Good day, ladies and gentlemen. My name is Kat, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Q2 2021 Applied UV Financial Results Conference Call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Kevin McGrath, Investor Relations Representative for Applied UV. Thank you. You may begin. Thank you, Kat, good morning, everyone. Speaking on our call today will be Keyoumars Saeed, Chief Executive Officer, Mike Riccio, Chief Financial Officer, and James Doyle, Chief Operating Officer of Applied UV. During today's call, we will make certain predictive statements that reflect our current views about future performance and financial results. We base these statements in certain assumptions and expectations on future events that are subject to risks and uncertainties. With that, I would now like to turn the call over to Keyoumars Saeed, our Chief Executive Officer. Keyou? Thank you, Kevin. Good morning, thanks to everyone for joining us. It's once again my pleasure, together with my team, to be with you this morning to review the highlights of our second quarter performance. Second quarter net sales increased by 11% to $1.9 million from $1.7 million in the second quarter of 2020. The net sales and financial results for the current period reflect the impact of the asset acquisition of the manufacturer of Airocide systems, Akida Holdings. That transaction closed on February 8, 2021. Materially, all net sales in 2020 presented were generated entirely from our MunnWorks subsidiary. During the second quarter, we experienced an improvement in demand from the hospitality industry as the economy rebounded from the COVID-19 pandemic. As a result, MunnWorks' revenues are slowly but surely returning to what seems like normal operating levels. This normalcy, albeit, is cast in some fits and starts with vaccination progress, followed with setbacks at the end of the quarter, given the new variants and the drop-off or plateauing of vaccination rates. We also experienced some delays in fulfilling orders for one of our SteriLumen product lines due to the current constraints in the supply chain and logistics environment, mostly in shipping delays and container cost and availability. We expect that these orders will be fulfilled in the second half of 2021. Net loss for the second quarter of 2021 was $2.1 million, or $0.23 per share, compared to a net loss of $6,000, or $0.00 per share in the second quarter of 2020. The net loss in the second quarter of 2021 was primarily due to an increase in Selling, General, and Administrative costs to improve future operations at dis infection segment of our business and planning for additional inventory for second half. Our liquidity remains strong with a cash balance of approximately $7 million on June 30th, 2021. At the end of the second quarter, we announced the closing of an underwritten registered public offering of a Series A cumulative perpetual preferred stock, raising gross proceeds of $13.8 million before deducting underwriting discounts and other offering expenses. As a result of this offering, we continue to strengthen our balance sheet and cash position, which is expected to support our strategy in investing in innovation, testing, and growing through complementary acquisitions. I'd like to talk about the growth trends we see developing in our markets and some of the sales and operational highlights for the quarter. Our access to markets were broadly improving domestically and globally, given variants and vaccinations. The increasing rate of vaccination at the start of the second quarter, along with the easing of social restrictions, provided further support for the global economic recovery. We've seen minor delays and setbacks with the emergence of the variants globally and in pockets in North America, we expect to see steady improvement for our MunnWorks subsidiary for the balance of this year. Our global commercial expansion initiatives for SteriLumen business, leveraging both partnerships and distribution, is beginning to gain measurable traction, particularly for our Airocide portfolio of air purification systems. During the second quarter and continuing through the first two months of Q3, we announced significant installations at museums, school systems, hospitals, wineries, and most recently, at a U.S. military base. We expect this momentum to continue as tested, proven infection control protocols become standard practice and our distribution capabilities continue to grow. We're also continuing to invest in our growth initiatives and our global capabilities on innovation, sales deployment, education about efficacy of the science and technology, balanced with safety, continuous product testing, and investment in our distribution infrastructure to leverage our position as the most innovative leader in this new and growing space. Across the globe, customers are increasingly learning about solutions with no byproducts or unintended downstream consequences to better control pathogen spread in the air and on surfaces while not compromising people's health with solutions causing new health risks. Looking beyond the pandemic, our long-term position remains very solid in the world where air quality and infection risk awareness has reached new levels. Our differentiated value proposition as a leader in air and surface infection prevention technologies positions us uniquely to capture these accelerating growth trends. We will continue to be a leader in infection control and air purification, and a step ahead of the competition by advancing our superior science of killing SARS-CoV-2 and all other pathogens, leaving no by-products. We continue to partner with like-minded organizations for innovation and speed to market and revenue, supporting testing of our SteriLumen portfolio of products against the most dangerous pathogens and other Volatile Organic Compounds, or VOCs. In addition, we have expanded safety testing of all SteriLumen products with Underwriters Laboratories, Electrical Testing Laboratories, and MRIGlobal across all relevant standards, while also continuously adding and maintaining all relevant regulatory certifications from entities such as the Food and Drug Administration and Environmental Protection Agency. The testing and safety initiatives initially began with surrogates of COVID-19 due to lack of access to qualified labs or the virus. Now, we've successfully tested the Lumicide surface products against the SARS-CoV-2, and we'll be finishing testing of the Airocide line with MRIGlobal, among others, as we are regaining access to the top labs in the U.S., allowing us to invest in efficacy without any by-products. We stay true to being science-based to validate efficacy of our products and provide important information to our customers and support our sales teams and partners worldwide. Moving to some of our highlights of the second quarter, we're very pleased to see that the sales momentum in Airocide business continued, and we remain excited about the prospects for growth through the remainder of 2021 based on our current pipeline of commercial opportunities. Progress has slowed by new lockdowns and COVID variants. Airocide has been a tremendous addition to our product portfolio, and their people are already a great asset to our team. We believe there are other complementary adjacent technologies or companies that would enrich and expand our portfolio of disinfectant solutions and open new markets for us. Our thesis remains to focus on technologies and innovations that work and remove harmful pathogens from the environment without leaving behind by-products. Inorganic growth remains high priority for the management team, and we're encouraged by the quality and synergies we see in some of the potential acquisition candidates we've engaged with. During the second quarter, we continued to make progress with our SteriLumen disinfecting system product lines, which today includes Lumicide for persistent and automatic disinfection of hard surfaces, above vanities in restrooms, above desks and countertops, plus the Lumicide Drain, which we believe is the only device that automatically disinfects inside the pipe in the high contamination risk drain trap. During Q2, we confidently announced independent lab tests confirming that our Lumicide Ribbon killed COVID-19, the actual COVID-19 virus. The study was designed to determine the Lumicide Ribbon's effectiveness against the actual SARS-CoV-2 virus, as opposed to the COVID surrogate tested in last year's pre-Initial Public Offering tests. At the time, this was the best available data for testing on hard surfaces. We are and will continue to support additional testing of pathogens and validation and their variants in the air and on surfaces to provide added scientific validation and claims of viral inactivation. In conclusion, we're excited about the opportunities underway in development for our SteriLumen business. We've made important advancements in the technical and safety attributes of our SteriLumen product portfolio that we believe differentiate us from the competition. We continue to see positive sales trends and increasing inquiries for both our Airocide and Lumicide products for SteriLumen from a broad set of customers and sectors on a global basis. We believe that Applied UV has a clear strategy and is well-positioned to drive revenue, improve our margins, and deliver sustainable value for our shareholders. This concludes my prepared remarks this morning. Kat, would you please give any instructions for participants, and we'll get started on Q&A, please. Certainly. Thank you. The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing one. Again, ladies and gentlemen, it's star one. Our first question comes from Jeffrey Cohen from Ladenburg Thalmann. Go ahead. Thank you. How are you? Good morning, Jeff. How are you? Good, thanks. I'm good. I got four or five. I'll just roll through briefly. Firstly, talk about the wineries a little bit and some of the placements there, I think it was Greece and Hungary, and then talk about average number of units in an average winery and what you think that market looks like. I didn't catch the first part of it. Talk about which part? Yeah, some of the recent placements in some of the wineries. Okay. Oh, the wineries. Got you. Actually, James Doyle has been closest to it since we just got somebody returned from Napa with some direct feedback. Essentially, there is a, we believe, a great vertical for us in the wineries, both in Europe and here. James Doyle, can you expand on that, please? Yeah, absolutely. Jeff, one of the announcements I think you saw in Greece, that was about a $300,000 project. Some of these wineries can be quite large. They tend to use our larger units, our HD Series out of Airocide for their cask rooms, and are starting to move out of just the cask rooms and mold removal into the front, which is the tasting rooms, with some of our APS Series and GCS Series. Wineries, as you probably know, have been a foundational area pre-pandemic for Airocide and continue to grow through and into the future for us across the world. Lots of growth in Europe. We're seeing growth in South Africa, obviously good growth in France and in the West Coast of the United States. Thanks, James Yeah, I think the big finding that were previous to COVID, a big part of the business model for these wineries has been the visiting rooms and the ability with social distancing to previously, if you had something there, people were wary of the air. Having the visiting rooms clean of any smell or pathogens as well, both makes the tasting experience and visiting feel better and less anxious as well, in terms of spread. Okay. Got it. For the quarter two, can you give us any revenue compositions as far as contribution from MunnWorks or SteriLumen? I would say that, yeah, there's probably relatively even. We were probably down towards the end as shutdown started happening at the end of the quarter. July was a slower month as Delta was around the world. A lot of holders, orders rather, that were coming in were held either for retasking for vaccinations, so delayed for later, but not lost. Also on the MunnWorks side, same thing with the hotels. There's been some openings and then closings. Mostly openings in general, outside of some of the specific areas here in the U.S. South Africa, when it got hit, we had a lot of momentum slow down towards the end of the quarter. That is starting to pick up as people are addressing sort of spot fires on a instance-by-instance episodic basis. Does that answer your question? Yep. Can you give us an update on Axis? Any update from the quarter as far as how the back half of the year might unroll? Yeah. The Axis is actually designing their product on much more elegant and sort of hospital-specific product for patient rooms, they expect that, I don't believe it has a name yet, that product to be rolled out, which is going to be sort of the runway product to the hospitals in Q1 of next year. Got it. Okay. I guess lastly for us, could you talk a little bit about your recent announcements out of both Vietnam and Africa, and give us a sense of what quarter those commitments may start? Vietnam has already, I believe, received their units. It's for some hospitals in Vietnam, those specific orders. Distributor there is very much focused on the healthcare vertical. South Africa is a pharma, a company in general, as a distributor, will serve the hospitality and healthcare and pharmaceutical space. Their initial orders have totaled, the first one was $100,000, I believe, and the second one was for almost, Mike Riccio, our CFO, will obviously jump on me and correct me, but a total of almost just about under million dollars is being, or has already been delivered or on its way to South Africa. The majority of that second order, which is close to, I think, Mike, check me, $800,000+ is [crosstalk] probably going to hit our books anyway in this third quarter. Is that right? Correct. Okay. Okay. James, can you clarify, is that for the continent, this deal with 360, or is it for South Africa, the country specifically? James, that was, I think, directed at you. Oh, I'm sorry. Yes, it is for all of Africa. A lot of their focus obviously is going to be in South Africa as a South African company, but they do have exclusivity across the continent. Got it. Okay. I think that those are for us. Thanks for taking the questions. You're welcome. Always. At this time, I would like to turn it back to management for any closing remarks. Go ahead, Keyou. Actually, there are no closing remarks. I'd like to, again, thank everyone for joining us this morning. We look forward to closing out. We're halfway through the third quarter and closing out this quarter and very positive heading towards the end of the year. Thank you very much for coming in and listening to us and for your time. Thanks, Kat. Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Loading workspace