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Applied UV Announces Third Quarter 2023 Financial Results, Revenue Increases to $11.4 Million, Adjusted EBITDA (non-GAAP) Improves 30.8% Year over Year

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NEW YORK, NY – (NewMediaWire) – November 17, 2023 – 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

  • Total revenues for the third quarter of 2023 of $11.4 million, representing a 94.8% increase over the third quarter of 2022
  • Gross profit grew to $2.7 million in the third quarter of 2023, up 216.6% from $0.8 million in the third quarter of 2022.
  • 11.2% improvement in operating loss for the third quarter year over year
  • 30.8% improvement in adjusted EBITDA (non-GAAP) for the third quarter year over year
  • Reaffirms its previous guidance of approximately $45 million in revenue for 2023

Business Highlights – Third Quarter and Recent Highlights

  • Initiated an organizational restructuring plan intended to improve operational performance and to position the business for long-term growth while establishing a clear path to consistent profitability and sustainable free cash flow.
  • Collaborating and transitioning all next generation and future R&D to Canon Virginia to leverage its vast engineering, software applications and new product launch expertise.
  • Introduced Airocide® Pro+ air food preservation solution designed to control ethylene levels and extend shelf life at the Global Produce & Floral Show, together with Canon Virginia, a subsidiary of Canon U.S.A.
  • United States Patent and Trademark Office issued a patent US 2023/0059472 A1 for the Company’s Airo™ Vortex, encompassing advanced disinfection capabilities and Photocatalytic Oxidation. Concurrently, the Company also received publication notice on its Fighter Flex™ LED. This next-generation Fighter Flex™ LED technology is designed to enhance the Company’s advanced HVAC and Smart Buildings technology, marking another significant step in Applied UV Inc.’s journey towards creating innovative solutions for indoor air quality and building efficiency.
  • Received approval of patent US 11,788,265 B2 for its “INTERCHANGEABLE DRAIN DISINFECTING DEVICE” designed to optimize UV source irradiation to effectively disinfect drain systems to enhance hygiene and safety. 

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

 

 

 

 

 

 

 

 

 

 

 

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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