Boxlight Reports Third Quarter 2020 Results

Boxlight Corporation (Nasdaq: BOXL) (“Boxlight”), a leading provider of interactive technology solutions, today announced the Company's financial results for the third quarter ended September 30, 2020.

Key Financial Highlights for Q3 2020

• Revenues decreased by 16% to $9.5 million
• Customer orders increased by 37% to $9.3 million
• Gross profit decreased to 21.4%
• Operating expenses decreased by 18% to $3.8 million
• Net loss increased by 792% to $4.2 million
• EPS loss increased by 117% to $(0.10)
• Adjusted EBITDA loss increased by 66% to $0.9 million
• Adjusted EPS loss decreased by 60% to loss of $0.02
• Ended quarter with $9.7 million in backorders
• Working capital improved by 558% to $25.1 million compared to prior quarter
• Stockholders’ equity improved by 313% to $44.3 million compared to prior quarter

Key Business Highlights for Q3 2020

• Acquired Sahara Presentation Systems for GBP 63 million
• Received $22 million investment from The Lind Partners and closed $34.5 million secondary offering
• Acquired screen sharing intellectual property portfolio
• Added seasoned North America sales leadership in Scott Willett, Vice President Sales and Dan Deem, Vice President Sales, Platforms & Services
• Announced strategic partnership with Samsung
• Extended contract with Atlanta Public Schools
• Received two Tech & Learning Awards of Excellence for Boxlight-EOS Distance Teaching Essentials and MySTEMKits 3D printing curriculum

Management Commentary

“Our progress during the third quarter was the most significant in our history, and we are one step closer to our vision of market leadership,” commented Michael Pope, Chairman and Chief Executive Officer. “During the quarter, we closed on fundraising of over $60 million in debt and equity, acquired Sahara Presentation Systems – a leading provider of interactive solutions with significant penetration in the EMEA region, augmented our sales leadership, formalized our partnership with Samsung, and steadied our balance sheet with a proper inventory profile and significant working capital.

Although sales and gross profit lagged our expectations in Q3 due to several factors including the effects of COVID-19, we are seeing increased demand in the fourth quarter and expect to generate greater than $27 million in revenue and positive Adjusted EBITDA.

We are committed to a tremendous fourth quarter and FY 2021, and we have a renewed focus on strong revenue growth, improving gross margins and positive earnings.”

Financial Results for the Three Months Ended September 30, 2020

Revenues for the three months ended September 30, 2020 was $9,476,956, as compared to $11,304,731 for the three months ended September 30, 2019, resulting in a 16% decrease. The decreased in revenues in 2020 is related to the reduction in sales of panels, software and STEM primarily attributable to the school closures as a result of the ongoing COVID-19 global pandemic.

Gross profit for the three months ended September 30, 2020 was $2,024,503, as compared to $3,233,801 for the three months ended September 30, 2019. The decrease in gross margin from 29% to 21% related to changes in the Company’s product mix with a reduction in higher margin products such as software and STEM coupled with a 33% increase in distributor sales compared to 2019.

General and administrative expenses for the three months ended September 30, 2020 was $3,306,845 as compared to $4,230,372 for the three months ended September 30, 2019. The decrease is primarily driven by reductions in compensation and benefits of $0.7 million, travel and entertainment of $0.2 million and stock compensation of $0.2 million.

Research and development expenses were $471,129 and $351,104 for the three months ended September 30, 2020 and 2019, respectively. The change in research and development expense is primarily driven by the increase in contract services related to software consultants.

Other income (expense) for the three months ended September 30, 2020 was ($2,457,433), as compared to $875,863 for the three months ended September 30, 2019. The increase in other expense is related to a change in fair value of derivative liabilities of $1.6 million and loss from settlement of liabilities of $1.7 million.

Net loss was $4,210,904 and $471,812 for the three months ended September 30, 2020 and 2019, respectively. The increase in the net loss was primarily driven by a decrease of gross profit, decrease in operating expenses and increase in other expense. The resulting EPS loss for the three months ended September 30, 2020 was $(0.10) per diluted share, compared to $(0.04) per diluted share for the three months ended September 30, 2019.

Adjusted EBITDA loss for the three months ended September 30, 2020 was $0.9 million, an increase of $0.3 million or 66% compared to $0.5 million for the three months ended September 30, 2019.

At September 30, 2020, Boxlight had $9.6 million of cash, $124 million of total assets, $22.3 debt, and 50.9 million shares issued and outstanding.

Financial Results for the Nine Months Ended September 30, 2020

Revenues for the nine months ended September 30, 2020 were $23,027,723, as compared to $27,099,654 for the nine months ended September 30, 2019, resulting in a 15% decrease. The decrease in revenues in 2020 is related to the reduction in sales of panels, projectors, software and STEM primarily attributable to school closures as a result of the ongoing COVID-19 global pandemic.

Gross profit for the nine months ended September 30, 2020 was $6,306,113 as compared to $7,895,312 for the nine months ended September 30, 2019. Gross margin decrease from 29% to 27% was related to changes in the Company’s product mix with a reduction in higher margin products such as software and STEM coupled with a 15% increase in distributor sales compared to 2019.

General and administrative expenses for the nine months ended September 30, 2020 were $10,444,060 as compared to $11,892,814 for the nine months ended September 30, 2019. The decrease was driven primarily by reductions in tradeshows of $0.3 million, contract services of $0.6 million, compensation and benefits of $0.4 million and travel and entertainment of $0.4 million.

Research and development expenses were $1,073,095 and $911,682 for the nine months ended September 30, 2020 and 2019, respectively. The increase in research and development expense was driven primarily by an increase in contact services for software consultants.

Other income (expense) for the nine months ended September 30, 2020 was ($2,375,481), as compared to ($1,591,684) for the nine months ended September 30, 2019. The increase in other expense is related to loss on settlement of the Lind debt $2.3 million, increased interest expense of $0.3 million offset by a gain on settlement of EDI accounts payable by $1.7 million and a decrease in the change in fair value of derivative liabilities of $0.3 million.

Net loss was $7,586,523 and $6,500,868 for the nine months ended September 30, 2020 and 2019, respectively. The increase in the net loss was primarily driven by a decrease of gross profit, decrease in operating expenses and increase in other expense. The resulting EPS loss for the nine months ended September 30, 2020 was ($0.31) per diluted share, compared to ($0.62) per diluted share for the nine months ended September 30, 2019.

Adjusted EBITDA loss for the nine months ended September 30, 2020 was $1.6 million, a decrease of $1.5 million compared to $3.1 million for the nine months ended September 30, 2019.

Adjusted EPS for the nine months ended September 30, 2020 was ($0.06) per diluted share, compared to ($0.37) per diluted share for the nine months ended September 30, 2019.

3rd Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the third quarter 2020 financial results on Monday, November 16, 2020 at 4:30 p.m. Eastern Time. The conference call details are as follows:

Date:		Monday, November 16, 2020
Time:		4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time
Dial-in:		1-888-567-1603 (Domestic) 1-862-298-0702 (International)
Webcast:		https://www.webcaster4.com/Webcast/Page/2213/38710

For those unable to participate during the live broadcast, a replay of the call will also be available from 7:30 p.m. Eastern Time on November 16, 2020 through 11:59 p.m. Eastern Time on November 30, 2020 by dialing 1-877-481-4010 (domestic) and 1-919-882-2331 (international) and referencing the replay pin number: 38710.

Use of Non-GAAP Financial Measures

To supplement Boxlight’s financial statements presented on a GAAP basis, Boxlight provides EBITDA and Adjusted EBITDA as supplemental measures of its performance.

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA and Adjusted EBITDA, non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation, the change in fair value of derivative liabilities, purchase accounting impact of inventory markup, and non- cash losses associated with debt settlement. Our management uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing pro forma results of operations, which include large non-cash amortizations of intangible assets from acquisitions and stock-based compensation. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

About Boxlight Corporation

Boxlight Corporation (Nasdaq: BOXL) is a leading provider of interactive technology solutions under its award winning brands Clevertouch and Mimio. The Company aims to improve engagement and communication in diverse business and education environments. Boxlight develops, sells, and services its integrated solution suite including interactive displays, collaboration software, supporting accessories and professional services. For more information about the Boxlight story, visit http://www.boxlight.com.

Forward-Looking Statements

This press release may contain information about Boxlight's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, competition in the industry, etc. Boxlight encourages you to review other factors that may affect its future results in Boxlight's filings with the Securities and Exchange Commission.

Boxlight Corporation
Consolidated Balance Sheets
		September 30				December 31
		2020				2019
ASSETS
Current asset:
Cash and cash equivalents		$	9,609,667			$	1,172,994
Accounts receivable-trade, net of allowances			21,095,910				3,665,057
Inventories, net of reserves			21,571,932				3,318,857
Prepaid expenses and other current assets			4,051,356				1,765,741
Total current assets			56,328,865				9,922,649
Property and equipment, net of accumulated depreciation			383,415				207,397
Intangible assets, net of accumulated amortization			54,012,656				5,559,097
Goodwill			13,429,385				4,723,549
Other assets			70,634				56,193
Total Assets		$	124,224,955			$	20,468,885
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	11,282,365			$	4,721,417
Accounts payable and accrued expenses - related parties			2,050,848				5,031,367
Warranty reserve			17,223				12,775
Current portion of debt-third parties			11,373,472				4,536,227
Current portion of debt-related parties			-				368,383
Earn-out payable - related party			119,132				387,118
Deferred revenues - short-term			4,917,088				1,972,565
Derivative liabilities			385,944				146,604
Other short-term liabilities			1,126,813				31,417
Total current liabilities			31,272,885				17,207,873
Deferred revenues - long-term			8,801,969				2,582,602
Long-term debt - third parties			10,950,403				1,201,139
Long-term debt - related party			-				108,228
Other long - term liabilities			5,623				16,696
Total liabilities			51,030,880				21,116,538
Commitments and contingencies
Mezzanine equity:
Series B preferred stock, $0.0001 par value, 1,586,620 shares designated, 1,586,620 and -0- shares issued and outstanding, respectively			18,181,178				-
Series C preferred stock, $0.0001 par value, 1,320,850 shares designated, 1,320,850 and -0- shares issued and outstanding, respectively			10,690,267				-
Total mezzanine equity			28,871,445				-
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value, 50,000,000 shares authorized:
Series A preferred stock, $0.0001 par value, 250,000 shares designated, 167,972 and 167,972 shares issued and outstanding, respectively			17				17
Common stock, $0.0001 par value, 200,000,000 shares authorized; 50,871,711 and 11,698,697 Class A shares issued and outstanding, respectively			5,087				1,170
Additional paid-in capital			82,860,910				30,735,815
Subscriptions receivable			(200	)			(200	)
Accumulated deficit			(38,932,954	)			(31,346,431	)
Other comprehensive loss			389,770				(38,024	)
Total stockholders' equity			44,322,630				(647,653	)
Total liabilities, mezzanine and stockholders' equity (deficit)		$	124,224,955			$	20,468,885

Boxlight Corporation
Consolidated Statement of Operations
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2020				2019				2020					2019
Revenues		$	9,476,956			$	11,304,731			$	23,027,723			$		27,099,654
Cost of Revenues			7,452,453				8,070,930				16,721,610					19,204,342
Gross Profit			2,024,503				3,233,801				6,306,113					7,895,312
Operating Expense:
General and administrative expenses			3,306,845				4,230,372				10,444,060					11,892,814
Research and development expenses			471,129				351,104				1,073,095					911,682
Total operating expense			3,777,974				4,581,476				11,517,155					12,804,496
Loss from operations			(1,753,471	)			(1,347,675	)			(5,211,042	)				(4,909,184	)
Other income (expense):
Interest expense, net			(530,830	)			(517,391	)			(1,618,366	)				(1,277,016	)
Other (expense) income, net			(14,673	)			21,077				60,932					65,956
Change in fair value of derivative liabilities			(193,640	)			1,372,177				(239,340	)				(527,058	)
Gain (loss) from settlement of liabilities			(1,718,290	)			-				(578,707	)				146,434
Total other income (expense)			(2,457,433	)			875,863				(2,375,481	)				(1,591,684	)
Net Loss		$	(4,210,904	)		$	(471,812	)		$	(7,586,523	)		$		(6,500,868	)
Comprehensive loss:
Net Loss		$	(4,210,904	)		$	(471,812	)		$	(7,586,523	)		$		(6,500,868	)
Other comprehensive loss:
Foreign currency translation income (loss)			536,118				(11,563	)			427,794					(26,749	)
Total comprehensive loss		$	(3,674,786	)		$	(483,375	)		$	(7,158,729	)		$		(6,527,617	)
Net loss per common share - basic and diluted			(0.10	)			(0.04	)			(0.31	)				(0.62	)
Weighted average number of common shares outstanding - basic and diluted			44,214,758				10,746,186				24,852,937					10,533,090

Boxlight Corporation
Reconciliation of Net Loss to Adjusted EBITDA
		Three Months Ended
		September 30,
			2020				2019
Net Loss		$	(4,211	)		$	(472	)
Depreciation and amortization			318				222
Interest expense			531				517
EBITDA		$	(3,362	)		$	267
Stock compensation expense			346				574
Change in fair value of derivative liabilities			194				(1,372	)
Purchase accounting impact of fair valuing inventory			217				16
Net loss on settlement of Lind debt in stock			1,748				-
Adjusted EBITDA		$	(857	)		$	(515	)

Boxlight Corporation
Reconciliation of Net Loss to Adjusted EBITDA
		Nine Months Ended
		September 30,
			2020				2019
Net Loss		$	(7,587	)		$	(6,501	)
Depreciation and amortization			758				689
Interest expense			1,618				1,277
EBITDA		$	(5,211	)		$	(4,535	)
Stock compensation expense			866				896
Change in fair value of derivative liabilities			239				527
Purchase accounting impact of fair valuing inventory			236				40
Net loss on settlement of Lind debt in stock			2,340				-
Adjusted EBITDA		$	(1,530	)		$	(3,072	)

 

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