Press release

Boxlight Reports First Quarter 2019 Results

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Boxlight Corporation (Nasdaq: BOXL) (“Boxlight”), a leading provider of
interactive technology solutions for the global education market, today
announced the Company’s financial results for the first quarter ended
March 31, 2019.

Key Business Highlights for Q1 2019:

  • Revenue of $5 million and Gross Profit of 31.6%
  • Strongest pipeline in Company history
  • Closed $4 million investment from The Lind Partners
  • Acquired Modern Robotics, to expand proprietary STEM solutions to
    programming and robotics
  • Selected by Colorado’s Cooperative Educational Purchasing Council as
    Preferred Provider for classroom audio visual solutions
  • Awarded by Michigan’s REMC Association as Provider for classroom
    technology solutions
  • Selected by Charter School for Applied Technologies to outfit
    classrooms with interactive teaching technologies
  • Selected as official vendor to appear on Federal Purchasing Contracts
    for all education institutions in Puerto Rico, Peru and Chile
  • New solution launches of Boxlight NDMS (Network Device Management
    System), MimioStudio12, MimioInteract, Mimio MyBot, Mimio MicroCloud,
    Unplug’d and On-Demand Educator Certifications

2019 Outlook:

The current business pipeline, backlog and awarded contracts support our
guidance of 25% organic revenue growth for 2019 to $47 million. The
first quarter of each year is our slowest sales quarter and often
unpredictable. However, we are optimistic as we enter the buying season
of Q2 and Q3 with our sales managers and channel partners reporting more
sales activity than in our history, fueled by a strong replacement
market and the acceptance of our total solution approach. Additionally,
we are seeing an increase in our gross profit margins and are targeting
a range of 25-30% for 2019, as we continue to enhance our product suite
with higher margin hardware, software and professional services. We
continue to see gross margins greater than 50% from our professional
services division, which is targeted to contribute as much as 10% of
total revenue by 2020. Furthermore, cross-sell opportunities exist to
expand penetration of our offerings within our existing customers, and
we are receiving significant interest in several of our new solutions
including Mimio MyBot, Boxlight NDMS (Network Device Management System),
Boxlight Unplug’d screen casting software and suite of professional
services offerings. Given our recent $4 million investment from The Lind
Partners, we are adequately capitalized to deliver on sales orders and
to execute on our 2019 growth strategy, and the investment funds are
expected to bridge our operations to positive cash flow.

Management Commentary

“We are set up for a very favorable 2019 and beyond as the K-12
classroom continues to evolve with interactive learning technologies,
and our products and services are at the forefront of this technology
transition,” commented, Mark Elliott, Boxlight’s Chief Executive
Officer. “Our team has done a tremendous job in developing an innovative
hardware, software and service solution that educators need to improve
engagement and learning in the classroom. This is reflected in the large
number of successful implementations we have deployed and our tremendous
sales pipeline across the U.S. and key international markets including
EMEA and Latin America. We are targeting a record number of prospective
sales opportunities and given our high success rate, we feel extremely
confident in our year-over-year growth prospects. Over the past three
years, we have grown our annual revenues from $20 million to $26 million
to $38 million and believe we are now better positioned for growth than
at any other time in our history. Our re-seller partner network is as
strong and loyal as ever. This coupled with our seasoned management
team, strong sales force and continued product development, enables us
to deliver our best-in-class and award-winning interactive technology
solutions to the education market globally.”

Global Expansion and Customer Reference Contracts

Boxlight whole-class learning solutions are in 60 countries, supported
in 32 languages and installed in 850,000+ classrooms. Boxlight solutions
encompass whole class learning, collaborative learning, assessment and
STEM solutions. The Company has 500+ global reseller partners that
assist in identifying, positioning and winning education contracts.

Significant contracts include:

  • Atlanta Public Schools, Georgia
  • Beaufort County, South Carolina
  • Clayton County, Georgia

Acquisition of Modern Robotics

On March 14, Boxlight closed the acquisition of Modern Robotics for
consideration consisting of (i) $70,000 in the form of a promissory note
and (ii) Two Hundred Thousand (200,000) shares of Boxlight Class A
Common Stock.

Modern Robotics are the developers of MyBot, a powerful and innovative
K-12 ecosystem and robotics program that helps students from pre-school
to high school develop skills and a passion for programming and
robotics. Through the cohesive software platform and innovative robots,
educators receive an out-of-the-box solution, complete with a robust
curriculum, STEM lessons, tutorials and videos.

The Company is excited to expand its offerings in the red-hot field of
STEM and robotics learning. MyBot was conceived and developed to fulfill
a need in robotics and coding in the classroom. By bringing these
cutting-edge teaching tools to educators, we help them engage today’s
students in meaningful learning experiences that will create graduates
who are workplace ready in emerging STEM fields including software,
robotics and technology.

Over the next 12 months, it’s expected that Boxlight will generate over
$2 million in robotics and programming revenues with gross profit
margins greater than 50%. The acquisition also brings significant
management talent to Boxlight by adding Stephen Barker as Vice
President, STEM Education. Barker has more than 30 years of extensive
experience in robotics and technology innovation, including developing
sensors and components for Lego Robotics, and brings an incredible
wealth of brain trust to Boxlight’s growing STEM offerings.

Financial Results for the Three Months Ended March 31, 2019:

Revenue for the three months ended March 31, 2019 was $5.0 million, a
decrease of $1.0 million or 16%, compared to $6.0 million for the three
months ended March 31, 2018. The first quarter is historically our
slowest sales quarter and often unpredictable. The decrease is primarily
attributable to the fact that in the first quarter of 2018, the Company
fulfilled some large projects while in 2019, certain projects were
delayed.

Gross profit for the three months ended March 31, 2019 was $1.6 million,
an increase of $0.1 million, compared to $1.5 million for the three
months ended March 31, 2018. The resulting gross margin was 31.6% for
the three months ended March 31, 2019, compared to 24.7% for the three
months ended March 31, 2018.

General and administrative expenses for the three months ended March 31,
2019 was $3.8 million, an increase of $0.6 million or 18%, compared to
$3.2 million for the three months ended March 31, 2018. The increase
resulted from an increase in salaries primarily as a result of new
acquisitions in 2018.

Research and development expenses for the three months ended March 31,
2019 was $0.2 million, an increase of $0.1 million or 155%, compared to
$0.1 million for the three months ended March 31, 2018. Research and
development expenses primarily consist of costs associated with the
development of proprietary technology. The increase was due primarily to
research and development contractors and salary expense.

Other income or expense for the three months ended March 31, 2019 was an
expense of $2.3 million, as compared to income of $0.9 million for the
three months ended March 31, 2018. The increase in other expense was
mainly non-cash and related to the change in fair value of derivative
liabilities.

Operating loss for the three months ended March 31, 2019 was $2.4
million, an increase of $0.6 million, or 34%, compared to $1.8 million
for the three months ended March 31, 2018.

Adjusted EBITDA loss for the three months ended March 31, 2019 was $1.8
million, an increase of $0.7 million or 70% compared to $1.1 million for
the three months ended March 31, 2018.

Net loss for the three months ended March 31, 2019 was $4.7 million, an
increase of $3.8 million, or 418%, compared to $0.9 million for the
three months ended March 31, 2018. The resulting EPS loss for the three
months ended March 31, 2019 was $(0.46) per diluted share, compared to
$(0.09) per diluted share for the three months ended March 31, 2018. The
increase in the net loss was primarily due to salary, research and
development and change in fair value of derivative liabilities.

At March 31, 2019, Boxlight had $2.7 million of cash, $20.7 million of
total assets, $3.7 debt, and 10.6 million shares issued and outstanding.

First Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2019
financial results on Thursday, May 16, 2019 at 9:00 a.m. Eastern Time.
The conference call details are as follows:

Date:           Thursday, May 9, 2019
Time: 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time
Dial-in: 1-877-407-9124 (Domestic)

1-201-689-8584 (International)

Webcast:

https://www.investornetwork.com/event/presentation/48537

 

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 May 16,
2019 through 11:59 p.m. Eastern Time on August 16, 2019 by dialing
1-877-481-4010 (domestic) and 1-919-882-2331 (international) and
referencing the replay pin number: 48537.

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 and change in
fair value of derivative liabilities. 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) (“Boxlight”) is a leading provider
of technology solutions for the global education market. The company
aims to improve learning and engagement in classrooms and to help
educators enhance student outcomes, by developing the products they
need. The company develops, sells, and services its integrated,
interactive solution suite including software, classroom technologies,
professional development and support 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
 
 
        March 31     December 31
2019 2018
ASSETS
 
Current asset:
Cash and cash equivalents $ 2,717,623 $ 901,459
Accounts receivable-trade, net of allowances 2,269,730 3,634,726
Inventories, net of reserves 3,520,022 4,214,316
Prepaid expenses and other current assets   942,023     1,214,157  
Total current assets 9,449,398 9,964,658
 
Property and equipment, net of accumulated depreciation 216,031 226,409
Intangible assets, net of accumulated amortization 6,292,406 6,352,273
Goodwill 4,723,549 4,723,549
Other assets   302     298  
Total Assets $ 20,681,686   $ 21,267,187  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable and accrued expenses $ 2,520,991 $ 1,883,626
Accounts payable and accrued expenses – related parties 5,966,673 6,009,112
Warranty 565,684 580,236
Short-term debt 1,602,185 2,306,227
Short-term debt – related parties 446,231 377,333
Current portion of earn-out payable – related party 300,923 136,667
Deferred revenues – short-term 440,092 938,050
Derivative liabilities 2,531,532 326,452
Other short-term liabilities   19,319     5,128  
Total current liabilities 14,393,630 12,562,831
 
Deferred revenues – long-term 105,416 134,964
Earn-out payable – related party 109,077 273,333
Long-term debt – related party 273,333 328,000
Long-term debt   1,344,446      
Total liabilities 16,225,902 13,299,128
 
Commitments and contingencies
 
Stockholders’s equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized;
250,000 shares issued and outstanding
25 25
Common stock, $0.0001 par value, 200,000,000 shares authorized;
10,588,118 and 10,176,433 Class A shares issued and outstanding,
respectively
1,059 1,018
Additional paid-in capital 28,492,785 27,279,931
Subscriptions receivable (225 ) (225 )
Accumulated deficit (23,893,294 ) (19,206,271 )
Other comprehensive loss   (144,566 )   (106,419 )
Total stockholders’ equity 4,455,784 7,968,059
   
Total liabilities and stockholders’ equity $ 20,681,686   $ 21,267,187  
 
 
 
 
 
Boxlight Corporation
Consolidated Statement of Operations
 
 
        Three Months Ended
March 31,
       
2019 2018
 
Revenues $ 5,012,713 $ 5,996,685
Cost of Revenues   3,428,173     4,515,713  
Gross Profit 1,584,540 1,480,972
 
Operating Expense:
General and administrative expenses 3,760,112 3,194,013
Research and development expenses   235,996     92,505  
Total operating expense   3,996,108     3,286,518  
 
Loss from operations (2,411,568 ) (1,805,546 )
 
Other income(expense):
Interest expense, net (280,603 ) (146,928 )
Other income (expense), net 21,209 (13,461 )
Gain on settlement of liabilities, net 146,434 25,738
Change in fair value of derivative liabilities   (2,162,495 )   1,035,159  
Total other income (expense)   (2,275,455 )   900,508  
 
Net Loss $ (4,687,023 ) $ (905,038 )
 
Comprehensive loss:
Net Loss $ (4,687,023 ) $ (905,038 )
Other comprehensive income (loss):
Foreign currency translation gain (loss)   (38,147 )   4,863  
Total comprehensive loss $ (4,725,170 ) $ (900,175 )
 
Net loss per common share – basic (0.46 ) (0.09 )
Net loss per common share – diluted (0.46 ) (0.09 )
 
Weighted average number of common shares outstanding – basic 10,255,808 9,617,234
Weighted average number of common shares outstanding – diluted 10,255,808 9,617,234
 
 
 
 
 
        Boxlight Corporation
Reconciliation of Net Loss to EBITDA
 
Three Months Ended
March 31,
 
2019     2018
Net Loss $ (4,687 ) $ (905 )
Depreciation and amortization 242 188
Interest expense   281     147  
EBITDA $ (4,164 ) $ (570 )
 
 
Boxlight Corporation
Reconciliation of Net Loss to Adjusted EBITDA
 
Three Months Ended
March 31,
 
2019 2018
Net Loss $ (4,687 ) $ (905 )
Depreciation and amortization 242 188
Interest expense 281 147
Stock compensation expense 161 521
Change in fair value of derivative liabilities   2,162     (1,035 )
Adjusted EBITDA $ (1,841 ) $ (1,084 )