MOUNT VERNON, N.Y.–(BUSINESS WIRE)–Applied UV, Inc. (NasdaqCM: AUVI) (“Applied UV” or the “Company”), a leading provider of patented, scientifically and clinically proven surface and air pathogen elimination and disinfection technologies (fixed, mobile, and HVAC), LED lighting products and premium hotel furnishings, used by clients globally, announces shareholder letter.
Dear Applied UV Inc. Shareholders,
I am writing to inform all of our shareholders of the Company’s accomplishments throughout 2022 and provide, to the extent possible, insights into our focus for 2023. We acquired Scientific Air late in 2021 with a mobile disinfection product suite that was client centric to one industry and distributor specific to COVID-19. Unfortunately, previous senior executive management’s focus did not timely re-position the Company to address this, a mistake which we corrected. Consequentially, we determined to write down a substantial portion of our investment and put it behind us. In addition, the Company has incurred significant one-time integration and acquisition related costs associated with the more successful acquisitions, thereby exiting 2022 with a Company better positioned to achieve improved results in 2023.
Despite the global supply chain disruptions borne out of the COVID pandemic and the geo-political uncertainty caused by the Ukraine war that triggered an economic slowdown throughout Europe and the world for much of 2022, the company completed significant positive milestones that, in my opinion, are not being recognized in our valuation. Despite these disruptions, the steady stewardship put forth by our entire team and board, and what we have accomplished since the completion of our Initial Public Offering almost 28 months ago, has positioned the Company for continued accelerated growth in revenue and future profitability both organically and via accretive acquisitions.
Why we are here – According to Research and Markets, the UV Disinfection market is expected to reach $9 billion by 2027 as technology continues to improve and the focus on stopping the spread of contagious diseases increases. According to The Center for Disease Control (CDC), 1 in 25 patients have at least one Hospital Associated Infection (HAI) annually and approximately 3 million serious infections and 100,000 deaths occur every year in long-term care facilities. According to the CDC, losses due to HAI’s have exceeded $28 billion, losses due to absenteeism have exceeded $225 billion, and losses due to student/teacher absenteeism have exceeded $25 billion. Scientists globally have been advocating improving air quality post pandemic, significantly boosting global adoption to control airborne pathogen transmission. Governments globally aremandating health agencies to address improving indoor air quality (IAQ) via grants and mechanisms to ease visitation and to protect facilities against future pathogens. Indoor air quality has become an even more important issue as world economies transition beyond the COVID 19 pandemic. In 2021, 39 scientists reiterated the need for a “paradigm shift” and called for improvements in “how we view and address the transmission of respiratory infections to protect against unnecessary suffering and economic losses.” In mid-2022, we began to see this seismic shift from pandemic related mobile apparatuses to complete systems within systems for facilities designed to monitor, improve, and report on indoor air quality on a more permanent basis. While there are opportunities for mobile systems, our emphasis will be on this growing market trend. In addition, the global air purifier market size is set to grow exponentially. It was valued at $9.24 billion in 2021 and is predicted to grow to approximately $22.84 billion by 2030 according to Precedence Research, and the immense demand for air purification and sterilization in the US will be driven by the commercial sector. SteriLumen Inc.’s (“SteriLumen”) product portfolio is one of the only research-backed, clinically proven pure-play air and surface pathogen elimination and disinfection technology companies with international distribution and globally recognized end users, with product developed for NASA. In addition to the numerous recognized research institutions and internationally recognized scientists who published the reports that were completed by the acquired companies, Airocide™ was independently proven to kill SARS, MERSA and Anthrax. SteriLumen’s air purification (Airocide™, Scientific Air™ and PURO Lighting) and surface disinfection (Lumicide™) were independently tested and proven to kill both Candida Auris (the anti-microbial product testing Resinnova Laboratories) and SARS CoV-2 (COVID-19) (the contract research organization MRIGlobal), MRSA (Resinnova Laboratories), Salmonella enterica (Resinnova Laboratories) and Escherichia coli (Resinnova Laboratories).
What we have accomplished – Since our inception, the Company has raised a total of $34.6 million in gross proceeds from equity offerings as well as $10.0 million in non-dilutive debt facilities, all of which enabled the completion of four asset acquisitions (Akida Holdings, Kes Science and Technologies, Scientific Air Management, VisionMark), and two acquisitions in January 2023 (PURO Lighting and LED Supply Co., both under common ownership). With the addition of Puro Lighting and LED Supply Co., we anticipate that the combined company could generate approximately $45-50 million of revenues in FY 2023 and further positions AUVI as a fully integrated company offering total pathogen elimination and disinfection platforms (air and surface), specialty LED lighting, and custom furnishings for the hospitality sector. With the completion of the acquisition of Puro our wholly owned subsidiary, SteriLumen, has more weapons to address the ever-changing challenges of air and surface pathogens, healthcare-acquired infections and hospital borne infections, protecting businesses, the facilities they occupy, their employees, and consumers who frequent them. To that end, after initial delays due to the COVID pandemic, 2022 saw the Company begin a clinical trial with its Lumicide™ sink and drain surface disinfection product at the prestigious Mt. Sinai Hospital in New York City. The Company’s products are targeted for use in facilities that have high customer touch and turnover which include hospitals, hotels, commercial facilities, sports arenas, dental offices, schools, food processing, post-harvest, cannabis grow facilities, long-term care, and other public spaces. SteriLumen™ received numerous repeat and new orders for its suite of air pathogen elimination and disinfection products including from the Government of Pakistan, a U.S. based leader in cosmetology, and two large school districts in Washington State and Missouri (public and private schools), as well as new client wins in food preservation and distribution. After a two-year hiatus due to the pandemic, 2022 saw the Company return to national and international industry trade shows presenting our entire suite of products at leading Industry conferences in the U.S. and all around the world. We believe that these efforts, combined with planned marketing initiatives, will help pave the way for an increased pipeline of orders with new and existing client wins throughout 2023. MunnWorks, LLC (“MunnWorks”) resumed its pre-pandemic growth rate as global economies re-opened and hotels resumed their planned remodeling and refurbishing activities, with several high-profile operators placing multi-million-dollar orders. The combination of MunnWorks’ legacy business and that of VisionMark provides for the opportunity to bid for a greater share of the hospitality furnishings market than previously possible. Furthermore, the business combination with VisionMark also allows for much of the MunnWorks products to be manufactured domestically, thus shortening delivery times and ensuring supply of certain materials used in the manufacturing process. The VisionMark asset purchase further enables MunnWorks to design-assist, fabricate, deliver, and install high-end, hotel living space furnishings that are constructed of wood, glass, metal, and stone and further expands the MunnWorks reach into the luxury hospitality market beyond its existing core mirror business. The Company plans on cross-market selling of our pathogen elimination and disinfection brands as an option both as free standing and to be engineered into hotel guestroom furniture. In 2022, the gross profit dollars for MunnWorks were negatively impacted by approximately $2.5 million due to deposits received by the previous owners of VisionMark (“Brooklyn”) prior to our acquisition of the Brooklyn operations. MunnWorks chose to complete these projects-in-process without the benefit of the deposits, thus negatively impacting our gross profit. LED Supply Co. provides design, distribution, and implementation services for lighting, controls, and smart building technologies, with a focus on new types of energy efficiency and sustainable technologies.
Our global distribution and strategic partnership expansion continued throughout 2022. The Company now boasts strategic manufacturing partnerships and alliances with the following Fortune 100 Companies: Canon, Acuity, Johnson Controls, USHIO, Siemens, and Grainger. Additionally, the Applied UV global network has grown to include 89 dealers and distributors in 52 countries, 47 manufacturing representatives, and 19 U.S. based internal sales representatives, offering a complete suite of products through its two wholly owned subsidiaries – SteriLumen, Inc. and Munn Works, LLC. SteriLumen now owns, brands, and markets a portfolio of research backed and clinically proven products utilizing advanced UVC Carbon, Broad Spectrum UVC LED’s, Photo-catalytic oxidation pathogen elimination technology, branded Airocide ™, Scientific Air™, Airoclean™ 420, Lumicide™, PUROAir, PUROHealth, and PURONet. SteriLumen’s proprietary platform suite of patented surface and air technologies offers the most complete pathogen elimination platform including mobile, fixed and HVAC systems and software solutions interconnecting its entire portfolio suite into the internet of things (IoT) allowing customers to implement, manage and monitor IAQ measures recommended by the U.S. Government’s EPA, across any enterprise. Additionally, the Lumicide™ platform applies the power of ultraviolet light to destroy pathogens automatically, addressing the challenge of healthcare-acquired infections in several patented designs for infection control in healthcare. Our global list of Fortune 100 end users includes Kaiser Permanente, NY Health+Hospitals, MERCY Healthcare, University of Chicago Medical, Baptist Health South Florida, New York City Transit, Samsung, JB Hunt, Boston Red Sox’s Fenway Park, JetBlue Park, France’s Palace of Versailles, Whole Foods, Del Monte Foods, U.S. Department of Veterans Affairs, Marriott, Hilton, Four Seasons and Hyatt, and more.
The Company also looks to leverage the synergies that exist between its entire suite of air and surface pathogen elimination and disinfection products with MunnWorks and LED Supply Co., leveraging its global distribution footprint and strategic partnerships and driving future cross-market selling opportunities that currently exist amongst all our brands. The Company is already enjoying the early benefits of this and expects to announce wins in the very near term. With the integration of the PURO UV and LED Supply Co. acquisitions rapidly progressing, coupled with the shifting of our entire supply chain, logistics, offshore manufacturing, and next generation product R&D to Canon Virginia, Inc., the savings in the reduction of duplicated expenses across all of our divisions is expected to equate to improvements in our corporate SG&A, driving future earnings higher. Additionally, we recently announced an expanded relationship with Canon to now include Canon Financial Services, allowing the Company to offer a suite of leasing and finance options to both MunnWorks’ and SterLumen’s global base of clients.
We strengthened the team with the recent addition of Messrs. Brian Stern and Lawrence Webb, both staying on as presidents of the PURO and LED divisions respectively. Brian Stern has also been appointed as a director, further strengthening our board. We look to enjoy the immense potential synergies from cross-marketing while reducing duplication in operating expenses. It is important to note that we continue to be driven by a single competitive principle, which is that we have a patented, disruptive air and surface pathogen elimination and disinfection technology platform that is differentiated by the global customers who use it to protect their facilities and customers, and by the independent studies that validate its efficacy. Our enthusiasm could not be any higher about the impact that our Company’s air and surface pathogen elimination and disinfection platform, LED lighting and hospitality segments could have as the world’s businesses and economies embark upon implementing guidelines recommended for adoption for use to improve indoor air quality, improving energy efficiency with technology that can prevent this type of global disruption from re-occurring in the future.
We have updated our website with the most recent Investor Presentation that covers more of our plans for 2023. You can also find more information maintained at www.applieduvinc.com
In closing, we continue to be mindful of the challenges and grateful for the opportunities. Our entire team and board remain solely focused towards expanding our global reach, market penetration and market share expansion with laser focused execution. On behalf of the entire management team and board, thank you for your continued support. Together, as we continue this journey, it is our sincere hope and expectation that we will unlock shareholder value and the truest potential for all our stakeholders and partners. Please feel free to contact me directly with any questions.
Best Regards,
Max Munn
Chief Executive Officer, President and Director
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About Applied UV
Applied UV, Inc., provides proprietary surface and air pathogen elimination and disinfection technology focused on Improving Indoor Air Quality (IAQ), specialty LED lighting and luxury mirrors and commercial furnishings all of which serves clients globally in both the commercial and retail segments.
Our products address the needs in the healthcare, hospitality, food preservation, cannabis, education, and winery vertical markets. The Company has established strategic manufacturing partnerships and alliances with such Companies as, Canon Virginia Inc, Canon Financial Services Inc., Acuity Brands Lighting, Johnson Controls International, USHIO, Siemens, W.W. Grainger, and maintains a global network of 89 dealers and distributors in 52 countries, offering a complete suite of products through its two wholly owned subsidiaries – SteriLumen, Inc. (“SteriLumen”) and Munn Works, LLC (“MunnWorks”). SteriLumen owns brands and markets a portfolio of clinically proven products utilizing advanced UVC Carbon, UVC LED’s, Far UV (222nm), Photo-catalytic oxidation (PCO) pathogen elimination and disinfection technology, branded Airocide ™, Scientific Air™, Airoclean™ 420, Lumicide™, PUROHealth, and PURONet. SteriLumen’s proprietary platform suite of patented, surface and air pathogen elimination and disinfection technologies offers complete pathogen disinfection platform. Our product suite includes mobile, fixed and HVAC systems and software solutions interconnecting its entire portfolio suite into the IoT allowing customers to implement, manage and monitor IAQ measures recommended by the EPA across any enterprise. SteriLumen’s Lumicide™ platform applies the power of ultraviolet light (UVC) to destroy pathogens automatically, addressing the challenge of healthcare-acquired infections (HAIs) in several patented designs for infection control in healthcare.
LED Supply Co., is a full-service, wholesale distributor of LED lighting and controls used throughout facilities in North America.
MunnWorks manufactures and sells custom luxury and backlit mirrors, and conference room and living spaces furnishings.
Our global list of Fortune 100 end users including Kaiser Permanente, NY Health+Hospitals, MERCY Healthcare, Baptist Health South Florida, New York City Transit, Samsung, JB Hunt, Boston Red Sox’s Fenway Park, JetBlue Park, France’s Palace of Versailles, Whole Foods, Del Monte Foods, U.S. Department of Veterans Affairs, Marriott, Hilton, Four Seasons and Hyatt, and more. For information on Applied UV, Inc., and its subsidiaries, please visit https://www.applieduvinc.com.