Thank you, and welcome to the Boxlight Full-Year 2019 and First Quarter 2020 Earnings Conference Call. By now, everyone should have access to the full-year 2019 earnings press release, issued on May 12, and the first quarter 2020 press release, issued on May 15. The call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meaning of securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends, and potential growth opportunity. 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. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-Q, Form 10-K, and in other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results provide additional analytical tools to understand the company's operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company's Web site, at investors.boxlight.com. And with that, I'll hand the call over to Boxlight's Chief Executive Officer, Michael Pope.

Good morning, everyone. Thank you for joining the call. I'd like to especially thank our shareholders, partners, and customers for their confidence and support during this critical time as a company. We've gone through significant transitions since our 2016 merger of Mimio and the Boxlight Group, and our subsequent IPO in 2017. Since that time, we have attracted a tremendous management team, assembled a global channel partner network, closed the acquisitions of Cohuba, Qwizdom, EOS Education, Modern Robotics, Robo3d and MyStemKits, continued to innovate with award-winning products and services, consolidated our operations and supply chain, and organized our systems and accounting under one ERP system. We are proud of our progress, and I believe we are well positioned as a company for future growth. We had a slower than expected fourth quarter, but we are pleased with our progress during the first quarter. For Q1 2020, we reported that revenues increased by 15%, to $5.7 million, and orders increased by 85%, to $7.6 million over the same period in 2019. Additionally, our adjusted EBITDA loss improved by 41%, to $1 million, and our adjusted EPS improved by 51%, to a loss a $0.08. Our CFO, Takesha Brown, will provide more financial details shortly. During the quarter, we delivered on several key contracts, including San Diego Unified in California, Montgomery County in Maryland, Jefferson County in Colorado, Frederick County in Maryland, and Penn Manor in Pennsylvania. We were also selected by Shelby County Schools in Tennessee, and Netherland Independent School District in Texas for our interactive displays, and by Union County Public Schools in North Carolina for our Mimio MyBot robotics and coding system. During the first quarter, we introduced new channel partners, including JB&A as a national partner, [AI Assist] [ph] in Texas, and [CT Internacional] [ph] in Mexico. We…

Thanks, Michael. I'll now review our fourth quarter 2019 results. Revenue for the three months ended December 31, 2019, was $5.3 million; a decrease of $6.7 million or 56% compared to $12 million for the three months ended December 31, 2018. The decrease is primarily attributable to fourth quarter of 2018 revenue including $4.6 million of previously deferred revenue related to a large Clayton County contract. In addition, the company adopted the new revenue recognition guidance, ASC Topic 606 which resulted in a year-to-date adjustment of $0.6 million that was recorded in the fourth quarter of 2019. Gross profit for the three months ended December 31, 2019 was $0.7 million; a decrease of $2.3 million compared to $3 million for the three months ended December 31, 2018. Resulting gross margin was 12.6% for the three months ended December 31, 2019 compared to 25.2% for the three months ended December 31, 2018. The decline in gross profit was primarily related to the year-to-date revenue adjustment of $0.6 million related to ASC Topic 606 adoption and an increase in customs expense of $0.2 million. General and administrative expenses for the three months ended December 31, 2019, was $3.9 million, relatively flat compared to $3.8 million for the three months ended December 31, 2018. Research and development expenses for the three months ended December 31, 2019, was $0.3 million, flat compared to three months ended December 31, 2018. Operating loss for the three months ended December 31, 2019 was $3.5 million; an increase of $2.4 million or 224% compared to $1.1 million for the three months ended December 31, 2018. Net loss for the three months ended December 31, 2019 was $3.3 million; an increase of $2.7 million or 448% compared to $0.6 million for the three months ended December 31, 2018. The…

Thank you. The floor is now open for questions. [Operator Instructions] And our first question we take from Brian Kinstlinger with Alliance Global Partners. Please go ahead.

Hey. I got a bunch. I'll ask a few and then I'll get back in the queue. Historically your tech has been for the classroom, like you said. In your portfolio of technology where are you seeing the most demand, given the move to iLearning?

That's a good question, Brian. I think initially my response would be that we think there's still going to be a large demand for in-classroom technology. We don't think that that demand is going to slow much. We're expecting when schools go back, in the fall, which we think the majority will, although we're watching the data like everybody, that there's going to be a place for the classroom. However there will be added distance and digital learning, and so there's an added opportunity there to provide additional tools, and we're absolutely looking at that, and there's really two areas. Number one is software. Schools need software that's going to work for both in classroom and at home, and so we have software that works in that manner, but we're actually developing additional software that we hope to launch in the near future that will be -- will provide additional tools. And then secondly, there needs to be a tremendous amount of training and professional development. Educators are not -- they're not currently trained on how to work in this environment, and they need education themselves on how to be successful in this new environment, and we have a lot of tools around that that we can help educators, starting at the school district level, put a plan in place for distance or hybrid learning in class and out of class, as well as training individual teachers on how to be effective in their classrooms.

Great, and then you really didn't say how COVID-19 is impacting revenue. You said that your goals are still the same, but have you seen pressure on orders or even shipments and past orders from late March to May, what have the trends been like, and should we expect that 2020, like many other companies, are going to be a challenge to grow revenue year-over-year?

Yes, so we're still figuring out ourselves, Brian, right. We're seeing what's happening, and we're monitoring on a daily basis what's happening in the education community. We do think there's going to be some slowdown. We haven't quantified it at this point, but we think that there will be some slowdown in the industry, and then I think also for us as a company, but I don't think it'll be dramatic. I think we're looking at probably flat line versus last year is our preliminary assessment. But we hope to put out some more guidance as time goes on. I would add there's still a lot of money out there for ed tech, right. Budgets generally haven't shrunk. And there's actually been new funding too that's come from the federal government and other sources to help provide additional assistance with the current environment. There has been a shifting in what solutions schools are buying. And that to some extent does affect us, right. Our largest piece of sales come from interactive flat panels, and if schools are looking at more distance learning tools then funds may be diverted from classroom-specific technologies to technologies that work over distance environment. So we're monitoring that, but I would say for the year, probably some slow, but we don't believe it'll be dramatic.

Can you just still comment on what order and/or revenue has looked like from late March to May, I mean most companies have commented on the pressure they've seen. Maybe you can talk about those trends that you've seen in the short-term?

Yes, so I would say for our business it's a little bit different than if we were, say, a consumer products company or something, right, where the order comes in immediately. Our sales cycle is a long sales cycle. And so as result of having a longer sales cycle we actually didn't see a dramatic slowdown when COVID-19 first hit because we had a lot of orders in the works, and we've still been shipping orders. And so I would say we haven't seen a dramatic slowdown yet, but we think that that could kick in over the next few months. So I would say we're still on pace as of now. I would say flat with last year as of now, but the future is going to be more telling to us over the next several weeks and couple of months.

Great. And then I get your mix can change the gross profit percentage in dollars dramatically, but can you talk about with your cuts what overhead looks like so we can see what kind of gross profit gets you to profitability?

Yes, so what we mentioned on the commentary was that our operating budget over 2019, which you can pull OpEx expenses from '19, we reduced our OpEx expenses by about $5 million in our budget. So if you take that, reduce it by $5 million. That gives you a baseline there. And then that includes payroll. We reduced payroll by about $2,000 in annual expense, and then as far as gross profit we expect to be 30%-plus for the year. That's our figure. We mentioned that last year, and we hope that we could start to grow that, but the expectation -- even though Q1 came in below that, the expectation for the year that we would be a minimum 30% gross profit margin.

Great. Last question I have for now. Although it's a long time ago it seems, you mentioned the year-over-year numbers for revenue in the December quarter were down because of a strong 2018, but if I recall, you were expecting significant growth, and growth to accelerate over the course of 2019, that didn't materialize. And some of that may have been New York City that you thought would be a big driver. So without commenting year-over-year what happened, what happened in the fourth quarter the numbers were so much lower than I think you guys were voicing a long time ago?

Yes, so I would say Q4 was definitely slower than expected. We had a large pipeline that we thought that we would close a much bigger sales figure, and it didn't happen the way we thought. I would say we were probably a little overaggressive too on our forecast for Q4. And some of that was related to us having such a strong Q4 in 2018, but when you look at it with hindsight, I think it's maybe not as bad as at first glance, and I would point to a couple things. Number one, our orders, if you look at orders for Q4 '19 versus Q4 '18 they were flat. So of course the orders come in prior to delivery, but that's an indicator, and I think the other thing that's interesting to note is that we began Q4 of '18, you'll remember, Brian, back then that we had a large deferred revenue number. It was actually $5.7 million that we began Q4 of '18 with, and then we also began Q4 of '18 with $4 million of backorders. We had about $10 million in the hopper going into Q4, versus going into Q4 '19 we had about $2 million. So we had a kind of a slower start. So I think some of which is over-optimism by management, and that's not something we plan to repeat. And them some of it was the fact that we thought that we were going to close some larger opportunities that did not close in the timeframe we expected.

Great, thanks so much.

Yes, great questions. Thank you, Brian.

Next, we go to John Nobile with Taglich Brothers. Please go ahead.

Hi, good morning, Mike and Takesha. And thanks for taking my questions on this call. I just wondered, I know you were speaking about, in light of all the school closures going to online learning, you're looking to really boost your software in this area and in-class training, but you have a Boxlight Together program, so I just wanted to get some clarification on that. I think it's offered for free, but my question really is, is it possible to monetize that program, your Boxlight Together program?

The answer is yes. So we offer free resources, absolutely, to get school districts and principals and educators in the door and give them some initial training, right, and some initial content, but the goal would be to then convert those two longer-term and high-value high-margin professional development customers. So that's the plan with that, and I should say twofold, it wasn't the only plan, right. So one plan was, hey, we really wanted to give back to the education community so we provided that campaign for that, but secondarily, yes, we want to convert those into revenue-paying school districts.

Okay, and I don't know if I need to bring this up or not, I think it was the assumption that the Clarity startup issues were going to be not really an issue, but I just wanted to make sure those that -- it adversely impacted your 2019 results, I remember in the last conference call that was brought up as far as those startup issues, but are those Clarity issues behind you now, or are there anything else that might be lingering in regard to that?

Yes, it's a good question, John. So, we still had some additional issues with getting Clarity fully launched. We are delivering Clarity now, but we have had some slowdowns in the manufacturing process, which are result of COVID-19. Those are getting finalized as we speak, and we think we'll be at a point where we can fully go out and market and sell that solution next quarter. So, it's been a little disappointing. It's a great solution. In fact, we think it competes with any other solution in the marketplace and it fulfills a real need, but it's been a little bit frustrating the fact that it's taken us longer than expected to get that launched and fully operational.

Okay. Well, thanks for that information, and I know at least last I checked there were robust growth projections for the educational robot market, I was hoping that you could talk a little about your business in that market since your acquisition of Modern Robotics in 2019, and your outlook for 2020, I preface that by saying not just 2020, but beyond assuming that school systems return to normalcy in the near-term by the fall things are back like you had mentioned earlier, a lot of kids are going back to the actual schools themselves and not learning from home. So, I was hoping just to get your take on that how the Modern Robotics acquisition might play into your 2019 and -- I mean, excuse me, 2020 and beyond numbers?

Yes. So, the answer is it absolutely plan to. We've talked a lot about STEM education and there needing to be a provider of a comprehensive STEM solution, and we aim to be that provider, and you'll see that we've continued to invest in STEM, right. Robotics and programming is one of those areas within STEM, but you also saw that we recently bought the Robo3d and MyStemKits company, which comes with a 3D printing solution, which is another foundational technology for STEM education, and then also we appointed Ryan Legudi as the Head of our STEM solution, and so Ryan, he's been on the job for about a month, so he hasn't been there very long, but he's working on a more comprehensive solution offering for STEM education, he's going to lead us over the next several months to make sure that we can see some tremendous growth with STEM solutions, but back on robots -- on the MyBot, absolutely our MyBot solution is part of that, and we think that there can be tremendous adoption. I would say for last year, it was a little slower than expected, ramping up. Some of that was making sure that we had the marketing right. Some of that was making sure we had content and lesson plans that were tied to standards, that kind of thing, but we've made a lot of improvement there to where we have a solution that's more fully baked now, and we have a great team and some added salespeople that are STEM-specific out there selling, and so I think that in the next couple quarters you're going to see growth, and we'll start to eat into that large market for robotics and programming.

Okay, and in regard to the Robo3d and MyStemKits acquisition, I was just curious because I know in the press release it wasn't mentioned as far as type of revenue that might have been generated, so I don't know if I should be of the assumption that it wasn't really that significant in 2019, or do you have those actual numbers for 2019 from these two companies?

So we didn't report that, but I'll tell you, trailing 12-months for the two companies was about a $1.5 million in revenue. So it wasn't substantial, but it was significant, right, a $1.5 million in 3D printing solution to education is significant, and they were selling through a lot of our same channel partners that we sell through, like Trox and Howard, and some of these names that we've mentioned before, and so, there was an easy tie in there, and then also the idea that that team that was selling successfully 3D printing solutions could also sell our broader STEM suite, which of course includes like I said, the robotic solution, but also our lab desk and our Mimio View and some other items. I think that's an easy progression to have them sell a broader STEM solution suite. So, I would think that added solution suite with additional resources from our company would show that over the next 12 months, hopefully we're significantly higher than that $1.5 million that team was generating.

Okay. Well, that's good to hear. Thanks for that input. Just one final question, I'll open up for others. One of the press releases, you said that you would be supplying an additional 150 panels to the Netherland Texas School System by 2023. I was hoping you could comment on how much revenue you expect that to generate, and if you believe that could lead to more Boxlight technology being used in that district, given, I think it was mentioned $151 million bond passed to further the use of new technology. So I'm just curious what you're seeing from that school district in regard to this?

Yes. So, I think the important question there is what additional opportunities we could see of course in that school district, but all of the school districts that we step into, right. We're not always going in with a fully comprehensive solution for every single classroom in the district. Sometimes it's a slower rollout, or it may be pilot, or it may be a smaller subset, and I would say the answer is in every case, if we start with just a handful of panels, our goal is to go in and try to put panels in every classroom, but also absolutely, we're talking about professional development and we're talking about STEM solutions, and we're talking about other accessories like our audio distribution system and others, and so, the answer is, I believe there's opportunity there. I don't have an exact revenue figure for that. I don't think Takesha would either. We'd have to pull that for you, but I would say that there is absolutely an opportunity to grow that, and if you wanted to do some rough math, revenue per panel is going to be a couple thousand dollars per panel. So, you can multiply that times the number of panels we mentioned in the press release.

Okay, I appreciate that input. I'll open it up for others in the queue.

Next we go to Allen Klee with National Securities. Please go ahead.

Yes, hello. You mentioned that you have back orders of $7.6 million. Can you remind us of when you have back orders is there a rule of thumb for how long it takes for that to get recognized as revenue?

This is Takesha. Typically, with our back orders, they usually turn pretty quickly in the quarter, depending on the availability of inventory, and one of the things that Mike mentioned is that we're in a pretty good place now we haven't had any issues with getting our inventory from China due to the COVID. So, that's working on our behalf. So pretty much the majority of what's in our backlog should turn within the quarter.

Thank you, and then the only other question I have is, can you -- would we expect seasonality upon among quarters to be what it's been historically, or because of what we're going through to think of it maybe a little differently this year?

I think the base of it, I'm sorry --

You go ahead, Takesha.

I think the base of it will pretty much be the same. However, as Michael mentioned earlier, we may see some slowing in Q2, because of the change and the schools trying to figure out what they're going to do and how they're going to prepare for the fall. So, you may see a slight decline in the second quarter, but then hopefully, ramping back up in third and fourth, so maybe fourth is a little higher than anticipated and the Q2 is a little bit lower, Q3 and Q4 maybe a little bit higher, and Q2 a little lower for this year. I don't know Mike [indiscernible]…

Yes, I think that's a good way to think about it, and it makes sense of course, Allen, right, because with schools shutting down, still working, but working from home and not being in office or in a school, that caused some delays, and then also schools tried to identify how they're going to tackle the current strategy with distance learning. That slowed some of the buying, but we think that schools by now are having solutions in place and are planning for the next school year, and so, we think that buying will start to ramp up again, and I think it's important to note that budgets are still strong as of now. There's been some constriction on certain budgets with reallocations, but generally from what we're hearing the school districts we're working with and the partners we sell through, the budgets are still strong, and we're expecting, yes, Q3 and Q4 to be on par or higher as what Takesha mentioned.

Thank you very much.

And we have an additional question from Brian Kinstlinger with Alliance Global. Please go ahead.

Yes, great, thanks. To Allen's question on the $7.6 million of back order, can you speak to what the product mix looks like, maybe what the driver of some of that revenue is, and is that also mixed with your 30% gross margin kind of commentary for 2Q?

So, the majority of that backlog is currently related to our hardware business, which -- that would align with what we are saying from a margin perspective.

I thought the hardware was little bit lower than the 30%, so will be not little bit lower in the 2Q expense?

So, actually hardware if you look it, after we kind of take out a whole bunch of other items that we wanted to be shipping, that is a little bit higher what we are seeing right now, right, at about the 30%, but we also are anticipating some additional items from our professional development perspective that will offset this. So, at this point, we are anticipating that our margins will around 30%. Now, it was a little bit lower in the first quarter, because we -- San Diego was one of our really big projects that came through in first quarter, and so, we had some specialty customer pricing related to that, which resulted in a little bit lower margin that we anticipated, but we do foresee that for the year it will be the 30% or a little bit higher than that.

Thank you.

And just to clarify that this $0.6 million, that was customer orders, right, during Q1, and then we ended the quarter with backorders of $4.5 million.

Got it. So, the $4.5 million is the yet to be recognized revenue for 2Q?

That's correct.

Correct.

Can you speak to the order trends more recently in April and May?

And so, Brian, our orders are still being strong, but that -- based on where we have been in similar times past and then also based the expectations, but that's because we had a lot in the [half] [Ph], like we said, a lot that was in the works that are still being shipped and fulfilled. I think the real test will be over the next few weeks in the next month or so as we are going to start to see our orders still coming in, and can we still maintain strong business. So, as of now, yes, we have been strong at this point of time.

Right, thanks so much.

And that was our final question before return to Michael Pope for closing remarks.

Great. Well, thank you everyone for your support and for joining us today on our first quarter conference all. We look forward to speaking with you again in August when we report our second quarter results and that is the end of the call. Thank you again.

This does conclude today's conference call. You may now disconnect your lines at this time. We thank you for your participation. Have a great day.