets
Current Assets
Cash and cash equivalents
$
7,137,582
$
7,922,906
Restricted cash
483,000
845,250
Accounts receivable, net of allowance for
doubtful accounts
1,554,512
986,253
Costs and estimated earnings in excess of
billings
190,050
-
Inventory, net of reserve
3,447,189
1,646,238
Vendor deposits
372,972
992,042
Prepaid expense and other current
assets
602,983
419,710
Total Current Assets
13,788,288
12,812,399
Property and equipment, net of accumulated
depreciation
1,286,960
196,611
Goodwill
3,722,077
4,809,811
Other intangible assets, net of
accumulated amortization
18,535,244
18,976,556
Right of use asset
1,632,997
1,730,615
Total Assets
$
38,965,566
$
38,525,992
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses
$
2,110,775
$
1,642,108
Contingent Consideration
-
1,460,000
Billings in excess of costs and earnings
on uncompleted contracts
1,267,173
-
Deferred revenue
964,556
788,776
Due to landlord
189,862
-
Warrant liability
24,435
68,263
Financing lease obligations
5,933
7,671
Operating lease liability
398,267
389,486
Note Payable
97,500
97,500
Total Current Liabilities
5,058,501
4,453,804
Long‑term Liabilities
Due to landlord ‑less current portion
570,080
-
Note payable‑ less current portion
60,000
60,000
Operating lease liability‑less current
portion
1,243,348
1,346,428
Total Long‑Term Liabilities
1,873,428
1,406,428
Total Liabilities
6,931,929
5,860,232
Stockholders' Equity
Preferred stock, Series A Cumulative
Perpetual, $0.0001 par value, 19,990,000 shares authorized, 552,000
shares issued and outstanding as of both March 31, 2022 and
December 31, 2021
55
55
Preferred stock, Series X, $0.0001 par
value, 10,000 shares authorized, 2,000 shares issued and
outstanding as of both March 31, 2022 and December 31, 2021
1
1
Common stock $.0001 par value, 150,000,000
shares authorized; 12,888,174 shares issued and outstanding as of
March 31, 2022, and 12,775,674 shares issued and outstanding as of
December 31, 2021
1,289
1,278
Additional paid‑in capital
44,257,610
42,877,622
Accumulated deficit
(12,225,318)
(10,213,196)
Total Stockholders' Equity
32,033,637
32,665,760
Total Liabilities and Stockholders'
Equity
$
38,965,566
$
38,525,992
Applied UV, Inc. and
Subsidiaries
Unaudited Condensed Interim
Consolidated Statements of Operations
For the Three Months Ended
March 31, 2022 and 2021
Three Months Ended March 31,
2022
2021
Net Sales
$
3,356,090
$
2,312,615
Cost of Goods Sold
2,206,991
1,388,349
Gross Profit
1,149,099
924,266
Operating Expenses
Research and development
59,314
43,645
Selling. General and Administrative
Expenses
3,101,226
1,601,517
Loss on impairment of goodwill
1,138,203
-
Total Operating Expenses
4,298,743
1,645,162
Operating Loss
(3,149,644)
(720,896)
Other Income (Expense)
Change in Fair Market Value
of Warrant Liability
43,828
(311,400)
Interest expense
(4,056)
-
Loss on change in Fair Market Value of
Contingent Consideration
(240,000)
-
Gain on Settlement of Contingent
Consideration
1,700,000
-
Other Expense
(655)
Total Other Income (Expense)
1,499,772
(312,055)
Loss Before Provision for Income Taxes
(1,649,872)
(1,032,951)
Provision from Income Taxes
-
-
Net Loss
$
(1,649,872)
$
(1,032,951)
Net Loss attributable to common
stockholders:
Dividends to preferred shareholders
(362,250)
-
Net Loss attributable to common
stockholders
(2,012,122)
(1,032,951)
Basic and Diluted Loss Per Common
Share
$
(0.16)
$
(0.12)
Weighted Average Shares Outstanding ‑
basic and diluted
12,928,174
8,630,811
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220523006022/en/
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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