2 unchanged sentences
Condensed Consolidated Statements of Operations and Comprehensive Loss
−Removed: For the three and six months ended June 30, 2022 and 2021
−Removed: (in thousands, except per share amounts)
+Added: For the three and nine months ended September 30, 2022 and 2021
+Added: (in thousands, except share and per share amounts)
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Revenues, net
4 unchanged sentences
Total operating expense
−Removed: Income (loss) from operations
+Added: Income from operations
Other income (expense):
3 unchanged sentences
Changes in fair value of derivative liabilities
−Removed: Total other income (expense)
+Added: Total other expense
Income (loss) before income taxes
−Removed: Income tax (expense) benefit
+Added: Income tax expense
Net income (loss)
1 unchanged sentence
Deemed contribution -Series B Preferred
−Removed: Net loss attributable to common stockholders
+Added: Net income (loss) attributable to common stockholders
Comprehensive loss:
Net income (loss)
−Removed: Other comprehensive (loss) income:
+Added: Other comprehensive loss:
Foreign currency translation adjustment
Total comprehensive loss
−Removed: Net loss per common share – basic and diluted
−Removed: Weighted average number of common shares outstanding – basic and diluted
+Added: Net income (loss) per common share – basic
+Added: Net income (loss) per common share – diluted
+Added: Weighted average number of common shares outstanding – basic
+Added: Weighted average number of common shares outstanding – diluted
See accompanying notes to unaudited condensed consolidated financial statements.
1 unchanged sentence
Condensed Consolidated Balance Sheets
−Removed: As of June 30, 2022 and December 31, 2021
+Added: As of September 30, 2022 and December 31, 2021
(in thousands, except share and per share amounts)
+Added: September 30,
Current assets:
40 unchanged sentences
Condensed Consolidated Statements of Changes in Stockholders’ Equity
−Removed: For the three and six months ended June 30, 2022
+Added: For the three and nine months ended September 30, 2022
(in thousands, except share amounts)
2 unchanged sentences
(Loss) Income
−Removed: Balance as of March 31, 2022
+Added: Balance as of June 30, 2022
Shares issued for:
−Removed: Stock options exercised
−Removed: Conversion of restricted shares
+Added: Shares issued for acquisition
+Added: Issuance of warrants and prefunded warrants
+Added: Warrants exercised
+Added: Issuance of stock, net
+Added: Vesting of restricted share units
Stock compensation
1 unchanged sentence
Fixed dividends Preferred Series B
−Removed: Balance as of June 30, 2022
+Added: Balance as of September 30, 2022
Balance as of December 31, 2021
1 unchanged sentence
Stock options exercised
+Added: Shares issued for acquisition
+Added: Issuance of warrants and prefunded warrants
Debt issuance costs
−Removed: Conversion of restricted shares
+Added: Vesting of restricted share units
Stock compensation
+Added: Issuance of stock
+Added: Warrants exercised
Foreign currency translation
Fixed dividends Preferred Series B
−Removed: Balance as of June 30, 2022
+Added: Balance as of September 30, 2022
See accompanying notes to unaudited condensed consolidated financial statements.
1 unchanged sentence
Condensed Consolidated Statements of Changes in Stockholders’ Equity
−Removed: For the three and six months ended June 2021
+Added: For the three and nine months ended September 2021
(in thousands, except share amounts)
1 unchanged sentence
Comprehensive
−Removed: Balance as of March 31, 2021
+Added: Balance as of June 30, 2021
Shares issued for:
1 unchanged sentence
Conversion of debt obligations
+Added: Stock options exercised
+Added: Warrants exercised
Stock compensation
−Removed: Shares issued for acquisition
Fixed dividends Preferred Series B
−Removed: Deemed contribution from Series B preferred
Foreign currency translation
−Removed: Balance as of June 30, 2021
+Added: Balance as of September 30, 2021
Balance as of December 31, 2020
10 unchanged sentences
Foreign currency translation
−Removed: Balance as of June 30, 2021
+Added: Balance as of September 30, 2021
See accompanying notes to unaudited condensed consolidated financial statements.
1 unchanged sentence
Condensed Consolidated Statements of Cash Flows
−Removed: For the six months ended June 30, 2022 and 2021
−Removed: Six Months Ended
+Added: For the nine months ended September 30, 2022 and 2021
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Cash flows from operating activities:
−Removed: Adjustments to reconcile net loss to net cash provided by operating activities:
+Added: Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount and issuance cost
15 unchanged sentences
Deferred revenues
−Removed: Net cash used in operating activities
+Added: Net cash provided by (used in) operating activities
Cash flows from investing activities:
Business acquisitions (net of cash acquired)
−Removed: Settlement of earnout obligations
−Removed: Purchases of furniture and fixtures, net
+Added: Asset acquisition
+Added: Purchases of property and equipment, net
Net cash used in investing activities
Cash flows from financing activities:
−Removed: Proceeds from short-term debt
+Added: Net proceeds from issuance of common stock and warrants, net of issuance costs
+Added: Proceeds from issuances of short-term debt
+Added: Proceeds from exercise of options and warrants
Principal payments on debt
+Added: Debt issuance costs
Payments of fixed dividends to Series B Preferred stockholders
−Removed: Proceeds from the exercise of options and warrants
−Removed: Net cash provided by (used in) financing activities
+Added: Net cash provided by financing activities
Effect of foreign currency exchange rates
−Removed: Net decrease in cash and cash equivalents
+Added: Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the period
9 unchanged sentences
Shares issued to convert notes payable and accrued interest
−Removed: Shares issued for acquisition
−Removed: Declared but unpaid fixed dividends on Series B Preferred Stock
+Added: Shares issued for asset acquisition
See accompanying notes to unaudited condensed consolidated financial statements.
36 unchanged sentences
The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.
−Removed: The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in thousands):
+Added: The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 (in thousands):
+Added: September 30,
Derivative liabilities - warrant instruments
Derivative liabilities - warrant instruments
−Removed: The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy (in thousands):
+Added: The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy:
(in thousands)
−Removed: Balance, March 31, 2022
−Removed: Change in fair value of derivative liabilities
Balance, June 30, 2022
+Added: Change in fair value of derivative liabilities
+Added: Balance, September 30, 2022
(in thousands)
1 unchanged sentence
Change in fair value of derivative liabilities
−Removed: Balance, June 30, 2022
+Added: Balance, September 30, 2022
(in thousands)
−Removed: Balance, March 31, 2021
−Removed: Change in fair value of derivative liabilities
Balance, June 30, 2021
+Added: Exercise of warrants
+Added: Change in fair value of derivative liabilities
+Added: Balance, September 30, 2021
(in thousands)
2 unchanged sentences
Change in fair value of derivative liabilities
−Removed: Balance, June 30, 2021
+Added: Balance, September 30, 2021
INCOME (LOSS) PER COMMON SHARE
3 unchanged sentences
The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted calculation for the entire period being presented.
−Removed: For the three months ended June 30, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.7 million shares from options to purchase common shares and unvested restricted shares as well as 3.5 million shares issuable upon exercise of warrants.
−Removed: Additionally, potentially dilutive securities from the assumed conversion of Series B and Series C convertible preferred stock (Note 12) into Class A common stock are excluded from the denominator because they would be anti-dilutive.
−Removed: For the three months ended June 30, 2021, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.3 million shares from options to purchase common shares and unvested restricted shares as well as 344,000 shares issuable upon exercise of warrants.
−Removed: Additionally, potentially dilutive securities from the assumed conversion of Series B and Series C convertible preferred stock (Note 12) into Class A common stock are excluded from the denominator because they would be anti-dilutive.
−Removed: Since the Company was in a loss position for the periods presented, basic net loss per common share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive.
−Removed: For the six months ended June
−Removed: 30, 2022 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.4 million shares from options to purchase common shares and unvested restricted shares as well as 344,000 shares issuable upon exercise of warrants.
−Removed: For the six months ended June 30, 2021, $ 6.6 million shares were not includable.
−Removed: Additionally, potentially dilutive securities from the assumed conversion of Series B and Series C convertible preferred stock (Note 12) into Class A common stock are excluded from the denominator because they would be anti-dilutive.
+Added: For the three months ended September 30, 2022 and September 30, 2021, where the Company had income, approximately 17.7 million and 1.89 million of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect.
+Added: For the nine months ended September 30, 2022 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.2 million shares from options to purchase common shares and unvested restricted shares as well as 10.8 million shares issuable upon exercise of warrants.
+Added: Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive.
+Added: For the nine months ended September 30, 2021 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 6.7 million shares from options to purchase common shares and unvested restricted shares as well as 265,000 shares issuable upon exercise of warrants.
+Added: Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive.
REVENUE RECOGNITION
−Removed: In accordance with the FASB’s Accounting Standards Update (“ASU”) No.
−Removed: 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.
+Added: 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.
21 unchanged sentences
Since observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis.
−Removed: The Company’s process for estimating SSPs without observable prices considers multiple
−Removed: factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins.
+Added: The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins.
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.
−Removed: 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.
−Removed: 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.
−Removed: A separate price has not been established by the Company for its hardware maintenance services and software maintenance services.
−Removed: 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.
−Removed: Therefore, the SSP of these products and services is estimated using the alternative method described above, which includes residual value techniques.
+Added: However, the Company does have performance obligations for which pricing is highly variable or uncertain, and
+Added: contracts with those performance obligations generally contain multiple performance obligations with highly variable or uncertain pricing.
+Added: 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 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.
+Added: A separate price has not been established by the Company for performance obligations generally included in its contracts.
+Added: In addition, the Company’s contracts generally include performance obligations that are never sold separately, are proprietary in nature, and the related selling price of these products and services is highly variable or uncertain.
+Added: Therefore, the SSP of these products and services is estimated using the alternative method described above.
The Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that are executed in the same manner, contain the same performance obligations, and are priced in a consistent manner.
13 unchanged sentences
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.
−Removed: The Company has no material contract assets as of June 30, 2022 or December 31, 2021.
−Removed: During the three months ended June 30, 2022 and June 30, 2021, respectively, the Company recognized $ 1.8 million and $ 513 thousand of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively.
−Removed: During the six months ended June 30, 2022 and June 30, 2021, respectively, the Company recognized $ 3.7 million and $ 1.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively.
+Added: The Company has no material contract assets as of September 30, 2022, or December 31, 2021.
+Added: During the three months ended September 30, 2022, and September 30, 2021, the Company recognized $ 2.2 million and $ 2.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021, and December 31, 2020, respectively.
+Added: During the nine months ended September 30, 2022, and September 30, 2021, the Company recognized $ 5.8 million and $ 4.4 million of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively.
Variable Consideration
2 unchanged sentences
However, the Company, on a case-by-case basis, will grant exceptions, mostly for “buyer’s remorse” where the distributor or reseller’s end customer either did not understand what they were ordering or otherwise determined that the product did not meet their needs.
−Removed: An allowance for sales returns is
−Removed: estimated based on an analysis of historical trends.
+Added: An allowance for sales returns is estimated based on an analysis of historical trends.
In very limited situations, a customer may return previous purchases held in inventory for a specified period of time in exchange for credits toward additional purchases.
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.
−Removed: These estimates are generally made using the expected value method based on historical experience and are measured at each reporting date.
−Removed: There was no material revenue recognized in the three and six months ended June 30, 2022 related to changes in estimated variable consideration that existed at December 31, 2021.
+Added: These estimates are generally made using the expected value method based on historical experience and are measured at each
+Added: reporting date.
+Added: There was no material revenue recognized in the three and nine months ended September 30, 2022 related to changes in estimated variable consideration that existed at June 30, 2022 or December 31, 2021.
Remaining Performance Obligations
3 unchanged sentences
Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer.
−Removed: As of June 30, 2022 and December 31, 2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 22.5 million and $ 21.5 million, respectively.
−Removed: The Company expects to recognize revenue on 33 % of the remaining performance obligations during the next twelve months , 27 % in the following twelve months , 21 % in the twelve months ended June 30, 2025, 14 % in the twelve months ended June 30, 2026, with the remaining 5 % recognized thereafter .
+Added: As of September 30, 2022 and December 31, 2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 23.2 million and $ 21.5 million, respectively.
+Added: The Company expects to recognize revenue on 33 % of the remaining performance obligations during the next twelve months , 26 % in the following twelve months , 22 % in the twelve months ended September 30, 2025, 14 % in the twelve months ended September 30, 2026, with the remaining 5 % recognized thereafter .
In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contracts).
6 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
(in thousands)
8 unchanged sentences
The Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs.
−Removed: The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have
−Removed: otherwise incurred if the contract were not obtained (e.g., a sales commission).
+Added: The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were not obtained (e.g., a sales commission).
The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all the following criteria:
5 unchanged sentences
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.
−Removed: Total deferred commissions, net of accumulated amortization, was $ 328 thousand at June 30, 2022.
+Added: Total deferred commissions, net of accumulated amortization, was $ 274 thousand at September 30, 2022.
+Added: Bill and Hold Arrangements
+Added: From time to time the Company enters custodial bill and hold arrangements with customers.
+Added: Each arrangement is reviewed, and revenue is recognized only when the following criteria have been met:
+Added: (1) the reason for the bill-and-hold arrangement is substantive (2) the product is identified as the customer’s asset (3) the product is ready for delivery to the customer (4) there must be a fixed schedule for delivery (5) the seller cannot use the product or direct the product to another customer.
+Added: At September 30, 2022, $ 5.3 million of revenue was recognized for goods that will be delivered to a customer during the fourth quarter.
RECENTLY ADOPTED ACCOUNTING STANDARDS
2 unchanged sentences
The Company elected the modified retrospective approach which we applied on January 1, 2022, and therefore have not restated comparative periods.
−Removed: The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component.
+Added: The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).
+Added: The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component.
Finally, the Company elected the hindsight practical expedient to determine the lease term for existing leases.
22 unchanged sentences
FrontRow also has offices in Toronto, Copenhagen, Brisbane, Hamilton (UK) and Shenzhen.
−Removed: In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a term loan credit facility with Whitehawk Finance LLC described in Note 9.
+Added: In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a term loan credit facility with Whitehawk Finance LLC described in more detail in Note 9.
The assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date.
29 unchanged sentences
On 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.
−Removed: The company has been Boxlight’s key distributor in Belgium and Luxembourg.
+Added: Interactive has been Boxlight’s key distributor in Belgium and Luxembourg.
The following table summarizes the estimated acquisition date fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid:
17 unchanged sentences
NOTE 3 – ACCOUNTS RECEIVABLE - TRADE
−Removed: Accounts receivable consisted of the following at June 30, 2022 and December 31, 2021 (in thousands):
+Added: Accounts receivable consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):
Accounts receivable – trade
6 unchanged sentences
Cost includes direct cost from the Current Manufacturer (“CM”) or Original Equipment Manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight and import duty costs.
−Removed: Inventories consisted of the following at June 30, 2022 and December 31, 2021 (in thousands):
+Added: Inventories consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):
Finished goods
3 unchanged sentences
NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
−Removed: Prepaid expenses and other current assets consisted of the following at June 30, 2022 and December 31, 2021 (in thousands):
+Added: Prepaid expenses and other current assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):
Prepayments to vendors
2 unchanged sentences
NOTE 6 – INTANGIBLE ASSETS
−Removed: Intangible assets consisted of the following at June 30, 2022 and December 31, 2021 (in thousands):
+Added: Intangible assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):
Customer relationships
2 unchanged sentences
Intangible assets, net of accumulated amortization
−Removed: For the three months ended June 30, 2022 and 2021, the Company recorded amortization expense of $ 2.2 million and $ 1.8 million, respectively.
−Removed: For the six months ended June 30, 2022 and 2021, the Company recorded amortization expense of $ 4.4 million and $ 3.5 million, respectively.
−Removed: Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $ 2.2 million reduction as of the six months ended June 30, 2022 and $ 3.0 million increase for the year ended December 31, 2021.
+Added: For the three months ended September 30, 2022 and 2021, the Company recorded amortization expense of $ 2.1 million and $ 1.8 million, respectively.
+Added: For the nine months ended September 30, 2022 and 2021, the Company recorded amortization expense of $ 6.5 million and $ 5.2 million, respectively.
+Added: Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $ 6.3 million reduction as of September 30, 2022 and $ 3.0 million increase as of December 31, 2021.
NOTE 7 – LEASES
7 unchanged sentences
Certain of the Company’s lease agreements provide for periodic adjustments to rental payments for inflation.
−Removed: As the majority of the
−Removed: Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
+Added: As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
The incremental borrowing rate is based on the term of the lease.
−Removed: In connection with the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date.
+Added: In connection with
+Added: the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date.
Leases with an initial term of 12 months or less are not recorded on the balance sheet.
For these short-term leases, lease expense is recognized on a straight-line basis over the lease term.
−Removed: At June 30, 2022, the Company had no leases classified as finance leases.
+Added: At September 30, 2022, the Company had no leases classified as finance leases.
The Company is not a lessor in any lease arrangement.
−Removed: Operating lease expense was $ 579 thousand for the three months ended June 30, 2022 and $ 1.0 million for the six months ended June 30, 2022.
−Removed: Variable lease cost and short-term lease cost were not material for the three and six months ended June 30, 2022.
−Removed: Cash paid for amounts included in the measurement of lease liabilities was $ 684 thousand for the three months ended June 30, 2022 and $ 1.1 million for the six months ended June 30, 2022.
−Removed: During the three months ended June 30, 2022, the Company obtained new operating lease right-of-use assets totaling $ 44 thousand and for the six months ended June 30, 2022, the Company obtained $ 1.9 million in operating right-of-use assets.
+Added: Operating lease expense was $ 439 thousand for the three months ended September 30, 2022 and $ 1.5 million for the nine months ended September 30, 2022.
+Added: Variable lease costs and short-term lease cost were not material for the three and nine months ended September 30, 2022.
+Added: Cash paid for amounts included in the measurement of lease liabilities was $ 267 thousand for the three months ended September 30, 2022 and $ 1.4 million for the nine months ended September 30, 2022.
+Added: During the three months ended September 30, 2022, the Company obtained new operating lease right-of-use assets totaling $ 143 thousand and for the nine months ended September 30, 2022, the Company obtained $ 2.0 million in operating right-of-use assets.
Future maturities of the Company's operating lease liabilities are summarized as follows (in thousands):
5 unchanged sentences
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
−Removed: Accounts payable and accrued expense consisted of the following at June 30, 2022 and December 31, 2021 (in thousands):
+Added: Accounts payable and accrued expense consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):
Accounts payable
2 unchanged sentences
NOTE 9 – DEBT
−Removed: The following is a summary of the Company’s debt as of June 30, 2022 and December 31, 2021 (in thousands):
+Added: The following is a summary of the Company’s debt as of September 30, 2022 and December 31, 2021 (in thousands):
Debt – Third Parties
1 unchanged sentence
Note payable - Whitehawk
−Removed: Discount and issuance cost
+Added: Discount and issuance costs
Current portion of debt
Long-term debt
−Removed: Total debt (net of discount)
+Added: Total debt (net of discount and issuance costs)
Debt - Third Parties:
Whitehawk Finance LLC
−Removed: In order to finance the acquisition of FrontRow, the Company and substantially all its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $ 68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent.
+Added: In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $ 68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent.
The Company received an initial term loan of $ 58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $ 10 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw”).
−Removed: The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans”.
−Removed: The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to the Company’s then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital.
+Added: The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans.” The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to the Company’s then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital.
Of the Initial Loan, $ 8.5 million was subject to repayment on February 28, 2022, with quarterly principal payments of $ 625,000 and interest payments commencing March 31, 2022 and the $ 40.0 million remaining balance plus any Delayed Draw loans becoming due and payable in full on December 31, 2025.
−Removed: The Term Loans will bear interest at the LIBOR rate plus 10.75 %;
+Added: The Term Loans bear interest at the LIBOR rate plus 10.75 %;
provided that after March 31, 2022, if the Company’s Senior Leverage Ratio (as defined in the Credit Agreement) is less than 2.25 , the interest rate would be reduced to LIBOR plus 10.25 %.
Such terms are subject to the Company maintaining a borrowing base in terms compliant with the Credit Agreement.
−Removed: In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 528,169 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to its existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 2,043,291 shares of Class A common stock (subject to increase to the extent of 3 % of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $ 2.00 per share (the “Warrant”), which Warrant was subject to repricing on March 31, 2022 based on the arithmetic volume weighted average prices for the 30 trading days prior to June 30, 2022, in the event the Company’s stock is then trading below $ 2.00 per share, (iii) a 3 % fee of $ 1,800,000 , and (iv) a $ 500,000 original issue discount.
+Added: In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 528,169 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to its existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 2,043,291 shares of Class A common stock (subject to increase to the extent of 3 % of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $ 2.00 per share (the “Warrant”), which Warrant was subject to repricing on March 31, 2022 based on the arithmetic volume weighted average prices for the 30 trading days prior to September 30, 2022, in the event the Company’s stock is then trading below $ 2.00 per share, (iii) a 3 % fee of $ 1,800,000 , and (iv) a $ 500,000 original issue discount.
In addition, the Company agreed to register for resale the shares issuable upon exercise of the Warrant.
2 unchanged sentences
The warrants repriced on March 31, 2022 to $ 1.19 per share and the shares increased to 3,434,103 .
−Removed: On March 29, 2022, the Company received a notice from the collateral agent, alleging, among other things, defaults as a result of (i) failure to repay $ 8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and documents.
+Added: On July 22, 2022, the Company entered into a Securities Purchase Agreement with an accredited institutional investor.
+Added: According to the terms of the Whitehawk agreement, this purchase agreement triggered a reduction of the exercise price of the warrants and a revaluation of the derivative liability.
+Added: The warrants were repriced to $ 1.10 and shares increased to 3,715,075 .
+Added: On March 29, 2022, the Company received a notice from the collateral agent, alleging, among other things, defaults as a result of (i) failure to repay $ 8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and
As a result, all accrued and unpaid interest owed under the Term Loan, became subject to a post-default interest rate equal to the highest interest rate allowed for under the Credit Agreement plus 2.50 % until such time as the events of default were either waived or cured.
In February 2022, WhiteHawk and the Company agreed in principle to an extension of the February 2022 Payment.
−Removed: Pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the
−Removed: terms of repayment of the $ 8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms.
+Added: Pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the terms of repayment of the $ 8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms.
In July 2022, the Company and Whitehawk agreed that the notice had inadvertently included the default with respect to the failure to repay $ 8.5 million of the facility.
2 unchanged sentences
In such connection, the Loan Parties have obtained credit insurance on certain key customers whose principal offices are located in the European Union and Australia as, without the credit insurance, their accounts owed to the Loan Parties had been deemed ineligible for inclusion in the borrowing base calculation primarily due to the perceived inability of the Collateral Agent to enforce security interests on such accounts.
−Removed: In addition, the Lender and Collateral Agent agreed to (i) reduce, through June 30, 2022, the minimum cash reserve requirement for the Loan Parties, (ii) reduce the interest rate by 50 basis points (to Libor plus+ 9.75 %) after delivery of the Loan Parties’ June 30, 2023 financial statements, subject to the Loan Parties maintaining 1.75 EBITDA coverage ratio, and (iii) waive all prior Events of Default under the Credit Agreement.
−Removed: In conjunction with the amendment to the Credit Agreement, the parties entered into an amended and restated fee letter (the “Fee Letter”) pursuant to which the parties agreed to prepayment premiums of (i) 5 % for payments made on or before December 31, 2022, (ii) 4 % for payments made between January 1, 2023 and December 31, 2023, and (iii) 2 % for payments made between January 1, 2024 and December 31, 2025 a.
+Added: In addition, the Lender and Collateral Agent agreed to (i) reduce, through September 30, 2022, the minimum cash reserve requirement for the Loan Parties, (ii) reduce the interest rate by 50 basis points (to Libor plus+ 9.75 %) after delivery of the Loan Parties’ September 30, 2023 financial statements, subject to the Loan Parties maintaining 1.75 EBITDA coverage ratio, and (iii) waive all prior Events of Default under the Credit Agreement.
+Added: In conjunction with the amendment to the Credit Agreement, the parties entered into an amended and restated fee letter (the “Fee Letter”) pursuant to which the parties agreed to prepayment premiums of (i) 5 % for payments made on or before December 31, 2022, (ii) 4 % for payments made between January 1, 2023 and December 31, 2023, and (iii) 2 % for payments made between January 1, 2024 and December 31, 2025.
Furthermore, the parties agreed that no prepayment premiums would be payable with respect to the first $ 5.0 million paid under the Term Loan, any payments made in relation to the $ 8.5 million due on or before February 28, 2023, any required amortization payments under the Credit Agreement and any mandatory prepayments by way of ECF or casualty events.
1 unchanged sentence
The Second Amendment to the Credit Agreement was entered into for purposes of the Lender funding a $ 2.5 million delayed draw term loan and adjusting certain terms to the Credit Agreement, including adjusting the Applicable Margin (as defined in the Second Amendment) to 13.25 % for LIBOR Rate Loans and 12.25 % for Reference Rate Loans, increasing the definition of change of control from 33 % voting power to 40 % voting power, requiring the Company to engage a financial advisor, and allowing additional time, until July 15, 2022, for the Company to come into compliance with certain borrowing base requirements set forth in the Second Amendment to the Credit Agreement, among other adjustments.
−Removed: During the six-month period ending June 30, 2022, the Company repaid principal of $ 1.3 million and interest of $ 3.6 million to Whitehawk.
+Added: During the three-month period ending September 30, 2022, the Company repaid principal of $ 656 thousand and interest of $ 2.0 million to Whitehawk.
+Added: During the nine-month period ending September 30, 2022, the Company repaid principal of $ 1.9 million and interest of $ 5.6 million to Whitehawk.
Lind Global Marco Fund and Lind Global Asset Management
−Removed: During the six months ended June 30, 2021, the Company repaid principal of $ 6.8 million and interest of $ 373 thousand, to Lind Global by issuing a total of 3.9 million shares of Class A common stock with an aggregate value of $ 9.9 million to Lind Global and recognized a loss extinguishment of debt of approximately $ 2.7 million.
+Added: During the nine months ended September 30, 2021, the Company repaid principal of $ 9.9 million and interest of $ 511 thousand, to Lind Global by issuing a total of 5.7 million shares of Class A common stock with an aggregate value of $ 13.8 million to Lind Global and recognized a loss extinguishment of debt of approximately $ 3.4 million.
Paycheck Protection Program Loan
On May 22, 2020, the Company received loan proceeds of $ 1.1 million under the Paycheck Protection Program.
−Removed: During 2021, the Company applied for forgiveness in the amount of $ 835,500 .
−Removed: On March 2, 2022, we received a decision letter from the lender that the forgiveness application had been approved, leaving a remaining balance of $ 173,100 to be paid.
+Added: During 2021, the Company applied for forgiveness in the amount of $ 836 thousand.
+Added: On March 2, 2022, we received a decision letter from the lender that the forgiveness application had been approved, leaving a remaining balance of $ 173 thousand to be paid.
The Company received a payment schedule from our lender on May 5, 2022, extending the payoff date until May 2025.
+Added: The amount remaining on the loan at September 30, 2022 was $ 140 thousand.
Everest Display, Inc.
−Removed: On January 26, 2021, the Company entered into an agreement with EDI and EDI’s subsidiary, AMAGIC, pursuant to which $ 1,983,436 in accounts payable owed by the Company to EDI was settled in exchange for the Company’s issuance of 793,375 shares
−Removed: (the “2021 Shares”) of its Class A common stock to AMAGIC at a $ 2.50 per share purchase price.
−Removed: The 2021 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.
+Added: On January 26, 2021, the Company entered into an agreement with EDI and EDI’s subsidiary, AMAGIC, settling $ 1,983,436 in accounts payable owed by the Company to EDI for 793,375 shares of Class A common stock.
+Added: During the nine months ended September 30, 2021, the Company recognized a $ 357 thousand gain.
Accounts Receivable Financing – Sallyport Commercial Finance
−Removed: On September 30, 2020, Boxlight Inc., and EOS EDU LLC entered into an asset-based lending agreement with Sallyport Commercial Finance, LLC (“Sallyport”), which agreement has a 12-month term (the “Term”).
−Removed: Pursuant to the agreement, Sallyport agreed to purchase 90 % of the eligible accounts receivable of the Company during the Term with a right of recourse back to the Company if the receivables are not collectible.
−Removed: This agreement requires a minimum monthly sales volume of $ 1,250,000 with a maximum facility limit of $ 8,000,000 .
+Added: On September 30, 2020, Boxlight Inc.
+Added: and EOS EDU LLC entered into an asset-based lending agreement with Sallyport Commercial Finance, LLC (“Sallyport”).
+Added: Sallyport agreed to purchase 90 % of the eligible accounts receivable of the Company during the Term with a right of recourse back to the Company if the receivables are not collectible.
Advances against this agreement accrue interest at the rate of 3.50 % in excess of the highest prime rate publicly announced from time to time with a floor of 3.25 %.
In addition, the Company is required to pay a daily audit fee of $ 950 per day.
−Removed: The Company granted Sallyport a security interest in all of the assets of Boxlight Inc.
−Removed: and Genesis Collaboration, LLC.
On July 20, 2021, Boxlight and Sallyport amended the Accounts Receivable Agreement (the “ARC Amendment”) for purposes of increasing the Maximum Facility Limit Amount to $ 13,000,000 , as well as increasing the minimum monthly sales from $ 1,250,000 to $ 3,000,000 .
8 unchanged sentences
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 the period.
−Removed: The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities at June 30, 2022 and December 31, 2021.
−Removed: June 30, 2022
+Added: The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities at September 30, 2022 and December 31, 2021.
+Added: September 30, 2022
Common stock issuable upon exercise of warrants
17 unchanged sentences
Pretax (loss) income resulting from domestic and foreign operations is as follows (in thousands):
+Added: September 30,
United States
Total pretax book income
−Removed: Six Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: Nine Months Ended
+Added: September 30,
United States
Total pretax book loss
−Removed: The Company recorded income tax expense of $ 41 thousand and $ 2.5 million for the three months ended June 30, 2022 and June 30, 2021, respectively and income tax benefit of $ 45 thousand and income tax expense of $ 2.5 million for the six months ended June 30, 2022 and June 30, 2021, respectively.
+Added: The Company recorded income tax expense of $ 520 thousand and $ 1.4 million for the three months ended September 30, 2022 and September 30, 2021, respectively and income tax expense of $ 475 thousand of $ 3.9 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
The year-to-date effective tax rate is 38 % due to there being no material tax expense/benefit for the legacy Boxlight entities, due to their valuation allowance position, while the Sahara entities are fully taxable.
−Removed: The decrease in tax expense year-over-year is largely due to foreign pretax book loss for the three months ended June 30, 2022 as compared to foreign pretax income for the three months ended June 30, 2021, as well as the impact of a significant tax rate change in the UK on the Company’s deferred tax liability that was recorded in the three months ended June 30, 2021.
+Added: The decrease in tax expense year-over-year is largely due to foreign pretax book loss for the nine months ended September 30, 2022 as compared to foreign pretax income for the nine months ended September 30, 2021, as well as the impact of a significant tax rate change in the UK on the Company’s deferred tax liability that was recorded in the three months ended September 30, 2021.
The Company operates in the United States, United Kingdom, and other jurisdictions.
9 unchanged sentences
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.
−Removed: Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset at June 30, 2022 and December 31, 2021.
+Added: Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset at September 30, 2022 and December 31, 2021.
The Sahara entities have recorded a net deferred tax liability, which is primarily driven by the net deferred tax liability on the intangibles for which it does not have tax basis.
21 unchanged sentences
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.
−Removed: As of June 30, 2022, a total of 167,972 shares of Series A preferred stock remained outstanding.
+Added: As of September 30, 2022, a total of 167,972 shares of Series A preferred stock remained outstanding.
Series B Preferred Stock and Series C Preferred Stock
15 unchanged sentences
Accordingly, the Series B Preferred Stock subject to the Amended Redemption Agreement was recorded at its fair value as of June 14, 2021, and a $ 367 thousand deemed contribution was credited to additional-paid-in-capital.
−Removed: With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature, but in accordance with ASC 470-20, since it is dependent upon contingencies that are not solely in the control of the holder, the beneficial conversion feature was not recognized for accounting purposes.
−Removed: Since we early adopted (as of January 1, 2021) ASU No.
−Removed: 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which includes a key provision eliminating the beneficial conversion feature guidance in ASC Subtopic 470-20, “Debt with Conversion and Other Options”, we will not record the beneficial conversion feature.
−Removed: The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method.
−Removed: In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
+Added: With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature.
+Added: The Company early adopted (as of January 1, 2021) ASU No.
+Added: 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which includes a key provision eliminating the beneficial conversion feature guidance in ASC Subtopic 470-20, “Debt with Conversion and Other Options.
The 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.
1 unchanged sentence
Upon any public or private sale or disposition by any holder of Class B common stock, such shares of Class B common stock would automatically convert into shares of Class A common stock.
−Removed: As of June 30, 2022 and December 31, 2021, the Company had 66,207,717 and 63,821,901 shares of Class A common stock issued and outstanding , respectively.
−Removed: No Class B shares were outstanding at June 30, 2022 or December 31, 2021.
+Added: As of September 30, 2022 and December 31, 2021, the Company had 74,123,492 and 63,821,901 shares of Class A common stock issued and outstanding , respectively.
+Added: No Class B shares were outstanding at September 30, 2022 or December 31, 2021.
Issuance of common stock
+Added: Securities Purchase Agreement
+Added: On July 22, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited institutional investor (the “Investor”) pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7.0 million shares (the “Shares”) of the Company’s Class A common stock, par value $ 0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 352,940 shares of Common Stock at an exercise price of $ 0.0001 per share, which Pre-Funded Warrants were issued in lieu of shares of Common Stock to ensure that the Investor did not exceed certain beneficial ownership limitations, and warrants to purchase an aggregate of 7,352,940 shares of Common Stock at an exercise price of $ 0.68 per share (the “Warrants”, and collectively with the Pre-Funded Warrants and the Shares, the “Securities”).
+Added: The Securities were sold at a price of $ 0.68 per share for total gross proceeds to the Company of $ 5.0 million (the “Offering”), before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants.
+Added: The Pre-Funded Warrants were exercisable immediately and the Warrants will be exercisable six months after the date of issuance and will expire five and a half years from the date of issuance.
+Added: As such, the net proceeds to the Company from the Offering, after deducting placement agent’s fees and estimated expenses payable by the Company and excluding the exercise of any Warrants or Pre-Funded Warrants was $ 4.6 million of which the proceeds net of issuance costs were allocated based on the relative fair values of the instruments, warrants and prefunded warrants;
+Added: $ 2.4 million was allocated to common stock, $ 2.2 million was allocated to warrants and $ 118 thousand was allocated to the pre-funded warrants.
+Added: The net proceeds received by the Company will be used for working capital purposes.
+Added: The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties.
+Added: Pursuant to the terms of the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its Common Stock or Common Stock Equivalents (as defined in the Purchase
+Added: Agreement) during the 60-day period following the closing of the Offering, which was on July 26, 2022.
+Added: On August 9, 2022, the Investor exercised the prefunded warrants.
+Added: The Company evaluated whether the Warrants, Pre-Funded Warrants and/or Shares were in the scope of ASC 480 which discusses the accounting for instruments with characteristics of both liabilities and equity.
+Added: The guidance in ASC 480, and the resulting liability classification, is applicable to such instruments when certain criteria are met.
+Added: Based on its analysis, the Company concluded that the Warrants, Pre-Funded Warrants and Shares did not meet any of the criteria to be subject to liability classification under ASC 480 and are therefore classified as equity.
Credit Facility
−Removed: In conjunction with its receipt of the Whitehawk loan, the Company issued to the Whitehawk 528,169 shares of Class A common stock, which were registered pursuant to the Company’s existing shelf registration statement and were delivered to the Whitehawk in January 2022.
+Added: In conjunction with its receipt of the Whitehawk loan, the Company issued to Whitehawk 528,169 shares of Class A common stock, which were registered pursuant to the Company’s existing shelf registration statement and were delivered to the Whitehawk in January 2022.
Debt Conversion
−Removed: During the three months ended June 30, 2021, the Company repaid principal of $ 3.2 million and interest of $ 169 thousand by issuing 1.65 million shares Class A common stock to Lind and recognized a $ 0.5 million loss.
−Removed: During the six months ended June 30, 2021, the Company repaid principal of $ 6.8 million and interest of $ 373 thousand by issuing 3.9 million shares Class A common stock with an aggregate value of $ 9.9 million to Lind and recognized a $ 2.7 million loss.
+Added: During the three months ended September 30, 2021, the Company repaid principal of $ 3.1 million and interest of $ 138 thousand by issuing 1.8 million shares Class A common stock to Lind and recognized a $ 0.7 million loss.
+Added: During the nine months ended September 30, 2021, the Company repaid principal of $ 9.9 million and interest of $ 511 thousand by issuing 5.7 million shares Class A common stock with an aggregate value of $ 13.8 million to Lind and recognized a $ 3.4 million loss.
Accounts Payable and Other Liabilities Conversion
−Removed: During the six months ended June 30, 2021, the Company converted $ 2.0 million of EDI accounts payable in exchange for 793 thousand shares of Class A common stock with an aggregate value of $ 1.6 million and recognized a $ 357 thousand gain.
+Added: During the nine months ended September 30, 2021, the Company converted $ 2.0 million of EDI accounts payable in exchange for 793 thousand shares of Class A common stock with an aggregate value of $ 1.6 million and recognized a $ 357 thousand gain.
Conversion of restricted stock units
−Removed: During the three and six months ended June 30, 2022, respectively, 544,688 and 1,660,806 restricted stock units vested and were converted into Class A common stock.
−Removed: During the three and six months ended June 30, 2021, 484,824 and 543,642 restricted stock units vested and were converted into Class A common stock.
+Added: During the three and nine months ended September 30, 2022, respectively, 332,065 and 1,995,871 restricted stock units vested and were converted into Class A common stock.
+Added: During the three and nine months ended September 30, 2021, 217,000 and 760,060 restricted stock units vested and were converted into Class A common stock.
Exercise of stock options
−Removed: During the three and six months ended June 30, 2022, options to purchase a total of 140,591 and 196,841 shares of Class A common stock were exercised.
−Removed: During the three months ended June 30, 2021, no shares options were exercised and during the six months ended June 30, 2021, options to purchase a total of 322,434 shares of Class A common stock were exercised.
+Added: During the three months ended September 30, 2022, no options to purchase stock were exercised and during the nine months ended September 30, 2022, options to purchase a total of 193,841 shares of Class A common stock were exercised.
+Added: During the three months ended September 30, 2021, 162,000 options were exercised and during the nine months ended September 30, 2021, options to purchase a total of 481,834 shares of Class A common stock were exercised.
+Added: The following is a summary of the equity warrant activities during the nine months ended September 30, 2022.
+Added: Exercise Price
+Added: Term (in years)
+Added: Outstanding, December 31, 2021
+Added: Outstanding, September 30, 2022
+Added: Exercisable, September 30, 2022
+Added: The Company used the following inputs to value warrants issued during the nine months ending September 30, 2022 using the Black Scholes option valuation method:
+Added: market value on measurement date, $ 0.59 ;
+Added: exercise price $ 0.68 ;
+Added: risk free interest rate, 2.86 %;
+Added: expected term, 6 years;
+Added: expected volatility, 132 % and expected dividend yield of 0 %.
Exercise of warrants
−Removed: No warrants were exercised during the six months ending June 30, 2022.
−Removed: No warrants were exercised during the three months ended June 30, 2021.
−Removed: During the six months ended June 30, 2021, 20,749 warrants were exercised, with an exercise price of $ 0.42 per share.
+Added: During the three and nine months ended September 30, 2022, pre-funded warrants to purchase 352,940 shares of Common Stock at an exercise price of $ 0.001 per share were exercised.
+Added: During the three and nine months ended September 30, 2021, 75,000 and 95,749 warrants were exercised, , respectively with an exercise price of $ 0.42 .
NOTE 13 – STOCK COMPENSATION
Grants made under the Equity Incentive Plans must be approved by the Company’s board of directors.
−Removed: As of June 30, 2022, the total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company or a subsidiary of the Company under the Company’s 2021 Equity Incentive Plan were 2,663,454 shares.
+Added: As of September 30, 2022, the total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company or a subsidiary of the Company under the Company’s 2021 Equity Incentive Plan were 2,725,400 shares.
Stock Options
4 unchanged sentences
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.
−Removed: The following is a summary of the option activities during the six months ended June 30, 2022:
+Added: The following is a summary of the option activities during the nine months ended September 30, 2022:
Exercise Price
1 unchanged sentence
Outstanding, December 31, 2021
−Removed: Outstanding, June 30, 2022
−Removed: Exercisable, June 30, 2022
+Added: Outstanding, September 30, 2022
+Added: Exercisable, September 30, 2022
The Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model.
−Removed: As of June 30, 2022 and December 31, 2021, the stock options had an intrinsic value of approximately $ 168 thousand and $ 1.9 million, respectively.
−Removed: On May 3, 2022, the Boxlight board of directors adopted a resolution, in exchange for a three year non-compete agreement, to grant James Mark Elliott, a member of the board and former CEO of the Company, an extension for one year, of previously granted stock options to purchase a total of 577,675 shares of Class A common stock, par value $ 0.001 per share, which had expired on January 12, 2022.
−Removed: The stock price on the remeasurement date was $ 1.04 and the fair value of the stock is $ 314,000 .
+Added: The Company used the following inputs to value warrants issued during the nine months ending September 30, 2022 using the Black Scholes option valuation method:
+Added: market value on measurement date, $ 0.59 to $ 0.93 ;
+Added: exercise price of $ 5.01 to $ 0.68 ;
+Added: risk free interest rate, 1.69 % to 2.87 %;
+Added: expected term, 3 to 4 years;
+Added: expected volatility, ranged from 141 to 148 and expected dividend yield of 0 %.
+Added: As of September 30, 2022 and December 31, 2021, the stock options had an intrinsic value of approximately $ 150 thousand and $ 1.9 million, respectively.
+Added: On May 3, 2022, the Boxlight board of directors adopted a resolution, in exchange for a three-year non-compete agreement, to grant Mark Elliott, a member of the board and former CEO of the Company, an extension for one year, of previously granted stock options to purchase a total of 577,675 shares of Class A common stock, par value $ 0.001 per share, which had expired on January 12, 2022.
+Added: The stock price on the remeasurement date was $ 1.04 and the incremental compensation recognized was $ 314,000 .
+Added: On June 13, 2022, the Boxlight board of directors granted Greg Wiggins, our Chief Financial Officer, stock options for 150,000 shares of the Company’s Class A common stock will vest in equal quarterly installments over a four-year term commencing on July 5, 2022.
Restricted Stock Units
3 unchanged sentences
The RSUs vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement.
−Removed: The following is a summary of the RSU activities during the six months ended June 30, 2022.
+Added: The following is a summary of the RSU activities during the nine months ended September 30, 2022.
Grant Date Fair
1 unchanged sentence
Outstanding, December 31, 2021
−Removed: Outstanding, June 30, 2022
+Added: ( 1,179,754 )
+Added: Outstanding, September 30, 2022
On March 21, 2022, the Company granted an aggregate of 348,840 RSUs to its board members.
7 unchanged sentences
The aggregate fair value of the shares was $ 2.1 million.
−Removed: During the first quarter ended March 31, 2022, Jens Holstebro, a former FrontRow employee, received 39,683 in restricted shares of Class A common stock, valued at $ 50,000 , as a bonus, which immediately vested.
+Added: During the first quarter ended March 31, 2022, Jens Holstebro, a former FrontRow employee, received 39,683 in restricted shares of Class A common stock, valued at $ 50,000 , as a bonus, which restricted stock vested immediately.
Stock Compensation Expense
−Removed: For the three and six months ended June 30, 2022 and 2021, the Company recorded the following stock compensation in general and administrative expense (in thousands):
−Removed: Three months ended June 30,
−Removed: Six months ended June 30,
+Added: For the three and nine months ended September 30, 2022 and 2021, the Company recorded the following stock compensation in general and administrative expense (in thousands):
+Added: Three months ended September 30,
+Added: Nine months ended September 30,
Stock options
1 unchanged sentence
Total stock compensation expense
−Removed: As of June 30, 2022, there was approximately $ 5.7 million of unrecognized compensation expense related to unvested options, restricted stock units, and warrants, which expense will be amortized over the remaining vesting period of such awards.
−Removed: Of that total, approximately $ 1.3 million is estimated to be recorded as compensation expense in the remaining six months of 2022.
+Added: As of September 30, 2022, there was approximately $ 4.7 million of unrecognized compensation expense related to unvested options, restricted stock units, and warrants, which expense will be amortized over the remaining vesting period of such awards.
+Added: Of that total, approximately $ 608 thousand is estimated to be recorded as compensation expense in the remaining three months of 2022.
NOTE 14 – RELATED PARTY TRANSACTIONS
13 unchanged sentences
The Company leases seven office building facilities located in Lawrenceville, Georgia and Duluth, Georgia;
−Removed: Poulsbo, Washington;
−Removed: Lexington, Massachusetts;
Scottsdale, Arizona;
5 unchanged sentences
The Company is legally obligated to fulfill certain purchase commitments made to vendors that supply materials used in the Company’s products.
−Removed: As of June 30, 2022, the total amount of such open inventory purchase orders was $ 11.6 million.
+Added: As of September 30, 2022, the total amount of such open inventory purchase orders was $ 33.8 million.
NOTE 16 – CUSTOMER AND SUPPLIER CONCENTRATION
−Removed: There was one customer that accounts for greater than 10% of the Company’s consolidated revenues for the six months ended June 30, 2022.
−Removed: There were two customers that accounted for greater than 10% of the Company’s consolidated revenues for the six months ended June 30, 2021.
+Added: There was one customer that accounts for greater than 10% of the Company’s consolidated revenues for the nine months ended September 30, 2022.
+Added: There were two customers that accounted for greater than 10% of the Company’s consolidated revenues for the nine months ended September 30, 2021.
Details are as follows:
Total revenues
−Removed: Total revenues from the
+Added: Total revenues
from the customer
+Added: from the customer
receivable from
1 unchanged sentence
receivable from
−Removed: as a percentage
+Added: as a percentage of
the customer as
1 unchanged sentence
this customer as of
−Removed: of total revenues
−Removed: for the year ended
−Removed: ended June 20, 2021
−Removed: For the six months ended June 30, 2022 and 2021, the Company’s purchases were concentrated primarily with two vendors.
+Added: total revenues
+Added: for the nine months ended
+Added: September 30,
+Added: for the nine months ended
+Added: September 30,
+Added: September 30,
+Added: September 30,
+Added: (in thousands)
+Added: (in thousands)
+Added: For the nine months ended September 30, 2022 and 2021, the Company’s purchases were concentrated primarily with two vendors.
Details are as follows:
2 unchanged sentences
from the vendor
−Removed: Accounts payable
from the vendor
1 unchanged sentence
as a percentage of
−Removed: (prepayment) to
+Added: Accounts payable
as a percentage
1 unchanged sentence
total cost of
+Added: (prepayment) to
of total cost of
−Removed: the year ended
−Removed: the year ended
+Added: the vendor as of
+Added: the nine months ended
+Added: September 30,
+Added: the nine months ended
+Added: September 30,
+Added: September 30,
+Added: September 30,
(in thousands)
2 unchanged sentences
NOTE 17 – SUBSEQUENT EVENTS
−Removed: On July 22, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited institutional investor (the “Investor”) pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7 million shares (the “Shares”) of the Company’s Class A common stock, par value $ 0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 352,940 shares of Common Stock at an exercise price of $ 0.0001 per share, which Pre-Funded Warrants are to be issued in lieu of shares of Common Stock to ensure that the Investor does not exceed certain beneficial ownership limitations, and warrants to purchase an aggregate of 7,352,940 shares of Common Stock at an exercise price of $ 0.68 per share (the “Warrants”, and collectively with the Pre-Funded Warrants and the Shares, the “Securities”).
−Removed: The Securities were sold at a price of $ 0.68 per share for total gross proceeds to the Company of $ 5.0 million (the “Offering”), before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants.
−Removed: The Pre-Funded Warrants are exercisable immediately and the Warrants will be exercisable six months after the date of issuance and will expire five and a half years from the date of issuance.
−Removed: The net proceeds to the Company from the Offering were approximately $ 4.6 million, after deducting placement agent’s fees and estimated expenses payable by the Company, and excluding the exercise of any Warrants or Pre-Funded Warrants.
−Removed: The net proceeds received by the Company will be used for working capital purposes.
−Removed: The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties.
−Removed: Pursuant to the terms of the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) during the 60-day period following the closing of the Offering, which closed on July 26, 2022.
−Removed: The Securities were offered by the Company pursuant to the Company’s effective shelf registration statement on Form S-3 (SEC File No.
−Removed: 333-239939), which was declared effective on July 28, 2020 (the “Registration Statement”) and the prospectus supplement, filed July 26, 2022.
−Removed: On July 6, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s Class A common stock was trading below the minimum $ 1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”).
−Removed: The notification has no immediate effect on the Company’s Nasdaq listing and the Company’s Common Stock will continue to trade on Nasdaq under the ticker symbol “BOXL”.
−Removed: In accordance with Nasdaq Rules, the Company has been provided an initial period of 180 calendar days, or until January 2, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.
−Removed: If at any time before the Compliance Date the closing bid price for the Company’s Common Stock is at least $ 1.00 for a minimum of 10 consecutive business days, the Staff will provide the Company written confirmation of compliance with the Bid Price Requirement.
−Removed: If the Company does not regain compliance with the Bid Price Requirement by the Compliance Date, the Company may be eligible for an additional 180 calendar day compliance period.
−Removed: To qualify, the Company would then be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Bid Price Requirement, and will need to provide written notice of its intention to cure the deficiency during the additional 180 calendar day compliance period, which compliance could be achieved by effecting a reverse stock split, if necessary.
−Removed: If the Company does not regain compliance with the Bid Price Requirement by the Compliance Date and is not eligible for an additional compliance period at that time, the Staff will provide written notification to the Company that its common stock will be subject to delisting.
−Removed: At that time, the Company may appeal the Staff’s delisting determination to a Nasdaq Hearings Panel.
−Removed: There can be no assurance that the Company will regain compliance or otherwise maintain compliance with any of the other listing requirements.
−Removed: Nonetheless, the Company intends to monitor the closing bid price of its Common Stock and may, if appropriate, consider available options to regain compliance with the Bid Price Requirement.
−Removed: On June 13, 2022, the Company entered into an employment agreement with Greg Wiggins, pursuant to which Mr.
−Removed: Wiggins commenced service as the Company’s Chief Financial Officer on July 5, 2022.
−Removed: Wiggins will receive annual base compensation of $ 250,000 and be eligible to receive a performance-based bonus of up to $ 75,000 per year.
−Removed: In addition, Mr.
−Removed: Wiggins was granted stock options entitling him to purchase 150,000 shares of the Company’s Class A common stock pursuant to the terms of Boxlight’s 2021 Equity Incentive Plan, and which options will vest in equal quarterly installments over a four-year term commencing on July 5, 2022.
−Removed: Wiggins is required to provide three months’ advance written notice to the Company prior to resignation.
−Removed: On April 5, 2022, the Company received notice from its Chief Financial Officer, Patrick Foley, that he was resigning from the Company.
−Removed: Foley provided the Company the six months advance notice in compliance with the terms of his employment agreement and stated that he is resigning for personal reasons and not due to any dispute with the Company.
−Removed: The Company and Mr.
−Removed: Foley agreed that his resignation is effective July 5, 2022.
+Added: On November 4, 2022, the Company made a $ 4.25 million payment on its Credit Agreement with Whitehawk.
+Added: The payment will be credited by WhiteHawk toward the repayment of the $ 8.5 million term loan due on February 28, 2023.There were no pre-payment penalties or premiums included with this payment.
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.