What changed in this filing

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Item 1. Financial Statements

2020-11-16 compared with 2020-08-14 · 1369 added, 1100 removed, 431 unchanged (85% of the section changed)

Financial Statements

Boxlight Corporation

Consolidated Condensed Balance Sheets

As of June 30, 2020 and December 31, 2019

June 30, 2020

December 31, 2019

Condensed Balance Sheets

of September 30, 2020 and December 31, 2019

Current asset:

Cash and cash equivalents

Accounts receivable –

and cash equivalents

receivable –

trade, net of allowances

Inventories, net of reserves

Prepaid expenses and other current assets

Total current assets

Property and equipment, net of accumulated depreciation

Intangible assets, net of accumulated amortization

LIABILITIES AND STOCKHOLDERS’

net of reserves

expenses and other current assets

current assets

and equipment, net of accumulated depreciation

assets, net of accumulated amortization

$ 124,224,955

LIABILITIES, MEZZANINE

EQUITY AND STOCKHOLDERS’

EQUITY (DEFICIT)

Current liabilities:

Accounts payable and accrued expenses

Accounts payable and accrued expenses –

payable and accrued expenses

payable and accrued expenses –

related parties

Warranty reserve

Current portion of debt –

portion of debt –

third parties

Current portions of debt –

portions of debt –

related parties

Earn-out payable –

payable –

related party

Deferred revenues –

Derivative liabilities

Other short-term liabilities

Total current liabilities

Deferred revenues –

Long-term debt –

revenues –

short-term liabilities

current liabilities

revenues –

third parties

Long-term debt –

related parties

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 14)

long-term liabilities

Commitments and

contingencies (Note 14)

Mezzanine equity:

B preferred stock, $0.0001 par value, 1,586,620 shares designated, 1,586,620 and -0- shares issued and outstanding, respectively

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

mezzanine equity

Stockholders’

Preferred stock, $0.0001 par value, 50,000,000 shares authorized;

167,972 shares issued and outstanding

Common stock, $0.0001 par value, 200,000,000 shares authorized;

31,857,327 and 11,698,697 Class A shares issued and outstanding, respectively

Additional paid-in capital

Subscriptions receivable

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’

equity (deficit):

Total liabilities and stockholders’

stock, $0.0001 par value, 50,000,000 shares authorized:

A preferred stock, $0.0001 par value, 250,000 shares designated, 167,972 and 167,972 shares issued and outstanding, respectively

stock, $0.0001 par value, 200,000,000 shares authorized;

50,871,711 and 11,698,697 Class A shares issued and outstanding,

paid-in capital

Subscriptions

(38,932,954 )

(31,346,431 )

other comprehensive income (loss)

stockholders’

equity (deficit)

See accompanying notes to unaudited consolidated

condensed financial statements.

Boxlight Corporation

Consolidated Condensed Statements of Operations

and Comprehensive Loss

For the six months ended June 30, 2020 and

liabilities, mezzanine and stockholders’

equity (deficit)

$ 124,224,955

accompanying notes to unaudited consolidated condensed financial statements.

Condensed Statements of Operations and Comprehensive Loss

the three and nine months ended September 30, 2020 and 2019

Revenues, net

Cost of revenues

Operating expense:

and administrative expenses

General and administrative

and development

2 unchanged sentences

Other income (expense):

in fair value of derivative liabilities

from settlements of liabilities

Interest expense,

Other (expense)

Changes in fair

value of derivative liabilities

(loss) from settlements of liabilities

other income (expense)

Comprehensive loss:

$ (4,210,904 )

$ (7,586,523 )

$ (6,500,868 )

Comprehensive loss:

$ (4,210,904 )

$ (7,586,523 )

$ (6,500,868 )

Other comprehensive

currency translation gain (loss)

comprehensive loss

Net loss per common

share –

basic and diluted

Weighted average number of common shares outstanding

$ (6,527,617 )

Net loss per common share –

Weighted average number of common shares

outstanding –

basic and diluted

accompanying notes to unaudited con solidated condensed financial statements.

Boxlight Corporation

Consolidated Condensed Statements of Changes

in Stockholders’

For the three and six Months Ended June 30,

2020 and 2019

Three Months Ended

Six Months Ended

accompanying notes to unaudited consolidated condensed financial statements.

Condensed Statements of Changes in Stockholders’

Equity (Deficit)

the three and nine months ended September 30, 2020 and 2019

Total stockholders’

(deficit) equity, beginning balances

Series A preferred stock

Class A common stock and additional paid-in capital:

Beginning balances

equity (deficit), beginning balances

Series A preferred

Shares issued for:

Conversion of accounts payable

Conversion of notes payable

Other share-based payments

Closing fees for issuance of notes payable

Stock compensation expense

Ending balances

Class A common stock

and additional paid-in capital:

Shares issued for:

of accounts payable

of notes payable

share-based payments

fees for issuance of notes payable

stock conversion

C preferred stock –

beneficial conversion feature

compensation expense

Ending balances

Subscription receivable

Beginning balances

Payment received from stockholder

received from stockholder

Ending balances

Other comprehensive loss

Beginning balances

Foreign currency translation loss

Other comprehensive

currency translation loss

Ending balances

Accumulated deficit

Beginning balances

(34,722,050 )

2 unchanged sentences

(19,206,271 )

Cumulative effects of adoption of new accounting standards in prior period

effects of adoption of new accounting standards in prior period

Ending balances

3 unchanged sentences

(28,445,221 )

Total stockholders’

stockholders’

equity, ending balances

See accompanying notes to unaudited consolidated

condensed financial statements.

Boxlight Corporation

Consolidated Condensed Statements of Cash

For the six Months Ended June 30, 2020 and

Six Months Ended

June 30, 2020

June 30, 2019

Cash flows from operating activities:

accompanying notes to unaudited consolidated condensed financial statements.

Condensed Statements of Cash Flows

the nine months ended September 30, 2020 and 2019

Cash flows from operating

$ (7,586,523 )

$ (6,500,868 )

Adjustments to reconcile net loss to net cash (used) in operating

Amortization of debt discount

Bad debt expense

to reconcile net loss to net cash used in operating activities:

of debt discount

(gain) on settlement of liabilities

Change in allowance for sales returns and volume rebate

Change in inventory reserve

Change in fair value of derivative liability

Change in fair value of earn-out payable

Shares issued for interest payment on notes payable

Stock compensation expense

Other share-based payments

Depreciation and amortization

Changes in operating assets and liabilities:

Accounts receivable –

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Warranty reserve

Accounts payable and accrued expenses - related parties

Other short-term liabilities

Deferred revenues

Net cash (used) in operating activities

in allowance for sales returns and volume rebate

in inventory reserve

in fair value of derivative liability

in fair value of earn-out payable

issued for interest payment on notes payable

compensation expense

share-based payments

and amortization

in operating assets and liabilities:

receivable –

expenses and other current assets

payable and accrued expenses

payable and accrued expenses - related parties

short-term liabilities

cash used in operating activities

$ (7,017,682 )

$ (6,280,556 )

Cash flows from investing activities:

Cash paid related to acquisition

Cash receipts from acquisitions

Net cash (used) provided by investing activities

Cash flows from financing activities:

Proceeds from subscription receivable

Net Proceeds from issuance of common stock

Proceeds from payment protection plan loan

Proceeds from short-term debt

Principal payments on short-term debt

Proceeds from convertible notes payable

Debt issuance costs

Net cash provided by financing activities

Effect of foreign currency exchange rates

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Supplemental cash flow disclosures:

Cash paid for interest

Non-cash investment and financing transactions:

Shares issued to convert accounts payable

Shares issued to convert notes payable –

Shares issued for closing fees related to outstanding notes payable

Notes payable issued as consideration for acquisition of MyStemKit

Shares and notes payable issued as consideration for acquisition of Modern Robotics, Inc.

Cash flows from investing

paid related to acquisitions

(51,003,200 )

receipts from acquisitions

paid for patents

paid for furniture and fixtures

cash (used) provided by investing activities

(45,052,970 )

Cash flows from financing

from subscription receivable

proceeds from issuance of common stock

from Payment Protection Plan loan

from short-term debt

payments on short-term debt

(19,626,724 )

from convertible notes payable

issuance costs

cash provided by financing activities

of foreign currency exchange rates

Net increase in cash

and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

Supplemental cash flow

paid for interest

Non-cash investing

and financing transactions:

Shares issued to convert

accounts payable

Shares issued to convert

notes payable –

Shares issued for closing

fees related to outstanding notes payable

Shares issued to convert

preferred stock

Notes payable issued

as consideration for acquisition of MyStemKit

Preferred shares issued

as consideration for acquisition of Sahara

Shares and notes payable

issued as consideration for acquisition of Modern Robotics, Inc.

net of cash received

See accompanying notes to unaudited consolidated

condensed financial statements.

Boxlight Corporation

Notes to the Unaudited Consolidated Condensed

Financial Statements

NOTE 1 –

ORGANIZATION AND SIGNIFICANT

ACCOUNTING POLICIES

Boxlight Corporation (the

“Company”

or “Boxlight Parent”) was incorporated in the State of Nevada on September 18, 2014 with

its headquarters in Atlanta, Georgia for the purpose of becoming a technology company that sells interactive educational

In 2016, the Company acquired Boxlight, Inc., Boxlight Latinoamerica, S.A.

(“BLA”) and Boxlight

Latinoamerica Servicios, S.A.

(“BLS”) (together, “Boxlight Group”), Mimio LLC

(“Mimio”) and Genesis Collaboration, LLC (“Genesis”).

In 2018, the Company acquired Cohuborate Ltd.

accompanying notes to unaudited consolidated condensed financial statements.

to the Unaudited Consolidated Condensed Financial Statements

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Corporation (the “Company”

or “Boxlight Parent”) is a leading provider of interactive technology solutions

under its award-winning brands Clevertouch ®

, and Mimio ®

The Company aims to improve

engagement and communication products and solution for use in diverse business and education environments.

Boxlight develops,

sells, and services its integrated solution suite including interactive displays, collaboration software, supporting accessories

and professional services.

Company is headquartered in Atlanta, Georgia and was incorporated in the State of Nevada on September 18, 2014.

In 2016, the Company

acquired Boxlight, Inc., Boxlight Latinoamerica, S.A.

and Boxlight Latinoamerica Servicios, S.A.

(together, “Boxlight

Group”), Mimio LLC (“Mimio”) and Genesis Collaboration, LLC (“Genesis”).

In 2018, the Company acquired

Cohuborate Ltd.

(“Cohuba”), Qwizdom Inc.

and its subsidiary Qwizdom UK Limited (“Qwizdom Companies”) and EOSEDU, LLC

(“EOS”).

and its subsidiary Qwizdom UK Limited (the “Qwizdom Companies”),

and EOSEDU, LLC (“EOS”).

In 2019, the Company acquired Modern Robotics, Inc.

(“MRI”).

The Company currently designs,

produces and distributes interactive technology solutions to the education market.

In 2020, the Company acquired MyStemKits

Inc., (“MyStemKits”).

MyStemKits is in the business of developing, selling and distributing 3D printable

science, technology, engineering and math curriculums incorporating 3D printed project kits for education, and owns the right

to manufacture, market and distribute Robo 3Dbranded 3D printers and associated hardware for the global education

BASIS OF PRESENTATION AND PRINCIPLES OF

CONSOLIDATION

The accompanying consolidated condensed financial

statements include the accounts of Boxlight Parent, Boxlight Group, Mimio, Genesis, Cohuba, Qwizdom Companies, EOS, MRI and MyStemKits.

In 2020, the Company

acquired MyStemKits Inc.

(“MyStemKits”) and Sahara Presentation Systems PLC (“Sahara”).

is in the business of developing, selling and distributing 3D printable science, technology, engineering and math curriculums

incorporating 3D printed project kits for education, and owns the right to manufacture, market and distribute Robo 3D branded

3D printers and associated hardware for the global education market.

Sahara is a leader in distributed AV products and

a global manufacturer of multi-award winning touchscreens and digital signage products.

See Note 3 for further discussion regarding

acquisitions.

OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

accompanying consolidated condensed financial statements include the accounts of Boxlight Parent, Boxlight Group, Mimio, Genesis,

Cohuba, Qwizdom Companies, EOS, MRI, MyStemKits, and Sahara.

Transactions and balances among all of the companies have been eliminated.

The accompanying unaudited consolidated condensed

financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United

States of America (“GAAP”) for interim unaudited consolidated condensed financial information and interim financial

reporting guidelines and rules and regulations of the Securities and Exchange Commission (“SEC”).

Accordingly, they

do not include all of the information and notes required by GAAP for complete consolidated financial statements.

The unaudited

consolidated condensed financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in

the opinion of management, necessary for a fair statement of the results for the interim periods presented.

Interim results are

not necessarily indicative of the results for the full year.

These unaudited consolidated condensed financial statements should

be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2019 and

notes thereto contained in the Company’s Annual Report on Form 10-K.

Certain information and note disclosures normally included

in the consolidated financial statements have been condensed.

The December 31, 2019 balance sheet included herein was derived from

the audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete

accompanying unaudited consolidated condensed financial statements and related notes have been prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”) for interim unaudited consolidated condensed

financial information and interim financial reporting guidelines and rules and regulations of the Securities and Exchange Commission

(“SEC”).

Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated

financial statements.

ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in

conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and

liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of

revenues and expenses during the reporting period.

Actual amounts could differ from those estimates.

The coronavirus disease (“COVID-19”)

pandemic has negatively impacted, and may continue to negatively impact, the macroeconomic environment in the United States and

globally, including our business, financial condition and results of operations.

Due to the evolving and uncertain nature of COVID-19

and its effects on the U.S.

and global economy, it is reasonably possible that it could materially impact our estimates, particularly

those that require consideration of forecasted financial information, in the near to medium term.

These estimates relate to certain

accounts including, but not limited to, the valuation allowance related to deferred taxes, intangible assets, and other long-lived

The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict or

prepare for, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions

taken in response to the pandemic, changes in consumer behavior in response to the pandemic and such governmental actions, and

the economic and operating conditions that we may face in the aftermath of COVID-19.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL

Accounts receivable

are stated at contractual amounts, net of an allowance for doubtful accounts.

The allowance for doubtful accounts represents management’s

estimate of the amounts that ultimately will not be realized in cash.

The Company reviews the adequacy of the allowance for doubtful

accounts on an ongoing basis, using historical payment trends, the age of receivables and knowledge of the individual customers.

The unaudited consolidated condensed financial statements reflect all adjustments (consisting of normal

recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim

periods presented.

Interim results are not necessarily indicative of the results for the full year.

These unaudited consolidated

condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company

for the year ended December 31, 2019 and notes thereto contained in the Company’s Annual Report on Form 10-K.

Certain information

and note disclosures normally included in the consolidated financial statements have been condensed.

The December 31, 2019 balance

sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures, including

notes, required by GAAP for complete financial statements.

AND ASSUMPTIONS

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

Actual amounts could differ from those

coronavirus disease (“COVID-19”) pandemic has negatively impacted, and may continue to negatively impact, the macroeconomic

environment in the United States and globally, including our business, financial condition and results of operations.

evolving and uncertain nature of COVID-19 and its effects on the U.S.

and global economy, it is reasonably possible that it could

materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near

to medium term.

These estimates relate to certain accounts including, but not limited to, the valuation allowance related to deferred

taxes, intangible assets, and other long-lived assets.

The magnitude of the impact will depend on numerous evolving factors that

we may not be able to accurately predict or prepare for, including the duration and extent of the pandemic, the impact of federal,

state, local and foreign governmental actions taken in response to the pandemic, changes in consumer behavior in response to the

pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19.

RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

receivable are stated at contractual amounts, net of an allowance for doubtful accounts.

The allowance for doubtful accounts represents

management’s estimate of the amounts that ultimately will not be realized in cash.

The Company reviews the adequacy of the

allowance for doubtful accounts on an ongoing basis, using historical payment trends, the age of receivables and knowledge of

the individual customers.

When the analysis indicates, management increases or decreases the allowance accordingly.

However, if the financial condition of

our customers were to deteriorate, additional allowances might be required.

Inventories are stated at the lower of cost

or net realizable value and includes spare parts and finished goods.

Inventories are primarily determined using the specific identification

method and the first-in, first-out (“FIFO”) cost method.

Cost includes direct cost from the contract manufacturer (“CM”)

or original equipment received from the manufacturer (“OEM”), plus material overhead related to the purchase, inbound

freight and import duty costs.

The Company continuously

reviews its inventory levels to identify slow-moving merchandise and markdowns necessary to clear slow-moving merchandise, which

reduces the cost of inventories to its estimated net realizable value.

Consideration is given to a number of quantitative and qualitative

factors, including current pricing levels and the anticipated need for subsequent markdowns, aging of inventories, historical sales

trends, and the impact of market trends and economic conditions.

Estimates of markdown requirements may differ from actual results

due to changes in quantity, quality and the mix of products in inventory, as well as changes in consumer preferences, market and

economic conditions.

the financial condition of our customers were to deteriorate, additional allowances might be required.

are stated at the lower of cost or net realizable value and includes spare parts and finished goods.

Inventories are primarily

determined using the specific identification method and the first-in, first-out (“FIFO”) cost method.

Cost includes

direct cost from the contract manufacturer (“CM”) or original equipment received from the manufacturer (“OEM”),

plus material overhead related to the purchase, inbound freight and import duty costs.

Company continuously reviews its inventory levels to identify slow-moving merchandise and markdowns necessary to clear slow-moving

merchandise, which reduces the cost of inventories to its estimated net realizable value.

Consideration is given to a number of

quantitative and qualitative factors, including current pricing levels and the anticipated need for subsequent markdowns, aging

of inventories, historical sales trends, and the impact of market trends and economic conditions.

Estimates of markdown requirements

may differ from actual results due to changes in quantity, quality and the mix of products in inventory, as well as changes in

consumer preferences, market and economic conditions.

assets AND GOODWILL

Intangible assets, other than goodwill are

amortized using the straight-line method over their estimated period of benefit.

We periodically evaluate the recoverability of

intangible assets, other than goodwill, and take into account events or circumstances that warrant revised estimates of useful

lives or that indicate that impairment exists.

No material impairments of intangible assets have been identified during any of

the periods presented.

Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential

impairment exist, using a market approach.

Goodwill is not amortized and is not deductible for tax purposes.

The Company classifies common stock purchase

warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or

net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement

or net-share settlement).

The Company classifies any contracts that (i) require net-cash settlement (including a requirement to

net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty

a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions

as either an asset or a liability.

The Company assesses classification of its freestanding derivatives at each reporting date to

determine whether a change in classification between equity and liabilities is required.

The Company determined that certain warrants

to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net

cash and non-fixed settlement provisions that are not within the sole control of the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments primarily

include cash, accounts receivable, derivative liabilities, accounts payable and debt.

Due to the short-term nature of cash, accounts

receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value.

Debt approximates

fair value due to either the short-term nature or recent execution of the debt agreement.

The amount of consideration received

is deemed to be the fair value of long-term debt net of any debt discount and issuance cost.

Derivative liabilities and the earn–out

payable are recorded at fair value at each period end.

Fair value is defined as the price that would

be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants.

hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical

assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in

active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices

included in Level 1 that are observable for the asset or liability, either directly or indirectly.

These might include quoted prices

for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that

are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities,

prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation

or other means.

Level 3 Inputs - Prices or valuation techniques

that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market

Financial assets and liabilities are classified

based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance

of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets

and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within

the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis

as of June 30, 2020 and December 31, 2019:

Derivative liabilities - warrant instruments

assets, other than goodwill are amortized using the straight-line method over their estimated period of benefit.

We periodically

evaluate the recoverability of intangible assets, other than goodwill, and take into account events or circumstances that warrant

revised estimates of useful lives or that indicate that impairment exists.

No material impairments of intangible assets have been

identified during any of the periods presented.

Goodwill is tested for impairment on an annual basis, and between annual tests

if indicators of potential impairment exist, using a market approach.

Goodwill is not amortized and is not deductible for tax

Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts

(i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement

in its own shares (physical settlement or net-share settlement).

The Company classifies any contracts that (i) require net-cash

settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control

of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share

settlement), or (iii) contain reset provisions as either an asset or a liability.

The Company assesses classification of its freestanding

derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments

due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company.

VALUE OF FINANCIAL INSTRUMENTS

Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable, earn-out

payable, debt, and redeemable preferred stock.

Due to the short-term nature of cash, accounts receivables and accounts

payable, the carrying amounts of these assets and liabilities approximate their fair value.

Debt approximates fair value due to

either the short-term nature or recent execution of the debt agreement.

The amount of consideration received is deemed to be the

fair value of long-term debt net of any debt discount and issuance cost.

liabilities, the earn–out payable, and certain related party debt are recorded at fair value at each period end.

Company’s redeemable preferred stock was issued in conjunction with a business combination and was recorded at fair value

at issuance (less the intrinsic value of a beneficial conversion feature embedded in the Series C preferred shares).

The redeemable

preferred stock is not measured at fair value on a recurring basis.

See further discussion in Note 3 and Note 11.

value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction

between market participants.

A fair value hierarchy has been established for valuation inputs that gives the highest priority

to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

value hierarchy is as follows:

1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability

to access at the measurement date.

2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

or indirectly.

These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical

or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset

or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally

from or corroborated by market data by correlation or other means.

3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable

(supported by little or no market activity).

assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect

the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted

for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

September 30,

Derivative liabilities -

warrant instruments

Earn-out payable –

related party

Note Payable –

STEM Education Holdings

Derivative liabilities - warrant instruments

Earn-out payable –

Derivative liabilities -

warrant instruments

Earn-out payable

related party

The following table shows the change in the

Company’s earn-out payable rollforward for the six months ended June 30, 2020:

following table shows the change in the Company’s earn-out payable rollforward for the nine months ended September 30, 2020:

Balance, December 31,

Change in fair value of earn-out payable

Balance, June 30, 2020

See rollforward of Derivative liabilities

- warrant instruments in Note 10.

REVENUE RECOGNITION

In accordance with the FASB’s Accounting

Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers (Topic 606) , the Company recognizes

revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers.

Control is generally transferred when the Company has a present right to payment and the title and the significant risks and rewards

of ownership of products or services are transferred to its customers.

Product revenue is derived from the sale of projectors,

interactive panels and related software and accessories to distributors, resellers, and end users.

Service revenue is derived from

hardware maintenance services, product installation, training, software maintenance, and subscription services.

Nature of Products and Services and Related

Contractual Provisions

The Company’s sales of interactive devices,

including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software,

and the provision of related software maintenance.

In most cases, interactive devices are sold with hardware maintenance services

with terms ranging from 36 –

Software maintenance includes technical support, product updates on a when and if

available basis, and error correction services.

At times, non-interactive projectors are also sold with hardware maintenance services

with terms ranging from 36-60 months.

The Company also licenses software independently of its interactive devices, in which case

it is bundled with software maintenance, and in some cases, subscription services that include access to on-line content, access

to replacement parts, and cloud-based applications.

The Company’s software subscription services provide access to content

and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software

applications.

The Company’s products sales, including

those with software and related services, generally include a single payment up front for the products and services, and revenue

is recorded net of estimated sales returns and rebates based on the Company’s expectations and historical experience.

most of the Company’s product sales, control transfers, and therefore, revenue is recognized when products are shipped at

the point of origin.

When the Company transfers control of its products to the customer prior to the related shipping and handling

activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than

a performance obligation.

For software product sales, control is transferred when the customer receives the related interactive

hardware since the customer’s connection to the interactive hardware activates the software license at which time the software

is made available to the customer.

For the Company’s software maintenance, hardware maintenance, and subscription services,

revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services

are transferred to the customer.

The Company’s installation, training

and professional development services are generally sold separately from the Company’s products.

Control of these services

is transferred to our customers over time with hours/time incurred in providing the service being the best depiction of the transfer

of services since the customer is receiving the benefit of the services as the work is performed.

For the sale of third-party products and services

where the Company obtains control of the products and services before transferring it to the customer, the Company recognizes revenue

based on the gross amount billed to customers.

The Company considers multiple factors when determining whether it obtains control

of the third-party products and services including, but not limited to, evaluating if it can establish the price of the product,

retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product or service.

Company has not historically entered into transactions where it does not take control of the product or service prior to transfer

to the customer.

The Company excludes all taxes assessed by

a governmental agency that are both imposed on and concurrent with the specific revenue-producing transaction from revenue (for

example, sales and use taxes).

In essence, the Company is reporting these amounts collected on behalf of the applicable government

agency on a net basis as though they are acting as an agent.

The taxes collected and not yet remitted to the governmental agency

are included in accounts payable and accrued expenses in the accompanying consolidated condensed balance sheets.

Significant Judgments

For contracts with multiple performance obligations,

each of which represent promises within a contract that are distinct, the Company allocates revenue to all distinct performance

obligations based on their relative stand-alone selling prices (“SSPs”).

The Company’s products and services

included in its contracts with multiple performance obligations generally are not sold separately and there are no observable prices

available to determine the SSP for those products and services.

Since observable prices are not available, SSPs are established

that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were

sold regularly on a stand-alone basis.

The Company’s process for estimating SSPs without observable prices considers multiple

factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when

applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific

business objectives, and competitor or other relevant market pricing and margins.

When pricing is highly variable or uncertain,

the Company applies the residual approach to determining SSP by subtracting the SSP of other products or services from the total

transaction price to arrive at the SSP for the performance obligations with highly variable or uncertain pricing.

When multiple

performance obligations in a contract have highly variable or uncertain pricing, the Company allocates the residual value to those

performance obligations using an alternative method of allocation that is consistent with the allocation objective and the guidance

on determining SSPs in Topic 606 considering, when applicable, the estimated cost to provide the performance obligation, market

pricing for competing product or service offerings, product-specific business objectives, incremental values for bundled transactions

that include a service relative to similar transactions that exclude the service, and competitor pricing and margins.

price has not been established by the Company for its hardware maintenance services and software maintenance services.

hardware maintenance services, software solutions, and the related maintenance services are never separately and are proprietary

in nature, and the related selling price of these products and services is highly variable or uncertain.

Therefore, the SSP of

these products and services is estimated using the alternative method described above, which includes residual value techniques.

The Company has applied the portfolio approach

to its allocation of the transaction price for certain portfolios of contracts that contain the same performance obligations and

are priced in a consistent manner.

The Company believes that the application of the portfolio approach produces the same result

as if they were applied at the contract level.

Contract Balances

The timing of invoicing to customers often

differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract

liabilities (deferred revenue) on the Company’s consolidated condensed balance sheets.

Fees for the Company’s products

and most of its service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally

due within 30-60 days of contract execution.

Fees for installation, training, and professional development services are fixed

and generally become due as the services are performed.

The Company has an established history of collecting under the terms of

its contracts without providing refunds or concessions to its customers.

The Company’s contractual payment terms do not

vary when products are bundled with services that are provided over multiple years.

In such contracts services are expected

to be transferred on an ongoing basis for several years after the related payment, and the Company has determined that

the contracts generally do not include a significant financing component.

The upfront invoicing terms are designed 1) to provide

customers with a predictable way to purchase products and services where the payment is due in the same timeframe as when the

products, which constitute the predominant portion of the contractual value, are transferred, and 2) to ensure that the customer

fair value of earn-out payable

Balance, September

rollforward of Derivative liabilities - warrant instruments in Note 10.

accordance with the FASB’s Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers

(Topic 606) , the Company recognizes revenue at the amount to which it expects to be entitled when control of the products

or services is transferred to its customers.

Control is generally transferred when the Company has a present right to payment

and the title and the significant risks and rewards of ownership of products or services are transferred to its customers.

revenue is derived from the sale of projectors, interactive panels and related software and accessories to distributors, resellers,

and end users.

Service revenue is derived from hardware maintenance services, product installation, training, software maintenance,

and subscription services.

of Products and Services and Related Contractual Provisions

Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware

maintenance services, a license to software, and the provision of related software maintenance.

In most cases, interactive devices

are sold with hardware maintenance services with terms ranging from 36–60 months.

Software maintenance includes technical

support, product updates on a when and if available basis, and error correction services.

At times, non-interactive projectors

are also sold with hardware maintenance services with terms ranging from 36-60 months.

The Company also licenses software independently

of its interactive devices, in which case it is bundled with software maintenance, and in some cases, subscription services that

include access to on-line content, access to replacement parts, and cloud-based applications.

The Company’s software subscription

services provide access to content and software applications on an as needed basis over the Internet, but do not provide the right

to take delivery of the software applications.

Company’s products sales, including those with software and related services, generally include a single payment up front

for the products and services, and revenue is recorded net of estimated sales returns and rebates based on the Company’s

expectations and historical experience.

For most of the Company’s product sales, control transfers, and therefore, revenue

is recognized when products are shipped at the point of origin.

When the Company transfers control of its products to the customer

prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling

activities as a fulfillment cost rather than a performance obligation.

For many of the Company’s software product sales,

control is transferred when shipped at the point of origin since the software is installed on the interactive hardware device

in advance of shipping.

For other software product sales, control is transferred when the customer receives the related

interactive hardware since the customer’s connection to the interactive hardware activates the software license at which

time the software is made available to the customer.

For the Company’s software maintenance, hardware maintenance, and subscription

services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those

services are transferred to the customer.

Company’s installation, training and professional development services are generally sold separately from the Company’s

Control of these services is transferred to our customers over time with hours/time incurred in providing the service

being the best depiction of the transfer of services since the customer is receiving the benefit of the services as the work is

the sale of third-party products and services where the Company obtains control of the products and services before transferring

it to the customer, the Company recognizes revenue based on the gross amount billed to customers.

The Company considers multiple

factors when determining whether it obtains control of the third-party products and services including, but not limited to, evaluating

if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring

acceptability of the product or service.

The Company has not historically entered into transactions where it does not take control

of the product or service prior to transfer to the customer.

Company excludes from revenue all taxes assessed by a governmental agency that are both imposed on and concurrent with the specific

revenue-producing transaction from revenue (for example, sales and use taxes).

The Company is reporting these amounts collected

on behalf of the applicable government agency on a net basis as though they are acting as an agent.

The taxes collected and not

yet remitted to the governmental agency are included in accounts payable and accrued expenses in the accompanying consolidated

condensed balance sheets.

contracts with multiple performance obligations, each of which represent promises within a contract that are distinct, the Company

allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”).

The Company’s products and services included in its contracts with multiple performance obligations generally are not sold

separately and there are no observable prices available to determine the SSP for those products and services.

Since observable

prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the

performance obligations would be if they were sold regularly on a stand-alone basis.

The Company’s process for estimating

SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related

to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends

in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and

When pricing is highly variable or uncertain, the Company applies the residual approach to determining SSP by subtracting

the SSP of other products or services from the total transaction price to arrive at the SSP for the performance obligations with

highly variable or uncertain pricing.

When multiple performance obligations in a contract have highly variable or uncertain pricing,

the Company allocates the residual value to those performance obligations using an alternative method of allocation that is consistent

with the allocation objective and the guidance on determining SSPs in Topic 606 considering, when applicable, the estimated cost

to provide the performance obligation, market pricing for competing product or service offerings, product-specific business objectives,

incremental values for bundled transactions that include a service relative to similar transactions that exclude the service,

and competitor pricing and margins.

A separate price has not been established by the Company for its hardware maintenance services

and software maintenance services.

In addition, hardware maintenance services, software solutions, and the related maintenance

services are never sold separately and are proprietary in nature, and the related selling price of these products and services

is highly variable or uncertain.

Therefore, the SSP of these products and services is estimated using the alternative method described

above, which includes residual value techniques.

Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that

are executed in the same period, contain the same performance obligations and are priced in a consistent manner.

The Company believes

that the application of the portfolio approach produces the same result as if they were applied at the contract level.

timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result

in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated condensed balance

Fees for the Company’s products and most of its service contracts are fixed, except as adjusted for rebate programs

when applicable, and are generally due within 30-60 days of contract execution.

Fees for installation, training, and professional

development services are fixed and generally become due as the services are performed.

The Company has an established history

of collecting under the terms of its contracts without providing refunds or concessions to its customers.

The Company’s

contractual payment terms do not vary when products are bundled with services that are provided over multiple years.

In such contracts,

services are expected to be transferred on an ongoing basis for several years after the related payment, and the Company has determined

that the contracts generally do not include a significant financing component.

The upfront invoicing terms are designed 1) to

provide customers with a predictable way to purchase products and services where the payment is due in the same timeframe as when

the products, which constitute the predominant portion of the contractual value, are transferred, and 2) to ensure that the customer

continues to use the related services, so that the customer will receive the optimal benefit from the products over their lives.

2 unchanged sentences

to exceed one year.

The Company has an unconditional right to

consideration for all products and services transferred to the customer.

That unconditional right to consideration is reflected

in accounts receivable in the accompanying consolidated condensed balance sheets in accordance with Accounting Standards Update

Company has an unconditional right to consideration for all products and services transferred to the customer.

That unconditional

right to consideration is reflected in accounts receivable in the accompanying consolidated condensed balance sheets in accordance

with Accounting Standards Update No.

2014-09, Revenue from Contracts with Customers (Topic 606).

Contract liabilities are reflected in deferred revenue

in the accompanying consolidated condensed balance sheets and reflect amounts allocated to performance obligations that have not

yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription services.

had no material contract assets as of June 30, 2020 or December 31, 2019.

During the six months ended June 30, 2020

and June 30, 2019, the Company recognized $0.7 million and $0.7 million, respectively, of revenue that was included in the deferred

revenue balance at the beginning of each period, as adjusted for Topic 606, at the beginning of the period.

Variable Consideration

The Company’s otherwise fixed consideration

in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, or in connection

with certain rebate provisions.

The Company generally does not allow product returns other than under assurance warranties or

hardware maintenance contracts.

However, the Company, on a case by case basis, will grant exceptions, most often in cases of

“buyer’s remorse”

where the distributor or reseller’s end customer either did not understand what

they were ordering or determined that the product did not meet their needs.

An allowance for sales returns is estimated based

on an analysis of historical trends.

In very limited situations, a customer may return previous purchases held in inventory for

a specified period of time in exchange for credits toward additional purchases.

In addition, rebates are provided to certain customers

when specified volume purchase thresholds have been met.

The Company includes variable consideration in its transaction

price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not be a significant reversal.

These estimates are generally made using the expected value method based on historical experience and are measured at each reporting

There was no material revenue recognized in 2020 related to changes in estimated variable consideration that existed at

December 31, 2019.

Remaining Performance Obligations

A performance obligation is a promise in a contract to transfer

a distinct good or service to the customer and is the unit of accounting within the contract.

The transaction price is allocated

to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring

the promised good or service to the customer.

The Company identifies performance obligations at contract inception so that it can

monitor and account for the obligations over the life of the contract.

Remaining performance obligations represent the portion

of the transaction price in a contract allocated to products and services not yet transferred to the customer.

As of June 30, 2020,

the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was approximately $3.9

The Company expects to recognize revenue on approximately 24% of the remaining performance obligations in 2020, 57% in

2021 and 2022, with the remainder recognized thereafter.

In accordance with Topic 606, the Company has

elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at

the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services

In addition, the Company has elected not to disclose the value of remaining performance obligations for contracts with

performance obligations that are expected, at contract inception, to be satisfied over a period that does not exceed one year.

Disaggregated Revenue

The Company disaggregates revenue based upon

the nature of its products and services and the timing and manner in which it is transferred to the customer.

Although all product

revenue is transferred to the customer at a point in time, hardware revenue is generally transferred at the point of shipment,

while software is generally transferred to the customer at the time the hardware is received by the customer or when software product

keys are delivered electronically to the customer.

All service revenue is transferred over time to the customer;

however, professional

services are generally transferred to the customer within a year from the contract date as measured based upon hours or time incurred

while software maintenance, hardware maintenance, and subscription services are generally transferred over 3-5 years from the contract

execution date as measured based upon the passage of time.

Three Months Ended

Six Months Ended

Contract liabilities are

reflected in deferred revenue in the accompanying consolidated condensed balance sheets and reflect amounts allocated to performance

obligations that have not yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription

The Company had no material contract assets as of September 30, 2020 or December 31, 2019.

During the nine months ended

September 30, 2020 and September 30, 2019, the Company recognized $0.9 million and $0.8 million, respectively, of revenue that

was included in the deferred revenue balance at January 1, 2019, as adjusted for Topic 606, at the beginning of the period.

Consideration

Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales

returns, stock rotation rights, or in connection with certain rebate provisions.

The Company generally does not allow product

returns other than under assurance warranties or hardware maintenance contracts.

However, the Company, on a case by case basis,

will grant exceptions, most often in cases of “buyer’s remorse”

where the distributor or reseller’s end

customer either did not understand what they were ordering or determined that the product did not meet their needs.

for sales returns is estimated based on an analysis of historical trends.

In very limited situations, a customer may return previous

purchases held in inventory for a specified period of time in exchange for credits toward additional purchases.

In addition, rebates

are provided to certain customers when specified volume purchase thresholds have been met.

The Company includes variable consideration

in its transaction price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not

be a significant reversal.

These estimates are generally made using the expected value method based on historical experience and

are measured at each reporting date.

There was no material revenue recognized in 2020 related to changes in estimated variable

consideration that existed at December 31, 2019.

Performance Obligations

performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting

within the contract.

The transaction price is allocated to each distinct performance obligation and recognized as revenue when,

or as, the performance obligation is satisfied by transferring the promised good or service to the customer.

The Company identifies

performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract.

Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services

not yet transferred to the customer.

As of September 30, 2020, the aggregate amount of the contractual transaction prices allocated

to remaining performance obligations was approximately $11.6 million.

The Company expects to recognize revenue on approximately

20% of the remaining performance obligations in 2020, 55% in 2021 and 2022, with the remainder recognized thereafter.

accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts

for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example,

for time-and-materials professional services contracts).

In addition, the Company has elected not to disclose the value

of remaining performance obligations for contracts with performance obligations that are expected, at contract inception, to be

satisfied over a period that does not exceed one year.

Disaggregated

Company disaggregates revenue based upon the nature of its products and services and the timing and manner in which it is transferred

to the customer.

Although all product revenue is transferred to the customer at a point in time, hardware revenue is generally

transferred at the point of shipment, while some software is transferred to the customer at the time the hardware is received

by the customer or when software product keys are delivered electronically to the customer.

All service revenue is transferred

over time to the customer;

however, professional services are generally transferred to the customer within a year from the contract

date as measured based upon hours or time incurred while software maintenance, hardware maintenance, and subscription services

are generally transferred over 3-5 years from the contract execution date as measured based upon the passage of time.

Product Revenues:

1 unchanged sentence

Professional Services

Maintenance and Subscription Services

Contract Costs

The Company capitalizes incremental costs to

obtain a contract with a customer if the Company expects to recover those costs.

The incremental costs to obtain a contract are

those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were

not obtained (e.g.

and Subscription Services

Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs.

incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not

have otherwise incurred if the contract were not obtained (e.g.

a sales commission).

The Company capitalizes the costs incurred to fulfill a contract only if those costs meet

all of the following criteria:

The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.

The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

The costs are expected to be recovered.

Certain sales commissions incurred by the

Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over

the estimated economic benefit period.

For these sales commissions that are incremental costs to obtain where the period of amortization

would have been recognized over a period that is one year or less, the Company elected the practical expedient to expense those

costs as incurred.

Commission costs that are deferred are classified as current or non-current assets based on the timing of when

the Company expects to recognize the expense, and are included in prepaid and other assets and other assets, respectively, in

the accompanying consolidated condensed balance sheets.

Total deferred commissions as of June 30, 2020 and December 31,

2019 and the related amortization for 2019 were less than $0.1 million.

No impairment losses were recognized for the six months

ended June 30, 2020 and 2019.

The Company has not historically incurred any

material fulfillment costs that meet the criteria for capitalization.

The Company’s consolidated condensed

statements of operations and cash flows for the six months ended June 30, 2019 were recorded under the prior GAAP, without

including the adjustments now required under Topic 606.

As such, we have revised these statements to be comparable

to the June 30, 2020 period which are recorded under Topic 606.

The Company capitalizes the costs incurred

to fulfill a contract only if those costs meet all of the following criteria:

costs relate directly to a contract or to an anticipated contract that the Company can specifically identify,

costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance

obligations in the future, and

costs are expected to be recovered.

sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred

and amortized ratably over the estimated economic benefit period.

For those sales commissions that are incremental costs

to obtain where the period of amortization would have been recognized over a period that is one year or less, the Company elected

the practical expedient to expense those costs as incurred.

Commission costs that are deferred are classified as current or non-current

assets based on the timing of when the Company expects to recognize the expense, and are included in prepaid and other assets

and other assets, respectively, in the accompanying consolidated condensed balance sheets.

Total deferred commissions as of September

30, 2020 and December 31, 2019 and the related amortization for 2019 were less than $0.1 million.

No impairment losses were recognized

for the nine months ended September 30, 2020 and 2019.

Company has not historically incurred any material fulfillment costs that meet the criteria for capitalization.

Company’s consolidated condensed statements of operations and cash flows for the nine months ended September 30, 2019 were

recorded under the prior GAAP, without including the adjustments now required under Topic 606.

As such, we have revised these

statements to be comparable to the September 30, 2020 period which are recorded under Topic 606.

following table presents the effects of adopting Topic 606 on the Company’s consolidated condensed statement of operations

for the three and six months ended June 30, 2019:

for the three and nine months ended September 30, 2019:

Reconciliation

of Topic 606 Adjustments for the

months ended June 30, 2019

months ended September 30, 2019

STATEMENT OF OPERATIONS

3 unchanged sentences

Loss from operations

Net loss/income

Net loss per common

3 unchanged sentences

of Topic 606 Adjustments for the

months ended June 30, 2019

months ended September 30, 2019

STATEMENT OF OPERATIONS

3 unchanged sentences

Loss from operations

Net loss/income

$ (6,500,868 )

$ (6,144,121 )

Net loss per common share –

Net loss per common

share –

basic and diluted

The following table presents the effects of

adopting Topic 606 on the Company’s consolidated condensed statement of cash flows for the six months ended June 30, 2019:

Balances under

CASH FLOWS FROM OPERATING ACTIVITIES:

following table presents the effects of adopting Topic 606 on the Company’s consolidated condensed statement of cash flows

for the nine months ended September 30, 2019:

CASH FLOWS FROM OPERATING

$ (6,500,868 )

3 unchanged sentences

Deferred revenues

Cash used for operating activities

WARRANTY RESERVE

For customers that do not purchase hardware

maintenance services, the Company generally provides warranty coverage on projectors and accessories, batteries and computers.

This warranty coverage does not exceed 24 months, and the Company establishes a liability for estimated product warranty costs,

included in other short-term liabilities in the consolidated condensed statements of operations, at the time the related product

revenue is recognized.

The warranty obligation is affected by historical product failure rates and the related use of materials,

labor costs and freight incurred in correcting any product failure.

Should actual product failure rates, use of materials, or other

costs differ from the Company’s estimates, additional warranty liabilities could be required, which would reduce its gross

RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are expensed

as incurred and consists primarily of personnel related costs, prototype and sample costs, design costs, and global product certifications

mostly for wireless certifications.

An asset and liability approach is used for

financial accounting and reporting for income taxes.

Deferred income taxes arise from temporary differences between income tax

and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax

accounting purposes and are measured using currently enacted tax rates and laws.

In addition, a deferred tax asset can be generated

by net operating loss carryforwards.

If it is more likely than not that some portion or all of a deferred tax asset will not be

realized, a valuation allowance is recognized.

STOCK COMPENSATION

The Company estimates the fair value of each

stock compensation award at the grant date by using the Black-Scholes option pricing model.

The fair value determination

represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service

in exchange for the award.

NEW ACCOUNTING STANDARDS

In February 2016, the FASB issued ASU 2016-02,

“Leases”

The new guidance requires organizations that lease assets to recognize assets and liabilities

on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as

finance or operating leases.

Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash

flows arising from a lease primarily will depend on its classification as a finance or operating lease.

The guidance also requires

new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from

Since the Company is an Emerging Growth Company, the ASU is effective for annual reporting periods beginning after December

15, 2020, and interim periods within annual reporting periods beginning after December 15, 2021.

used in operating activities

$ (6,280,556 )

customers that do not purchase hardware maintenance services, the Company generally provides warranty coverage on projectors and

accessories, batteries and computers.

This warranty coverage does not exceed 24 months, and the Company establishes a liability

for estimated product warranty costs, included in other short-term liabilities in the consolidated condensed statements of operations,

at the time the related product revenue is recognized.

The warranty obligation is affected by historical product failure rates

and the related use of materials, labor costs and freight incurred in correcting any product failure.

Should actual product failure

rates, use of materials, or other costs differ from the Company’s estimates, additional warranty liabilities could be required,

which would reduce its gross profit.

AND DEVELOPMENT EXPENSES

and development costs are expensed as incurred and consists primarily of personnel related costs, prototype and sample costs,

design costs, and global product certifications mostly for wireless certifications.

asset and liability approach is used for financial accounting and reporting for income taxes.

Deferred income taxes arise from

temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses

in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws.

addition, a deferred tax asset can be generated by net operating loss carryforwards.

If it is more likely than not that some portion

or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model.

The fair value of each restricted stock unit award is equal to the market value of the underlying shares at the grant date.

fair value determination represents the cost for the award and is recognized over the vesting period during which an employee

is required to provide service in exchange for the award.

ACCOUNTING STANDARDS

February 2016, the FASB issued ASU 2016-02, “Leases”

The new guidance requires organizations that lease

assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases,

regardless of whether they are classified as finance or operating leases.

Consistent with current guidance, the recognition, measurement,

and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating

The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and

uncertainty of cash flows arising from leases.

Since the Company is an Emerging Growth Company, the ASU is effective for annual

reporting periods beginning after December 15, 2021, and interim periods within annual reporting periods beginning after December

Earlier application is permitted.

The new standard is to be applied using a modified retrospective approach.

The Company is currently evaluating the impact of the

new pronouncement on its financial statements.

In December 2019, the FASB issued ASU No.

is currently evaluating the impact of the new pronouncement on its financial statements.

June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments Credit Losses”

Measurement of Credit

Losses on Financial Instruments.

The new guidance replaces the incurred loss methodology with the current expected credit

loss (CECL) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets

measured at amortized cost, including trade accounts receivable.

It also applies to off-balance sheet credit exposures not accounted

for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments

in leases recognized by a lessor in accordance with Topic 842.

This new guidance changes the impairment model for most financial

assets and certain other instruments.

Since the Company is an Emerging Growth Company, the ASU is effective for fiscal years beginning

after December 15, 2022, and interim periods within that fiscal year.

The Company is currently evaluating the impact that this

standard will have, if any, on its financial statements.

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes”

The new guidance modifies the requirements for the timing of adoption of enacted change

The effects of changes on taxes currently payable or refundable for the current year must be reflected in the computation

of annual effective tax rate in the first interim period that includes the enactment date of the new legislation, beginning after

The new guidance modifies the requirements

for the timing of adoption of enacted change in tax law.

The effects of changes on taxes currently payable or refundable for the

current year must be reflected in the computation of annual effective tax rate.

Since the Company is an Emerging Growth Company,

the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after

December 15, 2022.

2 unchanged sentences

any, on its financial statements.

There were various other accounting standards

and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations

or cash flows.

NOTE 2 –

These consolidated condensed financial

statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge

its liabilities in the normal course of business.

The long-term continuation of the Company as a going concern is dependent upon

attainment of profitable operations.

As of June 30, 2020, the Company had an accumulated deficit of $34,722,050 and a working

capital surplus of $3,809,365.

During the six months ended June 30, 2020, the Company incurred a net loss of $3,375,619 and net

cash used in operations was $6,213,357.

During June and July of 2020, the Company raised significant capital and is not dependent

on obtaining funds for operations through public or private sales of equity and debt securities or from bank or other loans in

the near term.

NOTE 3 –

The acquisition described below was accounted

for as a business combination which requires, among other things, that assets acquired, and liabilities assumed be recognized at

their estimated fair values as of the acquisition date on the balance sheet.

Transaction costs are expensed as incurred.

of the consideration transferred over the assigned values of the net assets acquired would be recorded as goodwill.

has not yet finalized its evaluation and determination of the fair value of certain assets acquired and liabilities assumed.

Company recorded provisional amounts based on initial measurements of the assets acquired and liabilities assumed.

The provisional

amounts are subject to change and could result in goodwill, which could be significant.

The Company will finalize the amounts recognized

no later than one year from the acquisition date.

On April 17, 2020, the Company acquired

the assets, and assumed certain liabilities of MyStemKits and STEM Education Holdings, Pty, an Australian corporation (“STEM”)

which is the sole shareholder of MyStemKits, for consideration of $450,000, after working capital adjustments of $150,000.

Consideration

included $100,000 paid in cash at closing with the balance payable in the form of a $350,000 purchase note payable in four equal

installments of $87,500 (the “Installment Payments”) on July 31, 2020, October 31, 2020, January 31, 2021 and April

Further, acknowledging the ongoing COVID-19 pandemic, the Letter Agreement states that potential adjustments may be

made to the Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits

is materially below budget.

August 2020, the FASB issued ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s

Own Equity.”

The new guidance simplifies the accounting for certain convertible instruments and for contracts in an entity’s

Key provisions include the elimination of the “cash conversion”

guidance and the “beneficial conversion

feature”

guidance in ASC 470-20 as well as a simplification of the settlement assessment that entities are required to perform

to determine whether a contract qualifies for equity classification by removing certain conditions in ASC 815-40-25.

Company is an Emerging Growth Company, the ASU is effective for annual reporting periods beginning after December 15, 2023.

application is permitted for fiscal periods beginning after December 15, 2020.

The Company is currently evaluating the impact

that this standard will have on its financial statements.

were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact

on our financial position, operations or cash flows.

consolidated condensed financial statements have been prepared on a going concern basis, which assumes the Company will continue

to realize its assets and discharge its liabilities in the normal course of business.

The Company had an accumulated deficit

of $38,932,954 and a working capital surplus of $25,055,980 as of September 30, 2020.

The long-term continuation of the Company

as a going concern is dependent upon attainment of profitable operations.

During June, July and September of 2020,

the Company raised significant capital which was primarily used for the acquisition of Sahara and to meet working capital requirements.

The Company has the ability to raise additional funds through public or private sales of equity and debt securities or leveraging

its asset based lending agreement.

acquisitions described below were accounted for as business combinations which requires, among other things, that assets acquired,

and liabilities assumed be recognized at their estimated fair values as of the acquisition date on the balance sheet.

costs are expensed as incurred.

Any excess of the consideration transferred over the assigned values of the net assets acquired

would be recorded as goodwill.

Presentation Systems PLC

September 24, 2020, the Company acquired 100% of the outstanding shares of Sahara Holdings Limited, a private limited company

operating under the laws of the UK and all of its subsidiaries, including Sahara Presentation Systems PLC (collectively, “Sahara”).

Sahara is a distributor of audio and video software and equipment including the Clevertouch branded product line of interactive

touch screens.

This strategic acquisition expands the Company’s geographic footprint, industry verticals served, and enhances

the Company’s technology and product offerings.

consideration for the purchase of Sahara, the Company transferred $74.2 million to the Sellers, including $44.9

million in cash (net of $6.0 million in cash acquired) and $29.3 million in convertible preferred stock.

issued 1,586,620 shares of Series B convertible redeemable preferred stock (the “Series B Preferred Stock”)

and 1,320,850 shares of Series C convertible redeemable preferred stock (the “Series C Preferred Stock”).

contingent consideration was issued.

estimated preliminary fair value of the preferred shares issued was approximately $18.2 million and $11.1 million

for the Series B Preferred Stock and Series C Preferred Stock, respectively.

See further discussion of the features of the preferred

shares in Note 11.

transaction was accounted for using the acquisition method, and as a result, assets acquired and liabilities assumed are recorded

at their estimated fair values in addition to any consideration transferred to the Sellers at the acquisition date.

the fair value of assets acquired and liabilities assumed and the Series B Preferred Stock and Series C Preferred Stock requires

management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future

revenue, costs and cash flows, discount rates, and selection of comparable companies.

The Company engaged the assistance

of an independent third-party valuation specialist to determine certain fair value measurements related to acquired assets, the

Series B Preferred Stock, and the Series C Preferred Stock.

Any excess consideration over the fair values of the assets acquired

and liabilities assumed is recognized as goodwill.

fair value of the deferred revenue at the date of acquisition was determined based on the estimated direct and incremental costs

to fulfill the performance obligations associated with the deferred revenue, plus a reasonable profit margin.

Accordingly, the

carrying amount of deferred revenue at the acquisition date was reduced to its estimated fair value based on the assumptions above

which will result in a reduction in revenue that otherwise would have been recognized in periods subsequent to the acquisition

fair value or net realizable value of inventories at the date of acquisition was determined using a “top-down”

based upon the estimated sales value, less a reasonable profit margin and less the estimated costs to dispose of the inventory,

including selling costs and other disposal costs such as freight.

Accordingly, the carrying amount of inventories at the acquisition

date was increased to its estimated fair value based on these assumptions which will result in an increase in cost of revenues

in periods subsequent to the acquisition date.

Company has not yet finalized its evaluation and determination of the fair value of certain assets acquired and liabilities assumed,

and has recorded provisional amounts based on initial measurements using currently available information.

The Company has not

received a final valuation report from the independent valuation expert for acquired intangible assets, as well as the valuation

of the preferred shares consideration.

In addition, the Company is still gathering information about certain items including

income taxes and deferred income tax assets and liabilities, based on facts that existed as of the date of acquisition.

provisional amounts are subject to change and could result in changes to goodwill, which could be significant.

will finalize the amounts recognized no later than one year from the acquisition date.

following table summarizes the preliminary estimated fair values of the net assets acquired and liabilities assumed, and

the preliminary estimate of the fair value of consideration paid:

Assets acquired:

Accounts receivable

Prepaid expenses and other current

Total assets acquired

liabilities assumed

Accounts payable and accrued expenses

Deferred revenue

Other liabilities

Total liabilities

(18,351,107 )

Net tangible assets acquired

intangible assets:

Customer relationships

Total intangible

assets subject to amortization

assets acquired

Consideration paid:

shares issued

Total consideration

following table presents the useful lives over which the acquired intangible assets will be amortized on a straight-line basis,

which approximates the pattern by which the related economic benefits of the assets are consumed:

Weighted Average

Customer relationships

is primarily attributable to synergies expected from the acquisition and the assembled workforce.

The Company incurred a

total of $0.2 million in merger related costs for the acquisition and expensed all such costs incurred during the period in

which the service was received.

Merger related costs are included in general and administrative expenses in the Consolidated

Condensed Statement of Operations and Comprehensive Loss.

The results of operations of Sahara since the acquisition are

included in the Consolidated Condensed Statement of Operations and Comprehensive Loss for the three and nine months ended

September 30, 2020.

Revenue and net loss attributable to Sahara in the period from the acquisition date of September 24, 2020

through September 30, 2020 were approximately $1.1 million and $0.3 million, respectively.

Company is also required to present a pro forma balance sheet assuming the transaction was consummated on the date of the latest

balance sheet included in the filing and a pro forma statement of operations assuming the transaction was consummated at the beginning

of the fiscal year presented and carried forward through any interim period presented.

However, due to the limited time since

the date of acquisition, it is impracticable for the Company to gather the necessary information for this disclosure.

intends to disclose the pro forma information on a future Form 8-K filing with the SEC.

Company is currently assessing its aggregation of operating segments for the newly combined entity on a go-forward basis.

and STEM Education Holdings, Pty

April 17, 2020, the Company acquired the assets, and assumed certain liabilities of MyStemKits and STEM Education Holdings, Pty,

an Australian corporation (“STEM”) which is the sole shareholder of MyStemKits, for consideration of $450,000, after

working capital adjustments of $150,000.

Consideration included $100,000 paid in cash at closing with the balance payable in the

form of a $350,000 purchase note payable in four equal installments of $87,500 (the “Installment Payments”) on July

31, 2020, October 31, 2020, January 31, 2021 and April 30, 2021.

Further, acknowledging the ongoing COVID-19 pandemic, the Letter

Agreement states that potential adjustments may be made to the Installment Payments due on July 31, 2020 and October 31, 2020

in the event the actual gross revenue of MyStemKits is materially below budget.

following table summarizes the fair values of the net assets acquired and the fair value of consideration paid:

Assets acquired:

Total assets acquired

Total liabilities

Net assets acquired

Identifiable intangible assets:

Customer relationships

Total identifiable intangible

assets subject to amortization

Consideration paid:

NOTE 4 –

ACCOUNTS RECEIVABLE - TRADE

Accounts receivable consisted of the following

at June 30, 2020 and December 31, 2019:

Total consideration

ACCOUNTS RECEIVABLE - TRADE

Allowance for doubtful accounts

Allowance for sales returns and volume rebates

Accounts receivable - trade, net of allowances

NOTE 5 –

Inventories consisted of the following at June

30, 2020 and December 31, 2019:

receivable consisted of the following at September 30, 2020 and December 31, 2019:

receivable - trade

Allowance for doubtful

for sales returns and volume rebates

receivable - trade, net of allowances

consisted of the following at September 30, 2020 and December 31, 2019:

Finished goods

Reserve for inventory obsolescence

Inventories, net

NOTE 6 –

PREPAID EXPENSES AND OTHER

CURRENT ASSETS

Prepaid expenses and other current assets consisted

of the following at June 30, 2020 and December 31, 2019:

Reserve for inventory

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consisted of the following at September 30, 2020 and December 31, 2019:

Prepayments to vendors

Prepaid licenses and other

Prepaid local taxes

Unbilled revenue

Prepaid insurance

Prepaid expenses and other current assets

NOTE 7 –

Prepaid expenses

and other current assets

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following

at June 30, 2020 and December 31, 2019:

and equipment consisted of the following at September 30, 2020 and December 31, 2019:

Building improvements

4 unchanged sentences

Accumulated depreciation

Property and equipment, net of accumulated depreciation

For the six months ended June 30, 2020 and

2019, the Company recorded depreciation expense of $8,744 and $16,768, respectively.

NOTE 8 –

equipment, net of accumulated depreciation

the nine months ended September 30, 2020 and 2019, the Company recorded depreciation expense of $10,947 and $20,500, respectively.

INTANGIBLE ASSETS AND GOODWILL

Intangible assets and goodwill consisted of

the following at June 30, 2020 and December 31, 2019:

assets and goodwill consisted of the following at September 30, 2020 and December 31, 2019:

Customer relationships

Intangible assets, at cost

Accumulated amortization

Intangible assets, net of accumulated amortization

Intangible assets,

net of accumulated amortization

Goodwill from acquisition of Sahara

Goodwill from acquisition of STEM

Goodwill from acquisition of EOS

1 unchanged sentence

Goodwill from acquisition of Mimio

Goodwill from acquisition of Boxlight

For the six months ended June 30, 2020 and

2019, the Company recorded amortization expense of $431,080 and $450,641, respectively.

NOTE 9 –

The following is a summary of our debt as

of June 30, 2020 and December 31, 2019:

Third Parties

Goodwill from

acquisition of Boxlight

the nine months ended September 30, 2020 and 2019, the Company recorded amortization expense of $747,232 and $668,543, respectively.

following is a summary of our debt as of September 30, 2020 and December 31, 2019:

Note payable –

2 unchanged sentences

Paycheck Protection Program loan

Note Payable –

STEM Education Holdings

1 unchanged sentence

third parties

Discount and issuance cost –

Current portion of debt –

Discount and issuance cost

portion of debt –

third parties

Long-term debt –

third parties

Related Parties

Note payable –

Qwizdom (Darin & Silvia Beamish)

Note payable –

Qwizdom (Darin

& Silvia Beamish)

Note payable –

3 unchanged sentences

related parties

current portion of debt –

portion of debt –

related parties

Long-term debt –

related parties

Debt - Third Parties:

Lind Global Marco Fund, LP

On March 22, 2019, the Company entered into

a securities purchase agreement with Lind that contemplates a $4,000,000 working capital financing.

The investment is in

the form of a $4,400,000 principal amount convertible secured Boxlight Parent note, payable at an 8% interest rate, compounded

monthly with a maturity date of 24 months.

The note is convertible at the option of Lind into the Company’s Class A voting

common stock at a fixed conversion price of $4.00 per share.

The Company will have the right to convert up to 50% of the outstanding

amount of the note if the volume weighted average closing price of our Class A common stock trades above $8.00 for 30 consecutive

and convert up to 100% of the outstanding amount of the note if the volume weighted average closing price of our Class A

common stock trades above $12.00 for 30 consecutive days.

A commitment fee in the amount of $125,000 was paid to Lind.

The Company paid Lind $275,428 for

closing fees by issuing 108,091 shares of Class A common stock.

As of June 30, 2020 and December 31, 2019, the Company paid principal

of $1,466,666 and $977,778, respectively, interest of $91,259 and $106,643, respectively, through issuance of Class A common stock

On December 13, 2019, the Company entered

into a second securities purchase agreement with Lind that contemplates a $1,250,000 working capital financing.

The investment is in the form of a $1,375,000 principal amount convertible secured Boxlight Parent note, payable at an 8% interest

rate, compounded monthly with a maturity date of 24 months.

The note is convertible at the option of Lind into the Company’s

Class A voting common stock at a fixed conversion price of $2.50 per share.

The Company will have the right to convert up to 50%

of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades above $5.00

for 30 consecutive days;

and convert up to 100% of the outstanding amount of the note if the volume weighted average closing price

of our Class A common stock trades above $6.25 for 30 consecutive days.

A commitment fee in the amount of $43,750 was paid to

- Third Parties:

Global Marco Fund, LP

March 22, 2019, the Company entered into a securities purchase agreement with Lind that contemplates a $4,000,000 working capital

The investment is in the form of a $4,400,000 principal amount convertible secured Boxlight Parent note, payable at

an 8% interest rate, compounded monthly with a maturity date of 24 months.

The note is convertible at the option of Lind into

the Company’s Class A voting common stock at a fixed conversion price of $4.00 per share.

The Company has the right to convert

up to 50% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades

above $8.00 for 30 consecutive days;

and convert up to 100% of the outstanding amount of the note if the volume weighted average

closing price of our Class A common stock trades above $12.00 for 30 consecutive days.

A commitment fee in the amount of $125,000

was paid to Lind.

The Company paid Lind $275,428 for closing fees by issuing 108,091 shares of Class A common stock.

30, 2020 and December 31, 2019, the Company paid principal of $76,388 and $0, respectively, interest of $55,925 and $0,

respectively, through issuance of Class A common stock to Lind.

On February 4, 2020, the Company and Lind

entered into a third securities purchase agreement pursuant to which the Company is to receive on February 6, 2020

$750,000 in exchange for the issuance to Lind of (1) an $825,000 convertible promissory note, payable at an 8% interest

rate, compounded monthly (the “2020 Note”), (2) certain shares of restricted Class A common stock valued at $60,000,

calculated based on the 20-day volume average weighted price of the Class A common stock for the period ended February 4, 2020,

and (3) a commitment fee of $26,250.

The Note matures over 24 months, with repayment to commence on August 4, 2020, after

which time the Company will be obligated to make monthly payments of $45,833, plus interest.

Interest shall accrue during the

first six months of the note, after which time the interest payments, including accrued interest will be payable monthly in either

conversion shares or in cash.

A commitment fee in the amount of $26,250 was paid to Lind.

The Company paid Lind

$60,000 for closing fees by issuing 44,557 shares of Class A common stock.

As of June 30, 2020 the outstanding

principal net of debt issuance cost and discount, and accrued interest owed to Lind were $3,668,504 and $62,872,

respectively.

As of December 31, 2019, the outstanding principal net of debt issuance cost and discount, and accrued

interest owed to Lind were $4,185,866 and $5,425, respectively.

Principal of $3,417,537 is due within one year

from June 30, 2020.

Accounts Receivable Financing –

Commercial Finance

On August 15, 2017, Boxlight Inc., and Genesis

Collaboration, LLC (“Genesis”) entered into a 12-month term account sale and purchase agreement with Sallyport Commercial

Finance, LLC (“Sallyport”).

Pursuant to the agreement, Sallyport agreed to purchase 85% of the eligible accounts receivable

of the Company with a right of recourse back to the Company if the receivables are not collectible.

This agreement requires a

minimum monthly sales volume of $1,250,000 with a maximum facility limit of $6,000,000.

Advances against this agreement accrue

interest at the rate of 4.00% in excess of the highest prime rate publicly announced from time to time with a floor of

As of September

30, 2020 and December 31, 2019, the Company had paid principal of $2,200,000 and $977,778, respectively, interest of $143,407

and $106,643, respectively, through issuance of Class A common stock to Lind.

December 13, 2019, the Company entered into a second securities purchase agreement with Lind that contemplates a $1,250,000 working

capital financing.

The investment is in the form of a $1,375,000 principal amount convertible secured Boxlight Parent note, payable

at an 8% interest rate, compounded monthly with a maturity date of 24 months.

The note is convertible at the option of Lind into

the Company’s Class A common stock at a fixed conversion price of $2.50 per share.

The Company has the right to convert

up to 50% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades

above $5.00 for 30 consecutive days;

and convert up to 100% of the outstanding amount of the note if the volume weighted average

closing price of our Class A common stock trades above $6.25 for 30 consecutive days.

A commitment fee in the amount of $43,750

was paid to Lind.

The Company paid Lind $93,022 for closing fees by issuing 69,420 shares of Class A common stock.

As of September

30, 2020 and December 31, 2019, the Company paid principal of $152,778 and $0, respectively, and interest of $64,582 and $0, respectively,

through issuance of Class A common stock to Lind.

February 4, 2020, the Company and Lind entered into a third securities purchase agreement pursuant to which the Company is to

receive on February 6, 2020 $750,000 in exchange for the issuance to Lind of (1) an $825,000 convertible promissory note, payable

at an 8% interest rate, compounded monthly, (2) certain shares of restricted Class A common stock valued at $60,000, calculated

based on the 20-day volume average weighted price of the Class A common stock for the period ended February 4, 2020, and (3) a

commitment fee of $26,250.

The Note matures over 24 months, with repayment to commence on August 4, 2020, after which time the

Company will be obligated to make monthly payments of $45,833, plus interest.

Interest shall accrue during the first six months

of the note, after which time the interest payments, including accrued interest will be payable monthly in either conversion shares

A commitment fee in the amount of $26,250 was paid to Lind, along with legal fees in the amount of $15,000.

The Company paid Lind $60,000 for closing fees by issuing 44,557 shares of Class A common stock.

As of September

30, 2020, the Company paid principal of $91,667 and interest of $38,749 through issuance of Class A common stock to Lind.

September 21, 2020, the Company and Lind entered into a fourth securities purchase agreement pursuant to which the Company received

on September 22, 2020 $20,000,000 in exchange for the issuance to Lind of (1) a $22,000,000 convertible promissory note, payable

at an 4% interest rate, compounded monthly, (2) 310,399 shares of restricted Class A common stock valued at $500,000, calculated

based on the 20-day volume average weighted price of the Class A common stock for the period ended September 21, 2020, and (3)

a commitment fee of $400,000.

The Note matures over 24 months, with repayment to commence on November 22, 2020, after which time

the Company will be obligated to make monthly payments of $1,000,000, plus interest.

Interest will accrue during the first two

months of the note, after which time the interest payments, including accrued interest will be payable monthly in either conversion

shares or in cash.

A commitment fee in the amount of $400,000 was paid to Lind, along with legal fees in the amount of $20,000.

The Company paid Lind $500,000 for closing fees by issuing 310,399 shares of Class A common stock.

of September 30, 2020, the outstanding principal net of debt issuance costs and discounts, and accrued interest

owed to Lind were $20,965,300 and $33,059, respectively.

As of December 31, 2019, the outstanding principal net of debt issuance

cost and discount, and accrued interest owed to Lind were $4,185,866 and $5,425, respectively.

Principal of $13,453,408 is due

within one year from September 30, 2020.

Receivable Financing –

Sallyport Commercial Finance

August 15, 2017, Boxlight Inc., and Genesis Collaboration, LLC (“Genesis”) entered into a 12-month term account sale

and purchase agreement with Sallyport Commercial Finance, LLC (“Sallyport”).

Pursuant to the agreement, Sallyport

agreed to purchase 85% of the eligible accounts receivable of the Company with a right of recourse back to the Company if the

receivables are not collectible.

This agreement requires a minimum monthly sales volume of $1,250,000 with a maximum facility

limit of $6,000,000.

Advances against this agreement accrue interest at the rate of 4.00% in excess of the highest prime rate

publicly announced from time to time with a floor of 4.25%.

In addition, the Company is required to pay a daily audit fee of $950

The Company granted Sallyport a security interest in all of the assets of Boxlight Inc.

This agreement was

terminated and replaced with an asset-based lending agreement effective September 30, 2020.

September 30, 2020, Boxlight Inc., and EOS EDU LLC.

entered into a 12-month term asset-based lending agreement with Sallyport

Commercial Finance, LLC (“Sallyport”).

Pursuant to the agreement, Sallyport agreed to purchase 90% of the eligible

accounts receivable of the Company with a right of recourse back to the Company if the receivables are not collectible.

This agreement

requires a minimum monthly sales volume of $1,250,000 with a maximum facility limit of $6,000,000.

Advances against this agreement

accrue interest at the rate of 3.50% in excess of the highest prime rate publicly announced from time to time with a floor of

In addition, the Company is required to pay a daily audit fee of $950 per day.

1 unchanged sentence

interest in all of the assets of Boxlight Inc.

As of June 30, 2020, outstanding principal

and accrued interest were $1,639,251 and $0, respectively.

For the six months ended June 30, 2020, the Company incurred interest

expense of $411,267.

Paycheck Protection Program Loan

On May 22, 2020, the Company received loan

proceeds of approximately $1,008,575 under the Paycheck Protection Program (“PPP”) established as part of the Coronavirus

Aid, Relief and Economic Security Act (“CARES Act”).

The loans and accrued interest received under the PPP are forgivable

to the extent borrowers use the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains

their payroll levels during the designated eight-week period prior to which the PPP would otherwise be repayable.

The amount of

loan forgiveness is reduced if the borrower terminates employees or reduces salaries during the eight-week period.

The unforgiven portion of the PPP loan is

payable over two years at an interest rate of 1%, with a deferral of payments for the first six months.

The Company intends to

use the proceeds for purposes consistent with the PPP.

As of June 30, 2020, outstanding principal

and accrued interest were $1,008,575 and $1,121, respectively.

STEM Education Holdings

On April 17, 2020, the Company issued a note

to STEM Education Holdings, the sole shareholder of MyStemKits, in the amount of $350,000 bearing a 7% interest rate.

was issued as part of the purchase price pursuant to the asset purchase agreement.

The principal is payable in four equal installments

Further, acknowledging the ongoing COVID-19 pandemic, the Letter Agreement states that potential adjustments may

be made to the Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits

continues to be materially below budget.

As of June 30, 2020, outstanding principal and accrued interest under this note were

$350,000 and $5,036, respectively.

Debt - Related Parties:

Long Term Note Payable- Qwizdom Shareholders

On June 22, 2018, the Company issued a note

to Darin and Silvia Beamish, the previous 100% shareholders of Qwizdom, in the amount of $656,000 bearing an 8% interest rate.

of September 30, 2020, outstanding principal and accrued interest were $0 and $0, respectively.

For the nine months ended September

30, 2020, the Company incurred interest expense of $499,671.

Protection Program Loan

May 22, 2020, the Company received loan proceeds of $1,008,575 under the Paycheck Protection Program (“PPP”) established

as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

The loans and accrued interest received

under the PPP are forgivable to the extent borrowers use the loan proceeds for eligible purposes, including payroll, benefits,

rent and utilities, and maintains their payroll levels during the designated eight-week period prior to which the PPP would otherwise

be repayable.

The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during the eight-week

unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first

The Company is using the proceeds for purposes consistent with the PPP.

of September 30, 2020, outstanding principal and accrued interest were $1,008,575 and $3,698, respectively.

Education Holdings

April 17, 2020, the Company issued a note to STEM Education Holdings, the sole shareholder of MyStemKits, in the amount of $350,000

bearing a 7% interest rate.

The note was issued as part of the purchase price pursuant to the asset purchase agreement (“MyStemKits

Asset Purchase Agreement”).

The principal owed under the MyStemKits Asset Purchase Agreement is payable in four equal installments

of $87,500 (the “Installment Payments”).

Further, acknowledging the ongoing COVID-19 pandemic, on April 17, 2020,

the Company and the sellers entered into a letter agreement which stated that potential adjustments may be made to the Installment

Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits continues to be materially

below budget.

The Company failed to make the July 31, 2020 payment and is presently in negotiations with the note holder for purposes

of determining a suitable adjustment as a result of the COVID-19-related sales decline.

As of September 30, 2020, outstanding

principal and accrued interest due under this note were $350,000 and $11,297, respectively.

- Related Parties:

Term Note Payable- Qwizdom Shareholders

June 22, 2018, the Company issued a note to Darin and Silvia Beamish, the previous 100% shareholders of Qwizdom, in the amount

of $656,000 bearing an 8% interest rate.

The note was issued as a part of the purchase price pursuant to a stock purchase agreement.

The principal and accrued interest

of the $656,000 note is due and payable in 12 equal quarterly installments.

The first quarterly payment was due September

2018 and subsequent quarterly payments are due through June 2021.

Principal and accrued interest become due and payable in full

upon the completion of a public offering of Class A common stock or private placement of debt or equity securities for $10,000,000

As of June 30, 2020, outstanding principal and accrued interest under this note were $381,563 and $22,555, respectively.

As of December 31, 2019, outstanding principal and accrued interest under this agreement was $381,563 and $7,334, respectively.

Principal in the amount of $381,563 is due within a year from June 30, 2020.

Note Payable –

On March 12, 2019, the Company purchased the

net assets of MRI for 200,000 shares of the Company’s Class A common stock and a $70,000 note payable.

The principal and accrued interest of the $656,000 note is due and payable in 12 equal quarterly installments.

The first quarterly

payment was due September 2018 and subsequent quarterly payments are due through June 2021.

Principal and accrued interest become

due and payable in full upon the completion of a public offering of Class A common stock or private placement of debt or equity

securities for $10,000,000 or more.

As of December 31, 2019, outstanding principal and accrued interest under this agreement was

$381,563 and $7,334, respectively.

The note was paid in full on August 14, 2020 as a result of a public offering completed

in June 2020.

Payable –

March 12, 2019, the Company purchased the net assets of MRI for 200,000 shares of the Company’s Class A common stock and

a $70,000 note payable.

As of December 31, 2019, outstanding principal and accrued interest under this note were $17,500 and $206,

respectively.

The note was paid in full on March 31, 2020.

Line of Credit - Logical Choice Corporation-Delaware

On May 21, 2014, the Company entered into

a line of credit agreement (the “LCC Line of Credit”) with Logical Choice Corporation, a-Delaware corporation

(“LCC-Delaware”), the former sole member of Genesis.

The LCC Line of Credit allowed the Company to borrow up to $500,000

for working capital and business expansion.

The funds when borrowed accrued interest at the rate of 10% per annum.

paid in full on June 26, 2020.

Note Payable –

On January 16, 2015, the Company issued a note

to James Mark Elliott, the Company’s Chief Executive Officer, in the amount of $50,000.

The note, as later amended, was due

on December 31, 2019 and bears interest at an annual rate of 10%, compounded monthly.

The note is convertible into the Company’s

common stock at the lesser of (i) $6.28 per share, (ii) a discount of 20% to the stock price if the Company’s common stock

is publicly traded, or (iii) if applicable, such other amount negotiated by the Company.

The note holder may convert all, but not

less than all, of the outstanding principal and interest due under this note.

of Credit - Logical Choice Corporation-Delaware

May 21, 2014, the Company entered into a line of credit agreement (the “LCC Line of Credit”) with Logical Choice Corporation,

a-Delaware corporation (“LCC-Delaware”), the former sole member of Genesis.

The LCC Line of Credit allowed the Company

to borrow up to $500,000 for working capital and business expansion.

The funds when borrowed accrued interest at the rate of 10%

As of December 31, 2019, outstanding principal and accrued interest under this note were $54,000 and $26,716, respectively.

The note was paid in full on June 26, 2020.

Payable –

January 16, 2015, the Company issued a note to James Mark Elliott, the Company’s Chief Executive Officer, in the amount

The note, as later amended, was due on December 31, 2019 and bears interest at an annual rate of 10%, compounded monthly.

The note is convertible into the Company’s common stock at the lesser of (i) $6.28 per share, (ii) a discount of 20% to

the stock price if the Company’s common stock is publicly traded, or (iii) if applicable, such other amount negotiated by

The note holder may convert all, but not less than all, of the outstanding principal and interest due under this

On July 3, 2018, Mr.

Elliott and the Company amended

the note to eliminate the conversion provision of the note.

As of June 30, 2020, outstanding principal and accrued interest under

this note were $2,163 and $1,744, respectively.

The note is currently in default.

As of December 31, 2019, outstanding principal

and accrued interest under this note were $23,548 and $593, respectively.

Elliott and the Company amended the note to eliminate the conversion provision of the note.

As of December

31, 2019, outstanding principal and accrued interest under this note were $23,548 and $593, respectively.

The note was paid

in full on July 17, 2020.

DERIVATIVE LIABILITIES

Company had issued warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their

conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future.

The Company concluded

that the warrants should be accounted for as derivative liabilities.

In determining the fair value of the derivative liabilities,

the Company used the Black-Scholes option pricing model at June 30, 2020 and 2019:

June 30, 2020

Common stock issuable upon exercise of warrants

Market value of common stock on measurement date

Exercise price

Risk free interest rate (1)

Expected life in years

Expected volatility (2)

Expected dividend yields (3)

June 30, 2019

Common stock issuable upon exercise of warrants

Market value of common stock on measurement date

Company issued warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their conversion

and exercise prices may be lowered if the Company issues securities at lower prices in the future.

The Company concluded that

the warrants should be accounted for as derivative liabilities.

In determining the fair value of the derivative liabilities, the

Company used the Black-Scholes option pricing model at September 30, 2020 and 2019:

Common stock issuable

upon exercise of warrants

Market value of common stock on measurement

Exercise price

$ 1.20 to 2.78

Risk free interest rate (1)

2 unchanged sentences

Expected dividend yields (4)

stock issuable upon exercise of warrants

value of common stock on measurement date

free interest rate (1)

life in years

volatility (3)

dividend yields (4)

risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date.

expected volatility was determined by calculating the volatility of the Company’s common stock.

expected volatility was determined by calculating the volatility of the Company’s

peer common stock.

Company does not expect to pay a dividend in the foreseeable future.

following table shows the change in the Company’s derivative liabilities rollforward for the six months ended June

following table shows the change in the Company’s derivative liabilities rollforward for the nine months ended September

30, 2020 and 2019:

Balance, December 31,

Change in fair value of derivative liabilities

Balance, June 30, 2020

fair value of derivative liabilities

Balance, September

Balance, December 31,

Initial valuation of derivative liabilities upon issuance of warrants

Change in fair value of derivative liabilities

Balance, June 30, 2019

Initial valuation of derivative liabilities

upon issuance of warrants

fair value of derivative liabilities

Balance, September

change in fair value of derivative liabilities includes losses from exercise price modifications.

Company’s articles of incorporation provide that the Company is authorized to issue 50,000,000 shares of preferred stock

consisting of:

1) 250,000 shares of non-voting Series A preferred stock, with a par value of $0.0001 per share;

Company’s articles of incorporation, as amended on September 18, 2020, provide that the Company is authorized to issue 50,000,000

shares of preferred stock consisting of:

1) 250,000 shares of non-voting Series A preferred stock, with a par value of $0.0001

2) 1,586,620 shares of voting Series B preferred stock, with a par value of $0.0001 per share;

3) 1,320,850 shares

of voting Series B preferred stock, with a par value of $0.0001 per share;

3) 270,000 shares of voting Series C preferred stock,

with a par value of $0.0001 per share;

of voting Series C preferred stock, with a par value of $0.0001 per share;

and 4) 46,842,530 shares of “blank check”

preferred stock to be designated

by the Company’s Board of Directors.

the time of the Company’s initial public offering, 250,000 shares of the Company’s non-voting convertible Series

A preferred stock were issued to Vert Capital for the acquisition of Genesis.

preferred stock to be designated by the Company’s Board of Directors.

of preferred shares

B Preferred Stock and Series C Preferred Stock

stated in Note 3, on September 25, 2020, in connection with the acquisition of Sahara, the Company issued 1,586,620 shares of

Series B Preferred Stock and 1,320,850 shares of Series C Preferred Stock.

The Series B Preferred Stock has a stated and liquidation

value of $10.00 per share and pays a dividend out of the earnings and profits of the Company at the rate of 8% per annum, payable

The Series B Preferred Stock is convertible into the Company’s Class A common stock at a conversion price of

$1.66 which was the closing price of BOXL’s Class A common stock on the Nasdaq stock market on September 25, 2020 (the “Conversion

Price”) either (i) at the option of the holder at any time after January 1, 2024 or (ii) automatically upon the Company’s

Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading days (based on a volume weighted average

The Series C Preferred Stock has a stated and liquidation value of $10.00 per share and is convertible into the Company’s

Class A common stock at the Conversion Price either (i) at the option of the holder at any time after January 1, 2026 or (ii)

automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading

days (based on a volume weighted average price).

the extent not previously converted into the Company’s Class A common stock, the outstanding shares of Series B Preferred

Stock shall be redeemable at the option of the Holders at any time or from time to time commencing on January 1, 2024, upon thirty

(30) days prior written notice to the Holders, for a redemption price, payable in cash, equal to sum of (a) Ten ($10.00) multiplied

by the number of shares of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and

unpaid dividends, if any, on such Redeemed Shares.

The Series C Preferred Stock is also subject to redemption on the same terms

commencing January 1, 2026.

Series B Preferred Stock has been recorded at its estimated fair value on the date of issuance of approximately

$18.2 million, which includes the conversion and redemption features as they have not been bifurcated from the host instruments.

Company determined that the Series C Preferred Stock included a beneficial conversion feature with an intrinsic value of approximately

$0.4 million.

The beneficial conversion feature has been separately recorded as a component of Additional Paid-in Capital at its

intrinsic value.

The Series C Preferred Stock has been recorded at its estimated fair value on the date of issuance (less the

intrinsic value of the beneficial conversion feature described above) of approximately $10.7 million, which includes the redemption

features as they have not been bifurcated from the host instrument.

the redemption features in the Series B Preferred Stock and Series C Preferred Stock are not solely with the control of the Company,

the Company has classified the Series B Preferred Stock and Series C Preferred Stock in temporary equity on the Company’s

consolidated balance sheet.

A Preferred Stock

the time of the Company’s initial public offering, 250,000 shares of the Company’s non-voting convertible Series A

preferred stock were issued to Vert Capital for the acquisition of Genesis.

All of the Series A preferred stock was convertible

8 unchanged sentences

of Class B common stock, such shares of Class B common stock shall automatically convert into shares of Class A common stock.

As of June 30, 2020 and December 31, 2019, the Company had 31,857,327 and 11,698,697 shares of Class A common stock issued and

outstanding, respectively.

No Class B shares were outstanding at June 30, 2020 and December 31, 2019.

As of September 30, 2020 and December 31, 2019, the Company had 50,871,711 and 11,698,697 shares of Class A common stock issued

and outstanding, respectively.

No Class B shares were outstanding at September 30, 2020 and December 31, 2019.

of common stock

6 unchanged sentences

underwriting discounts and offering expenses of $905,814.

During the period ended June 30, 2020,

the Company issued 2,340,056 shares of Class A common stock in lieu of $2,929,369 in principal and interest payments due in relation

to notes payable to Lind Global.

In addition, the Company issued 80,467 shares of Class A common stock in lieu of payment of the

closing fees of the convertible debt with an aggregate amount of $79,371 to Lind Global.

On July 31, 2020, the Company issued 17,250,000

shares of the Company’s Class A common stock at a public offering price of $2.00 per share.

Gross proceeds from the issuances

were $34,500,000, including the underwriting overallotment.

Net proceeds were $32,025,000 after deducting underwriting

discounts and offering expenses of $2,475,000.

the quarter ended March 31, 2020, the Company issued 787,489 shares of Class A common stock in lieu of $1,133,515 in principal

and interest payments due in relation to notes payable to Lind Global.

In addition, the Company issued 44,557 shares of Class

A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $49,013 to Lind Global.

the quarter ended June 30, 2020, the Company issued 1,552,567 shares of Class A common stock in lieu of $1,158,854 in principal

and interest payments due in relation to notes payable to Lind Global.

In addition, the Company issued 35,910 shares of Class

A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $30,358 to Lind Global.

the quarter ended September 30, 2020, the Company issued 1,407,364 shares of Class A common stock in lieu of $4,033,869 in principal

and interest payments due in relation to notes payable to Lind Global.

In addition, the Company issued 310,399 shares of Class

A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $437,663 to Lind Global.

Payable Conversion

During the period ended June 30, 2020,

the Company entered into an agreement with a related party, Everest Display, Inc., to convert $3.0 million in accounts payable

owed in exchange for 2,202,898 shares of Class A common stock with an aggregate value of $1,269,275 resulting in the Company recording

a $1,730,725 gain from settlement of liabilities.

April 17, 2020, the Company issued 142,857 shares to Stemify at a purchase price of $0.70 per share for a total proceeds of $100,000.

the quarter ended March 31, 2020, the Company entered into an agreement with a related party, Everest Display, Inc., to convert

$2.0 million in accounts payable owed in exchange for 1,333,333 shares of Class A common stock with an aggregate value of $566,667

resulting in the Company recording a $1,433,333 gain from settlement of liabilities.

the quarter ended June 30, 2020, the Company entered into an agreement with a related party, Everest Display, Inc., to convert

$1.0 million in accounts payable owed in exchange for 869,565 shares of Class A common stock with an aggregate value of $702,608

resulting in the Company recording a $297,392 gain from settlement of liabilities.

the quarter ended March 31, 2020, the Company issued 7,111 shares of Class A common stock in lieu of payment for services with

an aggregate amount of $8,000.

April 17, 2020, the Company issued 142,857 shares to Stemify at a purchase price of $0.70 per share for total proceeds of $100,000.

June 30, 2020, the Company issued 52,241 shares to Michael Pope as part of his stock compensation as the Chief Executive Officer.

The shares vested during the second quarter of the year.

the period ended June 30, 2020, the Company issued 7,111 shares of Class A common stock in lieu of payment for services with an

aggregate amount of $8,000.

On September 30, 2020, the Company issued an additional 46,621 shares

Pope as part of his stock compensation.

The shares vested during the third quarter of the year.

of stock options

options to purchase common stock were exercised during the six months ended June 30, 2020.

options to purchase common stock were exercised during the nine months ended September 30, 2020.

STOCK COMPENSATION

The total number of underlying shares of

the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company

or a subsidiary of the Company under the Company’s 2014 Equity Inventive Plan, as amended (the “Equity Incentive Plan”),

is 2,690,438 shares.

Grants made under the Equity Incentive Plan must be approved by the Company’s Board of Directors.

of June 30, 2020, the Company had 747,011 shares reserved for issuance under the Equity Incentive Plan.

On April 15, 2020, the Equity Incentive

Plan was amended, whereby the Board of Directors approved increasing the shares available for issuance under the Equity Incentive

Plan by 3,700,000 shares;

the Company is seeking shareholder approval of the aforementioned action at the Company’s upcoming

annual meeting, to be held on September 4, 2020.

our stock option program, pursuant to the Equity Incentive Plan, an employee receives an award that provides the opportunity

total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key

employees and consultants of the Company or a subsidiary of the Company under the Company’s 2014 Equity Inventive Plan,

as amended (the “Equity Incentive Plan”), was 2,690,438 shares.

Grants made under the Equity Incentive Plan

must be approved by the Company’s Board of Directors.

On April 15, 2020, the Equity Incentive Plan was amended, whereby

the Board of Directors approved increasing the shares available for issuance under the Equity Incentive Plan by 3,700,000 shares.

The Company obtained shareholder approval of the aforementioned action at the Company’s annual meeting, which was held on

September 4, 2020.

The number of underlying shares available, as amended, was 6,390,438.

As of September 30, 2020, the Company

had issued all of the shares reserved for issuance under the Equity Incentive Plan and, as such, there no longer shares available

for issuance under the Equity Incentive Plan.

our stock option program, pursuant to the Equity Incentive Plan, an employee may receive an award that provides the opportunity

in the future to purchase the Company’s shares at the market price of our stock on the date the award is granted (strike

8 unchanged sentences

by employees that leave the Company prior to vesting.

is a summary of the option activities during the six months ended June 30, 2020:

is a summary of the option activities during the nine months ended September 30, 2020:

Exercise Price

Average Remaining Contractual

Outstanding, December 31,

Outstanding, June

Exercisable, June

Term (in years)

December 31, 2019

September 30, 2020

Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model.

of June 30, 2020, the options had an intrinsic value of approximately $0.8 million.

of September 30, 2020, the options had an intrinsic value of approximately $3.0 million.

January 2, 2020, the Company granted 100,000 stock options each, for a total of 300,000 options to purchase common stock, to its

President, Chairman and Chief Executive Officer, its Chief Commercial Officer and its Chief Operating Officer;

such options have

an exercise price of $1.30 per share, and vest monthly over one-year period.

The expiration date of these options is five years

from the grant date.

These options had an aggregated fair value of approximately $268,512 on the grant date that was calculated

using the Black-Scholes option-pricing model.

January 13, 2020, the Company granted 50,000 stock options to Mark Elliott as part of his new employment agreement as the Company’s

Chief Commercial Officer with an exercise price of $1.20 per share, which options vest monthly over one-year period.

The expiration

date of these options is five years from the grant date.

These options had an aggregated fair value of approximately $46,700 on

the grant date that was calculated using the Black-Scholes option-pricing model.

April 15, 2020, the Company granted an aggregate of 2,550,000 stock options in total to its employees with an exercise price of

2 unchanged sentences

options had an aggregated fair value of approximately $1,503,645 on the grant date.

On January 13, 2020, the Company granted 50,000

stock options to Mark Elliott as part of his new employment agreement as the Company’s Chief Commercial Officer

with an exercise price of $1.20 per share, which options vest monthly over one-year period.

The expiration date of these options

is five years from the grant date.

These options had an aggregated fair value of approximately $46,700 on the grant date that

was calculated using the Black-Scholes option-pricing model.

On January 2, 2020, the Company granted 100,000

stock options each, for a total of 300,000 options to purchase common stock, to its President, Chairman and Chief Executive Officer,

its Chief Commercial Officer and its Chief Operating Officer;

such options have an exercise price of $1.30

per share, and vest monthly over one-year period.

April 20, 2020, the Company granted an aggregate of 20,000 stock options in total to a new employee with an exercise price of

$0.67 per share vesting quarterly over four years.

The expiration date of these options is five years from the grant date.

These options had an aggregated fair value of approximately $268,512 on the grant date that was calculated using the Black-Scholes

option-pricing model.

used in the Black-Scholes option-pricing model for options granted during the six months ended June 30, 2020 include:

rate of 0.29% –

options had an aggregated fair value of approximately $11,264 on the grant date.

September 17, 2020, the Company granted an aggregate of 16,000 stock options in total to an employee with an exercise price of

$1.46 per share vesting annually over four years.

The expiration date of these options is ten years from the grant date.

options had an aggregated fair value of approximately $20,135 on the grant date.

used in the Black-Scholes option-pricing model for options granted during the nine months ended September 30, 2020 include:

discount rate of 0.29% –

1.61%, (2) expected life, using simplified method, of 3- 4 years, (3) expected volatility of 136-148%,

and (4) zero expected dividends.

is a summary of the warrant activities during the six months ended June 30, 2020:

Number of Units

our stock option program, pursuant to the Equity Incentive Plan, the Company grants restricted stock units (“RSUs”)

to certain employees and non-employee directors.

Upon granting the RSUs, the Company records a fixed compensation expense equal

to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period

for the RSUs.

Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that

leave the Company prior to vesting.

The restricted stock units vest over a range of immediately vested to four-year vesting periods

in accordance with the terms of the applicable RSU grant agreement.

is a summary of the RSU activities during the nine months ended September 30, 2020:

Grant Date Fair Value

Outstanding, December

September 30, 2020

March 20, 2020, the Company granted an aggregate of 186,484 RSUs to Michael Pope.

These RSUs vest over one year, and had

an aggregated fair value of approximately $76,458 on the grant date.

June 30, 2020, the Company granted an aggregate of 108,696 RSUs to new board members.

These RSUs vest over one year, and

had an aggregated fair value of approximately $100,000 on the grant date.

September 18, 2020, the Company granted an aggregate of 34,483 RSUs to a new employee.

These RSUs vest over four years, and had

an aggregated fair value of approximately $50,000 on the grant date.

September 25, 2020, the Company granted an aggregate of 2,725,400 RSUs to its new employees retained in relation to the Sahara

These RSUs vest over four years, and had an aggregated fair value of approximately $4,524,164 on the grant date.

is a summary of the warrant activities during the nine months ended September 30, 2020:

Exercise Price

Weighted Average Remaining Contractual

Average Remaining Contractual

Term (in years)

Outstanding, December 31, 2019

Outstanding, June 30, 2020

Exercisable, June 30, 2020

On April 20, 2020, the Company granted

20,000 stock options to Ryan Legudi, the managing director of Stemify, as part of his compensation with an exercise price of $0.70

per share, which options vest quarterly over four-year period.

The expiration of these options is five years from the grant date.

The options had an aggregated fair value of approximately $16,444 on the grant date.

December 31, 2019

September 30, 2020

April 20, 2020, the Company granted 20,000 warrants to Ryan Legudi, the managing director of Stemify, as part of his compensation

with an exercise price of $0.70 per share, which warrants vest quarterly over four-year period.

The expiration of these

options is five years from the grant date.

The warrants had an aggregated fair market value of approximately $16,444 on

the grant date.

compensation expense

the six months ended June 30, 2020 and 2019, the Company recorded the following stock compensation in general and administrative

the nine months ended September 30, 2020 and 2019, the Company recorded the following stock compensation in general and administrative

Stock options

Restricted stock award

Total stock compensation expense

of June 30, 2020, there was approximately $2.3 million of unrecognized compensation expense related to unvested options, which

will be amortized over the remaining vesting period.

Of that total, approximately $0.6 million is estimated to be recorded as

compensation expense in the remaining six months of 2020.

Restricted stock units

compensation expense

of September 30, 2020, there was approximately $6.6 million of unrecognized compensation expense related to unvested options,

restricted stock units, and warrants, which will be amortized over the remaining vesting period.

Of that total, approximately

$0.6 million is estimated to be recorded as compensation expense in the remaining three months of 2020.

OTHER RELATED PARTY TRANSACTIONS

On January 31, 2018, the Company entered into

a management agreement (the “Management Agreement”) with an entity owned and controlled by our Chief Executive Officer,

President and Director, Michael Pope.

The Management Agreement is separate and apart from Mr.

Pope’s employment agreement

with the Company.

The Management Agreement, effective as of the first day of the same month that Mr.

Pope’s employment

with the Company terminates, and, for a term of 13 months thereafter, Mr.

Pope will provide consulting services

to the Company including sourcing and analyzing strategic acquisitions, assisting with financing activities, and other services.

As consideration for the services provided, the Company will pay a management fee equal to 0.375% of the consolidated net

revenues of the Company, payable in monthly installments, not to exceed $250,000 in any calendar year.

January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned

and controlled by our Chief Executive Officer, President and Director, Michael Pope.

The Management Agreement is separate and

apart from Mr.

Pope’s employment agreement with the Company.

The Management Agreement, effective as of the first day of

the same month that Mr.

Pope’s employment with the Company terminates, and, for a term of 13 months thereafter, Mr.

will provide consulting services to the Company including sourcing and analyzing strategic acquisitions, assisting with financing

activities, and other services.

As consideration for the services provided, the Company will pay a management fee equal to 0.375%

of the consolidated net revenues of the Company, payable in monthly installments, not to exceed $250,000 in any calendar year.

At his option, Mr.

may defer payment until the end of each year and receive payment in the form of shares of the Company’s Class A common

Pope may defer payment until the end of each year and receive payment in the form of shares of the Company’s

Class A common stock.

and Purchases - EDI

Everest Display Inc.

(“EDI”),

an affiliate of the Company’s major shareholder K-Laser Technology, Inc., is a major supplier of products to the Company.

For the six months ended June 30, 2020 and 2019, the Company had purchases of $317,327 and $379,627, respectively, from EDI.

the six months ended June 30, 2020 and 2019, the Company had sales of $35,654 and $21,336, respectively, to EDI.

The Company entered

into an agreement with EDI, to convert $3.0 million in accounts payable owed in exchange for 2,202,898 shares of common

stock valued at $1,269,275 resulting in the Company recording a $1,730,725 gain from settlement of liabilities.

of June 30, 2020, and December 31, 2019, the Company had accounts payable of $2,066,848 and $5,037,569, respectively, to EDI.

(“EDI”), an affiliate of the Company’s major shareholder K-Laser Technology, Inc., is a major supplier

of products to the Company.

For the nine months ended September 30, 2020 and 2019, the Company had purchases of $339,267 and $855,947,

respectively, from EDI.

For the nine months ended September 30, 2020 and 2019, the Company had sales of $35,654 and $37,360, respectively,

The Company entered into agreements with EDI during the first and second quarters of 2020, to convert a

total of $3.0 million in accounts payable owed in exchange for 2,202,898 shares of common stock valued at $1,269,275 resulting

in the Company recording a $1,730,725 gain from settlement of liabilities.

of September 30, 2020, and December 31, 2019, the Company had accounts payable of $2,066,848 and $5,037,569, respectively, to

COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases three offices under non-cancelable

lease agreements.

The leases provide that the Company pays only monthly rental fees and is not responsible for taxes, insurance

or maintenance expenses related to the properties.

Future minimum lease payments of the Company’s operating leases

with a term over one year subsequent to June 30, 2020 are as follows:

Company leases four offices under non-cancelable lease agreements.

The leases provide that the Company pays monthly rental

fees related to the properties.

Future minimum lease payments of the Company’s operating leases with a term over one year

subsequent to September 30, 2020 are as follows:

Year ending December 31,

Net Minimum Lease Payments

the six months ended June 30, 2020 and 2019, aggregate rent expense was $219,650 and $206,227 respectively.

the nine months ended September 30, 2020 and 2019, aggregate rent expense was $350,836 and $312,910 respectively.

CUSTOMER AND SUPPLIER CONCENTRATION

customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases.

Company’s revenues were concentrated among two significant customers for the six months ended June 30, 2020

Total revenues from the

customer to total

Company’s revenues were concentrated among three significant customers for the nine months ended September 30, 2020

revenues from the customer to total

revenues for the

six months ended

June 30, 2020

Accounts receivable

nine months ended

September 30, 2020

from the customer

June 30, 2020

September 30, 2020

(rounded to 000’s)

Total revenues from the

customer to total

revenues from the customer to total

revenues for the

six months ended

June 30, 2019

Accounts receivable

nine months ended

September 30, 2019

from the customer as of

June 30, 2019

September 30, 2019

(rounded to 000’s)

The loss of one of the above significant

customers or the failure to attract new customers could have a material adverse effect on our business, results of operations

and financial condition.

Company’s purchases were concentrated among a few vendors for the six months ended June 30, 2020 and 2019:

Total purchases from the

vendor to total

loss of one of the above significant customers or the failure to attract new customers could have a material adverse effect on

our business, results of operations and financial condition.

Company’s purchases were concentrated among two vendors for the nine months ended September 30, 2020 and 2019:

purchases from the vendor to total

purchases for the

six months ended

June 30, 2020

Accounts payable

nine months ended

September 30, 2020

(prepayment) to the

June 30, 2020

September 30, 2020

(rounded to 000’s)

Total purchases from the

vendor to total

purchases from the vendor to total

purchases for the

six months ended

June 30, 2019

Accounts payable

nine months ended

September 30, 2019

(prepayment) to the

June 30, 2019

September 30, 2019

(rounded to 000’s)

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SUBSEQUENT EVENTS

July 13, 2020, the Company issued 118,781 shares of Class A common stock at $0.72 to Lind Global in lieu of principal

and interest payment on notes payable with an aggregate amount of $85,046.

On July 16, 2020, the Company issued 488,888

shares of Class A common stock at $2.50 per share to Lind Global to convert a loan from Lind with an outstanding

loan amount of $1,222,222.

July 22, 2020, the Company issued 338,792 shares of Class A common stock at $0.76 per share to Lind Global in lieu

of principal and interest payment of notes payable with an aggregate amount of $257,481.

July 31, 2020, the Company issued 17,250,000 shares of Class A common stock at $2.00 per share, through a public offering.

Company received net proceeds of $32,025,000, after subtracting underwriting fees of $2,475,000.

August 4, 2020, the Company issued 66,602 shares of Class A common stock at $1.19 per share to Lind Global in lieu

of principal and interest payment of notes payable with an aggregate amount of $79,388.

October 1, 2020, the Company granted an aggregate of 20,000 RSUs to a new employee.

These RSUs vest over four years, and

had an aggregated fair value of approximately $37,000 on the grant date.

October 5, 2020, the Company issued 39,597 shares of Class A common stock in lieu of principal and interest payment of notes payable

with an aggregate amount of $50,722.

October 19, 2020, the Company granted an aggregate of 18,634 RSUs to a new employee.

These RSUs vest over four years, and

had an aggregated fair value of approximately $30,000 on the grant date.

October 22, 2020, the Company issued 180,812 shares of Class A common stock in lieu of principal and interest payment of notes

payable with an aggregate amount of $252,593.

November 5, 2020, the Company issued 42,015 shares of Class A common stock in lieu of principal and interest payment of notes

payable with an aggregate amount of $50,417.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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of unanticipated events or changes in future operating results.

are an educational technology company that is seeking to become a world leading innovator and integrator of interactive products

and software for schools, as well as for business and government learning spaces.

We currently design, produce and distribute

interactive projectors and distribute interactive technologies, including flat panels, projectors, whiteboards and peripherals

to the education market.

We also distribute science, technology, engineering and math (or “STEM”) products, including

a portable science lab.

All of our products are integrated into our classroom software suite that provides tools for whole class

learning, assessment and collaboration.

date, we have generated substantially all of our revenue from the sale of our software and interactive displays to the K-12 U.S.

are a leading provider of interactive technology solutions under our award-winning brands Clevertouch TM , Mimio ®

and Sedao TM .

We aim to improve engagement and communication in diverse business and education environments.

develop, sell, and service our integrated solution suite including interactive displays, collaboration software, supporting accessories

and professional services.

date, we have generated substantially all of our revenue from sales to the K-12 U.S.

educational market.

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strategic business acquisitions.

We have already started to implement this strategy as set forth below.

Highlights of our plan

products of the acquired companies and cross training our sales reps to increase their product offerings.

The combination

of products and cross training has already resulted in increased sales.

The synergy we have found between the products of

Boxlight and Mimio are adding opportunities to resellers for both companies to increase their sales.

new sales representatives with significant education technology sales experience in their respective territories and our current

pipeline has reached a record high level.

to increase demand in the US market for technology sales and have the products and infrastructure in place to handle our expected

Highlights of our plan include:

products of acquired companies and cross training our sales representatives and channel partners to increase their product

The combination of additional products and cross training has already resulted in a substantial increase

new sales representatives with significant education technology sales experience in their respective territories.

to develop innovative technology solutions for the markets we target.

Acquisitions and Related Financing

Holdings Limited

September 24, 2020, the Company entered into a share purchase agreement (the “Sahara SPA”) with the stockholders (the

“Sellers”) of Sahara Holdings Limited, a private limited company operating under the laws of the UK (“Sahara”),

pursuant to which the Company purchased 100% of the outstanding shares of Sahara, thereby acquiring Sahara, its operating company,

Sahara Presentations Limited PLC, a UK private limited company and its subsidiaries (together with “Sahara,”

the “Sahara

Entities”).

Sahara Presentations is a cutting-edge audio-visual technology company operating out of Dartford, England,

with operations in the U.K., the Netherlands, Germany, Sweden, Finland and the U.S.

consideration for the purchase of the Sahara Entities, the Company paid to the Sellers total consideration of £74,000,000

(approximately US$94,900,000) consisting of:

(i) £52,000,000 (approximately US$66,700,00) in cash;

(ii) 1,586,620

shares of Series B convertible preferred stock (the “Series B Preferred Stock”);

and (iii) 1,320,850 shares

of Series C non-voting convertible and redeemable preferred shares (the “Series C Preferred Stock”).

Preferred Stock has a stated and liquidation value of $10.00 per share and pays a dividend out of the earnings and profits of

the Company at the rate of 8% per annum, payable quarterly.

The Series B Preferred Stock is convertible into the Company’s

Class A common stock at a conversion price set at the closing price of BOXL’s Class A common stock on the Nasdaq stock market

on September 25, 2020 (the “Conversion Price”) either (i) at the option of the holder at any time after January 1,

2024 or (ii) automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price.

Preferred Stock has a stated and liquidation value of $10.00 per share and is convertible into the Company’s Class A common

stock at the Conversion Price either (i) at the option of the holder at any time after January 1, 2026 or (ii) automatically upon

the Company’s Class A common stock trading at 200% of the Conversion Price.

In addition, the Company issued some 3,000,000

restricted stock units (“RSUs”) to certain Sahara employees, which RSUs will vest in equal monthly instalments over

a period of 48-months.

the extent not previously converted into Conversion Shares, the outstanding shares of Series B Preferred Stock shall be redeemable

at the option of the Holders at any time or from time to time commencing on January 1, 2024, upon thirty (30) days prior written

notice to the Holders, for a redemption price, payable in cash, equal to sum of (a) Ten ($10.00) multiplied by the number of shares

of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if

any, on such Redeemed Shares.

The Series C Preferred Stock is also subject to redemption on the same terms commencing January

Sahara acquisition was financed through a $22,000,000 convertible note (the “Lind Convertible Note”) sold to Lind

Global Asset Management, LLC, a Delaware limited liability company (“Lind”), which closed on September 21, 2020 and

through which the Company received proceeds of $20,000,000.

Under the terms of the Lind Convertible Note offering, in addition

to the issuance of the Lind Convertible Note, the Company paid to Lind (i) a commitment fee of $400,000 and (ii) a bonus fee (the

“Bonus Payment”) of $500,000 payable in shares of Class A common stock of the Company, with the per share price of

the Bonus Payment shares calculated based on the 20-day VWAP of the Common Stock prior to closing.

The Lind Convertible Note has

a term of 24-months, bears a 4% interest rate (0% interest so long as the Common Stock trades at $3.50 or more per share), is

repayable in 22 equal instalments commencing 60 days after the Funding and, at the option of the Company, may be repaid in either

cash or Common Stock.

The Class A common stock issuable to Lind in conjunction with the Bonus Payment and the Lind Convertible

Note are issuable pursuant to the Company’s existing shelf registration statement on Form S-3.

April 17, 2020, the Company acquired the assets, and assumed certain liabilities of MyStemKits and STEM Education Holdings, Pty,

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31, 2020, October 31, 2020, January 31, 2021 and April 30, 2021.

Further, acknowledging the ongoing COVID-19 pandemic, the Letter

Agreement states that potential adjustments may be made to the Installment Payments due on July 31, 2020 and October 31, 2020

in the event the actual gross revenue of MyStemKits is materially below budget.

Further, acknowledging the ongoing COVID-19 pandemic, on April

17, 2020, the Company and the sellers entered into a letter agreement pursuant to which potential adjustments may be made to the

Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits is materially

below budget.

growth strategy includes acquiring assets and technologies of companies that have products, technologies, industry specializations

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acquisition targets, and there is no guarantee that we will complete any acquisition that we pursue.

believe we can achieve significant cost-savings by merging the operations of the companies we acquire and after their acquisition

leverage the opportunity to reduce costs through the following methods:

reductions –

consolidating resources, such as accounting, marketing and human resources.

of scale –

improved purchasing power with a greater ability to negotiate prices with suppliers.

market reach and industry visibility –

increase in customer base and entry into new markets.

of our Results of Operations and Financial Condition

revenue is comprised of product, installation and professional development revenues less sales discounts.

Product revenue is derived from the sale of our interactive projectors, flat panels, peripherals and accessories,

revenue is comprised of hardware, software and service revenues less sales discounts.

Hardware revenue is derived from the sale of our interactive flat panels, projectors, peripherals and accessories,

along with other third-party products, directly to our customers, as well as through our network of domestic and international

distributors.

We receive revenue from installation that we outsource to third parties.

development revenue.

We receive revenue from providing professional development services through third parties and our

network of distributors.

We receive revenue from the sale of our software platforms in the form of licensing fees.

also introduced a subscription-based model for our MimioConnect software platform.

We receive revenue from providing professional development, training and other services.

cost of revenues is comprised of the following:

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and administrative.

General and administrative expense consists of personnel related costs, which include salaries and stock-based

compensation, as well as the costs of professional services, such as accounting and legal, facilities, information technology,

depreciation and amortization and other administrative expenses.

General and administrative expense may fluctuate as a percentage

of revenue, notably in the second and third quarters of our fiscal year when we have historically experienced our highest levels

General and administrative expenses consist of personnel related costs, which include salaries

and stock-based compensation, as well as the costs of professional services, such as accounting and legal, facilities, information

technology, depreciation and amortization and other administrative expenses.

General and administrative expenses may fluctuate

as a percentage of revenue, notably in the second and third quarters of our fiscal year when we have historically experienced

our highest levels of revenue.

and development.

Research and development expense consist primarily of personnel related costs, prototype and sample costs,

design costs and global product certifications mostly for wireless certifications.

Research and development expenses consist primarily of personnel related costs, prototype and sample

costs, design costs and global product certifications mostly for wireless certifications.

income (expense), net

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Boxlight Corporation

the six-month periods ended June 30, 2020 and 2019

Total revenues for the six months ended June 30, 2020 were $13,550,767, as compared to $15,794,923 for the six months

ended June 30, 2019, resulting in a 14% decrease.

The decrease in revenues in 2020 is primarily attributable to school

closures as a result of the ongoing COVID-19 global pandemic.

Cost of revenues for the six months ended June 30, 2020 was $9,269,157, as compared to $11,133,412 for the six

months ended June 30, 2019, resulting in a 17% decrease.

The decrease in cost of revenues were driven by the decrease in sales.

Gross Profit.

profit for the six months ended June 30, 2020 was $4,281,610 as compared to $4,661,511 for the six months ended June 30,

Gross margin increase from 30% to 32% was related to changes in the Company’s product mix.

discussed in Note 3, the Company acquired 100% of the outstanding shares of Sahara on September 24, 2020.

Included in the three-month

and nine-month periods of 2020 below are Sahara’s operating results from September 25 through September 30.

Sahara contributed

approximately $1,052 thousand in revenue and approximately $92 thousand in gross profit.

Sahara’s total operating expenses

were $308 thousand and they incurred a net loss of approximately $276 thousand.

Sahara’s gross profit and net loss was negatively

impacted by the purchase accounting impact of $213 thousand as a result of marking the inventory up to fair value at acquisition

the nine-month periods ended September 30, 2020 and 2019

Total revenues for the nine months ended September 30, 2020 were $23,027,723, as compared to $27,099,654 for the nine months

ended September 30, 2019, resulting in a 15% decrease.

The decrease in revenues in 2020 is related to the reduction in sales of

panels, projectors, software and STEM products primarily attributable to school closures as a result of the ongoing COVID-19 global

Cost of revenues for the nine months ended September 30, 2020 was $16,721,610, as compared to $19,204,342 for

the nine months ended September 30, 2019, resulting in a 13% decrease.

The decrease in cost of revenues were driven by the decrease

Gross profit for the nine months ended September 30, 2020 was $6,306,113 as compared to $7,895,312 for the nine months

ended September 30, 2019.

Gross margin decrease from 29% to 27% was related to changes in the Company’s product mix with

a reduction in higher margin products such as software and STEM products coupled with a 15% increase in distributor sales compared

and Administrative Expenses.

General and administrative expenses for the six months ended June 30, 2020 were $7,137,215

as compared to $7,662,442 for the six months ended June 30, 2019.

General and administrative expenses for the nine months ended September 30, 2020 were $10,444,060

as compared to $11,892,814 for the nine months ended September 30, 2019.

The decrease was driven primarily by reductions in tradeshows

of $0.3 million and contract services of $0.4 million offset by increases in commissions of $0.2 million.

of $0.3 million, contract services of $0.6 million, compensation and benefits of $0.4 million and travel and entertainment of

$0.4 million.

and Development Expense.

Research and development expense was $601,966 and $560,578 for the six months ended June 30, 2020

Research and development expenses were $1,073,095 and $911,682 for the nine months ended September

30, 2020 and 2019, respectively.

The increase in research and development expense was driven primarily by an increase in

contact services offset by a decrease in payroll.

The increase in research and development expense was driven primarily by an increase in contact

services for software consultants.

Income (Expense).

Other income (expense) for the six months ended June 30, 2020 was $81,952, as compared to ($2,467,547) for

the six months ended June 30, 2019.

The increase in other income is related to gain on settlement of EDI accounts payable

by $1.7 million and decreases in the change in fair value of derivative liabilities of $1.8 million which

was offset by a loss on settlement of the Lind debt of $0.6 million and an increase

in interest expense of $0.3 million.

Net loss was $3,375,619 and $6,029,056 for the six months ended June 30, 2020 and 2019, respectively.

in the net loss was primarily driven by slight increase of gross profit, decrease in operating expenses and increase in other

the three-month periods ended June 30, 2020 and 2019

Total revenues for the three months ended June 30, 2020 was $7,827,718, as compared to $10,801,523 for the three months

ended June 30, 2019, resulting in a 28% decrease.

The decreased in revenues in 2020 is primarily attributable to the school

closures as a result of the ongoing COVID-19 global pandemic.

Cost of revenues for the three months ended June 30, 2020 was $5,137,168, as compared to $7,812,079 for the three

months ended June 30, 2019, resulting in a 34% decrease.

The decrease in cost of revenues were driven by the decrease in sales.

Gross Profit.

profit for the three months ended June 30, 2020 was $2,690,550, as compared to $2,989,444 for the three months ended June

The increase in gross margin from 28% to 34% was related to changes in the Company’s product mix.

Other income (expense) for the nine months ended September 30, 2020 was ($2,375,481), as compared to ($1,591,684)

for the nine months ended September 30, 2019.

The increase in other expense was related to loss on settlement of the Lind debt

$2.3 million, increased interest expense of $0.3 million offset by a gain on settlement of EDI accounts payable by $1.7

million and a decrease in the change in fair value of derivative liabilities of $0.3 million.

Net loss was $7,586,523 and $6,500,868 for the nine months ended September 30, 2020 and 2019, respectively.

in the net loss was primarily driven by a decrease of gross profit, decrease in operating expenses and increase in other expense.

the three-month periods ended September 30, 2020 and 2019

Total revenues for the three months ended September 30, 2020 was $9,476,956, as compared to $11,304,731 for the three months

ended September 30, 2019, resulting in a 15% decrease.

The decrease in revenues in 2020 was related to the reduction in sales

of panels, software and STEM products primarily attributable to the widespread school closures as a result of the ongoing COVID-19

global pandemic.

Cost of revenues for the three months ended September 30, 2020 was $7,452,453, as compared to $8,070,930 for

the three months ended September 30, 2019, resulting in a 18% decrease.

The decrease in cost of revenues were driven by the decrease

Gross profit for the three months ended September 30, 2020 was $2,024,503, as compared to $3,233,801 for the three

months ended September 30, 2019.

The decrease in gross margin from 29% to 21% related to changes in the Company’s product

mix with a reduction in higher margin products such as software and STEM products coupled with a 33% increase in distributor sales

compared to 2019.

and Administrative Expenses.

General and administrative expenses for the three months ended June 30, 2020 was $3,199,486 as

compared to $3,896,374 for the three months ended June 30, 2019.

The decrease is primarily driven by reductions in tradeshows

by $0.3 million and contract services of $0.3 million.

General and administrative expenses for the three months ended September 30, 2020 was $3,306,845

as compared to $4,230,372 for the three months ended September 30, 2019.

The decrease was primarily driven by reductions in compensation

and benefits of $0.7 million, travel and entertainment of $0.2 million and stock compensation of $0.2 million.

and Development Expenses.

Research and development expense were $285,210 and $324,582 for the three months ended June 30,

Research and development expenses were $471,129 and $351,104 for the three months ended September

30, 2020 and 2019, respectively.

The change in research and development expense is primarily driven by the decrease in both

contract services and payroll.

Other expense for the three months ended June 30, 2020 was $631,850, as compared to $192,092 for the three months

ended June 30, 2019.

The increase in other expense is related to an increase in interest expense of $0.1 million

and change in fair value of derivative liabilities of $0.3 million.

Net loss was $1,425,996 and $1,423,604 for the three months ended June 30, 2020 and 2019, respectively.

loss remained flat during the three months ended June 30, 2020.

The change in research and development expense was primarily driven by the increase in contract

services related to software consultants.

Income (Expense).

Other income (expense) for the three months ended September 30, 2020 was ($2,457,433), as compared to $875,863

for the three months ended September 30, 2019.

The increase in other expense was related to a change in fair value of derivative

liabilities of $1.6 million and loss from settlement of liabilities of $1.7 million.

Net loss was $4,210,904 and $471,812 for the three months ended September 30, 2020 and 2019, respectively.

in the net loss was primarily driven by a decrease of gross profit, decrease in operating expenses and increase in other expense.

provide investors with additional insight and allow for a more comprehensive understanding of the information used by management

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are prepared in accordance with GAAP with EBITDA and Adjusted EBITDA, both non-GAAP financial measures of earnings.

represents net loss before income tax expense, interest income, interest expense, depreciation and amortization.

Adjusted EBITDA

represents EBITDA, plus change in fair value of derivative liabilities, stock compensation expense and non-recurring expenses.

Our management uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of our business

reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).

However, our management also uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency

of our business model.

We use these non-GAAP financial measures to assess the strength of the underlying operations of our business.

These adjustments,

and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between

periods and over time.

We find this especially useful when reviewing results of operations, which include large non-cash amortizations

of intangibles assets from acquisitions.

Investors should consider our non-GAAP financial measures in addition to, and not as

a substitute for, financial measures prepared in accordance with GAAP.

Notably, non-cash gains or losses such as the net

settlement gain of $1.1 million in the current period, are not, and have not historically been, included as increases or decreases

to EBITDA in arriving at Adjusted EBITDA.

Management has determined Adjusted EBITDA is most useful as a measure of performance

when defined and presented consistently across reporting periods.

These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze

our operations between periods and over time.

We find this especially useful when reviewing results of operations, which include

large non-cash amortizations of intangible assets from acquisitions.

Investors should consider our non-GAAP financial measures

in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

Management has determined Adjusted

EBITDA is most useful as a measure of performance when defined and presented consistently across reporting periods.

EBITDA represents

net loss before income tax expense, interest income, interest expense, depreciation and amortization.

Adjusted EBITDA represents

EBITDA, plus certain adjustments as described in the note to the tables presented below.

following table contains reconciliations of net losses to EBITDA for the periods presented.

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(in thousands)

June 30, 2020

June 30, 2019

Depreciation and amortization

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Change in fair value of derivative liabilities

accounting impact of fair valuing inventory (3)

loss on settlement of Lind debt in stock (4)

Adjusted EBITDA

Reconciliation

of net loss for the six months ended

of net loss for the nine months ended

30, 2020 and 2019 to EBITDA and adjusted EBITDA

(in thousands)

June 30, 2020

June 30, 2019

Depreciation and amortization

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Change in fair value of derivative liabilities

accounting impact of fair valuing inventory (3)

loss on settlement of Lind debt in stock (4)

Adjusted EBITDA

compensation expense has been excluded from Adjusted EBITDA.

Although stock-based compensation is a key incentive

to our employees, management evaluates our business performance excluding this non-cash expense.

change in the fair value of derivatives has been excluded from Adjusted EBITDA.

We believe it is useful to understand

the effect of this non-cash item in Other Income (Expense).

connection with the accounting related to our acquisitions, business combinations rules require the acquired inventory be

recorded at fair value on the opening balance sheet.

This is different from historical cost.

Essentially, we are required

to write the inventory up to the end customer price less a reasonable margin as a distributor.

We have excluded the resulting

adjustments in inventory and cost of goods sold as the historic and forward gross margin trends will differ as a result of

the adjustments.

We believe it is useful to understand the effects of this on cost of goods sold and margin.

non-cash losses associated with settling debt using common shares has been excluded from Adjusted EBITDA.

This non-cash gain

or loss can vary significantly depending on the stock price, and management feels it is useful to understand the impact on

the operations.

of Effect of Seasonality on Financial Condition

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and Capital Resources

of June 30, 2020, we had cash and cash equivalents of $6,133,053 and a working capital surplus of $3,809,365.

months ended June 30, 2020 and 2019, we had net cash used in operating activities of $6,213,357 and $4,002,894, respectively,

net cash (used in) provided by investing activities of ($99,253) and $10,261 respectively, and net cash provided by financing

activities of $11,380,993 and $4,051,749, respectively.

of September 30, 2020, we had cash and cash equivalents of $9,609,667 and a net working capital surplus of $25,055,980.

For the nine months ended September 30, 2020 and 2019, we had net cash used in operating activities of $7,017,682 and $6,280,556,

respectively, net cash (used in) provided by investing activities of ($45,052,970) and $6,650 respectively, and net cash provided

by financing activities of $60,729,949 and $6,205,441, respectively.

We had accounts receivable net of allowances of $21,095,910

and $3,665,057 as of June 30, 2020 and year ended December 31, 2019.

and $3,665,057 as of September 30, 2020 and year ended December 31, 2019.

June 11, 2020, the Company issued 13,333,333 shares of the Company’s Class A common stock at a public offering price of

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underwriting discounts and offering expenses of $905,814.

July 31, 2020, the Company issued 17,250,000 shares of the Company’s Class A common stock at a public offering price of

$2.00 per share.

Gross proceeds from the issuances were $32,025,000, including the underwriting overallotment.

financed our operations in 2020 primarily with an accounts receivable financing arrangement entered into with a lender.

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for the majority of our inventory purchases, which further constrains our cash liquidity.

The Company had an accumulated

deficit of $34,722,050 and a net working capital surplus of approximately $3,809,365 as of June 30, 2020.

long-term continuation of the Company as a going concern is dependent upon attainment of profitable operations.

During June and

July of 2020, the Company raised significant capital and is not dependent on obtaining funds for operations through public or

private sales of equity and debt securities or from bank or other loans in the near term.

February 4, 2020, we and Lind entered into a separate securities purchase agreement (the “

2020 SPA ”) pursuant

to which we received on February 6, 2020 $750,000 in exchange for the issuance to Lind of (1) an $825,000 convertible promissory

note, payable at an 8% interest rate, compounded monthly (the “

2020 Note ”), (2) certain shares of restricted

Company Class A common stock valued at $60,000, calculated based on the 20-day volume average weighted price of the Class A common

stock for the period ended February 4, 2020, and (3) a commitment fee of $26,250.

Company had an accumulated deficit of $38,932,954 and a net working capital surplus of approximately $25,055,980 as of

September 30, 2020.

The long-term continuation of the Company as a going concern is dependent upon attainment of profitable operations.

During June, July and September of 2020, the Company raised significant capital which was primarily used for

the acquisition of Sahara and to meet working capital requirements.

The Company has the ability to raise additional funds through

public or private sales of equity and debt securities or leveraging its asset-based lending agreement.

February 4, 2020, we entered into a separate securities purchase agreement with Lind (the “2020 SPA”) pursuant to

which, on February 26, 2020, we received $750,000 in exchange for the issuance to Lind of (1) an $825,000 convertible promissory

note, payable at an 8% interest rate, compounded monthly (the “2020 Note”), (2) certain shares of restricted Company

Class A common stock valued at $60,000, calculated based on the 20-day volume average weighted price of the Class A common stock

for the period ended February 4, 2020, and (3) a commitment fee of $26,250.

2020 Note matures over 24 months, with repayment to commence August 4, 2020, after which time the Company will be obligated to

make monthly payments of $45,833.33 (the “

Monthly Payments ”), plus interest.

make monthly payments of $45,833.33 (the “Monthly Payments”), plus interest.

Interest payments owed under the 2020

2020 Note (the “

Interest Payments ”) shall accrue beginning on the one month anniversary of the issuance of

Accrued interest shall become payable in either conversion shares or in cash after the first six months of the note

and monthly thereafter.

As with the prior purchase agreement, we may make the Monthly Payments and any Interest Payments in shares

of the Company’s Class A common stock so long as such shares are either registered for resale under the Securities Act of

1933, as amended, or may be sold without restriction pursuant to Rule 144 thereunder.

As such, the Monthly Payments may be subject

to reduction in any month by any amounts converted into the Company’s Class A common stock.

Note (the “Interest Payments”) shall accrue beginning on the one month anniversary of the issuance of the Note.

interest shall become payable in either conversion shares or in cash after the first six months of the note and monthly thereafter.

As with the prior purchase agreement, we may make the Monthly Payments and any Interest Payments in shares of the Company’s

Class A common stock so long as such shares are either registered for resale under the Securities Act of 1933, as amended, or

may be sold without restriction pursuant to Rule 144 thereunder.

As such, the Monthly Payments may be subject to reduction in

any month by any amounts converted into the Company’s Class A common stock.

connection with the February 2020 transaction, we and Lind amended and restated the $4,400,000 note and the $1,375,000 note that

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notes in the form of Class A Common Stock if such payments could cause the Company to violate any rules of the Nasdaq Capital

In addition, the Company agreed to call a stockholders meeting on or before May 31, 2020 to seek stockholder approval

of the current and all prior financing transactions with Lind.

While we had originally intended to hold the meeting in June

2020, due to timing and organizational issues related to calling a meeting of stockholders, we have scheduled to hold our annual

meeting of stockholders on September 4, 2020.

addition, on February 4, 2020, we and Lind entered into a second amended and restated security agreement for purposes of amending

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the relative priority of each creditor’s respective security interests in our asset.

our 2020 annual meeting of stockholders, held on September 4, 2020, our stockholders approved all of the Lind financing transactions

that had occurred up until that point.

September 21, 2020, the Company entered into a securities purchase agreement (the “Lind GAM SPA”) with Lind Global

Asset Management, LLC, a Delaware limited liability company (“Lind GAM”), pursuant to which Lind purchased from the

Company a $22,000,000 secured convertible note (the “Convertible Note”) in exchange for payment of $20,000,000 (the

“Funding”).

Under the terms of the Lind SPA, in addition to the issuance of the Convertible Note, the Company paid

to Lind (i) a commitment fee of $400,000 and (ii) a bonus fee (the “Bonus Payment”) of $500,000 payable in shares

of Class A common stock of the Company (the “Common Stock”), with the per share price of the Bonus Payment shares

calculated based on the 20-day VWAP of the Common Stock prior to closing.

The Convertible Note has a term of 24-months, bears

a 4% interest rate (0% interest so long as the Common Stock trades at $3.50 or more per share), is repayable in 22 equal installments

commencing 60 days after the Funding and, at the option of the Company, may be repaid in either cash or Common Stock.

Stock issuable to Lind in conjunction with the Bonus Payment and the Convertible Note being issuable pursuant to the Company’s

existing shelf registration statement on Form S-3.

conjunction with the Lind Convertible Note offering, on September 21, 2020, the Company and Lind Global Macro Fund, LP, an affiliate

of Lind, entered into a third amended and restated security agreement (the “Third A&R Security Agreement”) for

purposes of amending and restating a prior security agreement, dated as of February 4, 2020, between the Company and GMF in order

to incorporate the Lind SPA and the Convertible Note therein.

In addition, on September 21, 2020, the Company, Sallyport Commercial

Finance, LLC (“Sallyport”), as first lien creditor, and GMF and Lind, as second lien creditors, entered into a third

amended and restated intercreditor agreement (the “Third A&R Intercreditor Agreement”) for purposes of amending

and restating the second amended and restated intercreditor agreement, dated as of February 4, 2020, between the Company, Sallyport

and GMF, in order to (i) incorporate Lind as a second lien creditor and (ii) reaffirm and confirm the relative priority of each

creditor’s respective security interests in the Company’s assets, among other matters.

Accounting Policies and Estimates

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compensation expense

preferred stock

Growth Company

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements