UV Flu Technologies, Inc. (UVFT)

[12Retyr]

Summary

The market was awfully wrong here targeting the wrong company and now is time for it to correct course.

Value of shares are multiples of current price with catalysts ahead.

A few days ago, a friend told me to check out UV Flu Technologies (OTCPK:UVFT) – at one point last week it was up over 1,500% YTD – that is impressive. What does the company do would be a reasonable question, and the answer is – NOTHING. However, it has a really cool name, and apparently that’s all it takes.

It is easy to come to the conclusion that UVFT is an empty shell company. The company sold all of its assets and IP to another company and later terminated its registration.

The acquirer of UVFT’s assets is Vystar Corporation (OTCQB:VYST) which is a holding company that does not have a cool name but has some very cool assets that can help with Covid-19.

- The company created and owns VYTEX Natural Rubber Latex that is used in health care products such as surgical and exam gloves.

- The company owns UV air purifiers for both residential and industrial / hospital use that it purchased from UVFT.

- The company also recently acquired Rotmans Furniture – the largest independent furniture retailer in the northeast. This is unrelated to Covid-19 but is a significant asset for the company.

UV light against CV-19

President Trump said UV light could be used to cure people of CV-19, this is obviously wrong, but there is actually talk of tech that could sterilize human skin without damaging it (it won’t kill virus inside the body though). Additionally, UV is known for many years to kill bacteria and pathogens on surfaces or in the air and is almost certain to work against CV-19. The company’s products are FDA certified and clean the air in a given space very effectively. Using UV eliminates the need for changing bacteria loaded filters which improves safety even more.

Upcoming Spinoff

In late 2019 the company announced its plans to spinoff part of the RxAir products and IP. Based on a recent Q&A with the company it appears there is a buyer interested solely in the FDA certified products and wishes to invest to scale it. An update about the spinoff is imminent based on a recent company twit.

Valuation

Rotmans Furniture – based on the recent 10-Q I estimate that the store does ~$6M in revenue each quarter which is $24M annually. It doesn’t seem to be very profitable so for simplicity I’ll value it on 20% of sales or $4.8M.

RX 3000 – this is an industrial air purifier device. Based on a recent company twit the company can ramp production to sell $42M annually. This product should have at least 60% margins. I’ll conservatively assume demand disappears after one year. So this is worth 42 x 60% = $25M.

RxAir – this is the residential unit that sells for $900 a unit. In a couple of recent twits (here and here) the company informed investors that the first shipment is for 5500 units and thereafter the pace will be of 550 units per week. I’ll assume the same 60% margins and again conservatively assume this disappears within 12 months, thus the value here is (5500 + 550 x 52) x 900 x 60% = $18M.

Debt – the company has about $3M in net debt.

Putting it all together the value of the equity after very conservative assumptions comes up to $45M. based on the recent 10-Q the company has 1.121B shares which brings the value of the shares to 4 cents per share. Current share price is 0.85 cents so conservatively there is 370% of upside for the stock – this makes sense in light of the recent UVFT price action. Yesterday the share price of VYST went up 26% on significant volume – IMHO there is a lot of upside left based on my valuation.

Catalysts

- An official PR describing the opportunity set, as currently all of the company communication was done through a low visibility Twitter account.

- News regarding the planned spinoff.

- Additional attention given to the UV sector by investors.

https://seekingalpha.com/instablog/43057856-deepvalueplay/5439922-vyst-significant-covidminus-19-upside-ahead