LAWRENCEVILLE Nov 13, 2019 (Thomson StreetEvents) — Edited Transcript of BOXLIGHT Corp earnings conference call or presentation Tuesday, November 12, 2019 at 9:30:00pm GMT

Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst

Good day, ladies and gentlemen, and welcome to the Boxlight Corporation Third Quarter 2019 Earnings Results Call.

(Operator Instructions) At this time, it is my pleasure to turn the floor over to your host, Stephen Hart.

Sir, the floor is yours.

Thank you very much. And welcome to the Boxlight Third Quarter 2019 Earnings Conference Call.

By now, everyone should have access to the earnings press release which was issued earlier today after the market closed at approximately 4:00 Eastern. This call is being webcast and available for replay.

In our remarks today, we will include statements that are considered forward looking within the meanings of securities law, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers, market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. And a detailed discussion of such risks and uncertainties are contained in Boxlight’s most recent Form 10-Q and Form 10-K and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements.

On this call, we’ll refer to non-GAAP measures that, when used in combination with GAAP results, provide us with additional analytical tools to understand our operations. We provided reconciliations to the most directly comparable GAAP financial measures in our earnings release, which will be posted on the investors relations section of our website at investors.boxlight.com.

With that, I’ll now hand the call over to Boxlight’s Chief Executive Officer, Mark Elliott.

Thanks. And good afternoon, everyone. And as you can likely tell, I am recovering from laryngitis, so my remarks will be brief today. And our President, Michael Pope, will cover most of the prepared dialogue. However, I will be available for the Q&A portion of today’s call.

We’re pleased with our year-to-date progress we reported today, 14% quarterly and 7% year-to-date revenue growth; improvement in our gross profit margin to 30% for both the quarter and year-to-date, which was at the high end of our 2019 guidance; and improved EPS and adjusted EPS. Our CFO, Takesha Brown, will provide more financial details shortly.

Our total classroom solution of interactive learning technologies continues to evolve, and we’re gaining market traction with both existing customers choosing to expand on their current solution and new customers looking to adopt new solution to replace older technologies.

With that, I’ll turn it over to our President, Michael Pope.

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Michael Ross Pope, Boxlight Corporation – President & Director [4]

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Thanks, Mark.

Our comments today, my comments today will focus on the continued execution of our sales and marketing efforts.

Revenues during the third quarter were driven by newly awarded contracts and continued implementations across a number of school districts. During the quarter, we were awarded contracts and received key new orders from Owosso Public Schools in Michigan, Southeastern Cooperative education programs in Virginia, Administración de Servicios Generales in Puerto Rico, Middletown city school district in New Jersey, Sedona-Oak Creek Unified School District in Arizona and Bennington Public Schools in Nebraska. We also continued to roll out implementations with Beaufort County School District in South Carolina, Montgomery County Public Schools in Maryland, Clayton County Public Schools in Georgia, San Diego Unified School District in California, Huntington Beach City School District in California, Anacortes School District in Washington, Aurora Public Schools in Colorado and Tangipahoa Parish School System in Louisiana.

Internationally, we were awarded contracts in Chile, the Dominican Republic, Ecuador, Mexico and Peru.

As we mature as a company, our revenues are becoming more predictable and taking on a recurring nature. School districts are typically on 5- to 7-year technology replacement cycles. The majority of significant, school-wide awarded contracts call for multiple-year rollouts. Once a school district has adopted one or more of our solutions, we are likely to obtain additional business with new products and services and are in an ideal position for the next upgrade cycle. Examples of multiyear contracts include Atlanta Public Schools, a 2,000-classroom contract we began deploying in 2016 and expect to complete by next year; and San Diego Unified School District, awarded in Q2 of this year, for a total of 7,000 classrooms to be installed over 5 years. We deployed the first 1,350 classrooms in San Diego during the second and third quarters of this year. We were also awarded a significant professional development contract in Clayton County Public Schools in the second quarter of this year, which is an example of a sales opportunity beyond the initial $12 million contract awarded in Q1 of 2018. We expect this professional development contract to produce greater than $1 million in sales and continue through 2020.

We have strong reseller partner relationships in key regions across the U.S., highlighted by several key national partners such as Troxell, Howard Technology Solutions and CDW-G. We also have a growing international channel. And during the third quarter, we introduced new channel partners, including EH Tecnología in Bolivia and AV Associates of Nebraska. Our reseller partner network, along with our experienced regional sales managers, allow us to maintain a significant pipeline, target key opportunities and successfully deliver our award-winning interactive technology solutions to classrooms globally.

The education technology industry continues to see double-digit growth both in the U.S. and most countries internationally, and we are optimistic in both our short-term and long-term growth potential in each of our product categories. Although interactive flat panels bundled with our Mimio studio software currently account for over 50% of our total sales, we have a strategic focus on diversifying our product suite to include additional high-margin proprietary solutions. We believe this diversification strategy will position us to maintain high margins and continue revenue growth in future years. We have made significant progress in this regard over the last several quarters through both strategic acquisitions and our R&D efforts. Specifically, our product suite now includes several new software offerings, STEM products, accessories and professional services. These new solutions are differentiated in the market and generate high gross profit margins. The adoption of these higher-margin products is demonstrated by our improved gross profit during 2019 of approximately 30%, which we believe will continue to strengthen in future years. Each of our STEM, accessory and other hardware solutions are integrated into our Mimio studio software, providing educators a simplified and enhanced user experience. This is a key differentiator for us in the industry.

We are especially optimistic about the potential of our classroom audio distribution system MimioClarity, which we’ll begin to deliver to customers this quarter. MimioClarity has already received positive industry recognition, including a 2019 Tech Edvocate award winner in best classroom audiovisual tool category. And we expect the audio system to be one of our top-selling products. In addition, our Mimio MyBot robotic system was honored as a finalist in the best STEM/STEAM tool or app category by Tech Edvocate. And Boxlight was selected as a finalist in the best global ed tech company category.

We are receiving positive feedback from industry experts, school districts and educators that use our solutions. And we believe we are better positioned today than at any time in our history to become a leader in education technology globally.

With that, I will now turn the call over to our CFO, Takesha Brown.

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Takesha Brown, Boxlight Corporation – CFO [5]

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Thanks, Michael.

I will now review our third quarter 2019 results.

Revenue for the 3 months ended September 30, 2019, was $11.6 million, an increase of $1.4 million or 14% compared to $10.2 million for the 3 months ended September 30, 2018. The increase is primarily attributable to the increase in sales of hardware, software and professional development services. Gross profit for the 3 months ended September 30, 2019, was $3.4 million, an increase of $1 million compared to $2.4 million for the 3 months ended September 30, 2018. The resulting gross margin was 30% for the 3 months ended September 30, 2019, compared to 24% for the 3 months ended September 30, 2018.

General and administrative expenses for the 3 months ended September 30, 2019, was $4.3 million, relatively flat compared to $4.3 million for the 3 months ended September 30, 2018. Research and development expenses for the 3 months ended September 30, 2019, were $0.4 million, an increase of $0.3 million or 255% compared to $0.1 million for the 3 months ended September 30, 2018. The increase was due primarily to software and engineering costs.

Operating loss for the 3 months ended September 30, 2019, was $1.2 million, a decrease of $0.7 million or 39% compared to $1.9 million for the 3 months ended September 30, 2018. Net loss for the 3 months ended September 30, 2019, was $0.3 million, a decrease of $0.9 million or 76% compared to $1.2 million for the 3 months ended September 30, 2018. The resulting EPS loss for the 3 months ended September 30, 2019, was $0.03 per diluted share compared to $0.12 per diluted share for the 3 months ended September 30, 2018. The decrease in net loss was primarily due to increased revenue, a decrease in cost of sales as a percent of revenues and change in the fair value of derivative liabilities.

Adjusted EBITDA loss for the 3 months ended September 30, 2019, was $0.4 million, a decrease of $0.8 million or 69% compared to $1.2 million for the 3 months ended September 30, 2018.

Our financial results for the 9 months ended September 30, 2019, were as follows.

Revenue for the 9 months ended September 30, 2019, was $27.7 million, an increase of $1.8 million or 7% compared to $25.9 million for the 9 months ended September 30, 2018. Gross profit for the 9 months ended September 30, 2019, was $8.3 million, an increase of $2.7 million compared to $5.6 million for the 9 months ended September 30, 2018. The resulting gross margin was 30% for the 9 months ended September 30, 2019, compared to 22% for the 9 months ended September 30, 2018.

General and administrative expenses for the 9 months ended September 30, 2019, was $11.9 million, an increase of $0.7 million or 7% compared to $11.2 million for the 9 months ended September 30, 2018. The slight increase of $0.7 million was primarily attributable to the increase in employee salaries of $0.6 million, bonuses of $0.3 million and increase in contract services of $0.2 million, which was offset by a decrease in stock-based compensation of $0.7 million. Research and development expenses for the 9 months ended September 30, 2019, was $0.9 million, an increase of $0.5 million or 147% compared to $0.4 million for the 9 months ended September 30, 2018. The increase in research and development expense was related to contract services primarily for software consultants of $0.3 million for Qwizdom and salaries of $0.1 million each for Qwizdom and Modern Robotics engineers.

Operating loss for the 9 months ended September 30, 2019, was $4.6 million, a decrease of $1.3 million or 23% compared to $5.9 million for the 9 months ended September 30, 2018. Net loss for the 9 months ended September 30, 2019, was $6.1 million, a decrease of $0.5 million or 7% compared to $6.6 million for the 9 months ended September 30, 2018.

The resulting EPS loss for the 9 months ended September 30, 2019, was $0.58 per diluted share compared to $0.66 per diluted share for the 9 months ended September 30, 2018.

Adjusted EBITDA loss for the 9 months ended September 30, 2019, was $2.8 million, a decrease of $0.7 million or 21% compared to $3.5 million for the 9 months ended September 30, 2018.

With that, we’ll open up the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Brian Kinstlinger from Alliance Global Partners.

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [2]

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Great. Last quarter, you guys guided to 25% revenue growth for the second half of the year, and so the majority of the $15 million in 2Q orders would be recognized in the September quarter. First, can you address the shortfall? And then I noticed you didn’t provide an updated outlook, but you said your business is becoming more predictable, so is there updated guidance as well for the year or your goals maybe for the future?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [3]

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Well, the fourth quarter of — what we’re looking at or expecting is that we’re going to be flat over prior year. We had a good fourth quarter in 2018, and we’re expecting 2019 to be a slight uptick for the year. We had a lot of activity in the third quarter, Brian, and a lot of good things happened in the quarter. However, some of the major deals that we were working on moved out. We didn’t lose them. They’re still out there, and they’re either going to be moved into the fourth quarter or into the first quarter next year. So we’re still upbeat about our possibilities and things like that, but we’re as dependent on some of these larger deals and deployments as we are when they slip and move that it has a big impact on our total earnings.

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [4]

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Can you maybe — sorry. Go ahead.

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Michael Ross Pope, Boxlight Corporation – President & Director [5]

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(inaudible) — yes, yes. I was going to add just one more comment that I think is important to note. So if you look last year, we won a large deal in Clayton County, you’ll remember, right, which was 3,200 classrooms. And they have that — has installed that all within 7 months which — last year. That was a $12 million contract. So comparatively, for the current year, we actually haven’t had many of those larger contracts with a short installation period. I mean we’ve won some large contracts, like San Diego which is going to be bigger than Clayton County was, but that was a — that’s a 5-year rollout, right, versus a immediate rollout. And so I think that’s kind of what Mark was speaking to, that we have some larger opportunities. Some of those, we’ve either got pushed out or we’ve had several multiyear rollouts where we don’t have that one big uptick. And in Clayton County, if you look at just last year, that was about 30% of our total sales last year. So if we had another Clayton County this year, of course, that would have tipped our numbers.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [6]

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And Michael referred earlier to Clarity. We had some product delays with Clarity. Clarity is going to be a big contributor to our overall success. We think we’ve got an outstanding product solution right there, but the delays there had an impact on some of the key opportunities we have, including places that may not have just been totally looking at Clarity as an add-on but wanted to add that as part of their decision-making process for everything. So that’s been a good thing, that these districts have waited until we can come in and show them the complete installation of what it can do. And so that had a significant impact, I think, on our projections for the — and delivery in the third quarter.

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [7]

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So — but to Michael’s point, I — going into giving that guidance for 25% growth in the second half of the year, I think your — you took into account that Clayton was very large. So were there a handful of deals of that size that you thought would move that quickly that you had that 25% guidance? Is that what happened? And how many such large contracts were there out there?

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Michael Ross Pope, Boxlight Corporation – President & Director [8]

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So I will say of that size, all right, because we grew 14%, all right, shy of our [north of] 25%. Keep in mind, I guess, too that Q4 last year was strong. And so we probably should have been an uptick of that in Q3 but not $12 million sized in 1 quarter, no, but — or in a couple quarters. But in aggregate, the opportunities that got pushed out would be not too shy of that, I guess. It’s probably…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [9]

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Brian, we had some very big districts that are just looking right now, waiting for the Clarity. We also spend a lot of time getting positioned to sell it in New York City. We were selected in New York City to be added to the contract; 1 of 3 vendors now, there’s Promethean and SMART, that can sell in New York City. And there was a push within the district to add another vendor, and we were selected for that. The startup time to get us up and the contracts approved, and the price and the bundles and the logistics and everything, took longer than we had anticipated, but we’re now seeing that that’s starting to happen in the fourth quarter. And we’re seeing significant activity and excitement in New York City to the point that we think New York City is going to be probably our largest customer for 2020.

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Michael Ross Pope, Boxlight Corporation – President & Director [10]

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And so Brian, to the kind of the heart of your question. Definitely, we were slower than we anticipated in Q3, all right, but not for lack of opportunity. I think it’s a timing — it’s been a timing struggle for us because, a lot of these pieces, especially larger opportunities, there’s a lot of different individuals involved and there’s a lot of different moving pieces. And so the deal then, when those get closed, apparently we were a little optimistic versus what actually happened.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [11]

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We were, but we have a very good forecasting system here. And we work it with our channel partners and with our channel managers that are here, and this is what they rolled out to us. And so the surprises that came were just surprises and that’s — but we didn’t lose them, and that’s a good thing…

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [12]

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Yes, okay. So based on the seasonality of your business and when the school year happens, will a lot of these deals not likely get recognized till the second or third quarter of next year? Or will the first quarter maybe not be as seasonally weak as it traditionally is?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [13]

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I think we’re going to have a better first quarter than we’ve had in a long time because of some of these rollouts and the delays that we’ve had. New York City too traditionally buys in the first quarter. And we’ve never been selling into New York City, whereas our 2 key — of our competitors have been. And they’ve done a vast — a good percentage of their total revenue from that. So with New York City coming onboard and some of these other deployments that we’re looking at right now in some big school districts, I think we’re going to have a good first quarter. And that’s (inaudible).

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [14]

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Okay. And then — yes. Can you talk about what products you’re seeing the most demand for? And maybe specifically, I know it’s early, but maybe talk about the adoption of your robotics technology, on top of what else is producing strong growth.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [15]

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Well, there’s no question flat panels are hot right now across the board, but we’re seeing a lot of interest too in other districts for our MimioFrame solution. We’ve got a big opportunity in [South Florida] there, that they’re looking to deploy this in 3,200 classrooms. So we’re now in a test mode with them for that. But flat panels, without question, are there. People are replacing them. And I think I referred in the last call that they’re looking at a lot of different things because it’s a replacement market. And it’s not like potentially in the past where they would just roll out 1,200, 1,500 all at once and test the water to see what’s working. And that’s good for us because in these tests, like we had in San Diego, Montgomery County and other extensive rollouts in places like Harford of Maryland County, Maryland, where they’ve decided that we’re the choice there — but they do a lot of extensive evaluations and looking and then they start deploying. And that’s where we excel in is in rolling out. We deployed 1,200 classrooms in 7 weeks in San Diego and 3,200 in 7 months in Clayton County. So those are the things that speak well for us with as a district start looking at who can effectively take on projects of this size and deploy them effectively. So flat panels are really hot.

The STEM solutions are really taking hold now. We’ve talked about our relationship with the Aldrin foundation. And that’s gotten us into multiple large districts. They’ve already deployed, I think, 25 of their maps into Clark County. And they did a big press release out there and public remarks and things for that, but they have 241 schools there, and our goal would be to have at least 10 to 20 of our robots to go with each one of those. So we’ve done the training there and it’s gone incredibly well from that. The superintendents referenced us and recommended us to New York City. So we’ve had meetings with them and they’ve started an evaluation process. And out of that, we had Philadelphia. And then here in Georgia, Gwinnett County, we’ve had multiple meetings with them, where we’ve had Dr. Andy Aldrin come in with us meeting with the superintendent and his staff there. Gwinnett County is a 180,000-student district. 10% of the students in the State of Georgia are in Gwinnett County. And so we’re now meeting with them to look at how we can deploy this. So we’re getting a lot of groundswell for the STEM approach right there. And our robotics solution there is standing up incredibly well to the competitive pressures there. They’re seeing that this is a breakthrough technology. And it’s developed by a guy, Steve Barker, who had a lot of experience working with the Legos organization they’re providing with a lot of sensors. So we’ve developed a product very competitive, and we’re getting a lot of interest in it. So STEM solutions; flat panels; and then audio, audio with microphones and things of that nature, being able to tie in the potential public announcement systems and things of that nature, with a lot of the issues that we have with special needs, being able to hear properly the microphones in the classroom and then being able to have security tied into that potentially. So those are the hot items, Brian, that…

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Brian David Kinstlinger, Alliance Global Partners, Research Division – Head of TMT Research, MD & Senior Technology Analyst [16]

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The last question I’ve got — I appreciate it. The last question I’ve got: We’ve talked previously about needing to fund cash in the cash cycle for your business. So I’m curious if capital has been a constraint at all to your growth. And during the quarter, how much did you raise from Lind Partners? I know you have that agreement. So I’m just trying to understand how much capital was raised during the quarter.

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Michael Ross Pope, Boxlight Corporation – President & Director [17]

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Yes. So let me speak first to the agreement with Lind Partners. So we signed that agreement end of March of this year, and we brought in $4 million from Lind Partners between March and beginning of April. And that really helped kind of buffer us until now for inventory purchases and operating expenses. We’re actually in a better position today than we were at the same time last year. So we — I’m not going to say that we’re not going to be in need of additional cash. We’re still figuring that internally and going through some of those projections, but we’re actually in an okay position today. The worries come Q1, right, because Q1 traditionally has been a little bit slower. And so we’re analyzing that right now, as far as what our cash needs will be, but a couple of things that have helped us on the cash front is better arrangement with our factoring facility. We also have a credit insurance that’s allowed us to borrow a little bit more with our factor. And then on top of that, we have some better terms too with our manufacturers through some other [borrowers]. And so terms combined with the fundraising with Lind Partners has put us in a pretty okay position through this point in time.

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Operator [18]

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Your next question comes from Allen Klee with National Securities.

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Allen Robert Klee, National Securities Corporation, Research Division – Research Analyst [19]

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Yes. Can you go through all the add-backs to get to adjusted net income?

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Michael Ross Pope, Boxlight Corporation – President & Director [20]

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Yes, to the adjusted EBITDA, is that your — right, Allen?

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Takesha Brown, Boxlight Corporation – CFO [21]

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Adjusted EBITDA…

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Allen Robert Klee, National Securities Corporation, Research Division – Research Analyst [22]

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Well, you also have an adjusted EPS in your press release.

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Takesha Brown, Boxlight Corporation – CFO [23]

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Yes. So to get to the adjusted EBITDA, right, if we start with our net loss. To just get to EBITDA, we add back the normal depreciation and amortization and interest expense. And then to get to adjusted EBITDA from there, we add back stock compensation expense and then the change in the fair value of the derivative liabilities. That line is the larger one, some warrants that we have that we have to re-fair value them every quarter. And so depending on where our stock is at that point from 1 quarter to the other, you can see some significant swings there. So that gets us to the adjusted EBITDA number. And then the adjusted EPS is basically taking the adjusted EBITDA numbers and looking at how many shares we have outstanding, to do that calculation.

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Allen Robert Klee, National Securities Corporation, Research Division – Research Analyst [24]

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Okay. So the adjusted EPS is really adjusted EBITDA per share.

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Takesha Brown, Boxlight Corporation – CFO [25]

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Yes.

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Allen Robert Klee, National Securities Corporation, Research Division – Research Analyst [26]

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Okay. And then you talked in the press release about that a lot of your contracts are delivered over multiple years. Is there a way of thinking about, for the contracts that you already have, what the amount of additional orders you might be able to — that you can reasonably think you would get from them over the next quarter and over the next 12 months?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [27]

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There is. And that’s what we look at. We’re obviously going through quota establishment this year. That’s part of what we look at for all of our sales reps, is what are the deals that they already have in place and what are the rollout schedule as they know them. The rollout schedules we mentioned in Atlanta Public Schools, 4 years of — they had a loss of revenue one — during one period of time when a lawsuit that came in against them from the [park line] or the beltway, [people right there that calls to delay that]. So there are unexpected things that can potentially happen, but like San Diego that has the 5-year referendum out there, they got the money there. And they put everything out. The board’s seen it. So that’s the — for the schedule now. They should have more money come in. They could potentially move it up, but other than unexpected-type things, we work very closely with the districts to make sure that we’re doing everything to get the product in with the schedules that they’re going to be installing. And most of them who did install typically started in the May time frame through into August and September for the major rollouts we have. And that’s why the third quarter is historically bigger. However, with some of the larger opportunities we’re seeing and new schools coming onboard and things like that, we see a pickup starting in the first quarter now and into the second quarter. And then the fact we diversify some — but we don’t have major rollouts with flat panels and interactives, projectors and things like that, but we have robots and things of those nature. They can be rolled out more effectively during the year. So we’re going to have more predictability and not quite as much seasonality there.

And the fact that another issue is — we hope to have more revenue out of our European operation, and we’re restructuring that this year. We hired several people over there that had industry background. And we had a tremendous foundation in Tony Cann’s company Cohuba, but the European market was flatter than everybody anticipated. And so we’re restructuring and looking in that and evaluating there. And then South America, which has historically done well for us, Mexico was down considerably with the government restructuring. So if you were to take those two, (inaudible) and indeed Latin America; and then the product delays, we would have had, I think, a more significant impact on our revenue for the fourth — or third quarter as well.

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Michael Ross Pope, Boxlight Corporation – President & Director [28]

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So if — just a couple more points on that. So even though international did not perform where we expected, international was still greater than 10% of our total sales. And we actually saw a lot of growth internationally over last year, and we’ll expect to continue to see that. And then, Allen, also back on your previous question as far as how you should think about some of these multiyear rollouts: We haven’t provided more detailed numbers on that. That’s something we’re looking at internally, and maybe in future quarters we can provide you a little bit more guidance on how you should look at that. I mean, of course, you can do the math on the large ones we announced like San Diego and some of these others, but yes, we’ll see if we can shed some more light on that maybe next quarter.

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Allen Robert Klee, National Securities Corporation, Research Division – Research Analyst [29]

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Okay. My last question is for the higher-margin products that you’ve mentioned such as professional services, STEM, robotics. In aggregate, what percent of — that is of sales. And how has that been growing?

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Michael Ross Pope, Boxlight Corporation – President & Director [30]

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Yes, I mean, if you look at all of this in aggregate, it’s well over 10% sales. And we haven’t broken those out at this point in time, but it’s becoming more and more significant, those areas. And so we’ll look at maybe breaking some of that out as well in future quarters, but the hot items, as Mark talked about earlier, are of course STEM, including our robotics solution, which we’re going to see, we think, a lot of growth in that; professional services; and then software. Those are kind of the hot areas. And I would add also under accessories is our Clarity product that Mark talked about. So those kind of 4 areas, we’ll look to provide more on that. All those are very early in their infancy, right? And so we are seeing growth in opportunities there, and we’ll look to start to break those out in the future.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [31]

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I think we’re especially pleased with Qwizdom in the software side, right. They’re becoming the de facto standard for the — outside of the 3 key players that provide interactive solution for classroom development, which would be SMART, Promethean and us. (inaudible) Qwizdom has now become the primary software choice of platforms from all of our competitors, including people like ViewSonic, Newline, [Vestal], Qomo, Galaxy, CTOUCH, Elo, BenQ, Planar. They are all standardized on that. And I think that it was an incredibly good merger for us right there because not only are we making sure that we’re tied in and developing software for all these providers that are out there that they select and like and we get good margins for it, but it also allows us to be able to develop the best of both solutions. So you’ll see some new products coming out in the future in our software side. And it allow us to take the best of what we had out of the Qwizdom solution. Coupled then with our existing, maybe that’s (inaudible) that product suite even stronger. And so that’s high profit and high margin there, and it’s very well accepted by the customers and by our competitors.

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Operator [32]

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Our next question comes from Jack Vander Aarde with Maxim Group.

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Jack Vander Aarde, Maxim Group LLC, Research Division – Equity Research Associate [33]

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So while you guys mentioned some deals may have pushed out or pushed forward into future quarters here, I’m curious just given the guidance from last quarter on the top line. Was there anything in particular that was serving as somewhat of a bottleneck maybe in terms of classroom implementation from the channel?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [34]

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The biggest thing will be again we — the Clarity solution that we have there. We’re partnering with some engineers that are some of the best in the industry. We were anticipating being able to deliver that starting in the second quarter and the third quarter. We’re now believing that we’re going to have that ready, but we had some startup issues with quality and things like that, that we wanted to get reconciled. And so we had anticipated doing a couple of million of dollars worth of Clarity business this year, but it wasn’t just that lost business. They are moved-out business. It was also other big districts that were saying, “We like what we’re hearing from you. The addition of Clarity makes it even stronger. We — can you show us that complete solution?” And so that was an impact on us, Jack, no question about it. And we’re optimistic that we’re behind that. We’ve been working night and day with an engineering and development group there to get the issues corrected. And we’ve gotten samples out now and have started to deploy this and feel like we’ll be right on schedule here to get the initial installations starting in the fourth quarter and then major of volume releases starting in the first quarter of next year…

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Jack Vander Aarde, Maxim Group LLC, Research Division – Equity Research Associate [35]

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Okay. Got it. That’s helpful — go ahead.

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Michael Ross Pope, Boxlight Corporation – President & Director [36]

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(inaudible) organic growth — I was going to mention, Jack, as well that we look at opportunities all the way down to — with a partner, to the school district level, all right, opportunities that they put in our system. And I would say atypically we have large — a lot of opportunities which they were planning on closing, our sales manager were planning on closing during the third quarter. They got pushed out, as Mark talked about previously. And we typically don’t talk about those by name until we win those contracts, but I would say, uncharacteristically, we have a lot of opportunities that are still in the pipeline which just got moved out.

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Jack Vander Aarde, Maxim Group LLC, Research Division – Equity Research Associate [37]

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Got it. That’s helpful. And then as it relates to Clarity, for example, is there — would those deals be reflected in the $2.2 million in back orders? Or is that outside of that?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [38]

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No. We had some back orders for that right there, but most of it is in future orders that we’re looking at. And they’re significant. I mean we’ve got one district with 1,800 classrooms, and they’re looking at this. And that had — we’ve been able to show them that was something that we had looked at very strongly. And we had this strong potential there with one of our existing customers that was there. So it’s significant. And I think it’ll be as much as 10% of our revenue moving forward there or more. And it’s just a hot aisle. There’s so much research on the benefits of having microphones and students being able to hear clearly in a classroom and the fact that it enhances the ability for the teachers to present and not have the impact on their vocal cords and everything else. And so we’ve got an outstanding solution here and we’ve got a great customer base that’s receptive to looking at how we can bring this in because it is part of our strategy. It’s also integrated. And that’s a big issue, as they can go to their toolbar; and they can start doing all sorts of things with audio, record it and can [tied it] into our software that’s integrated. So we have an inherent advantage in our existing customers being able to deliver this new solution. And it’s significant amount of revenue.

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Jack Vander Aarde, Maxim Group LLC, Research Division – Equity Research Associate [39]

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Got it. And then if I can just follow up and sticking along the revenue topic. So Mark, I believe you mentioned earlier on the call that you expect 4Q revenue to be maybe flat, maybe slightly up year-over-year. Is it safe, though, to expect that 4Q revenue will increase sequentially from this 3Q? Or is that kind of up in the air as well?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [40]

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Explain it — say that again. I’m — it…

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Jack Vander Aarde, Maxim Group LLC, Research Division – Equity Research Associate [41]

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Yes. Let me simplify it. You — is it safe to assume that 4Q revenue will increase from 3Q here? So will 4Q be higher than 3Q? Is that safe, or is that still uncertain?

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Michael Ross Pope, Boxlight Corporation – President & Director [42]

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Yes, Mark, you had mentioned that we expect Q4 to be flat, approximately up for the year, right? So think approximately flat for Q4. We’re up for the year, 7%, right? So you’re looking somewhere — without providing exact guidance: You’re looking somewhere around that for the year is what we’re looking at.

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Operator [43]

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Okay. Our next question comes from John Nobile with Taglich [Inc.].

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [44]

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A lot of them have been addressed already. The main one, which was brought up several times obviously, this year looks like it’s going to look like last year, as far as product being delayed into the fourth quarter. Like we just mentioned, we’re going to see a higher revenue number in — we should see a higher revenue in Q4 versus what we just saw in Q3, but I have a couple of other questions here. Historically you’ve derived the greatest portion of revenue from sales of interactive flat-panel displays. And in light of acquisitions that have expanded your business into services and robotics over the past year, what percentage of sales would you say displays currently contribute to your overall picture?

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Michael Ross Pope, Boxlight Corporation – President & Director [45]

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Yes. If you look over the last 2 years — I mean you’re saying all displays, or just interactive flat-panel displays.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [46]

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Let’s take all flat panels, not just interactive, but I think that was the majority of your revenue would be interactive. But let’s just look at all of them because I’m looking to get an idea of the sales mix.

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Michael Ross Pope, Boxlight Corporation – President & Director [47]

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Yes, yes. So if you’re looking at flat-panel displays, right, which we show interactive flat panel, that’s about half of our revenues come from that, if you look at the last couple years. And that’s going to start trending where it’s going to be less and less, we believe, of our total sales over time. So that’s what you’re looking at. Some of our other displays that we sell also would be in addition to that, like projectors and some of our other interactive whiteboards and our portable interactive whiteboard. Those — the projectors are trending down. That’s becoming less and less important in our product suite versus some of these portable interactive whiteboard solutions potentially could start to scale up a little bit as we sell them internationally in developing markets. But if you’re looking at currently the interactive flat panels is, by far, our largest solution, that’s about half. Keep in mind too that that’s packaged with our Mimio software solution as well. And so it’s not just (inaudible) standalone.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [48]

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Which is why it’s about 50% now. Because I believe — a year or 2 ago, weren’t we looking at the majority, like 70% or 80%, really being derived from your flat panels? But I guess that plays into the services…

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Michael Ross Pope, Boxlight Corporation – President & Director [49]

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Yes. [You can put] flat panels plus our projectors. If you’re looking back 1 or 2 years, you would have to take all displays. And that’s about accurate, yes, a couple years ago. So that’s (inaudible) a little bit. We plan, John. We’re going to start to bridge some of that out. We talk internally about it. So we just want to — we want to make sure we can start to break that a little bit for you in future quarters, and so we’ll talk about that. And the hot items, of course, are going to be flat panels and displays, STEM products, accessories and professional services…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [50]

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And STEM.

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Michael Ross Pope, Boxlight Corporation – President & Director [51]

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And STEM, yes. So those will be kind of the categories we’ll start to break out, but yes, you can think of interactive. If you think of flat panel, it’s about half of them. And…

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [52]

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Okay. No, no, I appreciate that breakout. Look, I have a question here. I just want to bring it up only because you currently do business with hundreds of resellers. And I noticed that recently you put out press releases on an agreement with Virtuocomm, if I’m pronouncing that correctly, and Sussman. And I thought, I said, “Well, they put out press releases on these.” I’m just trying to get an idea of how significant these particular agreements are that you decided to put press releases out. I mean, is this just going to be like a norm for — with all the other resellers that you have? Or do you anticipate even greater things with these guys?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [53]

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Well, we have had press releases over the years for all of them. These are typically the newer ones that we’ve added…

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [54]

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Okay, all right. That’s I wasn’t sure if this was like something…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [55]

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Yes, these brand-new ones of Virtuocomm is a significant one. They’ve got a multi-state [re-sayer] and they represent other lines besides us. And so the fact that they brought us onboard was significant. And then Sussman only represents us. And because they’re in New York City and tied into the CDW and [GDI] group up there with a new contract there, that was very significant. They’ve been in business for over 50 years. And they’ve got a tremendous sales group there, so — but these are typically press releases that we do on new channel partners we’ve added.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [56]

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Okay. So Sussman is your main reseller in New York City, is that correct, right now? This is…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [57]

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Yes. That’s in New York City, primarily the (inaudible) contract. The schools — and I think there are 1,841 schools in New York City, and they all purchase separately there. So having — and we’re 1 of 3 vendors that they can be — they can buy — that can be purchased by the schools there off of a contract called (inaudible). And CDW-G administers that contract. And so the fact that we’re now being brought into that is a very major, major opportunity for us. And so Sussman is well positioned in New York City to have that coverage in all of these different schools. They’ve been selling educational products and services in there, like I said, for over 50 years.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [58]

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Okay. And if I could back up earlier comments: You believe that New York City should be the largest customer affecting the first quarter, starting in the first quarter of ’20. Now do you have actual orders on hand right now for New York City? Or is this something you’re looking at maybe in another month or so?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [59]

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We’re starting to get the orders coming in now. We’ve been doing — we just did a major conference there with our construction group there. They had like 1,100 of the principals and from New York City there, and we had a big exhibit there. And a lot of leads were generated from that. And we’re an ideal solution there, John, because they have SMART. They have Promethean interactive whiteboards in the past. And our software allows them to run and continue to run any lessons that have been developed by the teacher on either SMART or Promethean. So we can go into a school this minute and then they can take our lesson, our software and continue to run. So we’re Switzerland for them. We’re an easy choice. We’re very price competitive. And what we’ve done there, they like our integrated solution. And they like the fact that we have other products that tie into it, whereas our competitors don’t necessarily sell audio; and a lot of the other solutions, document, cameras and voting devices that we have included in our product offering in the STEM solutions. So we are very excited about New York City.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [60]

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And I — if I could be so bold as to get into even the first quarter guidance only because of what you mentioned about New York City starting to come in now, should be a contributor in your first quarter. And you had mentioned product delays in the third quarter, which pushed into the fourth quarter and actually into Q1. So in looking back: Last year, you actually had a very strong first quarter in actually [October]. I think…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [61]

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October…

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [62]

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I’m sorry. Last year. I’m looking at ’18. Actually, in ’19 it’s a slower quarter. It was a $5 million even quarter. So I would anticipate…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [63]

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(inaudible).

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [64]

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Yes, that was a pretty slow quarter. The year before, it was a $6 million quarter, but if I could even look at like a $6 million number in the first quarter, I would think with what I see here it looks like there should be revenue, if I could say, guidance as far as the first quarter is concerned, to be kind of strong versus the prior 2 first quarters. Is this kind of correct to look at, at this point?

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [65]

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Yes, yes, yes. It’s not hard to improve over the first quarter of this year, but we’re in a much better position here. And some of it is because of the product delays there, that we’ve been able to deliver and [stop] moving into the first quarter of this year. So our sales team are going through their forecasts or anything like that. The first quarter is shaping up to be much stronger than it was this year.

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John Nobile, Taglich Brothers, Inc., Research Division – Principal Equity Analyst [66]

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Okay. And I just have my last question. You’ve had several acquisitions over the past few years. I’m just curious if you’re looking at anything that might happen in the near term.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [67]

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We’ll let Michael address that, but…

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Michael Ross Pope, Boxlight Corporation – President & Director [68]

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Yes. So John, we are looking at opportunities. We’ve been very open over the last few quarters that we’re constantly looking for targets that we think will enhance the products we offer or allow us to move into territories and sell where we’re not currently selling. That being said, we have several targets. I think we absolutely will close more acquisitions at some point in the near future, and we hope to do announcements at some point. I wouldn’t expect anything transformative necessarily, but I think just like the last several acquisitions that we’ve closed, where they have been small enhancements. I think we look at new acquisitions being similar to where they’ll enhance our product suite or again allow us to sell to new territories.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [69]

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And profitable.

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Michael Ross Pope, Boxlight Corporation – President & Director [70]

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Yes, yes. There’s definitely new opportunities we’re looking at, yes. We’re looking at opportunities that are going to bring some revenue and that are cash flow positive day 1. And they’re going to be accretive to us on a profitability standpoint…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [71]

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But we’re not in a shortage for companies that are coming to us, wanting us to — wanting to take advantage of our sales and distribution and our integrated process. So we’ve got the pick of the litter, I think, as far as a lot of the solutions that are happening…

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Michael Ross Pope, Boxlight Corporation – President & Director [72]

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Yes. I think, even though it may look like we’ve been a little slower, right, this year thus far than anticipated, we’ve had a lot of very successful implementations out in the marketplace. And so we have a very good reputation that’s been growing in the last couple quarters. So much like we’ve had a lot more companies coming to us, and then we’re able to be able to find partners in that way.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [73]

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And I think what Michael is referencing there. I mean one of the things we’ve accomplished. And if you get a chance, I encourage you to look at our website, at Clayton County and at Huntington Beach. We’ve done the right things there from project management to training, to installation, to getting them tied in using a total solution there, that they are outstanding references. And on a scale, Huntington Beach is not nearly as large as Clayton County, but it’s still a very prestigious district. But Clayton County, 55,000 students, 3,200 classrooms. And you can see their superintendent, in one of the sessions that we have there, going through why they selected us, how it’s gone and the results that they’re expecting and that they’re realizing there. That speaks volumes in a very risk-averse world in the education space. Like we’ve said in the past, they can’t afford to make a mistake. [It’s public in there]. It’s just something that they’re not going to do. So they’d be able to have the references like we got from Clayton County, Beaufort County, Atlanta Public Schools. I mean they’re there. And some of the other companies we compete with, they’re primarily hardware companies. And their software and solution and training and things like that, they’re dependent on us for that. And so we’re doing the best we can to help them against that, but we’ve got incredible references there. And that’s something you earn and that’s what we have. And that’s something that we’re very proud of, and that’s something we’re going to be continuing to build off of.

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Operator [74]

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Okay. Our final question comes from Hunter Diamond with Diamond Equity.

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [75]

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So just I wanted to know in terms of the new technologies you’re seeing, I guess, generally in education technology. What’s exciting you most? And what are you seeing as potential — you discussed acquisitions, I guess, but areas where you’re looking to invest in R&D, et cetera.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [76]

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I think STEM is the one right there. There’s a lot of emphasis on STEM globally. Everybody understands the economic advantages that STEM brings to their economies and schools and things like that, and they all want to have that. What we’re seeing, though, is that there’s a lot of solutions and a lot of confusion and a lot of toys on those that have been able to blend in and get some recognition there, but there is nothing that’s really taking hold other than potentially [Legos] and a company called [Zax]. And we think that we can provide that cohesiveness there by tying it together into an integrated solution and being able to complement that with products like our Labdisc which ties into that; and then also other things we’re looking at, as far as mergers or alliances with other companies, like we’ve done with the Aldrin foundation with a whole space program and the initiatives they’ve got in there. So STEM is exciting. It’s fundamental to making our world a better place. And every country has programs and every school district is doing something there, but I think there is a drive to see something that’s cohesive and that can kind of bring it all together. And so that’s what we’re looking to do. And then I think the audio side again is something that’s really exciting because there are just so many studies that show the impact that you can have by having children be able to hear all over the classroom, as opposed to just upfront, and then tying that together into some kind of a safety-type approach there that — with all of the emphasis that a school is having. And so there is just a lot of excitement in all of those areas.

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Michael Ross Pope, Boxlight Corporation – President & Director [77]

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Yes. And I would add as well, Mark. I would add professional services, right. That’s an area that we acquired EOS in, you’ll remember, last year. And they’re making great headway over the last few months, but we’re looking at other potential opportunities in services. And then also I would add software. Branded software is the glue that will hold all of our solutions together. And we have a great software solution, but there’s areas where our software currently doesn’t touch. And there’s a lot of opportunity for us to branch out a little bit more broadly with our software, and that’s something else we’re looking at also.

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [78]

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Right. No, it makes a lot of sense. And you also thought in terms of getting like celebrities or other people. I know Chegg very well, and they have a lot of celebrity endorsers that promote their services. They do events in universities. They got rappers or famous people, actors, actresses. Have you thought about — I mean you can get like Ivanka Trump posting an Instagram thing with [a Boxlight thing]. Any of that would be great exposure for Boxlight that’s free, right? So has that been something…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [79]

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Yes. Well, that’s some good ideas. Ron Clark Academy is a company — a very well-known private school here, but they have like 12,000 teachers a year that come through there just to watch them teach. And so we’ve got a lot of our STEM solutions tied into what they’re doing there, so we get exposure, but we haven’t looked into that. I just found out Michael was a cheerleader at Brigham Young, so maybe he could get them to tie up into something for that.

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Michael Ross Pope, Boxlight Corporation – President & Director [80]

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And it’s starting right back on the football team both at the same time. I don’t believe either one of those…

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [81]

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But that’s [a great idea]. We’re right here in Atlanta, and we should be able to do that with Atlanta Public Schools, Clayton County…

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Michael Ross Pope, Boxlight Corporation – President & Director [82]

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That was my (inaudible). I think we’re selling to school districts, right? And we’re trying to get the attention of superintendents and their offices. And so I think for us, the high-profile school districts, those are the ones that really allow us to be able to branch out. And so — and I think our celebrities really are the Clayton and Beaufort Counties and San Diego, Atlanta Public Schools. These are large school districts, some of the largest ones in the country. And those allow us to branch out and attract other large school districts.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [83]

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Well, we’ve also added Jim Clark to our Board. He was — he is the CEO and President of the Boys & Girls Clubs of America. And they’ve got a who’s who of people that have been tied into the boys and girls clubs that I think would [love] to be tied in as sponsors because we have a similar message. Our approach is, “change the classroom, change the world,” and we do it through education. And so they’re reaching the boys and girls clubs, which we think will probably end up doing some potential business in that — there with their pre-school and post-school programs that they have but — and STEM and a lot of other things. So I think we can certainly tap into Jim Clark and then all of the incredible celebrities and ties that they have that have been part of the alumni out of the boys and girls clubs, which is just an incredible institute for America. That’s a great idea and something we will certainly look at.

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [84]

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Yes. No, I just think it’s free advertising. And you just have a business that’s so aligned with sort of the country, and so it’s a positive service. It’s not like jewel or something where it’s making billions but has very negative health implications and mental health stuff. So you might as well use sort of the momentum that companies like Chegg and these other ones are doing. I think it’s gone — yes, it’s gone very well. The other thing: I was just thinking the other day and just going back to Chegg. Their strategy, they’re like a — I don’t know how familiar you are with them. I just bring them up because their strategy was basically they were shipping textbooks. And then they’ve acquired maybe 15, 20 companies, right? And they’re not even that integrated, but for some reason, the — they bought — one is an internship company. One is a tutoring company, but for some reason, the market value is something like 12x revenue, right, 12x trailing revenue. And their growth is only — is 25% of your top line. So I’m just trying to figure out. Maybe — I don’t know if you, Mike or — you’ve talked to investors. Is that something you think, as you guys just acquire other businesses, if you have this just a bigger base, that they sort of reset this valuation? Because it just seems such a disconnect from your fractional trailing revenue multiple.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [85]

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[Yes].

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Michael Ross Pope, Boxlight Corporation – President & Director [86]

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Yes. So we follow Chegg and some of the others in the industry in this ed tech category. And their model, of course, is very different than ours, as well as some of the others that have those high valuations. I think a couple things. One, I think it’s scale, right, will be valued differently, or at least we hope it will. So we think, given kind of our size currently — also, I know there have been some concerns about our cash flow situation, which we feel like we have a handle on it, but I can see, outside of — looking in, maybe I think a little concern about that. So I think, as we start to turn our profit as we scale and become a larger business, we hope to be trading something more like a Chegg or some of the others in the industry. I guess that’s a potential for us, but yes, good…

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [87]

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Yes, it makes sense. No, I was just thinking about it the other day just in terms…

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Michael Ross Pope, Boxlight Corporation – President & Director [88]

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Yes. And I’ll (inaudible) just one comment real quick because you mentioned Chegg made some new acquisitions. We’re looking at acquisitions but not just for the sake of acquisitions, right? We really are big on making sure that, the acquisitions that we bring in, that those integrate well with our management team and with our product suite and we’re really delivering the best integrated solution for the market, all right? So we’re not looking for [fluff] acquisitions or acquisitions [that pattern numbers]. We’re — really we’re planning on being a much bigger company. And we believe our building base of a real integrated solution suite is the best option for the market, and we think we’ll be rewarded later on. So that’s where we are.

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [89]

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No, that’s definitely completely agree. And I think, going back to Chegg, a lot of their acquisitions, from my understanding because I spoke to their CFO recently, they haven’t been integrated at all. They just have like an internship site. Then they have a tutor site. And they’re charging kids who don’t have money, anyway, but they just have like a [market site side]. And they say, “Oh, we’re entering this market that’s 50 billion and this one that’s 100 billion,” and for some reason, the [market has valued]. So I was just wondering. Again, the markets can correct rapidly, right? And maybe they’ll look for more of these real acquisitions like you guys are pursuing, so…

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Michael Ross Pope, Boxlight Corporation – President & Director [90]

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Yes. [Today], another differentiator between Chegg and some of the others, we’re classroom focused, right, not — today, we’re not beyond the classroom, but that’s something we may look at in the future but, yes, with a little bit of a revenue modeling [that as they would have]. But I think, as we become more software focused, which I think we will over time, and we have more of these differentiated products which we’ve been coming out with that are higher margins, I think that’s another thing that will have a large impact on our valuation as we see gross profit margins increase and we’re less dependent on things like interactive flat panels. I think I would hope that the investor base would see that, and that would correct our valuation as well.

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Hunter Louis Diamond, Diamond Equity Research LLC – CEO & Founder [91]

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Exactly, exactly, yes. Flat panels, you can get the hardware valuation which is very low. So yes, no, I completely agree.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [92]

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Great questions and great ideas for us.

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Operator [93]

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Okay. I would like to turn the call back over to Mark Elliott for closing remarks.

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James Mark Elliott, Boxlight Corporation – Chairman & CEO [94]

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Well, thanks for everybody for joining. We look forward to speaking to you again in March when we report on our full year 2019. And thanks for all your support and being part of our family here.

Thanks a lot. Bye-bye.

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Operator [95]

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Thank you. This concludes today’s conference call. We thank you for your participation. You may disconnect your lines at this time, and have a great day.



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