Certain statements made in this prospectus are "forward-looking statements" regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the "Company" to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and therefore, there can be no assurance the forward-looking statements included in this prospectus will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and in other parts of this prospectus. Our fiscal year ends onDecember 31 . Overview
Applied UV is focused on the development and acquisition of technology that addresses infection control in the healthcare, hospitality, government, food and beverage, education, cannabis, entertainment and consumer markets. The Company has two wholly owned subsidiaries -SteriLumen, Inc. ("SteriLumen") andMunnWorks, LLC ("MunnWorks"). SteriLumen's connected platform for Data Driven Disinfection™ applies the power of ultraviolet light (UVC) to destroy pathogens safely, thoroughly, and automatically, addressing the challenge of healthcare-acquired infections ("HAIs"). Targeted for use in facilities that have high customer turnover such as hospitals, hotels, commercial facilities, and other public spaces, the Company's Lumicide™ platform uses UVC LEDs in several patented designs for infection control in and around high-traffic areas, including sinks and restrooms, killing bacteria, viruses, and other pathogens residing on hard surfaces within the devices' proximity. The Company's patented in-drain disinfection device, Lumicide™ Drain, is the only product on the market that addresses this critical pathogen-intensive location. SteriLumen's Airocide™ air purification devices are research backed, clinically proven and developed for NASA with assistance from theUniversity of Wisconsin . Airocide™ is listed as an FDA Class II Medical device, utilizes a proprietary photocatalytic (PCO) bioconversion technology that draws air into a reaction chamber that converts damaging molds, microorganisms, dangerous airborne pathogens, destructive VOCs, allergens, odors and biological gasses into harmless water vapor and green carbon dioxide without producing ozone or other harmful byproducts. Airocide™ applications include healthcare, hospitality, food preservation, wineries, dairy, commercial real estate, education, dental offices, post-harvest, grocery, food processing, transportation, correctional facilities, cannabis, and consumer. SteriLumen'sScientific Air product was developed initially for healthcare facilities and is helping hospitals across the country address the growing need for effective and safe airborne infection prevention. Utilizing Scientific Air systems, hospitals report significant reductions in viable airborne pathogens as well as significant declines in non-viable particulates including elimination of odor and VOC's.Scientific Air products produce no harmful by-products, provide rapid, portable, whole-room disinfection via a patented 3-phase design, are safe and fast-acting in occupied spaces, and have been proven and tested in facilities withEPA and FDA guidance compliance. According to Resource and Markets, the UV Disinfection market is expected to reach$9 billion by 2026 as technology continues to improve and the focus on stopping the spread of contagious diseases increases.The Center for Disease Control states that 1 in 25 patients have at least one Hospital Associated Infection (HAI) annually and that 3 million serious infections occur every year in long-term care facilities. Scientists globally have been advocating improving air quality post pandemic, significantly boosting global adoption to control airborne pathogen transmission. Governments globally mandating health agencies to address air quality via grants and mechanisms to ease visitation and protect facilities against future pathogens (Centers for Medicare and Medicaid Services - CMS)February 2022 Long-term Care Initiative. Indoor air quality has become an even more important issue as world economies start the recovery process. 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 addition to this, 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 toPrecedence Research , the immense demand for air purification and sterilization in the US will be driven by the commercial sector. SteriLumen's product portfolio is one of the only research-backed, clinically proven pure-play air and surface 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 globally recognized names who published the reports that were completed by the acquired companies, Airocide™ was independently proven to kill SARS, MRSA and Anthrax, in addition to removing damaging molds, microorganisms, destructive VOC's, allergens, odors, and biological gases. Also, SteriLumen's air purification (Airocide™) and surface disinfection Lumicide™) were independently tested and proven to kill bothCandida Auris (Resinnova Laboratories ) and SARS CoV-2 (COVID-19) (MRIGlobal ). 31 SteriLumen's product portfolio is used by globally recognized names including: Walmart,Whole Foods ,SuperValue , Delmonte, Esmeralda,Joel Gott Wines , Opus One,Athena Healthcare ,NYC Health and Hospitals,Kaiser Permanente ,Advent Health ,University Rochester Medical Center andBaptist Health South Florida . This past year, the SteriLumen product portfolio expanded its reach and deployed its air purification products intoBoston Red Sox Fenway Park andJet Blue Park , The Palace Versaille , Uruguayan School Systems,Tennessee Department of Corrections ,Armed Forces Research Institute of Medical Sciences (AFRIMS), US Army Aberdeen Proving Grounds and Schools throughoutSouth Korea . The Company works with a global base of distributors to sell both SteriLumen air purification and disinfection products and the MunnWorks product lines. The past year, the Company has signed distribution agreements coveringAfrica (360BioPharma),US Healthcare (Axis), Lootah Batta Water and Environment Sign Exclusive Distribution Agreement for Airocide™ Air Purification Systems for theUnited Arab Emirates , and Plandent a wholly owned subsidiary ofPlanmeca Oy (Scandinavia). SteriLumen plans to continue to expand its global distribution base of significant breadth and scale to introduce the entire SteriLumen's air purification product lines to new markets, including building management, commercial real estate, retail, healthcare, cannabis and environmental health and safety, leveraging the networks of the recent acquisitions described above. MunnWorks is a manufacturer of custom designed fine mirrors and furniture specifically for the hospitality industry with one manufacturing facility inMount Vernon, New York and, with the acquisition of the assets of VisionMark, another manufacturing facility inBrooklyn, New York . Our goal is to contribute to the creation of what our design industry clients seek: manufacturing better framed mirrors and customized furniture on budget and on time. As part of our long-term strategy, the Company has instituted multi-site production for high-value items, complicated designs and finishes. Our headquarters inMount Vernon, NY serves as the center for multi-country manufacturing. The Company works with a satellite network of artisans and craftsmen, including gilders, carvers, and old-world finishers.
Acquisitions
In February of 2021, the Company acquired all the assets and assumed certain liabilities ofAkida Holdings, LLC ("Akida"). At the time of the acquisition, Akida owned the Airocide™ system of air purification technologies, originally developed for NASA with assistance from theUniversity of Wisconsin atMadison , that uses a combination of UVC and a proprietary, titanium dioxide based photocatalyst that may help to accelerate the reopening of the global economy with applications in the hospitality, hotel, healthcare, nursing homes, grocer, wine, commercial buildings and retail sectors. The Airocide™ system has been used by brands and organizations such as NASA,Whole Foods , Dole, Chiquita, Opus One, Sub-Zero Refrigerators andRobert Mondavi Wines . Akida had contractedKES Science & Technology, Inc. ("KES") to manufacture, warehouse and distribute the Airocide™ system and Akida's contractual relationship with KES was assigned to and assumed by the Company as part of the acquisition. OnSeptember 28, 2021 , the Company acquired all the assets and assumed certain liabilities of KES. At the time of the acquisition, KES was principally engaged in the manufacturing and distribution of the Airocide™ system of air purification technologies and misting systems. KES also had the exclusive right to the sale and distribution of the Airocide™ system in certain markets. This acquisition consolidates all of manufacturing, sale and distribution of the Airocide™ system under the SteriLumen brand and expands the Company's market presence in food distribution, post-harvest produce, wineries, and retail sectors. The Company sells its products throughoutthe United States ,Canada , andEurope . OnOctober 13, 2021 , we acquired substantially all of the assets of Old SAM Partners, LLCF/K/A Scientific Air Management, LLC , which owned a line of air purification technologies ("Scientific Air ').Scientific Air is a provider of whole-room, aerosol chamber and laboratory certified air disinfection machines that use a combination of UVC and a proprietary, patented system to eliminate airborne bacteria, mold, fungi, viruses, volatile organic compounds, and many odors without producing any harmful by-products. The units are well suited for larger spaces within a facility and are mobile with industrial grade casters allowing for movement throughout a facility to address increased bio burden from larger meetings or increased human traffic. OnMarch 25, 2022 , the Company acquired the assets and assumed certain liabilities ofVisionMark, LLC , ("Visionmark"). Visionmark is engaged in the business of manufacturing custom furniture using wood and metal components for the hospitality and retail industries. This acquisition is synergistic with our legacy MunnWorks operations, and allows for further market expansion and business diversification, as well as improvement in cost and onshore manufacturing efficiencies.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
• our ability to acquire new customers or retain existing customers.
• our ability to offer competitive product pricing.
• our ability to broaden product offerings.
• industry demand and competition; and
• market conditions and our market positions
32 Results of Operations Three Months EndedJune 30, 2022 Compared to the Three Months EndedJune 30, 2021 Three Months Ended Three Months Ended June 30, 2022 June 30, 2021 Hospitality Disinfection Corporate Total Hospitality Disinfection Corporate Total Net Sales$ 4,169,112 $ 1,738,534 $ -$ 5,907,646 $ 964,618 $ 919,702 $ -$ 1,884,320 Cost of Goods Sold 3,695,267 908,587 - 4,603,854 746,451 604,640 - 1,351,091 Gross Profit 473,845 829,947 - 1,303,792 218,167 315,062 - 533,229 Research and development - 82,049 - 82,049 - 9,763 - 9,763
Loss on impairment of goodwill - -
- - - - - - Selling, General and Administrative 1,225,609 2,070,874 734,732 4,031,215 907,359 1,791,123 - 2,698,482 Total Operating expenses 1,225,609 2,152,923 734,732 4,113,264 907,359 1,800,886 - 2,708,245 Operating Loss (751,764 ) (1,322,976 ) (734,732 ) (2,809,472 ) (689,192 ) (1,485,824 ) - (2,175,016 ) Other Income Change in Fair Market Value of Warrant Liability - - (32,111 ) (32,111 ) - - 10,948 10,948 Loss on change in contingent consideration - - - - - - - - Gain on settlement of contingent consideration - - - - - - - - Other income (expense) (47,072 ) - - (47,072 ) - 25,837 - 25,837 Total Other Income (Expense) (47,072 ) - (32,111 ) (79,183 ) - 25,837 10,948 36,785 Loss Before Provision for Income Taxes (798,836 ) (1,322,976 )
(766,843 ) (2,888,655 ) (689,192 ) (1,459,987 ) 10,948 (2,138,231 ) Provision for Income Taxes
- - - - - - - - Net Loss$ (798,836 ) $ (1,322,976 ) $ (766,843 ) $ (2,888,655 ) $ (689,192 ) $ (1,459,987 ) $ 10,948 $ (2,138,231 ) Non-GAAP Financial Measures Adjusted EBITDA Operating Loss$ (751,764 ) $ (1,322,976 ) $ (734,732 ) $ (2,809,472 ) $ (689,192 ) $ (1,485,824 ) $ -$ (2,175,016 ) Depreciation and Amortization 55,173 455,576 - 510,749 15,490 204,465 -
219,955
Loss on impairment of goodwill - -
- - - - - - Stock based compensation 30,149 37,800 44,502 112,451 237,144 228,456 - 465,600 Adjusted EBITDA$ (666,442 ) $ (829,600 ) $
(690,230 )
The Company utilizes Adjusted EBITDA, a non-GAAP financial measure, to assist in analyzing our segment operating performance by removing the impact of certain key items that management believes do not directly reflect our underlying operations. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity, and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenues, operating income, net income (loss), earnings (loss) per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. Adjusted EBITDA is defined as Operating Profit (Loss), excluding Depreciation and Amortization, and excluding Stock Based Compensation and Loss on Impairment ofGoodwill . Adjusted EBITDA was a loss of ($2,186,272 ) for the three months endedJune 30, 2022 , which was an increase of ($696,811 ) as compared to the three months endedJune 30, 2021 . Adjusted EBITDA loss by segment: Hospitality increased ($229,884 ), Disinfection decreased$223,303 and Corporate increased ($690,230 ). Segments The Company has three reportable segments: the design, manufacture, assembly and distribution of disinfecting systems for use in healthcare, hospitality, and commercial municipal and residential markets (Disinfection segment); the manufacture of fine mirrors and custom furniture specifically for the hospitality and retail industries (Hospitality segment); and the Corporate Segment, which includes expenses primarily related to corporate governance, such as board fees, legal expenses, audit fees, executive management, and listing costs. See NOTE 11 - Segment Reporting. 33Net Sales Net sales of$5,907,646 for the three months endedJune 30, 2022 as compared to net sales of$1,884,320 for the three months endedJune 30, 2021 represented an increase of$4,023,326 , or 213.5%. This increase was attributable to both the Disinfection segment, which increased$818,832 , largely as a result of the strategic acquisitions of KES andScientific Air in Q3 and Q4 of 2021, respectively, and the Hospitality segment, which increased$3,204,494 , primarily as a result of the fulfilment of orders that were delayed from Q1 plus the addition of the orders fulfilled from the VisionMark acquisition.
Gross Profit
Gross profit increased$770,563 for the three months endedJune 30, 2022 as compared to the three months endedJune 30, 2021 , driven by volume growth from both the Disinfection segment and the Hospitality segment. However, gross profit as a percentage of sales decreased (6.2%) from 28.3% in Q1 of 2021 to 22.1% in Q1 of 2022, driven primarily by the initial costs required to complete projects in process and to integrate and absorb the VisionMark operations. As the Company continues to integrate our strategic acquisitions, the focus will be on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operations.
Operating Expenses
Selling, General, and Administrative - S,G&A costs for the three months endedJune 30, 2022 , increased to$4,031,215 as compared to$2,698,482 for the three months endedJune 30, 2021 . This increase of$1,332,733 was driven primarily by the expansion of the Disinfection segment with the additional acquisitions of KES and SciAir; the expansion of the Hospitality segment with the addition of the VisionMark acquisition; and Corporate segment expenses due to increased consulting, legal, accounting, and infrastructure costs related to the initial integration of the operations of our strategic acquisitions. The Company incurred one-time costs of approximately$739,000 related primarily to the integration of VisionMark operations and the establishment of strategic marketing programs. We anticipate efficiency gains in the coming year as we fully integrate our acquisitions and leverage synergies where practical.
Net Loss
The Company recorded a net loss of$2,888,655 for the three months endedJune 30, 2022 , compared to a net loss of$2,138,231 for the three months endedJune 30, 2021 . The increase of$750,424 in the net loss was mainly due to the increase is S, G&A costs incurred in support of the business acquisitions and expansion of the both the Disinfection and Hospitality segments. 34 Six Months Ended Six Months Ended June 30, 2022 June 30, 2021 Hospitality Disinfection Corporate Total Hospitality Disinfection Corporate Total Net Sales$ 5,578,362 $ 3,685,374 $ -$ 9,263,736 $ 2,532,469 $ 1,664,466 $ -$ 4,196,935 Cost of Goods Sold 4,853,911 1,956,934 - 6,810,845 1,817,775 921,665 - 2,739,440 Gross Profit 724,451 1,728,440 - 2,452,891 714,694 742,801 - 1,457,495 Research and development - 141,363 - 141,363 - 53,408 - 53,408 Stock based compensation 116,160 60,086 224,204 400,450 343,130 333,211 - 676,341
Loss on impairment of goodwill - 1,138,203 - 1,138,203 - - - - Selling, General and Administrative 1,854,548 3,818,284 1,059,159 6,731,991 1,220,230 2,403,428 - 3,623,658 Total Operating expenses 1,970,708 5,157,936 1,283,363 8,412,007 1,563,360 2,790,047 - 4,353,407 Operating Loss (1,246,257 ) (3,429,496 ) (1,283,363 ) (5,959,116 ) (848,666 ) (2,047,246 ) - (2,895,912 ) Other Income Change in Fair Market Value of Warrant Liability - - 11,717 11,717 - - (300,452 ) (300,452 ) Loss on change in contingent consideration - (240,000 ) - (240,000 ) - - - - Gain on settlement of contingent consideration - 1,700,000 - 1,700,000 - - - - Other income (expense) (51,128 ) - - (51,128 ) - 25,182 - 25,182 Total Other Income (Expense) (51,128 ) 1,460,000 11,717 1,420,589 - 25,182 (300,452 ) (275,270 ) Loss Before Provision for Income Taxes (1,297,385 ) (1,969,496 )
(1,271,646 ) (4,538,527 ) (848,666 ) (2,022,064 ) (300,452 ) (3,171,182 ) Provision for Income Taxes
- - - - - - - - Net Loss$ (1,297,385 ) $ (1,969,496 ) $ (1,271,646 ) $ (4,538,527 ) $ (848,666 ) $ (2,022,064 ) $ (300,452 ) $ (3,171,182 ) Non-GAAP Financial Measures Adjusted EBITDA Operating Loss$ (1,246,257 ) $ (3,429,496 ) $ (1,283,363 ) $ (5,959,116 ) $ (848,666 ) $ (2,047,246 ) $ -$ (2,895,912 ) Depreciation and Amortization 63,148 915,347 - 978,495 23,235 289,084 - 312,319 Loss on impairment of goodwill - 1,138,203
- 1,138,203 - - - - Stock based compensation 116,160 60,086 224,204 400,450 343,130 333,211 - 676,341 Adjusted EBITDA$ (1,066,949 ) $ (1,315,860 ) $
(1,059,159 )
-$ (1,907,252 ) The Company utilizes Adjusted EBITDA, a non-GAAP financial measure, to assist in analyzing our segment operating performance by removing the impact of certain key items that management believes do not directly reflect our underlying operations. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity, and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenues, operating income, net income (loss), earnings (loss) per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. Adjusted EBITDA is defined as Operating Profit (Loss), excluding Depreciation and Amortization, and excluding Stock Based Compensation and Loss on Impairment ofGoodwill . Adjusted EBITDA was a loss of ($3,441,968 ) for the six months endedJune 30, 2022 , which was an increase of ($1,534,716 ) as compared to the six endedJune 30, 2021 . Adjusted EBITDA loss by segment: Hospitality increased ($584,648 ), Disinfection decreased$109,091 , and Corporate increased ($1,059,159 ).
Segments
The Company has three reportable segments: the design, manufacture, assembly and distribution of disinfecting systems for use in healthcare, hospitality, and commercial municipal and residential markets (Disinfection segment); the manufacture of fine mirrors and custom furniture specifically for the hospitality and retail industries (Hospitality segment); and the Corporate Segment, which includes expenses primarily related to corporate governance, such as board fees, legal expenses, audit fees, executive management, and listing costs. See NOTE 11 - Segment Reporting. 35Net Sales
Net sales of$9,263,736 for the six months endedJune 30, 2022 as compared to net sales of$4,196,935 for the six months endedJune 30, 2021 represented an increase of$5,066,801 , or 120.7%. This increase was attributable to both the Disinfection segment, which increased$2,020,908 , largely as a result of the strategic acquisitions of KES andScientific Air in Q3 and Q4 of 2021, respectively, and the Hospitality segment, which increased$3,045,893 , primarily due to orders that were delayed from Q1 and fulfilled in Q2, and from the fulfillment of orders related to the VisionMark acquisition.
Gross Profit
Gross profit increased$995,396 for the six months endedJune 30, 2022 as compared to the six months endedJune 30, 2021 , driven by volume growth from both the Disinfection and Hospitality segments. However, gross profit as a percentage of sales decreased (8.2%) from 34.7% for the six months endedJune 30, 2021 to 26.5% for the six months endedJune 30, 2022 , driven primarily by the initial costs necessary to integrate and absorb the VisionMark operations. As the Company continues to integrate our strategic acquisitions, the focus will be on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operations.
Operating Expenses
Selling, General, and Administrative - S,G&A costs for the six months endedJune 30, 2022 , increased to$7,132,441 as compared to$4,299,999 for the six months endedJune 30, 2021 . This increase of$2,832,442 was driven primarily by the expansion of both the Disinfection segment, with the additional acquisitions of KES and SciAir, and the Hospitality segment, with the addition of the VisionMark acquisition, and Corporate segment expenses due to increased consulting, legal, accounting, and infrastructure costs related to the initial integration of the operations of our strategic acquisitions. We anticipate efficiency gains in the coming year as we fully integrate our acquisitions and leverage synergies where practical. Loss on Impairment ofGoodwill - The Company determined that a triggering event had occurred as a result of a settlement agreement withScientific Air ("Old SAM Partners ") - see explanation of Other Income/Expense below. A quantitative impairment test on the goodwill determined that the fair value was below the carrying value and as a result the Company recorded a full goodwill impairment charge of$1,138,203 on the Condensed Consolidated Statements of Operations during the six months endedJune 30, 2022 .
Other Income/Expense
OnMarch 31, 2022 , there was a dispute between the Company andScientific Air ("Old SAM Partners ") regarding certain representations and warranties in the purchase agreement which resulted in a settlement and mutual release agreement whereOld Sam Partners agreed to relinquish such Partner's right, title, and interest in the previously issued 400,000 shares that were part of the original asset acquisition transaction. The Company recorded a loss on change in fair market value of contingent consideration of$240,000 , and as a result of the settlement, the company recorded a gain on settlement of$1,700,000 during the six months endedJune 30, 2022 .
Net Loss
The Company recorded a net loss of$4,538,527 for the six months endedJune 30, 2022 , compared to a net loss of$3,171,182 for the six months endedJune 30, 2021 . The increase of$1,367,345 in the net loss was mainly due to the increase is S,G&A costs incurred in support of the business acquisitions and expansion of both the Disinfection and Hospitality segments.
Liquidity and Capital Resources
Six Months Ended
Net Cash Used in Operating Activities$ (5,712,231 ) $ (3,398,543 ) Net Cash Used in Investing Activities (26,735 ) (1,274,728 ) Net Cash Provided by (Used In) Financing Activities 214,321 (67,101 ) Net decrease in cash and cash equivalents (5,524,645 ) (4,740,372 ) Cash and equivalents at beginning of period 8,768,156
11,757,930
Cash and equivalents at end of period 3,243,511
7,017,558
In the six months endedJune 30, 2022 , net cash used in operating activities was ($5,712,231 ), as compared to ($3,398,543 ) in the six months endedJune 30, 2021 . The increase in net cash used was due mainly to the increase in net loss to ($4,538,527 ) for the six months endedJune 30, 2022 , as compared to a net loss of ($3,171,182 ) for the six months endedJune 30, 2021 . Working capital was largely impacted by an increase in inventory for the six months endedJune 30,2022 as the Company prepares to launch targeted marketing initiatives in the 2nd half of 2022 and has secured parts in advance of production to mitigate
supply chain disruptions. 36 In the six months endedJune 30, 2022 , net cash used in investing activities decreased to ($26,735 ) as compared to ($1,274,728 ) in the six months endedJune 30, 2021 , primarily due to net cash paid for the acquisition of Akida onFebruary 8, 2021 ($760,293 ), and a loan made to a related party onFebruary 17, 2021 ($500,000 ) (see Note 10). In the six months endedJune 30, 2022 , cash provided by financing activities was$214,321 , as compared to cash used in financing activities of (67,101) in the six months endedJune 30, 2021 , primarily due to the full exercise of the common stock offering over-allotment, which was$1.092,000 net, offset by dividends to preferred shareholders of ($724,500 ). The Company believes our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy. OnJuly 1 , the Company filed a shelf registration statement on Form S-3 with theSecurities and Exchange Commission to register and aggregate$50,000,000 of securities which may be issued in the form of common stock, preferred stock, warrants, debt securities, rights or units. Such securities will be offered pursuant to the base prospectus contained in the shelf registration statement and a prospectus supplement that will be prepared and filed at the time of any offering. Also, included in the registration statement was a second prospectus which provides for the issuance of$9,000,000 of the Company's common stock in at-the-market transactions pursuant to an equity distribution agreement datedJuly 1, 2022 between the Company andMaxim Group LLC , as sales agent. The shelf registration statement will expire onJuly 12, 2025 .
Contractual Obligations and Other Commitments
Payment due by
period
Total 2022 2023-2025 2026-2027 Thereafter Financing lease obligations$ 4,178 $ 4,178 $ - $ - $ - Operating lease obligations (1) 1,598,343 89,698 1,333,745 174,900 - Notes payable (2) 157,500 97,500 60,000 - - Assumed lease liability (3) 1,024,890 186,348 838,542
- - Total$ 2,785,911 $ 377,724 $ 2,232,287 $ 174,900 $ -
(1) The Company entered into a lease agreement in
term that commenced on
2024 at a monthly rate of
additional lease space and rent expense was increased to
through
2026. On
expire on
months,$15,171 from months 13-24, and$15,626 from months 25-36.
(2) In
a promissory note for the principal amount of
years. The Company is required to pay
of
(3) In connection with the
to repay
commencing on
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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