Q1 2022 Applied UV Inc Earnings Call
Good morning, ladies and gentlemen, thank you for holding our conference call will begin at just a couple of minutes. Once again. Thank you for holding your conference call will begin very shortly.
Speaker 1: Good morning ladies and gentlemen. Thank you for holding. Your conference call will begin in just a couple of minutes. Once again, thank you for holding. Your conference call will begin very shortly.
[music].
Good morning, ladies and gentlemen, I would like to welcome everybody to the Q1 2022 applied U V earnings conference call at.
Speaker 2: Good morning, ladies and gentlemen, I would like to welcome everybody to the Q1 2022 applied UV earnings.
Speaker 2: At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
At this time all participants are in a listen only mode.
Brief question answer session will follow the formal presentation.
This conference is being recorded.
Speaker 2: With me on the call today are John Andrews, Chief Executive Officer, and Mike Riccio, Chief Financial...
With me on the call today are John <unk>, Chief Executive Officer, and Mike Riccio, Chief Financial Officer.
Speaker 2: As a reminder, all material for today's live presentation are available on the company's investor relations website.
As a reminder, all materials for today's presentation are available on the company's Investor Relations website at Www dot apply Juvie dotcom.
Speaker 2: at www.applieduv.com.
Speaker 2: Before we begin, please take a moment to read the forward-looking statements in the Earnings Pressure Report.
Before we begin please take a moment to read the forward looking statements in the earnings press release.
During today's call, we'll make certain predictive statements that reflect our current views about future performance and financial results. We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties.
Speaker 2: During today's call, we'll make certain predictive statements that reflect our current views about future performance and financial results.
Speaker 2: We base these statements and certain assumptions and expectations on future events that are subject to risk and uncertainty.
Speaker 2: Our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our.
Our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions with that I'll now turn the call over to John Andres John You may begin.
Speaker 2: With that I'll now turn the call over to John Andrews. John , you may begin.
Speaker 3: Thank you and good morning, everyone. It's a pleasure to be with you to review the highlights of our first quarter.
Good morning, everyone. It's a pleasure to be with you to review the highlights of our first quarter.
Speaker 3: The progress we discussed in our 2021 Q4 year-end call continues to gain track.
Progress will be discussing our 2021 Q4 year end call continues to gain traction.
Speaker 3: The integration of our three strategic acquisitions that diversified our business to create an air and surface pathogen elimination platform is now firmly established. So that as a company, we are well positioned to capitalize on increasing market demand for safer environments, born out of the devastating impacts of the pandemic, as well as the recently announced U.S. government's EPA, EANS2, CMS.
Of our three strategic acquisitions that diversified our business to create an air and surface pathogen elimination platform is now firmly established so that as a company we are well positioned to capitalize on increasing market demand for safer environments born out of the devastating impacts of the pandemic as well as the recently announced.
Governments E P H E N S to CMS.
And the White house is clean in their indoor air initiatives, all aiming to improve indoor air quality.
Speaker 3: and the White House's Clean Indoor Air Initiatives, all aiming to improve indoor air quality.
We are well positioned to serve a global market that is expected to reach 24 billion by 2030, as a leading provider of pathogen elimination obsoletes that protect businesses facilities and the people who move through them.
Simply put we are in the business of providing solutions that address the growing demand for pure cleaner safer in any environment, where people live work and play.
Speaker 3: We have set the stage for increased organic growth driven by a sophisticated and targeted marketing initiative that we started stated last quarter was the beginning Q2. That initiative was launched in April and includes digital and social media campaigns aimed at the following key vertical markets including cannabis food preservation logistics long term care schools dental other health care facilities and hospitality.
We have set the stage for increased organic growth driven by a sophisticated and targeted marketing initiatives that we started stated last quarter was to begin in Q2.
That initiative was launched in April and includes digital and social media campaigns aimed at the following key vertical markets, including cannabis proves food preservation logistics long term care schools dental other health care facilities and hospitality as we announced recently the first targeted marketing push was in.
Speaker 3: As we announced recently, the first targeted marketing push was in the cannabis space, which was directed by our recently appointed director, Monica.
The cannabis space, which was directed by our recently appointed director Monica World.
Speaker 3: The Cannabis Market Initiative marks the first of many planned marketing investments into our three acquired companies, and we are already seeing strong market interest and expect to announce a significant relationship with one of the world's largest cannabis growers very
The cannabis market initiative marks the first of many planned marketing investments into our three acquired companies and we are already seeing strong market interest and expect to announce a significant relationship with one of the world's largest cannabis growers very soon.
Speaker 3: The marketing campaign is targeting key prioritized high-demand verticals that we expect will increase brand recognition, drive both market share and top-line revenue.
The marketing campaign is targeting key prioritized high demand verticals that we expect will increase brand recognition drive both market share and top line revenue.
Speaker 3: Secondly, for the first time since many of the countries we serve begin to reopen, we have returned to a number of industry conferences that were shuttered due to the pandemic, and we are scheduled to exhibit our platform of mobile and fixed air purification technologies at nine conferences throughout the U.S. and Europe , targeting cannabis.
Secondly for the first time since many of the countries. We serve begin to reopen we have returned to a number of industry conferences that were shuttered due to the pandemic and we are scheduled to exhibit our platform of mobile and fixed air purification technologies at nine conferences throughout the U S and Europe targeting cannabis.
Speaker 3: janitorial sanitation, correctional facilities, medical, and food preservation.
<unk> sanitation correctional facilities medical and food preservation, we will continue to expand these marketing initiatives to drive and expand market share in 2022 and beyond.
Speaker 3: We will continue to expand these marketing initiatives to drive and expand market share in 2022.
As we stated last quarter, we still can see a positive and energizing shift in the air purification market displacing some of the uncertainty that was an overhang for much of last quarter of 2021, and well into Q1 2022 as your end users the way to key policy decisions and funding allocations on the other hand, we.
Speaker 3: As we stayed the last quarter, we still can see a positive and energizing shift in the air purification market, displacing some of the uncertainty that was an overhang for much of the last quarter of 2021 and well into Q1 2022, as end-users awaited key policy decisions and funding allocations. On the other hand, we have seen increasing inflationary pressures and the uncertainty and fear related to the Ukraine-Russia war temporarily slowing down our growth.
We've seen increasing inflationary pressures and the uncertainty and fear related to the Ukraine, Russia War temporary slowing down our growth in Europe .
As more of the initiatives and commitments to funded by government agencies, including the centers for Medicare and Medicaid and the environmental Protection Agency. Among others are announced we continue to see the advancement of new business opportunities that we have been pursuing towards contract award.
Speaker 3: As more of the initiatives and commitments to funding by government agencies, including the Centers for Medicare and Medicaid, and the Environmental Protection Agency, among others, are announced, we continue to see the advancement of new business opportunities that we have been pursuing towards contract awards.
Speaker 3: As we recently announced, demand from the non-public schools program is accelerating with our distribution partner in Washington State being awarded a multimillion dollar contract of which a large allocation of those funds are expected to be used for the purchase of our air purification solution.
As we recently announced.
Man from the Nonpublic schools program is accelerating with our distribution partner in Washington State being awarded a multimillion dollar contract of which a large allocation of those funds are expected to be used for the purchase of air purification solutions.
Speaker 3: As we also stated on our Q1 call, we expect to announce several product placement pilot programs.
As we also stated on our Q1 call we expect to announce several product placement pilot program.
Speaker 3: across long-term care, urgent care, hospitality, and the logistic sectors. We have two of the best-class tools available in what the U.S. government detailed and announced as potential tools in a toolbox to improve indoor air quality.
Across long term care urgent care hospitality and the logistics sectors. We have two of the best class tools available and what the U S government detailed announced its potential tools in the toolbox to improve indoor air quality.
Speaker 3: Next I'd like to cover our progress in sales, our product development roadmap, and our
Next I'd like to cover our progress in sales our product development roadmap and R&D.
Speaker 3: Clearly our solutions are scalable and the list of opportunities for further awards is seemingly endless when you consider all the venues globally of varying sizes that are seeking ways to keep patrons safe from contagions and return to pre-pandemic levels of operation.
Our solutions are scalable in the list of opportunities for further awards. It seemingly analysts when you consider all the venues globally are various sizes that are seeking ways to keep patron safe from contagion and returned to pre pandemic levels of operations. We are in the process of increasing our head count to support our growth and expect to add additional season.
Speaker 3: We are in the process of increasing our headcount to support our growth.
Speaker 3: We expect to add additional seasoned business development professionals before the end of Q2. We also recently added a senior vice president of marketing and market development, as well as engineering talent.
Business development professionals before the end of Q2, we also recently added a senior vice president of marketing and market development as well as engineering talent.
Speaker 3: Before diving deeper, our wholly-owned subsidiary, MunWorks, recently announced a model room contract for the Renaissance Cleveland Hotel, which upon product approval should lead to a $2 million follow-on order. This win is primarily the result of our asset acquisition of VisionMark, which will expand our product offerings to the hospitality industry.
Before diving deeper our wholly owned subsidiary of <unk> recently announced a model room contract for the Renaissance Cleveland Hotel, which upon product approval should lead to a $2 million follow on order.
This win is primarily the result of our asset acquisition of vision, Mark, which will expand our product offerings to the hospitality industry.
Speaker 3: VisionMark reported revenues on a proforma basis of approximately $7 million in their fiscal year ended December 31, 2011.
Asian, Mark reported revenues on a pro forma basis of approximately $7 million in the fiscal year ended December 31 2021.
Speaker 3: Our air purification sales pipeline continues to build as we continue to identify attractive opportunities for new business that we believe will provide a positive contribution to financials and build on our 2021 accomplishments.
Our air purification sales pipeline continues to build as we continue to identify attractive opportunities for new business that we believe will provide a positive contribution to financials and build on our 2021 accomplishment comp.
Accomplishments.
Importantly, our expansion of network.
International distributors to increase sale channel span product throughput continues our distribution channel includes global leaders such as 360 Biopharma in Africa Soliris moved to bottled water among others. We continue to seek new distribution partners and growing our global distribution beyond our base of 52 distributor part.
Speaker 3: international distributors to increase sale channels and product throughput continues. Our distribution channel includes global leaders such as 360 BioPharma in Africa, Solarius, Lutu Bata Water, among others. We continue to seek new distribution partners in growing our global distribution beyond our base of 52 distributor partners and increasing our presence beyond the current 52 countries.
<unk> and increasing our presence beyond the current 52 countries.
Speaker 3: In fact, we will be hosting our African partners this month as they are beginning to see increased demand for the aerosol product offering related to cannabis in the continent of Africa.
In fact, we will be hosting our African partners. This month.
Are beginning to see increased demand for the aerospace product offerings related to cannabis in the continent of Africa.
Speaker 3: As we stated in Q4, our domestic and international distributor partners are key to the company's scaling our global market share and reach, a clear differentiation between us and our competition.
As we stated in Q4, our domestic and international distributor partners are key to the company's scaling our global market share and reach a clear differentiation between us and our competition.
Speaker 3: We expect to see our first stocking order from our recently announced Finnish-based distribution partner, Plandet Division, in late 2020.
We expect to see our first stocking order from our recently announced finished space distribution partner planned It division in late Q3.
Speaker 3: Operationally, we continue to analyze each of the points in our supply chain to tighten integration, to optimize inventory, improve quality control, and mitigate against supply chain disruptions that are so prevalent in our world today, including exploring the use of large, globally recognized contract OEMs and leasing.
Operationally, we continue to analyze each of the points in our supply chain to tighten integration to optimize inventory improve quality control and mitigate against supply chain disruptions that are so prevalent in our world today, including exploring the use large globally recognized contract Oems and leasing companies.
Speaker 3: From an R&D perspective, we're beginning to formulate our new product road map and making substantial improvements to our entire line of mobile and fixed air purification products, further differentiating our patented PCO and UVC carbon-based solutions from that of our competitors, as well as the creation of our sterile Lumen app, which we believe will both set a standard as well as set the stage for all our devices to join the IoT ecosystem.
From an R&D perspective, we're beginning to formulate our new product roadmap and making substantial improvements to our entire line of mobile and fixed air purification products further differentiating our patented PCL and UBC carbon based solutions from that of our competitors as well as the creation of our sterile alumina App, which we will.
Believe will both set of standard as well as set the stage for all our devices to join the Iot ecosystem.
Speaker 3: As we stated in our Q4 call, from a strategic transaction perspective, we continue to explore joint venture and other aerosol product placement pilot programs with established leaders to include big box retailers in the consumer market and hospitality verticals to further increase market penetration and adoption of our air purification products into new markets and expect to announce some strategic wins in the near future.
As we stated in our Q4 call from a strategic transaction perspective, we continue to explore joint venture and other aerospace product placement pilot programs with established leaders to include big box retailers and the consumer market and hospitality verticals to further increase market penetration and adoption of our air purification.
Products into new markets and expect to announce some strategic wins in the near term.
Let me close by saying that the last 12 months has been about laying a foundation for the business. We plan to build upon going forward 2022 will be a year of execution. We plan to meet performance obligations for existing contracts signed new business with existing contracts and new opportunities continue to develop and enhance our <unk>.
Speaker 3: Let me close by saying that the last 12 months has been about laying a foundation for the business we plan to build upon going forward.
Speaker 3: 2022 will be a year of execution. We plan to meet performance obligations for existing contracts, sign new business with existing contracts and new opportunities, continue to develop and enhance our product capabilities to meet the growing demands and needs of the market, continue to further our market expansion into adjacent market opportunities, and invest in internal operations to optimally capitalize on all these global opportunities.
<unk> capabilities to meet the growing demands and needs of the market continue to further our market expansion into adjacent market opportunities and invest in internal operations to optimally capitalize on all of these global opportunities.
Speaker 3: As of today, our business is performing at its highest level in the past year, the results of which will begin to show in the latter half of 2022 and into 2035.
As of today, our business is performing at its highest level in the past year. The results of which will begin to show in the latter half of 2022 and into 2022.
Next I'll turn the call over to Mike <unk>, Our Chief Financial Officer, who will walk us through the financial results of the quarter Mike.
Speaker 3: Next, I'll turn the call over to Mike Riccio, our Chief Financial Officer, who will walk us through the financial results of the quarter. Mike?
Thanks, John .
Net sales of approximately $3 $3 million represented an increase of 1.0 million or 45, 1% for the three months ended March 31, 2022, as compared to net sales of approximately.
Speaker 4: Net sales of approximately $3.3 million represented an increase of $1.0 million, or 45.1% for the three months ended March 31, 2022, as compared to net sales of approximately $2.3 million.
$3 million.
31 2021.
Okay, great contributor both to the disinfection segment, which increased $1 million.
Speaker 4: available to the disinfection segment, which increased $1.2 million, largely as a result of the strategic acquisitions of Kess and Science Differentiator Q3 and Q4.
Largely as a result of the strategic acquisitions of <unk>.
And scientists.
Q3 and Q.
21, respectively.
Decreased approximately $159000, primarily due to supply chain disruptions with multiple order fulfillment delayed into Q2 of 2022.
Speaker 4: decreased approximately $159,000, primarily due to supply chain disruptions with multiple order fulfillments delayed into Q2 of 2022.
The reminder, disinfection segment includes the design manufacture assembly and distribution of disinfecting segments for us in health care, hospitality and commercial municipal and residential markets.
Speaker 4: A reminder, the disinfection segment includes the design, manufacture, assembly, and distribution of disinfecting segments for use in healthcare, hospitality, and commercial, municipal, and residential markets.
<unk>.
Speaker 4: concludes the design and manufacture of fine mirrors and furniture specifically for the hospitality industry.
Includes the design and manufacture of assigned mirrors in furniture, specifically for the hospitality industry.
Gross profit increased approximately 225.
Speaker 4: Gross profit increased approximately $225,000, or 24.3% for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, driven primarily by volume growth from the disinfection segment. However, gross profit as a percentage of sales decreased approximately 5%.
Or 24, 3% for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, driven primarily by volume growth from the disinfection segment. However, gross profit as a percentage of sales decreased approximately five.
Speaker 4: 0.0% in Q1 of 2021 to 2025.
Zero percent in Q1 of 'twenty one.
20.
Okay.
Okay.
Sales and increase in factory overhead absorption and higher logistical costs in the hospitality segment.
Speaker 4: sales, an increase in factory overhead absorption, and higher logistical costs in the hospitality segment.
Speaker 4: as the company continues to integrate their strategic acquisitions.
As the company continues to integrate their strategic acquisitions.
Speaker 4: Focus will be on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operation.
This will be on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operations.
Speaker 4: SG&A costs for the three months ended March 31, 2022, increased to approximately $3.1 million, as compared to $1.6 million for the three months ended March 31, 2021.
SG&A costs for the three months ended March 31, 2022 increased to approximately $3 1 million as compared to $1 6 million for the three months ended March 31 2021.
Speaker 4: This increase of approximately $1.4 million was driven primarily by the expansion of
This increase of approximately $1 $4 million was driven primarily by the expansion of.
No acquisition.
Increased zero point $3 million year over year as head count increase from 31 at March 31, 2021 to 89 at March 31 2022.
Speaker 4: increased 0.3 million year-over-year as headcount increased from 31 at March 31, 2021 to 89 at March 31, 2022.
Speaker 4: Consulting, accounting, and legal costs increased $0.3 million. And amortization expense, mostly related to the tangible costs of our acquisitions, increased $1.3 million.
Consulting accounting and legal costs increased 0.3 million and amortization expense.
Related to the intangible.
With our acquisitions.
Okay.
Additionally, advertise.
Expenses increased with the.
We do.
Pete.
Okay.
In the coming year, as we fully integrate our acquisitions and leverage synergies where practical.
Speaker 4: coming year as we fully integrate our acquisitions and leverage synergies where.
During the quarter ended March 31, 2022, the company determined that a triggering event had occurred as a result of a settlement agreement with scientific air.
Speaker 4: During the quarter ended March 31, 2022, the company determined that a triggering event had occurred as a result of a settlement agreement with Scientific Air.
Speaker 4: A quantitative impairment test on Goodwill determined that the fair value was below the carrying value. And as a result, the company recorded a full Goodwill impairment charge of approximately $1.1 million on the condensed consolidated statements of operations during the three months ended March 31, 2022.
Quantitative impairment test on goodwill determined that the fair value was below the carrying value and as a result, the company recorded a full goodwill impairment charge of approximately $1 1 million on the condensed consolidated statements of operations. During the three months ended March 31 2022.
Speaker 4: Also, as a result of this settlement agreement, the previous owners of Scientific Air agreed to link risk to their property.
So as a result of this settlement agreement the previous owners of scientific Air link risks.
Okay.
Shares that were part of the room.
Okay.
22, the company recorded recorded a loss on change in fair market value of.
Speaker 4: The company recorded a loss on change in fair market value of duration of time.
Duration of 240.
Got it.
The result of the settlement agreement the company recorded a gain on the settlement of contingent consideration of $1 7 million.
Speaker 4: of the settlement agreement, the company recorded a gain on the settlement of contingent consideration of $1.7 million.
The company recorded a net loss of approximately $1 $6 million for the three months ended March 31 2022.
Speaker 4: The company recorded a net loss of approximately $1.6 million for the three months ended March 31, 2020.
Compared to a net loss of approximately $1.0 million for the three months ended March 31 2021.
Speaker 4: compared to a net loss of approximately $1.0 million for the three months ended March 31, 2021.
Speaker 4: The increase of 0.6 million in the net loss was mainly due to the increase in SG&A costs incurred in support of the expansion of the disinfection site.
The increase of 0.6 billion and the net loss was mainly due to the increase in SG&A costs incurred in support of the expansion.
<unk> segment.
On a non-GAAP .
The EBITDA was a loss of approximately $1 2 million for the three months ended March 31, 2022, which was an increase of approximately zero point $8 million as compared to the three months ended March 31, 2021, we use adjusted EBITDA to assist in analyzing our operating performance by removing the.
Speaker 4: Adjusted EBITDA was a loss of approximately $1.2 million for the three months ended March 31, 2022, which was an increase of approximately $0.8 million as compared to the three months ended March 31, 2021. We use adjusted EBITDA to assist in analyzing our operating performance by removing the impact of certain key items that we believe do not reflect our underlying performance.
A certain key items that we believe do not reflect.
Underlying operations.
Adjusted EBITDA is defined as operating profit or loss, excluding depreciation and amortization and excluding stock based compensation and loss on impairment of goodwill.
Speaker 4: Adjusted EBITDA is defined as operating profit or loss excluding depreciation and amortization and excluding stock-based compensation and loss on impairment of goodwill.
Speaker 4: Lastly, we ended the quarter with approximately $7.1 million of unrestricted cash available on our balance sheet.
Lastly, we ended the quarter with approximately $7 1 million of unrestricted cash available on our balance sheet.
Speaker 4: Looking ahead, we expect further efficiency gains during our fiscal year ending December 31, 2022, as we increase momentum with the integration of our acquisitions and leverage targeted synergies. This concludes our
Looking ahead, we expect further efficiency gains during our fiscal year ending December 31, 2022, as we increase momentum with the integration of our acquisitions and leverage targeted synergies.
This concludes our prepared remarks.
Operator, we can open the call for questions.
Thank you Mike.
Speaker 2: Thank you, Mike. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time.
And gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we also that while posing your question. Please pickup your handset. If this thing on speaker phone to provide optimum sound quantity. Please hold while we poll for questions.
Speaker 2: We ask that while posing your question you please pick up your handset if listening on speakerphone to provide optimum sound quality.
Thank you. Your first question is coming from Chip Moore of Hudson.
Speaker 2: Thank you. Your first question is coming from Chip Moore of EF Hutton. Chip, please can you ask your question?
Please can you ask your question.
Hi, good morning. Thanks.
Speaker 4: Wondering, maybe first, if you could just expand a bit on the marketing initiative you talked about, launching in cannabis in April to start. I think you referenced the potential for a nice win there, maybe give us a sense of the potential size there, and I guess just more broadly, how to think about the rollout of some of these efforts, you know, over the next few quarters, and the initiative.
Maybe first if you could just expand a bit on the marketing initiatives you talked about launching.
Launching <unk> candidates in April to start.
I think you referenced the potential for a nice win there maybe.
Give us a sense of the potential sides, there and I guess just more broadly.
How to think about there.
Rollout of some of these efforts.
Over the next few quarters.
And the initial feedback.
Speaker 3: Sure, Jeff. Thanks for the question. We're very excited about the marketing initiative we launched in April . The initiative really is a sophisticated and expansive approach to driving leads.
Sure Jeff. Thanks for the question, we're very excited about the marketing initiatives, we launched in April .
The initiative really is a sophisticated and an expansive approach to driving leads.
Speaker 3: and our cost per customer acquisition down. As I mentioned earlier, we launched our first initiative and targeted at Canada.
And our cost per customer acquisition down as I mentioned earlier, we launched our first initiative.
Targeted at cannabis.
And the early results are very very good.
Speaker 3: and yearly results are are very very good we've seen good traction in terms of what we're doing with social media as well as other digital forms of of marketing and
We've seen good traction in terms of what we're doing with social media as well as other digital forms of marketing.
And.
As I said earlier we've.
Speaker 3: are going to convert several of the leads that we've got we've gotten and one of those leads which i can't disclose at this time is one of the largest cannabis producers on the globe and uh... we're very close to that deal and we will announce it we think in the next
Are going to convert several of the leads that we've gotten and one of those leads which I can't disclose at this time is one of the largest candidates producers on the globe and we're very close to that deal and we will announce it we think in the next month or two.
Speaker 3: We're going to, once we're done with cannabis, we'll probably move to food preservation and or processing post-harvest. And then we have three other verticals that we'll also migrate.
We're going to once we're done with cannabis will probably move to food preservation and ore processing post harvest and then we have three other verticals that will also migrate towards.
Got it that's helpful and I think to the.
Speaker 4: Yeah, that's helpful. And if I think to the large cannabis producer, was the right way to think about that, assuming you convert that sort of an initial site and then potential to grow from there, or how should we think about that?
The largest cannabis producer with the right way to think about that assuming you convert that sort of initial site and then potential to grow from there or how should we think about that.
Speaker 3: Yes, I would think about it that way, initial site with large expansion capability.
Yes, I would think about it that way initial site with large expansion capabilities following.
Got it okay.
Speaker 5: And then specifically on the dealer award in Washington, I think it's about 700 buildings is sort of the addressable opportunity, what's sort of that initial contract? I know they've got some money to spend, and again, sort of similar, have to think about the timeframe, sort of initial site versus multi-site. Correct. Correct. It's...
And then specifically on the dealer.
Dealer Award.
Washington.
I think it's about 700 buildings as sort of the addressable opportunity.
What's sort of that initial contract I know they've got some money.
To spend.
And again sort of similar.
Think about the timeframe.
Initial site versus multi study.
Correct correct.
How many facilities did you mentioned.
I thought it was something like 700.
Speaker 3: Yeah, that's correct, Chip. So the award is a multimillion dollar award. We can't disclose any further numbers, but it's multiple millions of dollars.
Yes that is what that means.
That's correct chip so.
The award is.
A multimillion dollar award we can't disclose any further numbers, but it's multiple millions of dollars.
And the.
Speaker 3: There is a large allocation of that award that will go towards our air purification solutions and the implementation of those facilities is expected to begin next month.
There is a large allocation of that award that will go towards our air purification solutions and the implementation of those facilities is expected to begin next month.
Okay.
Yes, okay.
Speaker 4: And another, for me, if I could sneak one in, just supply chain, I know you called out in the queue some unfulfilled orders.
And another for me if I can sneak one in.
Supply chain I know you called out in the queue.
<unk> fulfilled orders were those I guess can you give us a sense of the magnitude.
Speaker 6: were those, I guess, can you give us a sense of the magnitude and were those recognized in Q2? And then is that a trend we should expect to continue given some of the supply chain challenges that are ongoing?
Were those recognized in Q2, and then as that.
We should expect to continue given some of the supply chain.
Challenges that are ongoing.
Hard to answer that question, just simply because the supply chain. This is an issue that no one can really.
Speaker 3: It's hard to answer that question just simply because the supply chain is an issue that no one can really...
Predict right now at this stage, but we are.
Speaker 3: predict right now at this stage but most likely planning for some delays and building that into our financial model so that uh... our financial model is rigorous in terms of being accurate so but we do we do plan for supply chain issues are going forward in two thousand
We're.
Most likely planning for some delays and building that into our financial model so that.
Our financial model is rigorous in terms of being accurate.
But we do we do plan for supply chain issues going forward in 2022.
Got it okay.
Speaker 6: Okay, sorry, and one last one before I hop off, the goodwill write down and settlement with scientific gear, just maybe a little more color there.
Alright, and one last one before I hop off.
The.
Goodwill write down and settlement with signs of the gear, just maybe a little more color there.
Sure.
I think it sounded like Mike was cutting out a little bit just some of the mechanics as well.
Speaker 6: Sounds like Mike was cutting out a little bit, just some of the mechanics as well.
Speaker 4: Oh, sorry. Sorry for you realize I was cutting out. But, um, yeah, there, there was.
Oh, sorry, sorry, and you realize I was cutting out but.
Yes.
There was a.
Sure.
Speaker 4: a settlement agreement with Scientific Air. Basically, that is considered a triggering event as well.
A settlement agreement with scientific Air and so and then basically that is considered.
A triggering event as well so.
Speaker 4: So part of the settlement was the give back of the 400,000 shares that was part of the.
So as part of the settlement was the give back of the 400000 shares that was part of the.
Speaker 4: original asset acquisition of Scientific Air.
Original.
Asset acquisition of scientific Air.
Speaker 4: And when you do that, you know, there's a kind of a mark to market that we have to do. So, there's an initial accounting for that stock or basically contingent consideration that was done through the first quarter. And then, as a result of the settlement agreement,
<unk>.
And when you do that.
There is a kind of a mark to market that we have to do so.
So there is an initiative.
Accounting for for that stock.
Basically contingent consideration that was done.
Through the first quarter and then as a result of the settlement agreement.
Speaker 4: we were able to record a gain of $1.7 million.
We were able to record a gain of $1.7 million.
Speaker 4: and that, in a sense, offset, although that's non-operating, offset the operating expense of the goodwill write-down. So, because of that triggering event,
That in a sense offset although thats nonoperating offset the operating expense of the goodwill write down so because of that triggering event.
Speaker 4: We just had to re-evaluate the...
Just had to reevaluate the.
Speaker 4: the purchase price allocation and the approximately 1.1 million of goodwill was then written down. So, you know, the net impact really is, you know, the right of the goodwill offset by the net gain on the contingent consideration for the quarter.
The purchase price allocation and the approximately $1 1 million of goodwill was then written down so.
The net impact really is.
The right the right of the goodwill offset by the net gain on contingent consideration for the quarter.
Speaker 6: Does that help? Yeah, no, that's helpful. Appreciate it. Okay, I'll hop back in queue. Thanks.
Does that does that help yes.
I appreciate it.
I'll hop back in queue. Thanks.
Thank you.
Speaker 2: Ladies and gentlemen, as a reminder, if you wish to ask a question or you have a comment, please press star 1 on your handset.
Ladies and gentlemen, as a reminder, if you wish to ask a question. When you have a comment please press star one on your handset at this time.
Your next question is coming from Simeon Gutman of Morgan Stanley Simeon.
Speaker 7: Your next question is coming from Simeon Goodman of Morgan Stanley . Simeon, over to you.
I mean, it might be on mute.
Okay.
Yes.
Simeon deadline.
Okay.
Speaker 2: OK, there appear to be no further questions in the queue. I will now hand back over to John .
No further questions in the queue I will now hand back over to John .
Thank you.
Speaker 3: Again, I want to thank everyone for joining us on today's call. Should anyone have any additional questions, please do not hesitate to contact me directly.
Again, I want to thank everyone for joining us on todays call should anyone have any additional questions. Please do not hesitate to contact me directly. Thank you again.
Thank you, ladies and gentlemen that does conclude today's conference call. You may now disconnect your lines and have a wonderful day. Thank you for your participation.
Speaker 2: Thank you, ladies and gentlemen. That does conclude today's conference call. You may now disconnect your lines and have a wonderful day. Thank you for your participation.