Applied UV Reports Third Quarter 2021 Results

Rhea-AI Summary

Applied UV reported a significant 88.5% increase in revenue to $3.55 million for Q3 2021, compared to $1.88 million in the previous quarter. Gross profit rose to $1.0 million, or 29.6% versus sales. The net loss improved by 49% to $(1,080,805), with net loss per share improving to $(0.14). The company continues to execute its growth strategy through acquisitions, including KES and Scientific Air Management, which are expected to add $10-14 million in annual revenues. As of September 30, Applied UV had approximately $11.7 million in cash on hand.

Positive

• Revenue increased 88.5% to $3.55 million in Q3 2021.
• Gross profit improved to $1.0 million, representing 29.6% of sales.
• Net loss improved by 49% to $(1,080,805) compared to the previous quarter.
• Successful acquisition of KES and Scientific Air Management expected to add $10-14 million in annual revenues.

Negative

• The net loss for the nine months ended September 30, 2021, was $4,251,987, significantly higher than the previous year.

Results:

• Revenue increased 88.5% to $3.55 million as compared to $1.88 in the previous quarter
• Gross profit increased to $1.0 million, or 29.6% vs. sales as compared to $0.5m, or 28.3% vs. sales in the previous quarter
• Net loss improved 49% to $(1,080,805) as compared to a net loss of $(2,138,231) in the previous quarter
• Net loss per share improved to $(0.14), inclusive of preferred dividends of $241,500, as compared to a net loss per share of $(0.23) in the previous quarter

Business Highlights and Strategy:

• Continued execution of inorganic growth strategy via synergistic acquisitions of healthcare technology companies
• Airocide® installations continue across hospitals, museums, wineries, and school systems
• Independent lab results confirmed SteriLumen's Airocide® kills SARS-CoV-2 (COVID-19 Virus)

MOUNT VERNON, NY / ACCESSWIRE / November 16, 2021 / Applied UV, Inc. (NASDAQ:AUVI) ("Applied UV" or the "Company"), a disinfection and purification 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, today announced its financial results for the third quarter of 2021. The Company is also providing key operational metrics on pro forma combined results of operations for the three and nine-month periods ended September 30, 2021, in accordance with Article 11 of Regulation S-X, which assumes the acquisitions of Akida, KES/JJS, and Scientific Air Management (the "Acquired Companies") occurred on January 1, 2021. The Company believes such combined information is useful to compare how the combined companies would have performed over time against the performance of the Company without such acquisitions.

Financial Results

Third quarter net sales increased by 127.6% to $3,551,564 from $1,560,633 in the third quarter of 2020. Due to the continuing logistics and transportation challenges in many regions the Company experienced delays in fulfilling orders in the second quarter. As previously expected, many of those orders shipped to the customer in the third quarter while others are expected to ship in the fourth quarter.

Net loss for the third quarter of 2021 was (1,080,805), compared to a net loss of ($890,559) in the third quarter of 2020. The net loss in 2021 was due primarily to an increase in SG&A costs to improve future operations and expand the disinfection segment of the Company's business. The Company's net loss for the third quarter of 2021 improved more than 49% compared to the second quarter of 2021.

Net sales for the nine months ended September 30, 2021, increased by 63.9% to $7,748,499 from $4,727,631 in the nine months ended September 30, 2020 [restated].

Net loss the nine months ended September 30, 2021, was $4,251,987 compared to a net loss of $975,128 in the nine months ended September 30, 2020. The net loss in 2021 was due primarily to an increase in SG&A costs to improve future operations and expand the disinfection segment of our business.

The Company had approximately $11.7 million of cash available on its consolidated balance sheet as of September 30, 2021.

As previously disclosed, on July 16, 2021, the Company closed an underwritten registered public offering of 480,000 shares of 10.5% Series A Cumulative Perpetual Preferred Stock (non-convertible into common stock) raising gross proceeds of $12.0 million before deducting underwriting discounts and other offering expenses. On July 29, 2021, the Company announced that the underwriters of its Series A Preferred Stock exercised in full their over-allotment option to purchase an additional 72,000 shares of Series A Preferred Stock from Applied UV at a price to the public of $25.00 per share for gross proceeds of $1.8 million, prior to deducting underwriting discounts and commissions. After giving effect to the exercise of the over-allotment option, a total of 552,000 shares were sold in the offering, resulting in gross proceeds to Applied UV of $13.8 million.

Proforma Financial Results*

The unaudited pro forma results of operations for the three and nine months ended September 30, 2021 in the table below assumes the Company's acquisition of Akida, KES/JJS, and Scientific Air Management (the "Acquired Companies") occurred on January 1, 2021.

	Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
Net Sales	$	5,894,136			$	16,149,817
Cost of Goods Sold		3,996,053				9,180,467
Gross Profit		1,898,083				6,969,350
Research and development		-				53,408
Stock based compensation		426,268				2,052,609
Selling, General and Administrative Expenses		3,887,863				10,795,269
Total Operating expenses		4,314,131				12,901,286
Operating Loss		(2,416,048	)			(5,931,936	)
Other (Expense) Income
Change in Fair Market Value of Warrant Liability		151,570				(148,882	)
Other income		533,787				797,889
Total Other Income		685,357				649,007
Loss Before Provision for Income Taxes		(1,730,691	)			(5,282,929	)
Benefit from Income Taxes		(101,354	)			(101,354	)
Net Loss	$	(1,629,237	)		$	(5,181,575	)

Definitions

* The above pro forma information is presented for the three and nine-month periods ended September 30, 2021, in accordance with Article 11 of Regulation S-X. The information presented assumes the Company's acquisition of Akida, KES/JJS, and Scientific Air Management (the "Acquired Companies") occurred on January 1, 2021. The pro forma information is not necessarily indicative of the Company's results of operations had the Acquisition been completed on January 1, 2021, nor is it necessarily indicative of the Company's future results. The pro forma information does not reflect any cost savings from operating efficiencies, synergies, or revenue opportunities that could result from the Acquisition. Management believes that measuring revenue rates on a comparable pro forma basis is an appropriate way for investors to understand the underlying performance of the business. The pro forma revenue is presented for informational purposes only and does not purport to project the company's revenue, results of operations or financial position for any future period or as of any future date.

Management Commentary

Q Saeed, Applied UV's Chief Executive Officer said, "In the third quarter we delivered strong results in an environment that has been impacted by ongoing global supply chain challenges. Our teams have done a commendable job navigating supply chain bottlenecks to deliver products to our customers. Sales for Q3 and the nine-month period of 2021 grew over 127% and 63%, respectively, driven by continued strong demand for our SteriLumen product portfolio and a gradual recovery in the hospitality market for our MunnWorks subsidiary. We are well positioned to conclude the year on a high note, as we expect sales to continue to show an improvement and accelerate as we move through 2022. We are also pleased to report a significant reduction in our net loss for the third quarter as compared to the second quarter as we drive towards profitable growth."

Saeed added, "During the quarter, we continued to execute our growth strategy through synergistic acquisitions to expand the commercialization of our product portfolio to drive both short and long-term growth. The acquisition of KES in Q3, followed by Scientific Air Management in early Q4, marked a major step forward in building out our air purification business to create a broad portfolio of patented, air disinfection and purification technologies. Under the SteriLumen brand, we are now capable of addressing virtually every major commercial market, including hospitals and assisted living facilities, schools, hospitality, museums, stadiums, food processing facilities and other large public spaces. In addition to the strengthening of our product portfolio, these two acquisitions significantly enhance our financial profile, adding approximately $10-14 million in current annualized revenues while being immediately accretive to our earnings per share. We continue to build momentum, and we are just beginning to see the tangible results from our investments in these businesses."

"Our financial foundation has been strengthened and we are well positioned to continue our planned investments in our business, maintain our focus on top-line growth and margin improvement, and pave the way towards a more profitable future."

Recent Announcements & Additional Highlights

• Completed $13.8 million Offering of Series A Cumulative Perpetual Preferred Stock (non-convertible)
• Closed on the acquisition of KES Science & Technology, Inc. ("KES") to manufacture and sell its patented, air disinfection and purification technologies and bolster SteriLumen's presence in major markets including food distribution, wineries, and the retail sector. KES Airocide® systems are purpose-built for the food processing, storage, and transportation industries and is expected to contribute approximately $5-7 million in revenue in 2022 and be immediately accretive to Applied UV's earnings per share.
• In Q3, the Company continued its global commercialization strategy, announcing multiple installations at museums, wineries, a U.S. military facility, hospitals, and schools as enhanced infection prevention protocols become standard practice.
• Signed a Master Distributor agreement with Lootah Batta Water and Environment, LLC for the distribution of the Airocide® consumer and commercial air purification systems within the United Arab Emirates.
• Announced testing results from an independent third-party laboratory confirming that the SteriLumen's Airocide® HD Air Purification System kills SARS-CoV-2 (COVID-19 Virus).
• On October 13 the Company acquired substantially all of the assets of Scientific Air Management which is expected to significantly strengthen its ability to address the growing health challenge caused by Hospital Associated Infections ("HAI's"). The acquisition provides established access to large hospital and healthcare facilities throughout N. America via a premier medical supply distributor, is expected to contribute approximately $5~$7 million in sales to the Company's current annual revenue and be immediately accretive to Applied UV's earnings per share.

Conference Call/Webcast Information

Applied UV's management team will host an investor conference call and live webcast on November 16, 2021, 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/2626/43647. For those planning to participate on the call, please dial +1- 888-506-0062 (for domestic calls), or +1- 973-528-0011 (for international calls), passcode 933198. 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 43647.

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 SteriLumen 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 is the only product that addresses this critical pathogen intensive location. SteriLumen's Airocide® products for air purification, developed for NASA and FDA Cleared as class II medical devices, utilize a proprietary photo-catalytic bioconversion technology that draws air into a reaction chamber that converts damaging molds, microorganisms, dangerous pathogens, destructive VOCs and biological gasses into harmless water vapor without producing ozone or other harmful byproducts. Airocide® applications include healthcare, hospitality, grocery chains, wine making facilities, commercial real estate, schools, dental offices, and homes.

For more information about Applied UV, Inc., and its subsidiaries, please visit the following websites: https://www.applieduvinc.com/; https://sterilumen.com/; and, https://munnworks.com/.

Contact Information:

Applied UV Investor Relations
Kevin McGrath
TraDigital IR
+1-646-418-7002
kevin@tradigitalir.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 Interim Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2021 and 2020 (Restated)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020 (Restated- Note 13)
Net Sales	$	3,551,564			$	1,560,633			$	7,748,499			$	4,727,631
Cost of Goods Sold		2,500,163				1,482,455				5,231,155				3,825,037
Gross Profit		1,051,401				78,178				2,517,344				902,594
Operating Expenses
Research and development		-				65,037				53,408				65,037
Stock based compensation		426,268				279,707				1,102,609				381,314
Selling, General and Administrative Expenses		2,256,757				624,228				5,888,863				1,443,276
Total Operating Expenses		2,683,025				968,972				7,044,880				1,889,627
Operating Loss		(1,631,624	)			(890,794	)			(4,527,536	)			(987,033	)
Other Income (Loss)
Change in Fair Market Value		151,570				-				(148,882	)			-
of Warrant Liability
Forgiveness of paycheck protection program loan		296,827				-				296,827				-
Other Income		1,068				235				26,250				11,905
Total Other Income		449,465				235				174,195				11,905
Loss Before Benefit		(1,182,159	)			(890,559	)			(4,353,341	)			(975,128	)
Benefit from Income Taxes		(101,354	)			-				(101,354	)			-
Net Loss	$	(1,080,805	)		$	(890,559	)		$	(4,251,987	)		$	(975,128	)
Net Loss attributable to common stockholders:
Dividends to preferred shareholders		(241,500	)			-				(241,500	)			-
Net Loss attributable to common stockholders		(1,322,305	)			(890,559	)			(4,493,487	)			(975,128	)
Basic and Diluted Loss Per Common Share	$	(0.14	)		$	(0.17	)		$	(0.48	)		$	(0.19	)
Weighted Average Shares Outstanding - basic and diluted		9,421,908				5,222,422				9,282,675				5,075,513

Applied UV, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets As of September 30, 2021 and December 31, 2020
	2021				2020
Assets
Current Assets
Cash and equivalents	$	11,746,826			$	11,757,930
Restricted cash		1,207,500				-
Accounts receivable, net of allowance for doubtful accounts		949,384				232,986
Inventory		1,284,136				156,290
Vendor deposits		966,166				40,800
Note receivable, related party		500,000				-
Prepaid expense and other current assets		370,155				158,498
Total Current Assets		17,024,167				12,346,504
Machinery and equipment, net of accumulated depreciation		224,368				112,804
Goodwill		3,671,607				-
Other intangible assets, net of accumulated amortization		9,373,400				-
Right of use asset		1,826,463				481,425
Patents, net of accumulated amortization		185,132				178,088
Total Assets	$	32,305,137			$	13,118,821
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses	$	1,358,494			$	1,398,073
Deferred revenue		1,045,298				841,636
Income tax payable		-				173,716
Warrant liability		284,007				-
Financing lease obligations		6,648				6,648
Lease liability		380,869				139,908
Payroll protection program loan		-				69,927
Loan payable		67,500				67,500
Total Current Liabilities		3,142,816				2,697,408
Long-term Liabilities
Financing lease obligations - less current portion		19,477				8,240
Note payable-less current portion		90,000				90,000
Lease liability-less current portion		1,447,574				341,517
Payroll protection program loan-less current portion		-				226,900
Total Long-Term Liabilities		1,557,051				666,657
Total Liabilities		4,699,867				3,364,065
Stockholders' Equity
Preferred stock, Series A Cumulative Perpetual, $0.0001 par value, 990,000 shares authorized, 552,000 shares issued and outstanding as of September 30, 2021, and no shares issued and outstanding as of December 31, 2020, $25 per share liquidation value		55				-
Preferred stock, Series X, 0.0001 par value, 10,000 shares authorized, 2,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		1				1
Common stock $.0001 par value, 150,000,000 shares authorized; 9,715,386 shares issued and outstanding as of September 30, 2021, and 7,945,034 shares issued and outstanding as of December 31, 2020		972				795
Additional paid-in capital		34,316,820				11,973,051
Accumulated deficit		(6,712,578	)			(2,219,091	)
Total Stockholders' Equity		27,605,270				9,754,756
Total Liabilities and Stockholders' Equity	$	32,305,137			$	13,118,821

SOURCE: Applied UV, Inc.

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FAQ

What were the financial results for Applied UV (AUVI) in Q3 2021?

Applied UV reported a revenue increase of 88.5% to $3.55 million and a net loss improvement of 49% to $(1,080,805) for Q3 2021.

What is Applied UV's revenue growth projection following recent acquisitions?

Applied UV expects the acquisitions of KES and Scientific Air Management to contribute approximately $10-14 million in annual revenues.

How much cash does Applied UV (AUVI) have as of September 30, 2021?

As of September 30, 2021, Applied UV had approximately $11.7 million in cash available.

What percentage did Applied UV's gross profit rise in Q3 2021?

Applied UV's gross profit increased to $1.0 million, or 29.6% versus sales for Q3 2021.