Improving Air Purification Market Trends
MOUNT VERNON, N.Y., May 23, 2022--(BUSINESS WIRE)--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."
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 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 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.
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.
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.
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/;
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
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts
Costs and estimated earnings in excess of billings
Inventory, net of reserve
Prepaid expense and other current assets
Total Current Assets
Property and equipment, net of accumulated depreciation
Other intangible assets, net of accumulated amortization
Right of use asset
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses
Billings in excess of costs and earnings on uncompleted contracts
Due to landlord
Financing lease obligations
Operating lease liability
Total Current Liabilities
Due to landlord ‑less current portion
Note payable‑ less current portion
Operating lease liability‑less current portion
Total Long‑Term Liabilities
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
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
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
Additional paid‑in capital
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
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,
Cost of Goods Sold
Research and development
Selling. General and Administrative Expenses
Loss on impairment of goodwill
Total Operating Expenses
Other Income (Expense)
Change in Fair Market Value
of Warrant Liability
Loss on change in Fair Market Value of Contingent Consideration
Gain on Settlement of Contingent Consideration
Total Other Income (Expense)
Loss Before Provision for Income Taxes
Provision from Income Taxes
Net Loss attributable to common stockholders:
Dividends to preferred shareholders
Net Loss attributable to common stockholders
Basic and Diluted Loss Per Common Share
Weighted Average Shares Outstanding ‑ basic and diluted
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Applied UV Inc.
Applied UV Interim CEO
Applied UV Investor Relations
Brett Maas, Managing Principal