NEW YORK, NY, Nov. 17, 2023 (GLOBE NEWSWIRE) — via NewMediaWire — Applied UV, Inc. (NASDAQ: AUVI), a leader in global food security, air quality, and specialty building solutions today announced financial results for the third quarter and nine months ended September 30, 2023.
“With continued strong revenue momentum and sustained progress on the path to profitability, we are delivering against the key milestones we laid out earlier this year. I’m proud of how our teams are executing our growth strategy,” said Max Munn, CEO of Applied UV. “Our innovation and commercial capabilities continue to enhance the value proposition of our brands and we have made meaningful progress on our transformation initiatives to improve our operational execution. We remain confident that these efforts will position us to deliver significant value over the long-term.”
Financial Highlights – Third Quarter
Business Highlights – Third Quarter and Recent Highlights
Q3 2023 Summary Financial Results
Net Sales
Net sales of $11.4 million represented an increase of 94.8% for the three months ended September 30, 2023, as compared to net sales of $5.9 million for the three months ended September 30, 2022. The Disinfection/Healthy Building Technologies segment increased $4.1 million, primarily due to the acquisition of Puro Lighting and LED Supply Co. on January 26, 2023. Additionally, the Hospitality segment increased $1.4 million as that market continues to improve and our operations have been streamlined to meet the increased demand.
Gross Profit
Gross profit increased $2.7 million, or 216.6%, for the three months ended September 30, 2023, as compared to $0.8 million for the three months ended September 30, 2022, driven by increased sales in the Disinfection/Healthy Building Technologies segment and improved margins in the Hospitality segment.
Selling, General, and Administrative (SG&A) Expense
SG&A costs for the three months ended September 30, 2023, increased to $4.7 million as compared to $3.3 million for the three months ended September 30, 2022. The increase of approximately $1.4 million was driven primarily by the acquisitions of Puro Lighting and LED Supply Co., which accounted for an increase of approximately $1.9 million of the increase, but was offset by a reduction in other SG&A of approximately $0.5 million.
Other Expense
Other expense was $0.1 million for the three months ended September 30, 2023, which includes $0.5 million in interest expense, offset by a $0.4 million gain on the change in fair market value of contingent consideration.
Net Loss
The Company recorded a net loss of $2.6 million for the three months ended September 30, 2023, compared to a net loss of $2.7 million for the three months ended September 30, 2022.
Adjusted EBITDA, a non-GAAP financial measure, is defined as Operating Profit (Loss), excluding Depreciation and Amortization, and excluding Stock Based Compensation and Loss on Impairment of Goodwill/Intangible Assets. Adjusted EBITDA was a loss of $1.5 million for the third quarter of 2023, compared to a loss of $2.1 million for the third quarter of 2022.
| Adjusted EBITDA Non-GAAP Financial Measure | ||
| 2023 Q3 | 2022 Q3 | |
| Operating (Loss) | ($2.4 million) | ($2.8 million) |
| Exclude: Depreciation and Amortization | $0.7 million | $0.5 million |
| Exclude: Stock Based Compensation | $0.2 million | $0.2 million |
| Adjusted EBITDA | ($1.5 million) | ($2.1 million) |
We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance. We believe Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry, as this measure generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.
Net cash and cash equivalents as of September 30, 2023, are approximately $1.5 million. The Company’s secured revolving credit facility with Pinnacle Bank has approximately $1.2 million available as of September 30, 2023. Total cash and borrowing availability is approximately $2.7 million as of September 30, 2023. Net cash used in operating activities was approximately $7.8 million for the nine months ended September 30, 2023. Net cash used in operating activities improved in the third quarter when compared to the net cash used of $6.6 million for the six months ended June 30, 2023.
On November 16, 2023, the Company closed on an underwritten public offering with gross proceeds to the Company of approximately $6.4 million, before deducting underwriting discounts and other estimated expenses payable by the Company. The Company intends to use the net proceeds from this offering for the repayment of notes, and for general corporate purposes, including working capital.
The Company believes by implementing its strategic plan for 2024, including the continued realization of cost savings from the synergies of its acquisitions completed in 2023, that it expects to be cash flow neutral in the latter half of 2024.
About Applied UV
Applied UV, Inc. engages in the pursuit of technologies focused on global food security, air quality, and specialty building solutions tailored for the commercial and hospitality sectors. More details about Applied UV, Inc., and its subsidiaries can be found at 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 the Company’s preliminary third quarter 2023 financial results, 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. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.
| Applied UV, Inc. and Subsidiaries Unaudited Condensed Interim Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2023 and 2022 |
||||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Sales | $ | 11,446,048 | $ | 5,875,611 | $ | 32,944,217 | $ | 15,139,347 | ||||||||
| Cost of Goods Sold | 8,790,764 | 5,036,997 | 25,956,853 | 11,847,842 | ||||||||||||
| Gross Profit | 2,655,284 | 838,614 | 6,987,364 | 3,291,505 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | 91,085 | 93,522 | 460,588 | 234,885 | ||||||||||||
| Selling General and Administrative Expenses | 5,013,988 | 3,505,097 | 15,200,486 | 10,637,538 | ||||||||||||
| Loss on impairment of goodwill and intangibles | — | — | — | 1,138,203 | ||||||||||||
| Total Operating Expenses | 5,105,073 | 3,598,619 | 15,661,074 | 12,010,626 | ||||||||||||
| Operating Loss | (2,449,789 | ) | (2,760,005 | ) | (8,673,710 | ) | (8,719,121 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Change in Fair Market Value of Warrant Liability | 1,206 | 34,804 | 2,124 | 46,521 | ||||||||||||
| Interest expense | (558,268 | ) | (43,037 | ) | (1,434,329 | ) | (96,113 | ) | ||||||||
| Gain (Loss) on change in Fair Market Value of Contingent Consideration | 434,000 | — | 1 | (240,000 | ) | |||||||||||
| Gain on Settlement of Contingent Consideration (Note 2) | — | — | — | 1,700,000 | ||||||||||||
| Other Income | — | 67,765 | — | 69,713 | ||||||||||||
| Total Other Income (Expense) | (123,062 | ) | 59,532 | (1,432,204 | ) | 1,480,121 | ||||||||||
| Loss Before Provision for Income Taxes | (2,572,851 | ) | (2,700,473 | ) | (10,105,914 | ) | (7,239,000 | ) | ||||||||
| Benefit from Income Taxes | — | — | — | — | ||||||||||||
| Net Loss | $ | (2,572,851 | ) | $ | (2,700,473 | ) | $ | (10,105,914 | ) | $ | (7,239,000 | ) | ||||
| Net Loss attributable to common stockholders: | ||||||||||||||||
| Dividends to preferred shareholders | (424,750 | ) | (362,250 | ) | (1,194,231 | ) | (1,086,750 | ) | ||||||||
| Net Loss attributable to common stockholders | (2,997,601 | ) | (3,062,723 | ) | (11,300,145 | ) | (8,325,750 | ) | ||||||||
| Basic and Diluted Loss Per Common Share | $ | (0.32 | ) | $ | (1.21 | ) | $ | (1.95 | ) | $ | (3.26 | ) | ||||
| Weighted Average Shares Outstanding – basic and diluted | 9,351,478 | 2,531,219 | 5,794,689 | 2,550,272 |
| Applied UV, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets As of September 30, 2023 and December 31, 2022 |
||||||||
| September 30, | December 31. | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,546,911 | $ | 2,734,485 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 6,126,692 | 1,508,239 | ||||||
| Costs and estimated earnings in excess of billings | 2,883,057 | 1,306,762 | ||||||
| Inventory, net | 7,570,331 | 5,508,086 | ||||||
| Vendor deposits | 1,176,065 | 75,548 | ||||||
| Prepaid expense and other current assets | 2,064,870 | 1,187,223 | ||||||
| Total Current Assets | 21,367,926 | 12,320,343 | ||||||
| Property and equipment, net of accumulated depreciation | 1,250,350 | 1,133,468 | ||||||
| Other assets | 431,500 | 153,000 | ||||||
| Goodwill | 17,809,235 | 3,722,077 | ||||||
| Other intangible assets, net of accumulated amortization | 27,334,870 | 11,354,430 | ||||||
| Right of use assets | 3,396,751 | 4,044,109 | ||||||
| Total Assets | $ | 71,590,632 | $ | 32,727,427 | ||||
| Liabilities, Redeemable Preferred Stock and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 10,278,076 | $ | 2,982,760 | ||||
| Contingent consideration | 18,375,672 | — | ||||||
| Deferred revenue | 6,113,192 | 4,730,299 | ||||||
| Due to landlord (Note 2) | 281,123 | 229,234 | ||||||
| Warrant liability | 7,863 | 9,987 | ||||||
| Financing lease obligations | 42,445 | 33,712 | ||||||
| Operating lease liability | 1,739,092 | 1,437,308 | ||||||
| Notes payable, net | 5,136,610 | 2,098,685 | ||||||
| Total Current Liabilities | 41,974,073 | 11,521,985 | ||||||
| Long-Term Liabilities | ||||||||
| Due to landlord – less current portion (Note 2) | 174,938 | 393,230 | ||||||
| Notes payable, net – less current portion | 4,810,922 | 765,144 | ||||||
| Financing lease obligations – less current portion | 143,575 | 158,070 | ||||||
| Operating lease liability – less current portion | 1,731,923 | 2,655,103 | ||||||
| Total Long-Term Liabilities | 6,861,358 | 3,971,547 | ||||||
| Total Liabilities | 48,835,431 | 15,493,532 | ||||||
| Redeemable Preferred Stock | ||||||||
| Preferred Stock, Series B Cumulative Perpetual, $0.0001 par value, 1,250,000 shares authorized, 1,250,000 shares issued and outstanding as of September 30, 2023 and no shares issued and outstanding as of December 31, 2022 | 3,712,500 | — | ||||||
| Preferred Stock, Series C Cumulative Perpetual, $0.0001 par value, 2,500,000 shares authorized, 399,996 shares issued and outstanding as of September 30, 2023 and no shares issued and outstanding as of December 31, 2022 | 1,063,989 | — | ||||||
| Total Redeemable Preferred Stock | 4,776,489 | — | ||||||
| Equity | ||||||||
| Preferred Stock, Series A Cumulative Perpetual, $0.0001 par value, 1,250,000 shares authorized, 552,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022 | 55 | 55 | ||||||
| Preferred Stock, Series X, $0.0001 par value, 10,000 shares authorized, 10,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 1 | 1 | ||||||
| Common Stock $0.0001 par value, 150,000,000 shares authorized 9,872,228 shares issued and 9,849,531 outstanding as of September 30, 2023 and 2,735,290 shares issued and 2,712,593 outstanding as of December 31, 2022, respectively | 987 | 274 | ||||||
| Additional paid-in capital | 57,665,013 | 45,620,764 | ||||||
| Treasury stock at cost, 22,697, respectively | (149,686 | ) | (149,686 | ) | ||||
| Accumulated deficit | (39,537,658 | ) | (28,237,513 | ) | ||||
| Total Equity | 17,978,712 | 17,233,895 | ||||||
| Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity | $ | 71,590,632 | $ | 32,727,427 | ||||
| Applied UV, Inc. and Subsidiaries Condensed Interim Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2023 and 2022 |
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| 2023 | 2022 | ||||||||
| Cash flows from Operating Activities | |||||||||
| Net Loss | $ | (10,105,914 | ) | $ | (7,239,000 | ) | |||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities | |||||||||
| Stock based compensation | 616,660 | 559,980 | |||||||
| Bad debt (recovery) expense | (59,839 | ) | 94,714 | ||||||
| Change in fair market value of warrant liability | (2,124 | ) | (46,521 | ) | |||||
| Change in fair market value of contingent consideration | (1 | ) | 240,000 | ||||||
| Gain on settlement of contingent consideration | — | (1,700,000 | ) | ||||||
| Loss on impairment of goodwill and intangible assets | — | 1,138,203 | |||||||
| Amortization of right-of-use asset | 647,358 | 834,889 | |||||||
| Depreciation and amortization | 2,187,321 | 1,484,968 | |||||||
| Amortization of debt discount | 617,664 | 53,646 | |||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||
| Accounts receivable | (2,822,579 | ) | (103,343 | ) | |||||
| Cost and estimated earnings excess of billings | (1,042,657 | ) | (234,869 | ) | |||||
| Inventory | 1,948,852 | (2,612,773 | ) | ||||||
| Vendor deposits | (724,845 | ) | 697,558 | ||||||
| Prepaid expenses and other current assets | (146,197 | ) | (161,797 | ) | |||||
| Accounts payable and accrued expenses | 3,112,862 | 582,297 | |||||||
| Other assets | (253,681 | ) | |||||||
| Billings in excess of costs and earnings on uncompleted contracts | — | (1,254,496 | ) | ||||||
| Deferred revenue | (915,205 | ) | 1,151,496 | ||||||
| Due to landlord | (279,515 | ) | (138,724 | ) | |||||
| Operating lease payments | (621,396 | ) | (819,828 | ) | |||||
| Net Cash Used in Operating Activities | (7,843,235 | ) | (7,473,600 | ) | |||||
| Cash Flows From Investing Activities | |||||||||
| Cash paid for patent costs | (66,023 | ) | (682 | ) | |||||
| Purchase of machinery and equipment | (248,319 | ) | (46,196 | ) | |||||
| Acquisitions, net of cash acquired (Note 2) | (4,115,709 | ) | (10 | ) | |||||
| Payments on notes payable | (166,262 | ) | (41,730 | ) | |||||
| Net Cash Used in Investing Activities | (4,596,313 | ) | (88,618 | ) | |||||
| Cash Flows From Financing Activities | |||||||||
| Payments on financing leases | (30,994 | ) | (5,269 | ) | |||||
| Shares repurchased | — | (149,686 | ) | ||||||
| Dividends to preferred shareholders | (769,481 | ) | (1,086,750 | ) | |||||
| Proceeds from equity raises, net | 6,630,799 | 1,092,000 | |||||||
| Proceeds from note payable, net | 5,421,650 | — | |||||||
| Net Cash Provided by (Used in) Financing Activities | 11,251,974 | (149,705 | ) | ||||||
| Net Decrease in Cash and equivalents | (1,187,574 | ) | (7,711,923 | ) | |||||
| Cash and cash equivalents at January 1, | 2,734,485 | 8,768,156 | |||||||
| Cash and cash equivalents at September 30, | $ | 1,546,911 | $ | 1,056,233 | |||||
| Supplemental Disclosures of Cash Flow Information: | |||||||||
| Cash paid during the year for: | |||||||||
| Interest | $ | 642,877 | $ | 101,365 | |||||
| Supplemental Non-Cash Disclosures of Investing and Financing Activities | |||||||||
| Conversion of debt into common stock | $ | 767,500 | $ | — | |||||
| Recognition of right of use asset and corresponding lease liability | $ | 563,315 | $ | 1,380,658 | |||||
| Accrued dividends | $ | 424,750 | $ | — | |||||
| Issuance of note payable for payment of prepaid expense | $ | 279,347 | $ | 318,833 | |||||
For Additional Company Information:
Applied UV, Inc.
Max Munn
Applied UV Founder, CEO & Director
Max.munn@applieduvinc.com
Investor Relations Contact:
TraDigital IR
Kevin McGrath
+1-646-418-7002
kevin@tradigitalir.com
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