Applied UV Reports Second Quarter 2023 Financial Results

Applied UV, Inc.

• Total revenues for the second quarter of 2023 of $10.8 million, representing an 83.6% increase over the comparable period in 2022

• Gross profit grew to $2.4 million, up 84.8% from $1.3 million in the comparable period in 2022.

• Record backlog of $20 million as of August 21, 2023

• Reaffirms its previous guidance of approximately $45 million in revenue for 2023

NEW YORK, NY, Aug. 21, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire -- Applied UV, Inc. (NASDAQ: AUVI), a leader in global food security, air quality, and intelligent building solutions today announced its financial results for the second quarter 2022. For the quarter, revenues were $10.8 million, increasing 83.6%, compared with $5.9 million in the second quarter of 2022. Gross profit for the second quarter of 2023 increased to $2.4 million, up 84.8%, compared with $1.3 million in the second quarter of 2022.

Q2 2023 and Recent Business Highlights

• Expanded its strategic relationship with  Canon U.S.A., Inc. to now include Canon Financial Services, Inc., a wholly owned subsidiary of, to provide leasing services for Applied UV’s four operating subsidiaries. The Canon group company, Canon Virginia, Inc., is contracted for the manufacturing of both product segments.

• Renewed its agreement with mfPHD, LLC, for installation of its PURONet UV Disinfection Control System in 16 operating rooms at the University of Texas, San Antonio hospital.

• LED Supply Co., and its FORTUNE 500 technology partner awarded approximately $0.8 million contract for comprehensive lighting & building controls solution for global auto manufacturer's U.S. facility.

• PURO, and Its Partner Academy Energy Groups Selected as a finalist for the GSA's Green Proving Ground (GPG) Program to demonstrate capability of next-generation LEDs and Far-UVC light to disinfect air without the need to increase ventilation. 

• Sterilumen received its first purchase order for its disinfecting mirrors from Mt. Sinai Hospital in New York. This significant milestone represents the successful culmination of three years of research, investment, and intellectual property development by Applied UV.

• Received over $2 million cash deposits on a significant $4 million order from hotel and multi-family developers for interior furnishings, validating strategy of expansion of domestic production facilities.

“We believe the continued increase in our customer commitments to engage Applied UV as their trusted resource across all of our businesses supports our long-term growth strategy. The expansion of our backlog also reflects the success we are experiencing in winning new customers nationwide,” said Max Munn, CEO of Applied UV. “We believe our robust growth in backlog, together with our strategic acquisitions, provides a positive outlook for the remainder of this year and that our strategies for profitable growth in 2024 and beyond are gaining momentum.”

Brian Stern, President of Puro Lighting, commented, “The second quarter has been a truly significant period for the Intelligent Building Solutions division of Applied UV Inc., marked by our selection for the General Services Administration GPG Competition, our pioneering research partnership on Far UV with Johnson Controls and USHIO, and expanded growth in the multifamily sector. Our continued advancements in technologies to enhance food security and produce shelf life, coupled with sales synergies and expense improvements across divisions, demonstrate our drive towards innovation and increased operating efficiency. These collective achievements represent our commitment to enhancing shareholder value, as we continue to lead in sustainable and intelligent building solutions.”

Q2 2023 Summary Financial Results

Net Sales

Net sales of $10.8 million represented an increase of $4.9 million, or 83.6% for the three months ended June 30, 2023, as compared to net sales of $5.9 million for the three months ended June 30, 2022. The Disinfection/Healthy Building Technologies segment increased $4.0 million, primarily due to the acquisition of Puro Lighting and LED Supply Co. on January 26, 2023. Additionally, the Hospitality segment increased $0.9 million as that market is steadily improving.

Gross Profit

Gross profit increased $1.1 million, or 84.8%, to $2.4 million for the three months ended June 30, 2023, as compared to $1.3 million for the three months ended June 30, 2023, 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 June 30, 2023, increased to $4.9 million as compared to $4.0 million for the three months ended June 30, 2022. The increase of approximately $0.9 million was driven primarily by the acquisitions of Puro Lighting and LED Supply Co., which accounted for an increase of approximately $1.7 million, but was offset by a reduction in other SG&A of approximately $0.7 million and a reduction in corporate expenses.

Other Expense

Other expense was $0.3 million for the three months ended June 30, 2023, which includes $0.5 million in interest expense, offset by a $0.2 million gain on the change in fair market value of contingent consideration. This compares to other expense of $0.1 million for the three months ended June 30, 2022.

Net Loss

The Company recorded a net loss of $3.0 million for the three months ended June 30, 2023, compared to a net loss of $2.9 million for the three months ended June 30, 2022. The increase in net loss of $0.1 million was mainly due to the increase in costs related to the acquisitions of Puro Lighting and LED Supply Co., offset by improved profitability in the Hospitality segment.

Total cash and equivalents as of June 30, 2023 were $3.3 million, compared to $2.7 million as of June 30, 2022.

Conference Call/Webcast Information

Applied UV's management team will host an investor conference call and live webcast on August 21, 2023, at 9:00 am ET. Investors can access the live webcast via a link on Applied UV's website or at https://www.webcaster4.com/Webcast/Page/2626/48955.

For those planning to participate in the call, please dial +1-888-506-(for domestic calls), or +1-973-528-0011 (for international calls), passcode 350611. 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 48955.

About Applied UV

Applied UV, Inc. engages in the pursuit of technologies focused on global food security, air quality, and intelligent 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.

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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 second 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 Six Months Ended June 30, 2023 and 2022
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2023				2022				2023				2022
Net Sales		$	10,843,686			$	5,907,646			$	21,498,169			$	9,263,736
Cost of Goods Sold			8,433,992				4,603,854				17,166,089				6,810,845
Gross Profit			2,409,694				1,303,792				4,332,080				2,452,891
Operating Expenses
Research and development			180,293				82,049				369,503				141,363
Selling General and Administrative Expenses			4,922,119				4,031,215				10,186,498				7,132,441
Loss on impairment of goodwill and intangibles			—				—				—				1,138,203
Total Operating Expenses			5,102,412				4,113,264				10,556,001				8,412,007
Operating Loss			(2,692,718)				(2,809,472)				(6,223,921)				(5,959,116)
Other Income (Expense)
Change in Fair Market Value of Warrant Liability			(1,384)				(32,111)				918				11,717
Interest expense			(483,122)				(49,020)				(876,061)				(53,076)
Gain (Loss) on change in Fair Market Value of Contingent Consideration			186,000				—				(433,999)				(240,000)
Gain on Settlement of Contingent Consideration (Note 2)			—				—				—				1,700,000
Other Income			—				1,948				—				1,948
Total Other Income (Expense)			(298,506)				(79,183)				(1,309,142)				1,420,589
Loss Before Provision for Income Taxes			(2,991,224)				(2,888,655)				(7,533,063)				(4,538,527)
Benefit from Income Taxes			—				—				—				—
Net Loss		$	(2,991,224)			$	(2,888,655)			$	(7,533,063)			$	(4,538,527)
Net Loss attributable to common stockholders:
Dividends to preferred shareholders			(407,231)				(362,250)				(769,481)				(724,500)
Net Loss attributable to common stockholders			(3,398,455)				(3,250,905)				(8,302,544)				(5,263,027)
Basic and Diluted Loss Per Common Share		$	(0.77)			$	(1.28)			$	(2.10)			$	(2.06)
Weighted Average Shares Outstanding - basic and diluted			4,434,036				2,533,077				3,949,211				2,559,957

Applied UV, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets As of June 30, 2023 and December 31, 2022
		June 30,				December 31.
		2023				2022
Assets
Current Assets
Cash and cash equivalents		$	3,333,544			$	2,734,485
Accounts receivable, net of allowance for doubtful accounts			5,049,906				1,508,239
Costs and estimated earnings in excess of billings			2,435,960				1,306,762
Inventory, net			8,207,895				5,508,086
Vendor deposits			1,149,385				75,548
Prepaid expense and other current assets			2,011,189				1,187,223
Total Current Assets			22,187,879				12,320,343
Property and equipment, net of accumulated depreciation			1,166,507				1,133,468
Other assets			—				153,000
Goodwill			17,809,235				3,722,077
Other intangible assets, net of accumulated amortization			28,000,601				11,354,430
Right of use assets			3,807,834				4,044,109
Total Assets		$	72,972,056			$	32,727,427
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses		$	8,862,351			$	2,982,760
Contingent consideration			18,809,672				—
Deferred revenue			5,406,083				4,730,299
Due to landlord (Note 2)			189,182				229,234
Warrant liability			9,069				9,987
Financing lease obligations			41,632				33,712
Operating lease liability			1,689,127				1,437,308
Notes payable, net			4,999,257				2,098,685
Total Current Liabilities			40,006,373				11,521,985
Long-Term Liabilities
Due to landlord - less current portion (Note 2)			325,557				393,230
Notes payable, net - less current portion			5,323,659				765,144
Financing lease obligations - less current portion			155,360				158,070
Operating lease liability - less current portion			2,190,159				2,655,103
Total Long-Term Liabilities			7,994,735				3,971,547
Total Liabilities			48,001,108				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 June 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 June 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 June 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 June 30, 2023 and December 31, 2022, respectively			1				1
Common Stock $0.0001 par value, 150,000,000 shares authorized 8,928,330 shares issued and 8,905,633 outstanding as of June 30, 2023 and 2,735,290 shares issued and 2,712,593 outstanding as of December 31, 2022,        respectively			893				274
Additional paid-in capital			56,883,253				45,620,764
Treasury stock at cost, 22,697, respectively			(149,686)				(149,686)
Accumulated deficit			(36,540,057)				(28,237,513)
Total Equity			20,194,459				17,233,895
Total Liabilities, Redeemable Preferred Stock and Stockholders' Equity		$	72,972,056			$	32,727,427

Applied UV, Inc. and Subsidiaries Condensed Interim Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2023 and 2022
		2023				2022
Cash flows from Operating Activities
Net Loss		$	(7,533,063	)		$	(4,538,527	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities
Stock based compensation			384,809				400,450
Bad debt (recovery) expense			(135,467	)			55,226
Change in fair market value of warrant liability			(918	)			(11,717	)
Change in fair market value of contingent consideration			433,999				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			236,275				462,832
Depreciation and amortization			1,418,127				978,495
Amortization of debt discount			399,129				53,646
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable			(1,670,165	)			(402,965	)
Cost and estimated earnings excess of billings			(595,560	)			(262,420	)
Inventory			1,311,288				(2,855,073	)
Vendor deposits			(698,165	)			494,888
Prepaid expenses and other current assets			(194,044	)			(62,600	)
Accounts payable and accrued expenses			2,088,635				768,872
Billings in excess of costs and earnings on uncompleted contracts			—				(616,475	)
Deferred revenue			(1,622,314	)			687,494
Due to landlord			(186,344	)			(93,172	)
Operating lease payments			(213,125	)			(449,388	)
Net Cash Used in Operating Activities			(6,576,903	)			(5,712,231	)
Cash Flows From Investing Activities
Cash paid for patent costs			(51,077	)			(682	)
Purchase of machinery and equipment			(75,959	)			(26,043	)
Acquisitions, net of cash acquired (Note 2)			(4,115,709	)			(10	)
Payments on notes payable			(166,262	)			—
Net Cash Used in Investing Activities			(4,409,007	)			(26,735	)
Cash Flows From Financing Activities
Payments on financing leases			(20,022	)			(3,493	)
Shares repurchased			—				(149,686	)
Dividends to preferred shareholders			(769,481	)			(724,500	)
Payments on note payable			(16,438,782	)			—
Proceeds from equity raises, net			6,630,799				1,092,000
Proceeds from note payable, net			22,182,455				—
Net Cash Provided by Financing Activities			11,584,969				214,321
Net Increase (Decrease) in Cash and equivalents			599,059				(5,524,645	)
Cash and cash equivalents at January 1,			2,734,485				8,768,156
Cash and cash equivalents at June 30,		$	3,333,544			$	3,243,511
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest		$	308,955			$	4,102
Supplemental Non-Cash Disclosures of Investing and Financing Activities
Conversion of debt into common stock		$	217,500			$	—
Recognition of right of use asset and corresponding lease liability		$	563,315			$	1,380,658

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