What changed in this filing

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Item 1. Financial Statements

2021-05-13 compared with 2020-11-16 · 1021 added, 1423 removed, 377 unchanged (87% of the section changed)

Financial Statements

Condensed Balance Sheets

of September 30, 2020 and December 31, 2019

Current asset:

Consolidated Statements of Operations and Comprehensive Loss

the Three Months Ended March 31, 2021 and 2020

thousands, except share amounts)

Cost of revenues

Operating expense:

General and administrative

and development

operating expense

from operations

Other income (expense):

Interest expense,

Other income,

(Loss) gain on

settlement of liabilities, net

in fair value of derivative liabilities

other income (expense)

loss before income taxes

dividends to Series B preferred shareholders

loss attributable to common stockholders

Comprehensive loss:

currency translation adjustment

comprehensive loss

common share –

basic and diluted

Weighted average

number of common shares outstanding –

basic and diluted

accompanying notes to unaudited condensed consolidated financial statements.

Consolidated Balance Sheets

of March 31, 2021 and December 31, 2020

thousands, except share amounts)

and cash equivalents

receivable –

Accounts receivable

trade, net of allowances

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current assets

and equipment, net of accumulated depreciation

assets, net of accumulated amortization

$ 124,224,955

LIABILITIES, MEZZANINE

EQUITY AND STOCKHOLDERS’

EQUITY (DEFICIT)

equipment, net of accumulated depreciation

Intangible assets,

net of accumulated amortization

LIABILITIES AND

STOCKHOLDERS’

Current liabilities:

payable and accrued expenses

payable and accrued expenses –

related parties

portion of debt –

third parties

portions of debt –

Accounts payable

and accrued expenses

Accounts payable

and accrued expenses –

related parties

payable –

Short-term debt

Earn-out payable

related party

revenues –

Deferred revenues

Derivative liabilities

short-term liabilities

current liabilities

revenues –

third parties

related parties

Deferred revenues

Long-term debt

long-term liabilities

Commitments and

contingencies (Note 14)

and contingencies (Note 13)

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

Preferred Series

mezzanine equity

Stockholders’

equity (deficit):

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)

Preferred Series

A, $0.0001 par value, 50,000,000 shares authorized;

167,972 and 167,972 shares issued and outstanding, respectively

Common stock, $0.0001

par value, 200,000,000 shares authorized;

56,786,557 and 53,343,518 Class A shares issued and outstanding, respectively

Additional paid-in

Accumulated deficit

other comprehensive income

stockholders’

equity (deficit)

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:

General and administrative

and development

operating expense

from operations

Other income (expense):

Interest expense,

Other (expense)

Changes in fair

value of derivative liabilities

(loss) from settlements of liabilities

other income (expense)

$ (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

$ (6,527,617 )

Net loss per common share –

Weighted average number of common shares

outstanding –

basic and diluted

accompanying notes to unaudited consolidated condensed financial statements.

liabilities and stockholders’

accompanying notes to unaudited condensed consolidated financial statements.

Condensed Statements of Changes in Stockholders’

Equity (Deficit)

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

Total stockholders’

equity (deficit), beginning balances

Series A preferred

Shares issued for:

Ending balances

Class A common stock

and additional paid-in capital:

the Three Months Ended March 31, 2021 and March 31, 2020

in thousands, except shares)

Subscriptions

Comprehensive

as of December 31, 2020

options exercised

of liabilities

of Restricted Shares

currency translation adjustment

dividends for preferred shareholders

as of March 31, 2021

Subscriptions

Comprehensive

as of December 31, 2019

of liabilities

shared based payments

currency translation income

as of March 31, 2020

accompanying notes to unaudited condensed consolidated financial statements.

Consolidated Statements of Cash Flows

the Three Months Ended March 31, 2021 and 2020

Cash flows from operating activities:

Adjustments to reconcile

net loss to net cash (used) provided in operating activities:

Amortization of

debt discount and issuance cost

Bad debt expense

Loss (gain) on settlement

of liabilities

Change in allowance

for sales returns and volume rebate

Change in inventory

Change in deferred

tax assets and liabilities, net

Change in fair value

of derivative liabilities

Change in fair value

of earn-out payable

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

received from stockholder

Ending balances

Other comprehensive

currency translation loss

Ending balances

Accumulated deficit

(34,722,050 )

(27,973,409 )

(31,346,431 )

(19,206,271 )

effects of adoption of new accounting standards in prior period

Ending balances

(38,932,954 )

(28,445,221 )

(38,932,954 )

(28,445,221 )

stockholders’

equity, ending balances

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 )

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

of debt discount

(gain) on settlement of liabilities

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

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

interest payment on notes payable

Stock compensation

Other share-based

Depreciation and

Changes in operating

assets and liabilities:

Accounts receivable

Prepaid expenses

and other current assets

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

accompanying notes to unaudited consolidated condensed financial statements.

to the Unaudited Consolidated Condensed Financial Statements

and accrued expenses

Accounts payable

and accrued expenses - related parties

Other short-term

Deferred revenues

Net cash used

in operating activities

Cash flows from investing activities:

Acquisition of Interactive Concepts (net of cash acquired)

of furniture and fixtures

used in investing activities

Cash flows from financing activities:

Proceeds from short-term

Principal payments

on short-term debt

Proceeds from convertible

Proceeds from the

exercise of stock options and warrants

Debt issuance costs

of fixed dividends to Series B Preferred stockholders

Net cash (used

in) provided by financing activities

Effect of foreign

currency exchange rates

Net decrease 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

Non-cash investment and financing transactions:

Shares issued to settle accounts payable

issued for conversion of notes payable and accrued interest

Declared but unpaid fixed dividends

on Series B Preferred Stock

Deferred consideration for Interactive

accompanying notes to unaudited condensed consolidated financial statements.

to the Unaudited Condensed Consolidated 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 (the “Qwizdom Companies”),

and EOSEDU, LLC (“EOS”).

In 2019, the Company acquired Modern Robotics, Inc.

(“MRI”).

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.

COMPANY AND RECENT ACQUISITIVE GROWTH

Corporation (“Boxlight”) designs, produces and distributes interactive technology solutions to the education, corporate

and government markets under its Clevertouch and Mimio brands.

The Company’s solutions include interactive displays, collaboration

software, supporting accessories and professional services.

March 23, 2021 the Company acquired Interactive Concepts BV, a Belgium company (“Interactive”) and a

distributor of interactive technologies.

On September 24, 2020, Boxlight acquired Sahara Presentation Systems PLC

(“Sahara”), a leader in distributed and manufactured AV solutions, headquartered in the United

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.

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

accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its wholly-owned subsidiaries

(collectively, the “Company”).

All significant intercompany balances and transactions have been eliminated in consolidation.

accompanying unaudited condensed consolidated 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 condensed consolidated

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

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financial statements.

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

The unaudited condensed consolidated 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

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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

These unaudited condensed

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

for the year ended December 31, 2020 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 note disclosures normally included in the consolidated financial statements have been condensed or omitted.

The December 31,

2020 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

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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.

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

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.

Note _ in the Notes to the Consolidated

Financial Statements for 2020 contained in the Annual Report describes the significant accounting policies that the Company used

in preparing our consolidated financial statements.

On an ongoing basis, The Company evaluates our estimates, including, but not

limited to, those related to revenue/reserves and allowances.

The Company bases estimates on historical experience and on various

other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results could differ

materially from these estimates under different assumptions or conditions.

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.

Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable and

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 approximate the fair value of long-term debt net of any

debt discount and issuance cost.

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

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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.

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

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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).

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.

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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,

for at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands):

Derivative liabilities -

warrant instruments

Earn-out payable –

Earn-out payable

related party

STEM Education Holdings

of December 31,

Derivative liabilities -

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related party

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

following table shows the change in the Company’s warrant instruments rollforward for the three months ended March 31, 2021:

Balance, December 31,

Exercise of warrants

fair value of derivative liabilities

Balance, March

following table shows the change in the Company’s earn-out payable rollforward for the three months ended March 31, 2021:

Balance, December 31,

fair value of earn-out payable

Balance, September

rollforward of Derivative liabilities - warrant instruments in Note 10.

Balance, March

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.

(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.

revenue is derived from hardware maintenance services, product installation, training, software maintenance, and subscription services.

of Products and Services and Related Contractual Provisions

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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.

are sold with hardware maintenance services with terms of approximately 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 of approximately 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

include access to on-line content, 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 product 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

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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.

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.

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

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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.

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 balance sheets.

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

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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.

Because observable prices are generally not available for the Company’s performance obligations that are sold in

bundled arrangements, the Company does not apply the residual approach to determining SSP.

However, the Company does have certain

performance obligations for which pricing is highly variable or uncertain, and contracts with those performance obligations generally

contain multiple performance obligations with highly variable or uncertain pricing.

For these contracts the Company allocates

the transaction price 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, residual values based on the estimated SSP for certain

goods, 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.

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

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.

Additionally, the Company has elected the practical expedient to exclude any financing component from consideration for contracts

where, at contract inception, the period between the transfer of services and the timing of the related payment is not expected

to exceed one year.

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

Fees for the Company’s product and most 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 these contracts where services are

expected to be transferred on an ongoing basis for several years after the related payment, 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.

Additionally,

the Company has elected the practical expedient to exclude any financing component from consideration for contracts where, at

contract inception, the period between the transfer of services and the timing of the related payment is not expected to exceed

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

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.

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

Contract liabilities are reflected in deferred revenue in the accompanying consolidated 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.

The Company has no material contract assets on March 31, 2021 or December 31,

During the three months ended March 31, 2021 and March 31, 2020, the Company recognized $1.6 million and $0.9 million, respectively

of revenue that was included in the deferred revenue balance as of December 31, 2020 and December 31, 2019, respectively.

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.

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

generally does not allow product returns other than under assurance warranties or hardware maintenance contracts.

Company, on a case-by-case basis, will grant exceptions, mostly “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.

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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.

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 Q1 of 2021 related to changes

in estimated variable consideration that existed at December 31, 2020.

Performance Obligations

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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.

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

As of March 31, 2021 and December 31, 2020, the aggregate amount of the contractual transaction prices allocated to remaining

performance obligations was $17.2 million and $16.1 million, respectively.

The Company expects to recognize revenue on 27% of

the remaining performance obligations during the 2 nd thru 4 th quarters of 2021, 28% in 2022, 37% in 2023 and 2024,

with the remaining 8% 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.

a 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

Company disaggregates revenue based upon the nature of its products and services and the timing and in the manner 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.

Although all products are transferred to the customer at a point in time, hardware and some software is pre-installed

on the interactive device are 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 five years from the contract execution date as measured based upon the passage of time.

31, 2020 (in thousands)

Product Revenues:

Service Revenues:

Professional Services

and Subscription Services

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The Company capitalizes the costs incurred

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

to fulfill a contract only if those costs meet all 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

obligations in the future.

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

sales commissions incurred by the Company are 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

For these sales commissions that are incremental costs to obtain

where the period of amortization would be recognized over a period that is one year or less, the Company has 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 condensed consolidated balance sheets.

Total deferred commissions at March 31, 2021

and December 31, 2020 and the related amortization for 2021 were less than $0.1 million.

No impairment losses were recognized

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

for the three months ended March 31, 2021 and 2020.

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 nine months ended September 30, 2019:

Reconciliation

of Topic 606 Adjustments for the

months ended September 30, 2019

STATEMENT OF OPERATIONS

Cost of revenues

General and administrative expenses

Total operating expense

Loss from operations

Net loss per common

share –

basic and diluted

Reconciliation

of Topic 606 Adjustments for the

months ended September 30, 2019

STATEMENT OF OPERATIONS

Cost of revenues

General and administrative expenses

Total operating expense

Loss from operations

$ (6,500,868 )

$ (6,144,121 )

Net loss per common

share –

basic and diluted

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 )

$ (6,144,121 )

Prepaid expense and other current assets

Warranty reserve

Deferred revenues

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.

reviewed all material events through the date of these condensed consolidated financial statements were issued for subsequent

event disclosure consideration as described in Note 16.

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

February 2016, the FASB issued ASC 842 “Leases”

that creates new accounting and reporting guidelines for leasing arrangements.

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.

Under the previous guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily

depended on its classification as a finance or operating lease.

The new guidance also requires disclosures to help financial statement

users better understand the amount, timing, and uncertainty of cash flows arising from leases.

For Emerging Growth Companies,

the new standard is not effective until annual reporting periods beginning after December 15, 2021, including interim periods

within that reporting period.

Earlier application is permitted.

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

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

The Company is currently evaluating the impact of this new pronouncement

on its financial statements.

June 2016, the FASB issued ASU No.

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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

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.

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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.

Since the Company is an Emerging Growth Company, the ASU is not effective until 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.

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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.

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

The effects of changes on taxes currently payable or refundable for

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

Since the Company is an Emerging Growth

Company, the ASU is not effective until fiscal years beginning after December 15, 2021, and interim periods within fiscal years

beginning after December 15, 2022.

Early adoption is permitted.

The Company is currently evaluating the impact that this standard will have, if

any, on its financial statements.

The Company is currently evaluating the impact that this standard

will have, if any, on its financial statements.

August 2020, the FASB issued ASU No.

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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.

Company is an Emerging Growth Company, the ASU is not effective until annual reporting periods beginning after December 15, 2023.

Earlier application is permitted.

The Company is currently evaluating the impact that this standard will have on its financial

were various other accounting standards and interpretations issued recently, some of which although applicable, are expected to

a have a material impact on our financial position, operations or cash flows.

RECENT BUSINESS ACQUISITION

March 23, 2021 the Company acquired 100% of the outstanding shares of Interactive Concepts BV, a company incorporated and

registered in Belgium and a distributor of interactive technologies (“Interactive”), for total consideration of

approximately $3.3 million in cash, common stock and deferred consideration.

The company has been Boxlight’s key

distributor in Belgium and Luxembourg.

valuation of intangible assets acquired was not final at the date these condensed consolidated financial statements were issued.

Amounts recorded for acquired intangibles and goodwill are provisional.

The finalization of the valuation of certain acquired

intangibles may result in measurement period adjustments to the fair value of customer relationships and intangibles and corresponding

changes to the carrying value of goodwill.

As a result of the eight-day period between the acquisition date and March 31, 2021,

such adjustments are not expected to materially affect prospective amortization, which will be calculated as if the accounting

had been completed at the acquisition date, or have other material effects on the reported results of operations or cash flows.

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

of the fair value of consideration paid:

(in thousands)

Assets acquired:

Accounts receivable

Accounts payable and accrued expenses

Deferred tax liability

Total liabilities

Net tangible assets acquired

Identifiable intangible assets:

Customer relationships

Total intangible assets subject to

assets acquired

Consideration paid:

Deferred cash consideration

Common shares

Total consideration

Presentation Systems PLC

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touch screens.

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

This strategic acquisition expanded the Company’s geographic footprint, industry verticals served, and enhanced

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.

consideration for the purchase of Sahara, the Company transferred $73.7 million to the Sellers, including $44.9 million in cash

(net of $6.0 million in cash acquired) and $28.9 million in convertible preferred stock.

The convertible preferred stock was comprised

of 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”).

The fair value of the

preferred shares issued was $16.5 million and $12.4 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 10.

On March 24, 2021 the Company entered into a

share redemption and conversion agreement with the former shareholders of Sahara Presentation Systems PLC (“Sahara”) who

together own approximately 96% of our Series B and Series C preferred stock.

Under the terms of the agreement, we agreed to redeem

and purchase from such preferred stockholders on or before June 30, 2021 all of the shares of Series B preferred stock for

£11.5 million (or approximately $15.9 million) being the stated or liquidation value of the Series B preferred stock plus (b)

accrued dividends from January 1, 2021 to the date of purchase.

In addition, the holders of 96% of the Series C preferred stock

agreed to convert those shares into 7,.6 million shares of our Class A Common Stock at a conversion price of $1.66 per share.

event for any reason, we do not complete the conversion and redemption by June 30, 2021, and the Sahara shareholders do not agree to

an extension, the agreement will terminate without liability by any party.

consideration transferred to the selling shareholders along with the assets acquired and liabilities assumed were recorded at

their estimated fair values at the acquisition date.

The excess consideration over the net fair values of the assets acquired

and liabilities assumed was 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:

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

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

above which has resulted in and will result in a reduction in revenue that otherwise would have been recognized in periods subsequent

to the acquisition date.

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

fair value of consideration paid:

(in thousands)

Assets acquired:

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Prepaid expenses and other current

Total assets acquired

Accounts payable and accrued expenses

Deferred revenue

Deferred tax liability

Other liabilities

Total liabilities

(18,351,107 )

Net tangible assets acquired

intangible assets:

Identifiable intangible assets:

Customer relationships

Total intangible

assets subject to amortization

Total intangible assets subject to

assets acquired

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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:

Total consideration

results of operations of Sahara since the acquisition are included in the Condensed Consolidated Statement of Operations and Comprehensive

Loss for the three months ended March 31, 2021.

Revenue and net income attributable to Sahara for the 1 st quarter of

2021 were $22.8 million and $2.0 million, respectively.

Forma Financial Results

following unaudited pro forma information reflects our consolidated results of operations for the three months ending March 31, 2020

as if the acquisition of Sahara had taken place on January 1, 2020.

The unaudited pro forma information is not necessarily

indicative of the results of operations that the Company would have reported had the acquisition actually occurred at the beginning of

these periods nor is it necessarily indicative of future results.

The unaudited pro forma financial information does not reflect the

impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies

or other operational improvements.

The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to

the business combination are included in the pro forma revenue and net earnings reflected below.

Quarter ended March 31, 2020

(Unaudited) in thousands As Reported

(Unaudited) in thousands Proforma

Revenues, net

Net loss attributable to common shareholders

ACCOUNTS RECEIVABLE - TRADE

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

receivable - trade

Allowance for doubtful

receivable consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):

Accounts receivable –

Allowance for doubtful accounts

for sales returns and volume rebates

receivable - trade, net of allowances

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

Accounts receivable

- trade, net of allowances

consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):

Finished goods

1 unchanged sentence

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

expenses and other current assets consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):

Prepayments to vendors

1 unchanged sentence

Unbilled revenue

Prepaid insurance

Prepaid expenses

and other current assets

PROPERTY AND EQUIPMENT

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

Building improvements

Leasehold improvements

Office equipment

Other equipment

Property and equipment, at cost

Accumulated depreciation

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

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

INTANGIBLE ASSETS

assets consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):

Customer relationships

Intangible assets, at cost

Intangible assets,

net of accumulated amortization

Goodwill from acquisition of Sahara

Goodwill from acquisition of STEM

Goodwill from acquisition of EOS

Goodwill from acquisition of Qwizdom

Goodwill from acquisition of Mimio

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:

assets, net of accumulated amortization

the three months ended March 31, 2021 and 2020, the Company recorded amortization expense of $1.7 million and $215 thousand, respectively.

following is a summary of our debt on March 31, 2021 and December 31, 2020 (in thousands):

Note payable –

Paycheck Protection Program

Accounts receivable financing –

Sallyport Commercial

Paycheck Protection Program loan

STEM Education Holdings

Total debt –

third parties

Discount and issuance cost

portion of debt –

third parties

Note payable –

Qwizdom (Darin

& Silvia Beamish)

Note payable –

Logical Choice Corporation –

Total debt –

related parties

portion of debt –

related parties

portion of debt

- 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.

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.

Global Marco Fund and Lind Global Asset Management

February 4, 2020, the Company and Lind Global Macro Fund L.P.

(“Lind”) entered into a second securities purchase

agreement pursuant to which the Company received $750 thousand in exchange for the issuance to Lind of (1) $825 thousand convertible

promissory note, payable at an 8% interest rate, compounded monthly, (2) certain shares of restricted Class A common stock valued

at $60 thousand, 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 $26.25 thousand.

The Note matures over 24 months, with repayment that commenced

on August 4, 2020, after which time the Company is obligated to make monthly payments of $45,833 thousand plus interest.

accrued during the first six months of the note, after which time the interest payments, including accrued interest is payable

monthly in either conversion shares or in cash.

The commitment fee in the amount of $26 thousand was paid to Lind, along with

legal fees in the amount of $15 thousand.

The Company paid Lind $60 thousand for closing fees by issuing 44,557 shares of Class

A common stock.

September 21, 2020, the Company and Lind Global Asset Management, LLC (“Lind Global”) entered into a securities

purchase agreement (the “Lind SPA”) pursuant to which the Company received $20.0 million in exchange for the issuance

to Lind of (1) a $22.0 million convertible promissory note, payable at a 4% interest rate, compounded monthly, (2) 310,399 shares of

restricted Class A common stock valued at $900 thousand, 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 thousand.

The Note matures over 24 months, with

repayment commencing on November 22, 2020, after which time the Company became obligated to make monthly payments of $1.0 million, plus

Interest accrued during the first two months of the note, after which time the interest payments, including accrued interest

is payable monthly in either conversion shares or in cash.

The commitment fee in the amount of $400 thousand was paid to Lind Global,

along with legal fees in the amount of $20 thousand.

The Company paid Lind $500 thousand for closing fees by issuing 310,399 shares of

Class A common stock.

the three months ended March 31, 2021, the Company repaid principal of $3.63 million and interest of $204 thousand by issuing

2.25 million shares Class A common stock with an aggregate value of $5.96 million to Lind and recognized a $2.2 million loss.

Protection Program Loan

May 22, 2020, the Company received loan proceeds of $1.09 million 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 period prior to which the PPP would otherwise be

The Company used the proceeds for purposes consistent with the PPP.

During 2020, the Company applied for forgiveness

in the amount of $837 thousand of the original PPP loan and is presently awaiting a decision from the Small Business Administration.

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.

Display, Inc .

June 22, 2020, the Company entered into an agreement with Everest Display, Inc., a Taiwan corporation (“EDI”), and

EDI’s subsidiary, AMAGIC Holographics, Inc., a California corporation (“AMAGIC”), effective June 11, 2020, pursuant

to which $1,000,000 in accounts payable owed by the Company to EDI was settled in exchange for the Company’s issuance of

869,565 shares (the “Shares”) of its Class A common stock to AMAGIC at a $1.15 per share purchase price.

were issued to AMAGIC pursuant to an exemption from registration provided by Rule 506 of Regulation D under Section 4(a)(2) of

the Securities Act of 1933, as amended.

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.

10 unchanged sentences

interest in all of the assets of Boxlight Inc.

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 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.

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 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.

and Genesis Collaboration, LLC.

DERIVATIVE LIABILITIES

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:

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.

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

Such warrants are

measured at fair value at each reporting date, and the changes in fair value are included in determining net income (loss) for

In determining the fair value of the derivative liabilities, the Company used the Black-Scholes option pricing model

at March 31, 2021 and December 31, 2020:

Common stock issuable

6 unchanged sentences

Expected dividend yields (3)

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)

Common stock issuable

upon exercise of warrants

Market value of common stock on measurement

Exercise price

Risk free interest rate (1)

Expected life in years

Expected volatility (2)

Expected dividend yields (3)

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.

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

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 nine months ended September

30, 2020 and 2019:

following table shows the change in the Company’s derivative liabilities rollforward for the three months ended March 31,

2021 and 2020 (in thousands):

Balance, December 31,

fair value of derivative liabilities

Balance, September

Balance, March

Balance, December 31,

Initial valuation of derivative liabilities

upon issuance of warrants

Exercise of warrants

fair value of derivative liabilities

Balance, September

Balance, March

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

loss resulting from domestic and foreign operations is as follows (in thousands):

Months Ended March, 31

United States

pretax book loss

Company recorded income tax expense of $21 thousand for the three months ended March 31, 2021.

Company operates in the United States, United Kingdom and other jurisdictions.

Income taxes have been provided based upon the

tax laws and rates of the countries in which operations are conducted and income is earned.

to the Sahara acquisition, the Company had a net deferred tax asset position in the United States, the United Kingdom, and other

jurisdictions, primarily driven by the aforementioned net operating losses.

The recoverability of these deferred tax assets depends

on the Company’s ability to generate taxable income in the jurisdiction to which the carryforward applies.

The Company also

depends on specific tax provisions in each jurisdiction that could impact utilization.

The Company has evaluated both positive

and negative evidence as to the ability of its legacy entities in each jurisdiction to generate future taxable income.

its long history of cumulative losses in those jurisdictions, we believe it is appropriate to maintain a full valuation

allowance on the Company’s net deferred tax asset at March 31, 2021 and December 31, 2020.

to the Sahara acquisition, the Company has recognized a net deferred tax liability for the acquired entities, primarily driven

by acquired intangible assets for which it does not have tax basis in the jurisdictions in which operates (primarily the United

Kingdom, the Netherlands, and the United States).

The Company does not expect to qualify for any consolidated filing positions

in any of these countries, so there is no ability to net the deferred tax liabilities of the Sahara companies against the deferred

tax assets of the legacy Boxlight companies.

tax years from 2016 to 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Company has not identified any uncertain tax positions at this time.

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

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

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

3) 1,320,850 shares of voting Series

C preferred stock, 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.

preferred stock to be

designated by the Company’s Board of Directors.

of preferred shares

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

into 398,406 shares of Class A common stock.

On August 5, 2019 a total of 82,028 shares of Series A preferred stock were converted

into a total of 130,721 shares of Class A common stock.

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).

discussed in Note 2, 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 quarterly.

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

conversion price of $1.66 per share which was the closing price of the Company’s Class A common stock on the Nasdaq

Stock Market on September 25, 2020 (the “Conversion Price”).

Such conversion may occur 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 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 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

(30) days prior written notice to the holders, for a redemption price, payable in cash, equal to the sum of (a) ($10.00) multiplied

by the number of shares of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and

2 unchanged sentences

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.

disclosed in in Note 2, the aggregate estimated fair value of the Series B and C Preferred Stock of $28.9 million was included

as part of the total $79.7 million consideration paid for the purchase of Sahara.

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

into 398,406 shares of Class A common stock.

On August 5, 2019, 82,028 of these preferred shares were converted into 130,721 shares

of Class A common stock.

Company’s common stock consists of 1) 150,000,000 shares of Class A voting common stock and 2) 50,000,000 shares of Class

B non-voting common stock.

Class A and Class B common stock have the same rights except that Class A common stock is entitled

to one vote per share while Class B common stock has no voting rights.

Upon any public or private sale or disposition by any holder

of Class B common stock, such shares of Class B common stock shall automatically convert into shares of Class A common stock.

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.

the Company has classified the Series B Preferred Stock and Series C Preferred Stock as mezzanine or temporary equity in the Company’s

condensed consolidated balance sheet.

On March 24, 2021 the Company entered into a share

redemption and conversion agreement with certain holders of Series B and Series C preferred stock which allows the Company to redeem

and purchase each stockholder’s shares of Series B preferred stock on or before June 30, 2021 for the stated or liquidation value

of approximately £11.5 million (or approximately $15.9 million) plus accrued dividends from January 1, 2021 to the date of purchase.

The same stockholders hold 96% of the Series C preferred stock.

Upon redemption, the Series C shares would convert into approximately

7.6 million shares of Class A Common Stock at the stated conversion price of $1.66 per share.

In the event for any reason, we do not

complete the conversion and redemption by June 30, 2021, and the Sahara shareholders do not agree to an extension, the agreement will

terminate without liability by any party.

Company’s common stock consists of 200,000,000 shares of Class A voting common stock and 50,000,000 shares of Class B non-voting

common stock.

Class A and Class B common stock have the same rights except that Class A common stock is entitled to one vote per

share while Class B common stock has no voting rights.

Upon any public or private sale or disposition by any holder of Class B

common stock, such shares of Class B common stock shall automatically convert into shares of Class A common stock.

31, 2021, and December 31, 2020, the Company had 56,786,557 and 53,3436,518 shares of Class A common stock issued and outstanding,

respectively.

No Class B shares were outstanding at either March 31, 2021 or December 31, 2020.

of common stock

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

$32.0 million after deducting underwriting discounts and offering expenses of $2.5 million.

June 11, 2020, the Company issued 13,333,333 shares of the Company’s Class A common stock at a public offering price of

2 unchanged sentences

underwriter at $0.75 per share.

Gross proceeds from the issuances were $11,499,750.

Net proceeds were $10,593,937 after deducting

underwriting discounts and offering expenses of $905,814.

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

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.

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.

Gross proceeds from the issuances were $11.5 million.

Net proceeds were $10.6 million after deducting

underwriting discounts and offering expenses of $906 thousand.

the three months ended March 31, 2021, the Company repaid principal of $3.6 million and interest of $204 thousand by issuing 2.25

million shares Class A common stock to Lind and recognized a $2.2 million loss.

Payable and Other Liabilities Conversion

the three months ended March 31, 2021, the Company converted $1.98 million of EDI accounts payable in exchange for 793 thousand

shares of Class A common stock with an aggregate value of $1.63 million and recognized a $357 thousand gain.

the three months ended March 31, 2021 and in accordance with the terms of his employment agreement, Michael Pope, our Chairman

and Chief Executive Officer, received 875,000 shares of restricted Class A common stock, which shares remain subject to certain

vesting conditions.

The shares will vest in substantially equal monthly installments over a period of 12 months.

of stock options

options to purchase common stock were exercised during the nine months ended September 30, 2020.

the three months ended March 31, 2021, options to purchase a total of 319,434 shares of Class A common stock were exercised.

STOCK COMPENSATION

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

The options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from

the grant date, unless stated differently in the option agreements, if they are not exercised.

Stock options have no financial

statement effect on the date they are granted but rather are reflected over time through compensation expense.

We record compensation

expense based on the estimated fair value of the awards which is amortized as compensation expense on a straight-line basis over

the vesting period.

Accordingly, total expense related to the award is reduced by the fair value of options that are forfeited

by employees that leave the Company prior to vesting.

is a summary of the option activities during the nine months ended September 30, 2020:

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 2021 and 2014 Equity Inventive Plans, as amended

(the “Equity Incentive Plans”), in the aggregate were 5,000,000 and 116,837 shares, respectively.

The 2021 Equity

Incentive Plan was approved by the Company’s Board of Directors on April 12, 2021 and is pending shareholder approval.

made under the Equity Incentive Plans must be approved by the Company’s Board of Directors prior to issuance.

our 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 (the strike price).

The options become exercisable over

a range of immediately vested to four-year vesting periods and, if not exercised, expire five years from the grant date, unless stated differently

in the relevant option agreements.

Stock options have no financial statement effect on the date they are granted but rather are

recorded over time as compensation expense.

We record compensation expense based on the estimated fair value of the awards which

is amortized as compensation expense on a straight-line basis over the vesting period.

Accordingly, total expense related to the

award is reduced by the fair value of options that are forfeited by employees that leave the Company prior to vesting.

following is a summary of the stock option activities during the three months ended March 31, 2021:

Exercise Price

Average Remaining Contractual

Remaining Contractual

Term (in years)

December 31, 2019

September 30, 2020

Outstanding, December 31, 2020

Outstanding, March 31, 2021

Exercisable, March 31, 2021

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

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

$0.70 per share vesting monthly over four years.

The expiration date of these options is five years from the grant date.

options had an aggregated fair value of approximately $1,503,645 on the grant date.

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.

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.

our stock option program, pursuant to the Equity Incentive Plan, the Company grants restricted stock units (“RSUs”)

of March 31, 2021 and December 31, 2020, the stock options had an intrinsic value of approximately $5.5 million and $2.9

million, respectively.

our Equity Incentive Plans, pursuant to the Equity Incentive Plans, the Company may grant restricted stock units (“RSUs”)

to certain employees and non-employee directors.

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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:

following is a summary of the restricted stock activities during the three months ended March 31, 2021.

Grant Date Fair Value

Outstanding, December 31, 2020

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:

Outstanding, March 31, 2021

February 24, 2021, the Company granted an aggregate of 130,547 RSUs to its board members.

These RSUs vest ratably over one year

and had an aggregated fair value of approximately $374 thousand on the grant date.

addition, on March 20, 2021, the Company granted an aggregate of 875,245 shares of restricted common stock to Michael Pope, CEO

pursuant to his employment agreement.

These shares were issued pursuant to the 2014 Equity Incentive Plan, vest ratably over one

year, are issued monthly as they vest, and had an aggregated fair value of approximately $2.5 million on the grant date.

is a summary of the warrant activities during the three months ended March 31, 2021:

Exercise Price

Average Remaining Contractual

Term (in years)

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.

Outstanding, December 31, 2020

Outstanding, March 31, 2021

Exercisable, March 31, 2021

compensation expense

the nine months ended September 30, 2020 and 2019, the Company recorded the following stock compensation in general and administrative

the three months ended March 31, 2021 and 2020, the Company recorded the following stock compensation in general and administrative

expense (in thousands):

Stock options

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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

of March 31, 2021, there was approximately $8.0 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 $3.5 million

is estimated to be recorded as compensation expense in the remaining nine months of 2021.

RELATED PARTY TRANSACTIONS

January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned

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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.

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

(“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

Pope’s employment agreement with the Company’s Management Agreement, effective as of the first day

of the same month that Mr.

Pope’s employment with the Company shall terminate, and for a term of 13 months, Mr.

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 shall 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.

Pope may defer payment until the end of each year and receive payment in the form of shares of Class A common stock

of the Company.

June 21, 2018, the Company issued a warrant to purchase 270,000 Class A common stock, at an exercise price of $1.20 per share,

to Canaan Parish, LLC, an entity wholly owned by Mr.

Pope (the “Canaan Warrant”).

The Canaan Warrant was issued in

exchange for the cancellation of a warrant that had been issued to Vert Capital Corporation, an entity owned by Mr.

Levin (“Vert”), in November 2014 as compensation for certain advisory services rendered by Vert to the Company.

similar replacement warrant had also been issued to Mr.

Levin’s entity, Dynamic Capital, but that warrant has since expired.

COMMITMENTS AND CONTINGENCIES

Lease Commitments

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 nine months ended September 30, 2020 and 2019, aggregate rent expense was $350,836 and $312,910 respectively.

Company leases six office building facilities located in Lawrenceville, Georgia, Poulsbo, Washington, Lexington, Massachusetts,

Scottsdale, Arizona, Miami, Florida and Utica, New York in the U.S., and two office building facilities in Dartford and Kent in

for sales, marketing, technical support and service staff.

All such facilities are under non-cancelable lease agreements

with terms ending in 2023.

the three months ended March 31, 2021 and 2020, aggregate rent expense was $310 thousand and $132 thousand respectively.

Company is legally obligated to fulfill certain purchase commitments made to vendors that supply materials used in the Company’s

As of March 31, 2021 the total amount of such open inventory purchase orders was $49.5 million.

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 three significant customers for the nine months ended September 30, 2020

revenues from the customer to total

revenues for the

nine months ended

September 30, 2020

from the customer

September 30, 2020

(rounded to 000’s)

revenues from the customer to total

revenues for the

nine months ended

September 30, 2019

from the customer as of

September 30, 2019

(rounded to 000’s)

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

were no customers that account for greater than 10% of the Company’s consolidated revenues for the three months ended March

were concentrated among a few vendors for the three months ended March 31, 2021 and 2020:

of Total purchases from the

vendor to total

purchases for the

nine months ended

September 30, 2020

(prepayment) to the

September 30, 2020

(rounded to 000’s)

purchases from the vendor to total

three months ended

March 31, 2021

(in thousands)

of Total purchases from the

vendor to total

purchases for the

nine months ended

September 30, 2019

three months ended

March 31, 2020

(prepayment) to the

September 30, 2019

(rounded to 000’s)

March 31, 2020 (in thousands)

Company believes there are other suppliers that could be substituted should the supplier become unavailable or non-competitive.

SUBSEQUENT EVENTS

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.

to the terms of the share purchase agreement, dated March 23, 2021, between our subsidiaries, Sahara Holdings Ltd.

and Clevertouch

BV and the holders of 100% of the outstanding shares of Interactive Concepts BV, a Belgium company, we issued a total of 142,882

shares of the Company’s Class A common stock in April and May, 2021, as partial consideration for the purchase price.

On April 5, 2021, the

Company issued 23,574 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate

amount of $48,583.

On April 21, 2021,

the Company issued 601,339 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate

amount of $1,057,753.

On May 4, 2021, the

Company issued 28,179 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate

amount of $48,889.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

addition to historical information, this Form 10-Q may contain forward-looking statements relating to Boxlight Corporation.

statements, trend analyses and other information relative to markets for our products and trends in revenue, gross margins and

anticipated expense levels, as well as other statements including words such as “anticipate”, “believe”,

“plan”, “estimate”, “expect”, “trend”

“intend”, and other similar

expressions, constitute forward-looking statements.

Prospective investors are cautioned that any such forward-looking statements

are not guarantees of future performance and involve risks and uncertainties including those factors described below under “Factors

That May Affect Future Operations”, and that actual results may differ materially from those contemplated by such forward-looking

We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence

of unanticipated events or changes in future operating results.

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.

following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related

notes thereto included elsewhere herein.

The Management’s Discussion and Analysis (“MD&A”) contains forward-looking

statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions.

statements that are not statements of historical fact are forward-looking statements.

When used, the words “believe,”

“plan,”

“intend,”

“anticipate,”

“target,”

“estimate,”

“expect,”

and the like, and/or future-tense or conditional constructions (“will,”

“may,”

“could,”

“should,”

etc.), or similar expressions, identify certain of these forward-looking statements.

These forward-looking statements are subject

to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the

forward-looking statements in this form.

Our actual results and the timing of events could differ materially from those anticipated

in these forward-looking statements as a result of several factors.

results may not indicate future performance.

Our forward-looking statements reflect our current views about future events, are

based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially

from those contemplated by these statements.

We undertake no obligation to publicly update or revise any forward-looking statements,

including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking

Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

are a 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 interactive spaces.

We currently design, produce and distribute interactive

displays, collaboration software, supporting accessories and professional services.

We also distribute science, technology, engineering

and math (or “STEM”) products, including our robotics and coding system, 3D printing solution and portable science

All our products are integrated into our software suite that provides tools for presentation creation and delivery, assessment

and collaboration.

date, we have generated substantially all of our revenue from the sale of our interactive displays and software to the educational

market in the United States and Europe.

have also implemented a comprehensive plan to reach profitability both from our core business operations and as a result of making

strategic business acquisitions.

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,

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, 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.

We have already started to implement this strategy as set forth below.

Highlights of our plan

Integrating products

of the acquired companies and cross training our sales reps to increase their offerings.

Hiring new sales

representatives with significant industry experience in their respective territories.

Expanding our

reseller partner network both in key territories and in new markets, increasing our penetration and reach.

September 24, 2020, the Company acquired Sahara Presentation Systems PLC, a leader in distributed and manufactured AV solutions

(“Sahara”).

Headquartered in the United Kingdom, Sahara is a leader in distributed AV products and a manufacturer

of multi-award-winning touchscreens and digital signage products, including the globally renowned Clevertouch and Sedao brands.

In consideration for the acquisition, the Company paid to the shareholders of Sahara a total purchase price of GBP 74.0 million

(approximately USD $94.9 million) in the form of GBP 52.0 million (approximately USD $66.7 million) in cash and GBP 22.0 million

(approximately USD $28.2 million) in our Series B convertible preferred stock and our Series C convertible preferred stock.

March 24, 2021, we entered into a share redemption and conversion agreement with the former Sahara shareholders who own approximately

96% of our Series B and Series C preferred stock.

Under the agreement, we agreed to redeem and purchase from such preferred stockholders

on or before June 30, 2021 all of the shares of Series B preferred stock for £11.5 million being the stated or liquidation

value of the Series B preferred stock plus (b) accrued dividends from January 1, 2021 to the date of purchase.

addition, the holders of 96% of the Series C preferred stock agreed to convert those shares into 7.6 million shares of our Class

A Common Stock at a conversion price of $1.66 per share.

In the event, for any reason, we do not complete the conversion and redemption

by June 30, 2021, and the Sahara shareholders do not agree to an extension, the agreement will terminate without liability by

Strategy and Challenges

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 hardware, software and service revenues less sales discounts.

Hardware revenue is derived from the sale of our interactive flat panels, projectors, peripherals and accessories,

are comprised of hardware products, software services,

and professional development revenues less sales discounts.

Product revenue is derived from the sale of our interactive projectors, flat panels, 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 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.

development revenue.

We receive revenue from providing professional development services through third parties and our

network of distributors.

cost of revenues is comprised of the following:

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logistics costs;

and outbound freight costs and duties;

and outbound freight costs, and customs and duties charges;

associated with the repair of products under warranty;

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of professionals to deliver professional development training related to the use of our products;

of installation services.

outsource some of our warehouse operations and order fulfillment and purchase products from related and third parties.

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and administrative.

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.

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

and development.

Research and development expenses consist primarily of personnel related costs, prototype and sample

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

Research and development expense consist primarily of personnel related costs, prototype and sample costs, design

costs and global product certifications mostly for wireless certifications.

income (expense), net

income (expense), net, consists of interest expense associated with our debt financing arrangements, changes in fair value of

derivative liabilities, gain from settlements of liabilities and interest income earned on our cash.

We do not utilize derivatives

to hedge our foreign exchange risk, as we believe the risk to be immaterial to our results of operations.

are subject to income taxes in the countries in which we do business, including the United States, United Kingdom and Mexico.

The United Kingdom and Mexico have a statutory tax rate different from those in the United States.

Additionally, certain of our

international earnings are also taxable in the United States.

Our effective tax rates will vary depending on the relative proportion

of foreign to U.S.

income, absorption of foreign tax credits changes in the valuation of our deferred tax assets and liabilities

and changes in tax laws.

We regularly assess the likelihood of adverse outcomes resulting from the examination of our tax returns

Internal Revenue Service and other tax authorities to determine the adequacy of our income tax reserves and expense.

Should actual events or results differ from our current expectations, charges or credits to our income tax expense may become

Any such adjustments could have a significant impact on our results of operations.

The Company has cumulative losses

and there is no assurance of future taxable income, therefore, valuation allowances have been recorded to fully offset the deferred

income (expense), net primarily consists of interest expense associated with our debt financing arrangements, gains (losses) on

the settlements of debt and trade payable obligations exchanged for common shares, and the effects of changes in the fair value

of derivative liabilities.

are subject to income taxes in the United States, United Kingdom, Mexico, Sweden, Finland, Holland, and Germany where we do business.

The United Kingdom, Mexico, Sweden, Finland, Holland, and Germany have a statutory tax rate different from that in the United

Additionally, certain of our international earnings are also taxable in the United States.

Accordingly, our effective

tax rates will vary depending on the relative proportion of foreign to U.S.

income, the absorption of foreign tax credits, changes

in the valuation of our deferred tax assets and liabilities and changes in tax laws.

We regularly assess the likelihood of adverse

outcomes resulting from the examination of our tax returns by the U.S.

Internal Revenue Service, or IRS, and other tax authorities

to determine the adequacy of our income tax reserves and expense.

Should actual events or results differ from our current expectations,

charges or credits to our income tax expense may become necessary.

Any such adjustments could have a significant impact on our

results of operations.

Results –

Boxlight Corporation

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 nine months ended September 30, 2020 were $10,444,060

as compared to $11,892,814 for the nine months ended September 30, 2019.

The decrease was driven primarily by reductions in tradeshows

of $0.3 million, contract services of $0.6 million, compensation and benefits of $0.4 million and travel and entertainment of

$0.4 million.

and Development Expense.

Research and development expenses were $1,073,095 and $911,682 for the nine months ended September

30, 2020 and 2019, respectively.

The increase in research and development expense was driven primarily by an increase in contact

services for software consultants.

Income (Expense).

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.

the three month periods ended March 31, 2021 and 2020

revenues for the three months ended March 31, 2021 were $33.4 million as compared to $5.7 million for the three months ended

March 31, 2020, resulting in a 484% increase.

Revenues primarily consist of hardware revenue, software revenue,

and professional development.

The increase in revenues was primarily a result of the acquisition of Sahara Presentation

Systems in September 2020 and increased demand for our solutions in both the U.S.

and Europe, the Middle East, and

Cost of revenues for the three months ended March 31, 2021 was $25.2 million as compared to $4.1 million for

the three months ended March 31, 2020, resulting in an 509% increase.

Cost of revenues consists primarily of product cost, freight

expenses, customs expense and inventory adjustments.

The increase in cost of revenues was associated with the increase in revenues,

and also additional customs/freight costs which increased from approximately $700 thousand in Q1 2020 to $1.3 million in Q1 2021

due to supply chain challenges caused by product fulfillment complications attributable to the Covid-19 pandemic.

Gross profit for the three months ended March 31, 2021 was $8.2 million as compared to $1.6 million for the three

months ended March 31, 2020.

The Gross Profit Margin decreased from 28% in Q1 2020 to 25% in Q1 2021.

The gross margin decrease

was primarily driven by the effects of customs and freight expenses discussed above, and certain purchase accounting adjustments

stemming from the Sahara acquisition and effecting recognized revenues.

and Administrative Expenses.

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.

General and administrative (“G&A”) expense for the three months ended March 31,

2021 were $10.0 million and 30% of revenue as compared to $3.9 million and 69% of revenue for the three months ended March 31,

The increase resulted from additional personnel costs associated with the acquired Sahara operations.

The reduction in G&A

costs as a percentage of revenue was due to the effect of significant cost cutting actions undertaken during 2020 in response

to the general depressed economic environment caused by the Covid-19 pandemic.

and Development Expenses.

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 was primarily driven by the increase in contract

services related to software consultants.

Research and development expense was $474 thousand and 1% of revenue for the three months ended

March 31, 2021 as compared to $316 thousand and 5% of revenue for the three months ended March 31, 2020.

Research and development

expense primarily consists of costs associated with development of proprietary technology.

The increase in research and development

expense was primarily driven by an increase in contract services related to software development.

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.

Other expense for the three months ended March 31, 2021 was $(3.1) million as compared to income of $713

thousand for the three months ended March 31, 2020.

Other expense increased primarily due to an $601 thousand increase in interest

expense associated with increased borrowings, and $2.9 million of additional losses recognized upon the settlement of certain

debt obligations in exchange for issuance of common shares.

Net losses were $5.2 million and $1.9 million for the three months ended March 31, 2021 and 2020, respectively.

increase in the net loss was primarily due to the lower gross profit margins, increased interest expense, and losses

incurred on the settlement of certain debt obligations in exchange for shares of our common stock.

provide investors with additional insight and allow for a more comprehensive understanding of the information used by management

in its financial and decision-making surrounding operations, we supplement our consolidated condensed financial statements which

in its financial and decision-making surrounding operations, we supplement our condensed consolidated financial statements which

are prepared in accordance with GAAP with EBITDA and Adjusted EBITDA, both non-GAAP financial measures of earnings.

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 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.

represents net income (loss) before income tax expense, interest income, interest expense, depreciation and amortization.

Adjusted EBITDA represents EBITDA, plus stock compensation expense, the change in fair value of derivative liabilities,

purchase accounting impact of fair valuing inventory and deferred revenue, and non-cash losses associated with debt

Our management uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and

efficiency of our business model, and to assess the strength of the underlying operations of our business.

adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our

operations between periods and over time.

Investors should consider our non-GAAP financial

measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

following table contains reconciliations of net losses to EBITDA and adjusted EBITDA for the periods presented.

Reconciliation

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31, 2021 and 2020 to EBITDA and adjusted EBITDA

(in thousands)

Depreciation and amortization

Interest expense

Stock compensation expense (1)

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 nine months ended

30, 2020 and 2019 to EBITDA and adjusted EBITDA

(in thousands)

Depreciation and amortization

Interest expense

Stock compensation expense (1)

Change in fair value of derivative liabilities

accounting impact of fair valuing inventory (3)

and amortization

compensation expense

in fair value of derivative liabilities

Purchase accounting impact of fair valuing inventory

Purchase accounting impact of fair valuing deferred

loss on settlement of Lind debt in stock

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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The bulk of our products are shipped to our educational customers prior to the beginning of the

school year, usually in June, July, August or September.

school year, usually in between June and September.

To prepare for the upcoming school year, we generally build up inventories

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in which we record the highest level of sales.

have been very proactive, and will continue to be proactive, in obtaining contracts during the fourth and first quarters that

will help offset the seasonality of our business.

to travel restrictions and concerns for the safety for our employees during the ongoing COVID-19 pandemic, we have reduced face-to-face

meetings with customers and attendance at tradeshow events.

We are currently assessing the impact these changes will have on

our peak season sales.

Our initial assessment is that funding priority will be given to initiatives that provide for

continuity of learning which may result in lower priority on total learning solution sales including hardware, software and

teacher training.

and Capital Resources

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 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

$0.75 per share.

In addition, on June 24, 2020 the Company issued an additional 1,999,667 shares of Class A common stock to the

underwriter at $0.75 per share.

Gross proceeds from the issuances were $11,499,750.

Net proceeds were $10,593,937 after deducting

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.

agreed to purchase 85% of the eligible accounts receivable of the Company, up to $6 million, with the right of recourse.

receivable and our ability to borrow against accounts receivable provides an additional source of liquidity as cash payments are

collected from customers in the normal course of business.

Our accounts receivable balance fluctuates throughout the year based

on the seasonality of the business.

of March 31, 2021, we had cash and cash equivalents of $10.0 million and a working capital balance of $21.8 million.

financial position represents a significant improvement from a year ago at March 31, 2020 when we had a working capital deficit

of $(7.1) million and $612 thousand of cash and cash equivalents.

the three months ended March 31, 2021 and 2020, we had net cash used in operating activities of $1.6 million and $890 thousand,

respectively, net cash used by investing activities of $194 thousand and $0 respectively, and net cash (used in) provided by financing

activities of $(747) thousand and $434 thousand, respectively.

We had accounts receivable net of allowances of $22.9 million and

$4.3 million as of March 31, 2021 and year ended December 31, 2020, respectively.

addition to the cash flows generated by our ongoing operating activities we financed our operations during 2021 with a new $20.0

million tranche of debt funded by our primary lender, and from a pre-existing accounts receivable financing arrangement with another

lender who purchases 85% of the eligible accounts receivable of the Company, for up to $6.0 million, with the right of recourse.

Our accounts receivable and our ability to borrow against accounts receivable provides us with an additional source of liquidity

as cash payments are collected from customers in the normal course of business.

Our accounts receivable balance fluctuates throughout

the year based on the seasonality of our business.

the current COVID-19 pandemic environment, the availability of capital has been significantly reduced and the cost of capital

has increased.

Increasing our capital through equity issuance at this time could cause significant dilution to our existing stockholders

as a result of diminished stock value due to market volatility and uncertainty arising from the COVID-19 pandemic.

are confident that the Company will be able to manage through the current challenges in the equity and debt finance markets by

managing payment terms with customers and vendors.

cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect

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for the majority of our inventory purchases, which further constrains our cash liquidity.

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.

Interest payments owed under the 2020

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

we issued to Lind in March and December 2019, respectively, to provide that we would not make any payments under the three Lind

notes in the form of Class A Common Stock if such payments could cause the Company to violate any rules of the Nasdaq Capital

addition, on February 4, 2020, we and Lind entered into a second amended and restated security agreement for purposes of amending

and restating a prior security agreement, dated as of December 13, 2019.

In addition, Sallyport Commercial Finance, LLC, as first

lien creditor, and Lind, as second lien creditor, entered into a second amended and restated intercreditor agreement for purposes

of amending and restating the intercreditor agreement between the parties, dated December 13, 2019, in order to reaffirm and confirm

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.

September 21, 2020, we and Lind Global Asset Management LLC (“Lind Global”) entered into a securities purchase agreement

(the “Lind Global SPA”), pursuant to which Lind Global purchased from the Company a $22,000,000 secured convertible

note (the “Convertible Note”) in exchange for payment to us of $20,000,000 (the “Funding”).

terms of the Lind Global 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, with the per share price of the Bonus Payment shares calculated based on the 20-day VWAP of the Class A 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 Class A 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 Class A common stock.

Class A common stock issuable to Lind Global in conjunction

with the Bonus Payment and the Convertible Note was registered pursuant to a shelf takedown on the Company’s existing shelf

registration statement on Form S-3 (SEC File No.

conjunction with our entry into the Lind Global SPA and the issuance of the Convertible Note, on September 21, 2020, the Company

and Lind Global Macro Fund, LP, an affiliate of Lind Global(“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 Lind in order to incorporate the Lind Global SPA and the Convertible Note

In addition, on September 21, 2020, the Company, Sallyport Commercial Finance, LLC (“Sallyport”), as first

lien creditor, and Lind and Lind Global, 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 Lind, in order to (i) incorporate Lind

Global 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.

July 28, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group,

LLC, a Delaware limited liability company (“Maxim”), pursuant to which Maxim, as representative of the underwriters,

agreed to underwrite the public offering (the “Offering”) of up to 15,000,00 shares of the Company’s Class A

common stock, at a public offering price of $2.00 per share, in addition to an overallotment option (the “Overallotment

Option”) of 2,250,000 shares of Common Stock.

The Offering closed on July 31, 2020, with the sale of all 17,250,000 shares

of the Company’s Common Stock, including the Overallotment Option, for gross proceeds of $34,500,000.

Maxim acted as sole

book-running manager, National Securities Corporation acted as a co-manager for the Offering, and A.G.P./Alliance Global Partners

(“A.G.P.”) acted as financial advisor.

As compensation for underwriting the Offering, the underwriters received an

underwriting discount of 7%, equaling approximately $2,415,000, in addition to $60,000 in expenses.

A.G.P.’s compensation

was paid out of the underwriting discount.

The Offering was made pursuant to the Company’s effective shelf registration

statement on Form S-3 (SEC File No.

333-239939) (the “Registration Statement”) and the related base prospectus included

therein, as supplemented by the prospectus supplement dated July 28, 2020 (the “Preliminary Prospectus”) and the final

prospectus supplement, filed July 29, 2020 (the “Final Prospectus”

and collectively with the Preliminary Prospectus,

the “Prospectus”)

approved by the Company’s board of directors on June 22, 2020, the Company entered into an agreement with Everest Display,

Inc., a Taiwan corporation (“EDI”), and EDI’s subsidiary, AMAGIC Holographics, Inc., a California corporation

(“AMAGIC”), effective June 11, 2020, pursuant to which EDI forgave $1,000,000 in accounts payable owed by the Company

to EDI in exchange for the Company’s issuance of 869,565 shares (the “Shares”) of its Class A common stock,

par value $0.0001 per share, to AMAGIC at a $1.15 per share purchase price.

The Shares were issued to AMAGIC pursuant to an exemption

from registration provided by Rule 506 of Regulation D under Section 4(a)(2) of the Securities Act of 1933, as amended.

June 8, 2020, the Company entered into an underwriting agreement (the “June Underwriting Agreement”) with Maxim pursuant

to which Maxim agreed to underwrite the public offering (the “June Offering”) of 13,333,333 shares (the “Shares”)

of the Company’s Class A common stock at a public offering price of $0.75 per share.

National acted as co-manager of the

June Offering.

The June Offering closed on June 11, 2020, with the Company’s sale of the Shares for gross proceeds of $10,000,000.

In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 2,000,000 shares of Class A

common stock at the public offering price less discounts and commissions (the “June Over-Allotment Option”).

Over-Allotment Option was exercised in full on June 24, 2020, for additional proceeds of $1,500,000, through the sale of an additional

1,999,667 shares of Class A common stock.

Maxim acted as sole-bookrunner and National acted as co-manager for the Offering.

proceeds, before underwriting discounts and commissions and estimated offering expenses, totaled $11.5 million.

As compensation

for underwriting the Offering, Maxim and National together received an underwriting discount of 7% of the Offering and the Over-Allotment

Option and were reimbursed for up to $85,000 in underwriting expenses.

The June Offering was conducted pursuant to the Company’s

registration statement on Form S-1 (SEC File No.

333-238634) previously filed with and subsequently declared effective by the

February 4, 2020, we and Lind Global Marco Fund, LP (the “Investor”

or “Lind”) entered into a purchase

agreement (the “2020 SPA”) pursuant to which 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.

The Note matures over 24

months, with repayment commencing on August 4, 2020, after which time the Company will be obligated to make monthly payments of

$45,833 (the “Monthly Payments”), plus interest.

Interest payments owed under the 2020 Note (the “Interest Payments”)

began accruing on the one-month anniversary of the issuance of the Note, however such accrued Interest Payments, which may be

paid in either conversion shares or cash, did not become until after the six month anniversary of the Note’s issuance.

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.

In connection with this transaction the Company and Lind amended and restated the $4,400,000

note and the $1,375,000 note referred to below that we issued to Lind in March and December 2019, respectively, to provide that

we would not make any payments under the Lind notes in the form of Class A Common Stock if such payments could cause the Company

to violate any rules of the Nasdaq Capital Market.

In addition, on February 4, 2020, we and Lind entered into a second amended

and restated security agreement for purposes of amending and restating a prior security agreement, dated as of December 13, 2019.

Also, Sallyport Commercial Finance, LLC, as first lien creditor, and Lind, as second lien creditor, entered into a second amended

and restated intercreditor agreement for purposes of amending and restating the intercreditor agreement between the parties, dated

as of December 13, 2019, in order to reaffirm and confirm the relative priority of each creditor’s respective security interests

in our assets.

Balance Sheet Arrangements

have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our

financial condition, results of operations or liquidity and capital resources.

Accounting Policies and Estimates

consolidated condensed financial statements are prepared in accordance with accounting principles generally accepted in the United

condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United

States (“GAAP”).

3 unchanged sentences

We base our assumptions, estimates and judgments on historical experience, current trends and other

factors that management believes to be relevant at the time our consolidated condensed financial statements are prepared.

factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared.

regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements

2 unchanged sentences

actual results could differ from our assumptions and estimates, and such differences could be material.

significant accounting policies are discussed in the notes to the unaudited consolidated condensed financial statements.

significant accounting policies are discussed in the notes to the unaudited condensed consolidated financial statements.

that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial

1 unchanged sentence

the effect of matters that are inherently uncertain :

and Intangible assets

compensation expense

preferred stock

Growth Company

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Quantitative and Qualitative Disclosure About Market Risk

a “smaller reporting company,”

this item is not required.

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