Business Wire | Nov 16, 2020 04:16PM EST

Boxlight Reports Third Quarter 2020 Results

Nov. 16, 2020

LAWRENCEVILLE, Ga.--(BUSINESS WIRE)--Nov. 16, 2020--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

1-888-567-1603 (Domestic)Dial-in: 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(r) and Mimio(r). 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 383,415 207,397 depreciation

Intangible assets, net of accumulated 54,012,656 5,559,097 amortization

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 - 2,050,848 5,031,367 related parties

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 18,181,178 - -0- shares issued and outstanding,respectively

Series C preferred stock, $0.0001 par value,1,320,850 shares designated, 1,320,850 and 10,690,267 - -0- shares issued and outstanding,respectively

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 17 17 167,972 shares issued and outstanding,respectively

Common stock, $0.0001 par value, 200,000,000shares authorized; 50,871,711 and 11,698,697 5,087 1,170 Class A shares issued and outstanding,respectively

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 $ 124,224,955 $ 20,468,885 stockholders' equity (deficit)

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

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 7,452,453 8,070,930 16,721,610 19,204,342 Revenues

Gross Profit 2,024,503 3,233,801 6,306,113 7,895,312

OperatingExpense:

General andadministrative 3,306,845 4,230,372 10,444,060 11,892,814 expenses

Research anddevelopment 471,129 351,104 1,073,095 911,682 expenses

Totaloperating 3,777,974 4,581,476 11,517,155 12,804,496 expense

Loss from (1,753,471 ) (1,347,675 ) (5,211,042 ) (4,909,184 )operations

Other income(expense):

Interest (530,830 ) (517,391 ) (1,618,366 ) (1,277,016 )expense, net

Other(expense) (14,673 ) 21,077 60,932 65,956 income, net

Change in fairvalue of (193,640 ) 1,372,177 (239,340 ) (527,058 )derivativeliabilities

Gain (loss)from (1,718,290 ) - (578,707 ) 146,434 settlement ofliabilities

Total otherincome (2,457,433 ) 875,863 (2,375,481 ) (1,591,684 )(expense)

Net Loss $ (4,210,904 ) $ (471,812 ) $ (7,586,523 ) $ (6,500,868 )

Comprehensiveloss:

Net Loss $ (4,210,904 ) $ (471,812 ) $ (7,586,523 ) $ (6,500,868 )

Othercomprehensiveloss:

Foreigncurrency 536,118 (11,563 ) 427,794 (26,749 )translationincome (loss)

Totalcomprehensive $ (3,674,786 ) $ (483,375 ) $ (7,158,729 ) $ (6,527,617 )loss

Net loss percommon share - (0.10 ) (0.04 ) (0.31 ) (0.62 )basic anddiluted

Weightedaverage numberof commonshares 44,214,758 10,746,186 24,852,937 10,533,090 outstanding -basic anddiluted

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



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

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20201116005945/en/

CONTACT: Media Sunshine Nance +1 360-464-2119 x254 sunshine.nance@boxlight.com

CONTACT: Investor Relations Michael Pope +1 360-464-4478 investor.relations@boxlight.com