Molekule Group, Inc. (“Molekule” or the “Company”) (Nasdaq: MKUL),
an emerging leader in air purification technology solutions,
systems for healthcare and commercial smart building applications,
and individual consumer protection, today reported financial
results for the three months ended March 31, 2023 (“Q1 2023”).
First Quarter 2023 Financial and
Operational Highlights(Unless otherwise stated,
comparisons are made between Q1 2023 and Q1 2022 results)
- Revenues were $8.3
million.
- Gross profit was
$3.7 million, a gross profit margin of 44%.
- Operating loss was
$10.2 million, or $8.1 million on an adjusted basis to exclude $2.1
million of one-time costs associated primarily with
acquisitions.
-
Net loss from operations was $9.9 million, or $0.35 per share,
including the one-time costs referred to above.
-
Changed the Company name to Molekule Group, Inc. and began trading
under a new ticker symbol (NASDAQ: MKUL), upon completion of the
merger with Molekule, Inc. (“Molekule Merger”) on January 12,
2023.
-
Announced it had executed a definitive agreement on February 26,
2023 to acquire Aura Smart Air Ltd. (“Aura”), an Israeli-based
technology company currently listed on the Tel Aviv Stock Exchange,
in an all-stock merger with a value of approximately $10 million.
The acquisition of Aura will substantially improve the Company’s
Indoor Air Quality (“IAQ") monitoring, Internet-of-things (“IoT”)
device control, and AI-enabled software to create healthier indoor
environments and meet customers’ growing IAQ and sustainability
needs, accelerating the Company’s business-to-business growth
strategy. The completion of the merger with Aura is subject to
customary closing conditions.
Recent Developments
- Bolstered its balance sheet by
completing a $10.0 million private placement with a single
institutional investor, as well as agreeing with our principal
lender, subject to documentation, to defer approximately $6.1
million of principal payments through Q1 2025.
- Together with Aura, has expanded
its presence in the global education market through multiple
deployments and orders, with education industry sales having
recently reached nearly $4 million.
- Installed base in schools recently
hit over 11,000 air purifiers, including some of the largest school
districts in the U.S.
- Announced Molekule and Veterans
Integrated Services Network (“VISN 23”) entered into a second
one-year agreement, with an option for up to five years, for
Molekule to provide Veterans Affairs (“VA”) center employees and
veterans with real-time, IAQ monitoring and control systems across
three VA service centers.
- Having successfully completed a
one-year deployment, the Company believes the new agreement will
further demonstrate the versatility of its technology while
delivering the potential to expand deployment across all 18 VISNs
in the VHA network, which includes over 1,200 facilities.
- Launched new Alexa skill commands
for any Alexa-enabled device via the Alexa app. Commands such as
turning devices on or off, changing fan speeds or modes, and status
checks for filters and indoor air quality better enable consumers
to control their air purification devices while generating
opportunities for increased revenue.
- Strengthened senior leadership team
with the appointment of Ryan Patch to the role of Chief Legal
Officer, Corporate Secretary and Senior Vice President.
Management Commentary
“I am very proud of the results we achieved
during our first quarter as a combined company,” said Jason DiBona,
Chief Executive Officer of Molekule. “Through the powerful
combination of Molekule and AeroClean we are executing on the
immense opportunities available in the rapidly growing IAQ
industry. We believe our integration is proceeding exceptionally
well with Q1 2023 revenue of $8.3 million exceeding our guidance
for the quarter. We also provided guidance for sequential, organic
revenue growth of approximately 45% for Q2 2023. Additionally, we
are well on target to deliver substantially improved Q2 2023 EBITDA
due to a significant increase in gross profit and operating
leverage.”
Mr. DiBona added, “We view innovation leadership
and ease of use as a clear differentiator to capitalize on the
estimated $15 billion global air purification market. By bringing
together Molekule and Aeroclean, and with the addition of Aura’s
sensor, software and IoT technologies, we are positioned to deliver
a comprehensive, turn-key service on a subscription basis that
enables customers to monitor and control IAQ from a single location
on a multi-location, enterprise-wide basis. We believe our Safe
Air-as-a-Service platform will empower our customers to facilitate
safer air environments across various locations including school
campuses, office buildings, and healthcare facilities in support of
their sustainability and ESG goals.
Mr. DiBona concluded, “We’ve had a solid start
to the year, and we anticipate further exciting developments as we
fully integrate Aura’s technology onto our platform. Our large
range of FDA-cleared premium air purification products, SaaS
solutions and IoT capabilities puts us in the enviable position of
being able to deliver best-in-class solutions that meet the
evolving needs of our customers. We’ve strengthened our balance
sheet to advance our initiatives to grow our B2B business through
deployment of our software and technology platform in target
industry verticals. We have already realized cost and operational
synergies from the Molekule Merger, identified additional synergies
to be implemented and will continue to evaluate the cost structure
of the combined business following the completion of the proposed
merger with Aura. Through optimization and integration of our
combined operations, we intend to accelerate the development of
software solutions driving sales growth and margin expansion
through recurring revenues from our service offerings and sales of
consumables. We are committed to our mission to foster cleaner
indoor air everywhere and to execute on our goal to become the
leading provider of indoor air quality solutions.”
First Quarter 2023 Financial Results and
Highlights
Revenues for the three months ended March 31,
2023 were approximately $8.3 million.
For the three months ended March 31, 2023, we
incurred approximately $13.7 million of selling, general and
administrative (“SG&A”) expenses. SG&A expenses were
primarily driven by salaries and wages (approximately $3.8
million), legal fees and public company costs (approximately $2.8
million), stock-based compensation (approximately $1.5 million),
sales and marketing (approximately $1.4 million) and rent expense
(approximately $0.9 million). On an adjusted basis to exclude
one-time costs of approximately $2.0 million, SG&A was
approximately $11.6 million.
The change in fair value of the warrant
liability was a non-cash gain of approximately $1.7 million
resulting from a decrease in the fair value of the warrant
liability.
Our net loss was approximately $9.9 million, or
$0.35 per share for the three months ended March 31, 2023. On an
adjusted basis to exclude approximately $2.0 million of one-time
costs, net loss was approximately $7.9 million, or $0.27 per
share.
Total current assets were approximately $40.5
million and total current liabilities were approximately $20.4
million as of March 31, 2023. Net working capital as of March 31,
2023, was approximately $20.1 million. Cash was approximately $7.3
million as of March 31, 2023.
Financial results and analyses are available on
the Company’s investor relations website:
https://investors.molekule.com/.
About Molekule
Molekule is on a mission to provide clean indoor
air to everyone, everywhere. With the largest range of proprietary,
FDA-cleared air purification devices on the market, Molekule is
providing consumers, business owners and medical professionals with
hardware and software solutions to better understand and improve
indoor air quality. Its Air Pro, Air Mini+ and Pūrgo™ purification
devices can be applied to virtually any indoor space, including
homes, classrooms, offices, hospitals and more. For more
information and customer reviews, visit
https://investors.molekule.com/.Forward-Looking
StatementsThis press release contains “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based upon current beliefs and
expectations of our management and are subject to known and unknown
risks and uncertainties. Words or expressions such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,”
“will,” “projects,” “could,” “should,” “would,” “seek,” “forecast,”
or other similar expressions help identify forward-looking
statements. Factors that could cause actual events to differ
include, but are not limited to:
- general economic conditions in the
markets where we operate;
- the impact of the COVID-19 pandemic
and related prophylactic measures;
- expected timing of regulatory
approvals and product launches;
- non-performance of third-party
vendors and contractors;
- risks related to our ability to
successfully sell our products and the market reception to and
performance of our products;
- our compliance with, and changes
to, applicable laws and regulations;
- our limited operating history;
- our ability to manage growth;
- our ability to obtain additional
financing when and if needed;
- our ability to expand product
offerings;
- our ability to compete with others
in our industry;
- our ability to protect our
intellectual property;
- the ability of certain stockholders
to determine the outcome of matters that require stockholder
approval;
- our ability to retain the listing
of our common stock on Nasdaq;
- our ability to defend against legal
proceedings;
- success in retaining or recruiting,
or changes required in, our officers, key employees or
directors;
- the risk that the merger between
Molekule and Aura may not be completed; and
- other economic, business,
competitive, and regulatory factors affecting the businesses of the
Company generally, including but not limited to those set forth in
Molekule’s filings with the SEC, including in the “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of Molekule’s latest annual
report on Form 10-K, as amended, and other SEC filings.
Forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and actual
results may differ materially from those in the forward-looking
statements as a result of various factors. Although we believe that
the expectations reflected in the forward-looking statements are
reasonable based on information currently available, we cannot
assure you that the expectations will prove to have been correct.
Accordingly, you should not place undue reliance on these
forward-looking statements. In any event, these statements speak
only as of the date of this release. We assume no obligation to
revise or update any of the forward-looking statements to reflect
events or circumstances after the date of this release or to
reflect new information or the occurrence of unanticipated
events.
Contacts:
Media ContactsPress@molekule.com
Investor Relations ContactsRyan Tyler —
Chief Financial Officer, MolekuleRyan.Tyler@molekule.com
MATTIO Communicationsmolekule@mattio.com
Financial Statements
MOLEKULE
GROUP, INC. AND SUBSIDIARIESBalance
Sheets |
|
|
March 31, 2023 |
|
December 31, 2022 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
Cash |
$ |
7,285,691 |
|
$ |
22,062,657 |
Other current assets |
|
33,179,061 |
|
|
2,722,296 |
Total current assets |
|
40,464,752 |
|
|
24,784,953 |
Non-current assets |
|
88,019,131 |
|
|
4,373,933 |
Total
assets |
$ |
128,483,883 |
|
$ |
29,158,886 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities |
$ |
20,386,508 |
|
$ |
4,562,253 |
Non-current liabilities |
|
44,358,782 |
|
|
4,893,431 |
Total
liabilities |
|
64,745,290 |
|
|
9,455,684 |
Total
equity |
|
63,738,593 |
|
|
19,703,202 |
Total
liabilities and stockholders' equity |
$ |
128,483,883 |
|
$ |
29,158,886 |
|
|
|
|
MOLEKULE GROUP, INC. AND
SUBSIDIARIESStatements of
Operations(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
March 31, |
|
|
2023 |
|
|
2022 |
|
Product revenues |
|
$ |
8,349,422 |
|
|
$ |
6,733 |
|
Cost
of sales |
|
|
4,674,259 |
|
|
|
3,764 |
|
Gross profit |
|
|
3,675,162 |
|
|
|
2,969 |
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
|
13,665,614 |
|
|
|
2,142,224 |
|
Research and development |
|
|
243,779 |
|
|
|
531,483 |
|
Total
operating expenses |
|
|
13,909,393 |
|
|
|
2,673,707 |
|
Loss
from operations |
|
|
(10,234,231 |
) |
|
|
(2,670,738 |
) |
Change in
fair value of warrant liability |
|
|
1,726,000 |
|
|
|
— |
|
Interest
expense |
|
|
(1,248,677 |
) |
|
|
— |
|
Other
expense |
|
|
(176,498 |
) |
|
|
— |
|
Total other
income |
|
|
300,825 |
|
|
|
— |
|
Loss
before income tax benefit |
|
|
(9,933,406 |
) |
|
|
(2,670,738 |
) |
Income tax
benefit |
|
|
— |
|
|
|
92,774 |
|
Net
loss |
|
$ |
(9,933,406 |
) |
|
$ |
(2,577,964 |
) |
Net
loss per share: |
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.19 |
) |
Weighted-average common shares outstanding: |
|
|
|
|
|
|
Basic and diluted |
|
|
28,889,604 |
|
|
|
13,877,636 |
|
|
|
|
|
|
|
|
MOLEKULE GROUP, INC. AND
SUBSIDIARIESStatements of Cash
Flows(Unaudited) |
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net cash
flows used in operating activities |
|
(16,044,027 |
) |
|
|
(1,827,477 |
) |
Net cash
flows used in investing activities |
|
2,554,919 |
|
|
|
(28,075 |
) |
Net cash
flows provided by financing activities |
|
(171,968 |
) |
|
|
- |
|
Net
increase in cash |
|
(13,661,076 |
) |
|
|
(1,855,552 |
) |
Cash, beginning of period |
|
22,062,657 |
|
|
|
19,629,649 |
|
Cash, end of period |
$ |
8,401,581 |
|
|
$ |
17,774,097 |
|
|
|
|
|
Supplemental schedule of non-cash activities: |
|
|
|
Cash paid for interest |
$ |
1,247,267 |
|
|
|
- |
|
Supplemental schedule investing activities: |
|
|
|
Net asset acquired from Molekule, Inc. |
$ |
52,466,073 |
|
|
$ |
- |
|
|
|
|
|
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