Boxlight Corporation (Nasdaq: BOXL) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited. Boxlight designs and sells interactive technology, software, accessories, and services, primarily to education markets under its Clevertouch and Mimio brands.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $37.1 million | $41.2 million |
| Gross profit / margin | $12.8 million / 34.5% | $15.1 million / 36.8% |
| Operating loss | $3.6 million | $0.2 million |
| Net loss | $7.1 million | $2.9 million |
| Net loss attributable to common stockholders | $7.4 million | $3.2 million |
| Loss per common share, basic and diluted | $0.76 | $0.35 |
| Operating cash flow | $(1.9) million | $(1.9) million |
| Adjusted EBITDA (non-GAAP) | $0.2 million | $3.3 million |
Revenue fell 9.9%, primarily on lower sales volume in the U.S. Cost of revenue declined 6.8%, less than the revenue decline, and gross margin contracted 2.3 percentage points, which management attributed mainly to product mix. Product revenue was $34.4 million versus $38.7 million; service revenue was $2.7 million versus $2.5 million. General and administrative expense rose to $15.2 million, including approximately $0.9 million in severance charges. Research and development expense increased to $1.2 million from $0.6 million.
Cash and cash equivalents were $11.8 million at quarter-end, down from $17.3 million at December 31, 2023. Management reported working capital of $46.6 million and a current ratio of 2.17. Investing cash outflow was $0.4 million; financing cash outflow was $2.6 million, including $2.3 million of debt principal payments and $0.3 million of Series B preferred dividends. Cash interest paid was $1.8 million.
Debt at March 31 was $41.0 million gross, or $38.5 million net of discounts and issuance costs; the net balance included $1.1 million current and $37.4 million long-term debt. The Whitehawk facility is secured by substantially all company assets. Total liabilities were $104.8 million. Series B and C preferred shares, classified as mezzanine equity, totaled $28.5 million.
Changes, segments, and other notable items
- Americas revenue was $17.5 million versus $21.1 million; EMEA revenue was $21.0 million versus $24.0 million; Rest of World revenue was $0.3 million versus $1.3 million. The Americas segment recorded a $3.8 million operating loss; EMEA had $0.1 million operating income.
- On March 14, 2024, the lender waived the prior covenant default and amended financial covenants. Boxlight reported compliance at March 31, when the senior leverage ratio threshold was amended to 6.00. The threshold is scheduled to return to 2.00 at June 30, 2024 and 1.75 thereafter.
- On April 19, 2024, Boxlight obtained a $2.0 million working-capital bridge loan and an additional $3.0 million was made available for June, subject to covenant compliance. Both loans are due November 29, 2024 and carry a fee equal to 6% of aggregate borrowings.
- Open inventory purchase orders totaled $25.8 million. One vendor accounted for 47.6% of Q1 cost of revenues, with $12.2 million payable to that vendor at quarter-end.
- Series B holders may require cash redemption beginning January 1, 2024, at $10 per share plus accrued unpaid dividends. The 1,586,620 outstanding shares have an aggregate stated value of approximately $15.9 million. Boxlight is evaluating refinancing or restructuring alternatives.
Outlook, risks, and controls
The filing provides no quantified revenue or earnings guidance. Management cites seasonality, with education sales typically concentrated in the second and third quarters, and says liquidity depends on operating cash flow, financing, and managing customer and vendor payment terms. Management is pursuing refinancing but had no written or executed refinancing agreement as of the filing date.
The company states that forecast covenant compliance may not be maintained as leverage thresholds tighten, raising substantial doubt about its ability to continue as a going concern within one year after issuance of the financial statements. Continuation depends on generating positive operating cash flow, obtaining covenant relief, or refinancing on acceptable terms. The filing also reports that disclosure controls and procedures were not effective due to material weaknesses previously described in the 2023 Form 10-K; no material changes to internal control over financial reporting were reported for the quarter.
Investor verification priorities
- Progress and terms of refinancing the Whitehawk debt, and compliance with the June 2024 and later leverage covenants.
- Availability and conditions for the additional $3.0 million bridge loan, and repayment of bridge borrowings due in November 2024.
- Whether Series B holders demand redemption and how the company would fund or restructure that obligation.
- Quarterly cash burn, seasonal sales recovery, gross-margin trends, and the concentration of purchasing with the principal vendor.
- Remediation of the disclosed material weaknesses in disclosure controls and procedures.