Boxlight Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 57 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 F-5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 F-7 Notes to Consolidated Financial Statements F-8 ​ ​ ​ 47 Table of Contents Report of Independent Registered Public Accounting Firm ​ ​ To the Shareholders and the Board of Directors of Boxlight Corporation ​ Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Boxlight Corporation and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes and financial statement schedule II (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Critical Audit Matter – Fair Value of Derivative Liabilities As described in Notes 1 and 10, the Company has issued warrants to purchase common stock which feature net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered under certain conditions. The warrants are derivative liabilities and are remeasured at fair value at each reporting date using a Monte Carlo simulation technique. Changes in fair value are included in operations each period. As of F-1 Table of Contents December 31, 2022, the Company estimated the fair value to be $472 thousand and recognized a $2.6 million change in fair value in operations for the year ended December 31, 2022. We identified the fair value of the liability-classified warrants as a critical audit matter. The principal considerations for that determination were the unobservable inputs used in the Company’s valuation technique are highly subjectivity and involves higher measurement uncertainty. This required a high degree of auditor effort, including specialized skills and knowledge, and significant auditor judgment in evaluating the fair value of the warrants. The primary procedures we performed to address this critical audit matter included: ● We obtained an understanding of management’s process for determining the unobservable inputs for the fair value measurement. ● Utilizing a valuation specialist, we evaluated the significant assumptions and methods utilized in developing the fair value, including: o We evaluated the reasonableness of the Company’s measurement technique and significant assumptions and inputs. o We verified developed an independent calculation of the risk-free rate and volatility and compared our rates to those used by management. o We performed independent simulations using a Monte Carlo technique to determine the fair value of the warrants and test the accuracy of management’s valuation technique and application. Critical Audit Matter – Equity-Classified Warrants As described in Note 12, the Company issued certain warrants and prefunded warrants in connection with a securities purchase agreement to issue and sell 7.0 million shares of the Company’s common stock. The Company evaluated whether the warrants and pre-funded warrants were in the scope of ASC Topic 480 Distinguishing Liabilities from Equity, which discusses the accounting for instruments with characteristics of both liabilities and equity. The guidance in Topic 480, and the resulting liability classification, is applicable to instruments when certain criteria are met. Based on its analysis, the Company concluded that the warrants, and pre-funded warrants did not meet any of the criteria to be subject to liability classification and are therefore classified as equity. We identified the classification of the warrants as a critical audit matter. The principal considerations for that determination included the complexity and effort required in identifying all relevant features of and obligations under the instruments for evaluation against the criteria for classification. This required a high degree of auditor effort, including specialized skills and knowledge, and significant auditor judgment in evaluating the features of and obligations under the warrants and the determination of whether such features meet the criteria for liability-classification. The primary procedures we performed to address this critical audit matter included: ● We obtained an understanding of management’s process for identifying and evaluating the critical terms of the warrant agreements in determining the classification. ● With the assistance of professionals in our firm that have specialized skills and knowledge in accounting for debt and equity instruments: o We evaluated management’s analysis and conclusions regarding the relevant provisions and features of the warrants in light of relevant guidance and the criteria for classification. o We read the securities purchase agreement and underlying warrant agreements comprising the offering to identify the relevant features and settlement provisions for our evaluation. o We independently evaluated the relevant features and settlement provisions of the warrants under relevant guidance considering the criteria for liability-classification. F-2 Table of Contents Critical Audit Matter – Goodwill Impairment Assessment As described in Note 1, in analyzing goodwill for potential impairment in the quantitative impairment test, the Company uses a combination of the income and market approaches to estimate the fair value. Under the income approach, the Company calculates the fair value based on discounted estimated future cash flows. Under the market approach, the Company estimates the fair value based on the market multiples of revenue or earnings before interest, income taxes, depreciation, and amortization for benchmark companies. We identified the quantitative impairment test of goodwill as a critical audit matter. The principal considerations for that determination included the judgement involved in assessing management’s impairment test of goodwill due to the measurement uncertainty involved in determining the fair value of equity for the reporting units. In particular, the fair value estimates are sensitive to changes in assumptions such as discount rates, expected future cash flows, long-term growth rates, and comparable company earnings multiples. The primary procedures we performed to address this critical audit matter included: ● We obtained an understanding of management’s process for assessing goodwill impairment and performing the qualitative goodwill impairment test, including management’s process for developing assumptions used in the income and market approaches to estimate the fair value of reporting units. ● We evaluated management’s revenue growth rates, margins, and cash flows to current industry and economic trends, while also considering the current and future business, customer base, and product mix. ● We assessed management’s process for estimating revenue growth and margins by comparing past projections to actual performance. ● With the assistance of our valuation professionals with specialized skills and knowledge, we evaluated the models, valuation methodology, and significant assumptions used in the income and market approaches to estimate the fair values. ● We tested management’s reconciliation of the fair value of equity of the reporting units to the market capitalization of the Company. ​ /s/ FORVIS, LLP (Formerly, Dixon Hughes Goodman LLP) We have served as the Company’s auditor since 2018. Atlanta, Georgia March 16, 2023 ​ ​ F-3 Table of Contents Boxlight Corporation Consolidated Balance Sheets As of December 31, 2022 and 2021 (in thousands except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 14,591 ​ $ 17,938 Accounts receivable – trade, net of allowances ​ 31,009 ​ 29,573 Inventories, net of reserves ​ 58,211 ​ 51,591 Prepaid expenses and other current assets ​ 7,433 ​ 9,444 Total current assets ​ 111,244 ​ 108,546 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net of accumulated depreciation ​ 1,733 ​ 1,073 Operating lease right of use asset ​ ​ 4,350 ​ ​ — Intangible assets, net of accumulated amortization ​ 52,579 ​ 65,532 Goodwill ​ 25,092 ​ 26,037 Other assets ​ 397 ​ 248 Total assets ​ $ 195,395 ​ $ 201,436 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ Accounts payable and accrued expenses ​ $ 36,566 ​ $ 33,638 Short-term debt ​ 845 ​ 9,804 Operating lease liabilities, current ​ ​ 1,898 ​ ​ — Deferred revenues, current ​ 8,308 ​ 7,575 Derivative liabilities ​ 472 ​ 3,064 Other short-term liabilities ​ 386 ​ 667 Total current liabilities ​ 48,475 ​ 54,748 ​ ​ ​ ​ ​ ​ ​ Deferred revenues, non-current ​ 15,603 ​ 13,952 Long-term debt ​ 43,778 ​ 42,137 Deferred tax liabilities, net ​ 4,680 ​ 8,449 Operating lease liabilities, non-current ​ ​ 2,457 ​ ​ — Other long-term liabilities ​ — ​ 340 Total liabilities ​ 114,993 ​ 119,626 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 15) ​ ​ Mezzanine equity: ​ ​ ​ Preferred Series B, 1,586,620 shares issued and outstanding ​ 16,146 ​ 16,146 Preferred Series C, 1,320,850 shares issued and outstanding ​ 12,363 ​ 12,363 Total mezzanine equity ​ 28,509 ​ 28,509 ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ Preferred stock, $ 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; 74,716,696 and 63,821,901 Class A shares issued and outstanding at December 31, 2022 and 2021, respectively ​ 7 ​ 6 Additional paid-in capital ​ 117,843 ​ 110,867 Accumulated deficit ​ ( 65,043 ) ​ ( 61,300 ) Accumulated other comprehensive (loss) income ​ ( 914 ) ​ 3,728 Total stockholders’ equity ​ 51,893 ​ 53,301 ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 195,395 ​ $ 201,436 ​ See Accompanying Notes to Financial Statements. ​ F-4 Table of Contents Boxlight Corporation Consolidated Statements of Operations and Comprehensive Loss For the Years Ended December 31, 2022 and 2021 (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Revenues, net ​ $ 221,781 ​ $ 185,177 Cost of revenues ​ 156,913 ​ 138,652 Gross profit ​ 64,868 ​ 46,525 ​ ​ ​ ​ ​ ​ ​ Operating expense: ​ ​ General and administrative expenses ​ 59,337 ​ 47,270 Research and development ​ 2,482 ​ 1,826 Total operating expense ​ 61,819 ​ 49,096 ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ​ 3,049 ​ ( 2,571 ) ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ Interest expense, net ​ ( 9,923 ) ​ ( 3,382 ) Other expense, net ​ ( 267 ) ​ ( 20 ) Gain (loss) on settlement of liabilities, net ​ 856 ​ ( 4,532 ) Change in fair value of derivative liabilities ​ 2,591 ​ 13 Total other expense ​ ( 6,743 ) ​ ( 7,921 ) Loss before income taxes ​ ​ ( 3,694 ) ​ ​ ( 10,492 ) Income tax expense ​ ​ ( 49 ) ​ ​ ( 3,310 ) Net loss ​ ​ ( 3,743 ) ​ ​ ( 13,802 ) Fixed dividends - Series B Preferred ​ ​ ( 1,269 ) ​ ​ ( 1,269 ) Deemed contribution -Series B Preferred ​ ​ — ​ ​ 367 Net loss attributable to common stockholders ​ $ ( 5,012 ) ​ $ ( 14,704 ) ​ ​ ​ ​ ​ ​ ​ Comprehensive loss: ​ ​ ​ ​ Net loss ​ ​ ( 3,743 ) ​ ​ ( 13,802 ) Other comprehensive loss: ​ ​ ​ Foreign currency translation adjustment ​ ( 4,642 ) ​ ( 1,464 ) Total comprehensive loss ​ $ ( 8,385 ) ​ $ ( 15,266 ) ​ ​ ​ ​ ​ ​ ​ Net loss attributable to common stockholders ​ $ ( 5,012 ) ​ ​ ( 14,704 ) ​ ​ ​ ​ ​ ​ ​ Net loss per common share – basic and diluted ​ $ ( 0.07 ) ​ $ ( 0.23 ) ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding – basic and diluted ​ ​ 69,153 ​ ​ 58,849 ​ See Accompanying Notes to Financial Statements. ​ F-5 Table of Contents Boxlight Corporation Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2022 and 2021 (in thousands except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Class A ​ Additional ​ Accumulated Other ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ Paid-in ​ Comprehensive ​ Accumulated ​ ​ ​ ​ Shares Amount Shares Amount Capital Income (Loss) Deficit Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2020 167,972 ​ $ — 53,343,518 ​ $ 6 ​ $ 86,768 ​ $ 5,192 ​ $ ( 47,498 ) ​ $ 44,468 Shares issued for: ​ ​ ​ ​ ​ ​ Conversion of liabilities — ​ — 8,697,166 ​ — ​ 19,080 ​ — ​ — ​ 19,080 Stock options exercised ​ — ​ ​ — ​ 492,460 ​ ​ — ​ ​ 415 ​ ​ — ​ ​ — ​ ​ 415 Acquisition ​ — ​ ​ — ​ 142,882 ​ ​ — ​ ​ 404 ​ ​ — ​ ​ — ​ ​ 404 Debt issuance costs ​ — ​ ​ — ​ — ​ ​ — ​ ​ 660 ​ ​ — ​ ​ — ​ ​ 660 Vesting of restricted stock units — ​ — 916,682 ​ — ​ — ​ — ​ — ​ — Warrant redemption, net ​ — ​ ​ — ​ 229,193 ​ ​ — ​ ​ 382 ​ ​ — ​ ​ — ​ ​ 382 Stock compensation — ​ — — ​ — ​ 4,060 ​ — ​ — ​ 4,060 Foreign currency translation — ​ — — ​ — ​ — ​ ( 1,464 ) ​ — ​ ( 1,464 ) Fixed dividends for preferred shareholders — ​ — — ​ — ​ ( 1,269 ) ​ — ​ — ​ ( 1,269 ) Deemed contribution for preferred shareholders ​ — ​ ​ — ​ ​ ​ ​ — ​ ​ 367 ​ ​ — ​ ​ — ​ ​ 367 Net loss — ​ — — ​ — ​ — ​ — ​ ( 13,802 ) ​ ( 13,802 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2021 167,972 ​ — 63,821,901 ​ 6 ​ 110,867 ​ 3,728 ​ ( 61,300 ) ​ 53,301 Shares issued for: ​ ​ ​ ​ ​ ​ Stock options exercised — ​ — 296,841 ​ — ​ 81 ​ — ​ — ​ 81 Acquisition — ​ — 230,770 ​ — ​ 150 ​ — ​ — ​ 150 Debt issuance costs ​ — ​ ​ — ​ 528,169 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Vesting of restricted stock units — ​ — 2,486,075 ​ — ​ — ​ — ​ — ​ — Securities purchase agreement ​ — ​ ​ — ​ 7,000,000 ​ ​ 1 ​ ​ 2,352 ​ ​ — ​ ​ — ​ ​ 2,353 Warrant redemption, net ​ — ​ ​ — ​ 352,940 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of warrants and prefunded warrants ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,349 ​ ​ — ​ ​ — ​ ​ 2,349 Stock compensation — ​ — — ​ — ​ 3,313 ​ — ​ — ​ 3,313 Foreign currency translation — ​ — — ​ — ​ — ​ ( 4,642 ) ​ — ​ ( 4,642 ) Fixed dividends for preferred shareholders — ​ — — ​ — ​ ( 1,269 ) ​ — ​ — ​ ( 1,269 ) Net loss — ​ — — ​ — ​ — ​ — ​ ( 3,743 ) ​ ( 3,743 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2022 167,972 ​ $ — 74,716,696 ​ $ 7 ​ $ 117,843 ​ $ ( 914 ) ​ $ ( 65,043 ) ​ $ 51,893 ​ See Accompanying Notes to Financial Statements. ​ F-6 Table of Contents Boxlight Corporation Consolidated Statements of Cash Flows For the Years Ended December 31, 2022 and 2021 (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ Cash flows from operating activities: ​ ​ ​ Net loss ​ $ ( 3,743 ) ​ $ ( 13,802 ) ​ Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ Amortization of debt discount and issuance cost ​ 2,158 ​ 2,132 ​ Bad debt expense ​ 266 ​ 425 ​ (Gain) loss on settlement of liabilities ​ ( 856 ) ​ 3,345 ​ Changes in deferred tax assets and liabilities ​ ( 3,776 ) ​ 788 ​ Change in allowance for sales returns and volume rebate ​ 316 ​ 1,145 ​ Change in inventory reserve ​ ( 68 ) ​ 250 ​ Change in fair value of derivative liability ​ ( 2,591 ) ​ ( 13 ) ​ Shares issued for interest payment on notes payable ​ — ​ 617 ​ Stock compensation expense ​ 3,313 ​ 4,060 ​ Depreciation and amortization ​ 9,129 ​ 7,175 ​ Change in right of use assets and lease liabilities ​ ​ 8 ​ ​ — ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ Accounts receivable – trade ​ ( 3,800 ) ​ ( 6,427 ) ​ Inventories ​ ( 10,272 ) ​ ( 20,998 ) ​ Prepaid expenses and other current assets ​ 1,602 ​ ( 2,470 ) ​ Other assets ​ ( 161 ) ​ ( 158 ) ​ Accounts payable and accrued expenses ​ 5,756 ​ 17,948 ​ Other short-term liabilities ​ ​ 256 ​ ​ 344 ​ Deferred revenues ​ 3,965 ​ 4,318 ​ Other liabilities ​ ( 312 ) ​ ( 1,009 ) ​ Net cash provided by (used in) operating activities ​ $ 1,190 ​ $ ( 2,330 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ Asset acquisition ​ ( 100 ) ​ ( 33,604 ) ​ Cash paid to settle earnout obligations ​ ​ — ​ ​ ( 119 ) ​ Purchases of furniture and fixtures, net ​ ( 1,106 ) ​ ( 285 ) ​ Net cash used in investing activities ​ $ ( 1,206 ) ​ $ ( 34,008 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ Net proceeds from issuance of common stock and warrants, net of issuance costs ​ 4,700 ​ — ​ Proceeds from issuances of short-term debt ​ — ​ 54,225 ​ Proceeds from exercise of options and warrants ​ ​ — ​ ​ — ​ Principal payments on debt ​ ( 11,141 ) ​ ( 66,912 ) ​ Discount on notes payable ​ — ​ ( 500 ) ​ Proceeds from long term debt ​ ​ 2,500 ​ ​ 58,500 ​ Debt issuance costs ​ — ​ ( 3,324 ) ​ Payments of fixed dividends to Series B Preferred stockholders ​ ( 1,269 ) ​ ( 1,269 ) ​ Proceeds from issuance of common stock ​ 84 ​ 428 ​ Other Share based payments ​ ​ ​ ​ ​ ​ ​ Net cash (used in) provided by financing activities ​ $ ( 5,126 ) ​ $ 41,148 ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of foreign currency exchange rates ​ 1,795 ​ ( 332 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (decrease) increase in cash and cash equivalents ​ ( 3,347 ) ​ 4,478 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents, beginning of the period ​ 17,938 ​ 13,460 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents, end of the period ​ $ 14,591 ​ $ 17,938 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow disclosures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for income taxes ​ $ 1,615 ​ $ 1,476 ​ Cash paid for interest ​ $ 8,342 ​ $ 1,497 ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing transactions: ​ ​ ​ Shares issued to settle accounts payable ​ $ — ​ $ 1,626 ​ Shares issued for closing fees related to outstanding notes payable – Lind Global ​ $ — ​ $ 17,454 ​ Exercise of warrants ​ $ — ​ $ 350 ​ Shares issued for asset acquisition ​ $ 150 ​ $ 403 ​ Deemed contribution from Series B Preferred Stock ​ $ — ​ $ 367 ​ See Accompanying Notes to Financial Statements. ​ F-7 Table of Contents Notes to Consolidated Financial Statements Boxlight Corporation NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES COMPANY HISTORY AND RECENT ACQUISITIVE GROWTH Boxlight Corporation (the “Company”) was incorporated in the State of Nevada on September 18, 2014 with its headquarters in Atlanta, Georgia for the purpose of becoming a technology company that sells interactive educational products. The Company designs, produces and distributes interactive technology solutions predominantly to the education market. On December 31, 2021, the Company acquired FrontRow Calypso LLC, a California company and a leader in classroom and campus communication solutions for the education market. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Boxlight Corporation and its wholly owned subsidiaries. Intercompany transactions and account balances among all of affiliated entities have been eliminated. In the opinion of management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature and necessary for fair financial statement presentation. ESTIMATES AND ASSUMPTIONS The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. Significant estimates include estimates of reserves for inventory obsolescence; the recoverability of deferred tax assets; the fair value of warrants; the initial fair value of preferred stock, the fair value and recoverability of intangible assets and goodwill; the fair value of stock compensation; the fair values of assets acquired; the relative stand-alone selling prices of goods and services; and variable consideration. COMPREHENSIVE INCOME Comprehensive income (loss) reflects the change in equity during the year except those resulting from investments by and distributions to stockholders, and is comprised of all components of net income (loss) and foreign currency translation adjustments. FOREIGN CURRENCIES The Company’s reporting currency is the U.S. dollar. The U.S. dollar is the currency of the primary economic environment in which it operates and is generally the currency in which the Company’s business generates and expends cash. Subsidiaries with different functional currencies, translate their assets and liabilities into U.S. dollars at the exchange rates in effect as of the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average exchange rates for the year. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of equity (deficit). Foreign exchange gains and losses arise from transactions denominated in currencies other than the functional currency. Gains and losses on those foreign currency transactions are included in determining net income (loss) for the period in which the exchange rates change. CASH AND CASH EQUIVALENTS The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $ 250,000 for banks F-8 Table of Contents located in the U.S. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are stated at contractual amounts, net of an allowance for doubtful accounts. The allowance for doubtful accounts represents management’s estimate of the amounts that ultimately will not be realized in cash. The Company reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical payment trends, the age of receivables and knowledge of the individual customers. When the analysis indicates, management increases or decreases the allowance accordingly. However, if the financial condition of our customers were to deteriorate, additional allowances might be required. INVENTORIES Inventories are stated at the lower of cost or net realizable value and include spare parts and finished goods. Inventories are primarily determined using specific identification and the first-in, first-out (“FIFO”) cost methods. 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. The Company continuously reviews its inventory levels to identify slow-moving merchandise and markdowns necessary to clear slow-moving merchandise, which reduces the cost of inventories to its estimated net realizable value. Consideration is given to several 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 mix of products in inventory, as well as changes in consumer preferences, market and economic conditions. PROPERTY AND EQUIPMENT Property and equipment is stated at cost and depreciated using the straight-line method over the estimated life of the asset. Repairs and maintenance are charged to expense as incurred. LONG–LIVED ASSETS Long-lived assets to be held and used or disposed of other than by sale are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When required, impairment losses on assets to be held and used or disposed of other than by sale are recognized based on the fair value of the asset. Long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. BUSINESS COMBINATIONS Transactions in which the Company acquires or obtains control of one or more businesses are accounted for as business combinations in accordance with Topic 805, 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. Income taxes, where applicable, are recognized and measured in accordance with Topic 740, Accounting for Income Taxes . For transactions occurring on or after January 1, 2021, contract liabilities acquired in a business combination are recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers (“Topic 606”). Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgement and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, and discount rates. Transaction costs are expensed as incurred. Any excess consideration transferred over the assigned values of net assets acquired would be recorded as goodwill. The amounts of revenue and earnings of the acquiree since the acquisition date are included in the consolidated statements of operations and comprehensive loss for the reporting period. F-9 Table of Contents GOODWILL Goodwill represents the cost in excess of the fair value of the net tangible and intangible assets of acquired businesses, and represents implied synergies expected of the completed business combinations. Goodwill is not amortized and is not deductible for tax purposes. Under Topic 350, Intangibles—Goodwill and Other , the Company has an option to perform a “qualitative” assessment to determine whether quantitative impairment testing is necessary. If, as a result of a qualitative assessment, it is more-likely-than-not that the fair value of the business is less than carrying amount, quantitative impairment testing is required. Otherwise, no further testing is necessary. If the Company performs a qualitative assessment, the Company considers the following criteria: macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events. In addition, the Company assesses whether the most recent fair value determination resulted in an amount that significantly exceeded the carrying amount of the Company. Based on these assessments, the Company determines whether the likelihood that a current fair value determination would be less than the current carrying amount is not more likely than not. Because the qualitative assessment is an option, the Company may bypass it for any reporting unit in any period and begin the analysis using a quantitative impairment test. The Company may also elect to perform a quantitative impairment test based on the period of time that has passed since the most recent determination of fair value, even when the Company does not believe that it is more-likely-than-not that the fair value of the business is less than carrying amount. In analyzing goodwill for potential impairment in the quantitative impairment test, the Company uses a combination of the income and market approaches to estimate the fair value. Under the income approach, the Company calculates the fair value based on estimated future discounted cash flows. The assumptions used are based on what the Company believes a hypothetical marketplace participant would use in estimating fair value. Under the market approach, the Company estimates the fair value based on market multiples of revenue or earnings before interest, income taxes, depreciation, and amortization for benchmark companies. If the fair value exceeds carrying value, then no further testing is required. However, if the fair value were to be less than carrying value, the Company would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the goodwill exceeded its implied value. No goodwill impairments have been identified and recognized during any of the periods presented. We test goodwill annually for impairment during the fourth quarter. During the year ended December 31, 2022, we began performing the annual impairment test as of October 1, compared to December 31 in previous years. This facilitates the overall coordination and timing of our annual financial statement close cycle and the preparation of our annual report. The change to the testing date did not represent a material change to our method of applying the accounting principle in light of requirements to monitor goodwill throughout the reporting period. Since the acquisition of FrontRow Calypso LLC occurred December 31, 2021, the Company believes that the carrying amount does not exceed the fair value for the reporting unit. Goodwill arising from the FrontRow Calypso LLC acquisition was not included in the goodwill impairment testing for 2022. ​ INTANGIBLE ASSETS Intangible assets are amortized using the straight-line method over their estimated period of benefit and presented net of accumulated amortization. The Company reviews the carrying amounts of intangible assets for impairment whenever an event or change in circumstances indicates that the carrying amount of the assets may not be recoverable. The Company measures the recoverability of intangible assets by comparing the carrying amount of each asset to the future undiscounted cash flows the Company expects the asset to generate. Impairment is measured by the amount in which the carrying value of the asset exceeds its fair value. In addition, the Company periodically evaluates the estimated remaining useful lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization. ​ DERIVATIVE TREATMENT OF STOCK PURCHASE WARRANTS The Company classifies common stock purchase warrants 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 F-10 Table of Contents contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required. The Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company. Such warrants are measured at fair value at each reporting date, and the changes in fair value are included in determining net income for the period. See Note 10 “Derivative Liabilities” for more information. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments primarily include cash, accounts receivable, warrants, accounts payable and debt. Due to the short-term nature of cash, accounts receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value. Debt approximates fair value due to either the short-term nature or recent execution of the debt agreement. The amount of consideration received is deemed to be the fair value of long-term debt net of any debt discount and issuance cost. Warrants and contingent consideration for acquired businesses are recorded at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following tables set 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 December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Markets for Other Significant Carrying ​ ​ Identical ​ Observable ​ Unobservable ​ Value as of ​ ​ Assets ​ Inputs ​ Inputs ​ December 31, Description ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ 2022 Derivative liabilities - warrant instruments ​ ​ — ​ ​ — ​ ​ 472 ​ $ 472 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Markets for Other Significant Carrying ​ ​ Identical ​ Observable ​ Unobservable ​ Value as of ​ ​ Assets ​ Inputs ​ Inputs ​ December 31, Description ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ 2021 Derivative liabilities - warrant instruments ​ $ — ​ $ — ​ $ 3,064 ​ $ 3,064 ​ F-11 Table of Contents See Note 10 for discussion of the valuation techniques and inputs and reconciliation of the opening and closing balances of the fair value of warrants. The following tables reconcile opening and closing balances of contingent consideration for which fair value is based on level 3 inputs (in thousands). ​ ​ ​ ​ ​ ​ Amount Balance, December 31, 2020 $ 119 Amount paid ​ ​ ( 119 ) Balance, December 31, 2021 ​ ​ — Amount paid ​ ​ — Balance, December 31, 2022 ​ $ — ​ ​ NET INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. For purposes of this calculation, options to purchase common stock, restricted stock units subject to vesting and warrants to purchase common stock were considered to be common stock equivalents. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. The dilutive effect of convertible instruments is determined using the if-converted method, presuming share settlement. 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. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. For the year ended December 31, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 3.9 million shares from options to purchase common shares and 2.4 million of unvested restricted shares, 10.8 million shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million shares from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. For the year ended December 31, 2021, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 4.1 million shares from options to purchase common shares, unvested restricted shares of 2.0 million and 2.1 million shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million shares from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. REVENUE RECOGNITION In accordance with Topic 606 Revenue from Contracts with Customers, 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 interactive panels, audio and communication equipment and related software and accessories to distributors, resellers, and end users. Service revenue is derived from hardware maintenance services, product installation, training, software maintenance, and subscription services. Nature of Products and Services and Related Contractual Provisions The Company’s sales of interactive devices, including panels, audio and communication equipment and other interactive devices generally include hardware maintenance services, a license to software, and the provision of related software maintenance. Interactive devices are generally sold with hardware maintenance services with terms of approximately 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 panels 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, and cloud-based applications. The Company’s software subscription services provide F-12 Table of Contents access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications. The Company’s 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 expectations and historical experience. For most of the Company’s product sales, control transfers, and therefore, revenue is recognized when products are shipped at the point of origin. When the Company transfers control of its products to the customer prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. For many of the Company’s software product sales, control is transferred when shipped at the point of origin since the software is installed on the interactive hardware device in advance of shipping. For other software product sales, control is transferred when the customer receives the related access code or interactive hardware since the customer’s access code or connection to the interactive hardware activates the software license at which time the software is made available to the customer. For the Company’s software maintenance, hardware maintenance, and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer. The Company’s installation, training and professional development services are generally sold separately from the Company’s products. Control of these services is transferred to our customers over time with hours/time incurred in providing the service being the best depiction of the transfer of services since the customer is receiving the benefit of the services as the work is performed. For the sale of third-party products and services where the Company obtains control of the products and services before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of the third-party products and services including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product or service. The Company has not historically entered into transactions where it does not take control of the product or service prior to transfer to the customer. The Company excludes all taxes assessed by a governmental agency that are both imposed on and concurrent with the specific revenue-producing transaction from revenue (for example, sales and use taxes). In essence, the Company is reporting these amounts collected on behalf of the applicable government agency on a net basis as though they are acting as an agent. The taxes collected and not yet remitted to the governmental agency are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets. Significant Judgments For contracts with multiple performance obligations, each of which represent promises within a contract that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). The Company’s products and services included in its contracts with multiple performance obligations generally are not sold separately and there are no observable prices available to determine the SSP for those products and services. Since observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins. 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. 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. The Company believes that the application of the portfolio approach produces the same result as if they were applied at the contract level. Contract Balances The timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for F-13 Table of Contents 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 one year. The Company has an unconditional right to consideration for all products and services transferred to the customer. That unconditional right to consideration is reflected in accounts receivable in the accompanying consolidated balance sheets in accordance with Topic 606. 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 December 31, 2022 or 2021. During the years ended December 31, 2022 and 2021, the Company recognized $ 7.5 million and $ 5.6 million, respectively, of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively. Variable Consideration The Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, price protection provisions, or in connection with certain other 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, 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. 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 provides rebates to certain customers based on the achievement of certain sales targets. The provision for rebates is estimated based on customers’ contracted rebate programs and our historical experience of rebates paid. 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 2022 related to changes in estimated variable consideration that existed at December 31, 2021. Remaining Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting within the contract. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract. Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer. As of December 31, 2022 and 2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 23.9 million and $ 21.5 million, respectively. The Company expects to recognize revenue on approximately 33 % of the remaining performance obligations in 2023 , 27 % in 2024 , 21% in 2025 , 13 % in 2026 , with the remainder recognized thereafter. In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contract). 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. F-14 Table of Contents Disaggregated Revenue The 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 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 access codes 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 3 - 5 years from the contract execution date as measured based upon the passage of time. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ ​ (in thousands) ​ ​ ​ 2022 ​ 2021 ​ Product revenues: ​ ​ ​ ​ ​ Hardware ​ $ 206,770 ​ $ 171,780 ​ Software ​ 4,306 ​ 4,102 ​ Service revenues: ​ ​ ​ ​ ​ Professional services ​ 2,638 ​ 1,419 ​ Maintenance and subscription services ​ 8,067 ​ 7,876 ​ ​ ​ $ 221,781 ​ $ 185,177 ​ ​ Contract Costs The Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs. The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were not obtained (e.g., a sales commission). The Company capitalizes the costs incurred to fulfil a contract only if those costs meet all the following criteria: ● The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. ● The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. ● The costs are expected to be recovered. Certain sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the estimated economic benefit period. For these sales commissions that are incremental costs to obtain where the period of amortization would have been recognized over a period that is one year or less, the Company elected the practical expedient to expense those costs as incurred. Commission costs that are deferred are classified as current or non-current assets based on the timing of when the Company expects to recognize the expense and are included in prepaid and other assets and other assets, respectively, in the accompanying consolidated balance sheets. Total deferred commissions at December 31, 2022 and 2021 and the related amortization for 2022 and 2021 were less than $ 300,000 . The Company has not historically incurred any material fulfilment costs that meet the criteria for capitalization. Bill and Hold Arrangements From time to time the Company enters custodial bill and hold arrangements with customers. Each arrangement is reviewed, and revenue is recognized only when the following criteria have been met: (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. At December 31, 2022, $ 3.2 million of revenue was recognized for goods that will be delivered to a customer during the first quarter of 2023. F-15 Table of Contents WARRANTY RESERVE For customers that do not purchase hardware maintenance services, the Company generally provides warranty coverage on panels and accessories, batteries and computers. This warranty coverage ranges from 2 - 5 years , and the Company establishes a liability for estimated product warranty costs, included in other short-term liabilities in the consolidated balance sheets, 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. RESEARCH AND DEVELOPMENT EXPENSES Research and development costs are expensed as incurred and consist primarily of personnel related costs, prototype and sample costs, design costs, and global product certifications mostly for wireless certifications. INCOME TAX An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. STOCK-BASED COMPENSATION The Company estimates the fair value of each stock option compensation award at the grant date by using the Black-Scholes option pricing model; the fair value for each restricted stock unit award is the market price of the underlying shares at the date of grant. The fair value determined represents the cost for the award and is recognized on a straight-line basis over the vesting period during which an employee is required to provide service in exchange for the award. Total expense is reduced by the previously recognized compensation expense for options that are forfeited prior to vesting when the forfeiture occurs. LEASES The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through February 2027. Generally, these leases have initial lease terms of five years or less. Prior to the adoption of Accounting Standards Update ("ASU") No. 2016-02 "Leases” (Topic 842) on January 1, 2022, the Company recorded the difference between the rent paid and the straight-line rent expense as a deferred rent liability within accrued expenses and other current liabilities and other liabilities. Subsequent to the adoption of Topic 842, operating lease assets and liabilities are reflected within operating lease assets, operating lease liabilities, current, and operating lease liabilities, non-current, on the consolidated balance sheets. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at our sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of our lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of our lease agreements provide for periodic adjustments to rental payments for inflation. 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. In connection with the adoption of Topic 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. F-16 Table of Contents SUBSEQUENT EVENTS We reviewed all material events through the date of these consolidated financial statements were issued for subsequent event disclosure consideration as described in Note 17. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements The Company adopted Topic 842, as amended, which requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The Company elected the modified retrospective approach which it applied on January 1, 2022, and therefore have not restated comparative periods. 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. Finally, the Company elected not to apply the hindsight practical expedient to determine the lease term for existing leases. The Company’s operating leases relate primarily to office space. As a result of the adoption of ASU 2016-02, the Company recognized an operating lease right-of-use ("ROU") asset of $ 3.8 million and a current operating lease liability of approximately $ 1.6 million and a long-term operating lease liability of approximately $ 2.3 million as of January 1, 2022, with no impact on the Company’s Consolidated Statement of Operations and Comprehensive Loss or Consolidated Statement of Cash Flows. The ROU asset and operating lease liabilities are recorded as separate line items in the Consolidated Balance Sheet. The Company adopted ASU 2021-06, “ Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses ” to amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Among other changes, the final rule modifies the significance tests and improves the disclosure requirements for (1) acquired or to be acquired businesses, (2) real estate operations, and (3) pro forma financial information. In addition, the final rule includes amendments to financial disclosures specific to smaller reporting companies (SRCs). There is no immediate impact on the Company’s financial statements due to the adoption of this standard. ​ The Company early adopted (as of January 1, 2021) ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The new guidance simplifies the accounting for certain convertible instruments and for contracts in an entity’s own equity. Key provisions include the elimination of the “cash conversion” guidance and the “beneficial conversion feature” guidance in ASC Subtopic 470-20, (Debt with Conversion and Other Options) , as well as a simplification of the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification by removing certain conditions in ASC Subtopic 815-40-25. Since the beneficial conversion feature is eliminated by this guidance, it will not be recorded for our Series B preferred stock. The amendments in ASU 2020-06 further revise the guidance in ASC Topic 260, “ Earnings Per Share, ” to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For the years ended December 31, 2022 and 2021, the Company has calculated diluted earnings per share using the if-converted method. ​ The Company early adopted (as of January 1, 2021) ASU No. 2021-08, “ Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, ” (“ASU 2021-08”), which amends the guidance in ASC Topic 805, “ Business Combinations ,” to require that “an entity (acquirer) recognize, and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, rather than at fair value.” At the acquisition date, an acquirer would account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The Company applied the guidance in this ASU to the FrontRow acquisition that was completed on December 31, 2021. The Company adopted ASU No. 2019-12, “Income Taxes” (ASU 740): “Simplifying the Accounting for Income Taxes.” The new guidance eliminates the need for an organization to analyze whether the following apply in a given period: (1) the exception to the F-17 Table of Contents incremental approach for intraperiod tax allocation; (2) the exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) the exception in interim periods income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, (4) enacted changes in tax laws in interim periods and (5) certain income tax accounting for employee stock ownership plans and affordable housing projects. The standard became effective for the Company on January 1, 2021 and did not have a material impact on the financial statements. Recent Accounting Pronouncements not yet Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments Credit Losses” (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance replaces the incurred loss methodology with the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade accounts receivable. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. This new guidance changes the impairment model for most financial assets and certain other instruments. The ASU is not effective until fiscal years beginning after December 15, 2022, and interim periods within that fiscal year. The Company’s trade receivable terms are short term in duration and historically losses on accounts receivable have not been significant; write-offs were approximately $ 243,000 for the year ended December 31, 2022. Accordingly, the Company does not expect the adoption to have a material impact on the Company’s financial statements. There were various other accounting standards and interpretations issued recently, some of which may be applicable to the Company but none of which are expected to a have a material impact on our financial position, operations, or cash flows. ​ NOTE 2 –BUSINESS ACQUISITIONS The acquisitions described below were accounted for as business combinations which require, among other things, that assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date. Deferred income taxes are recognized and measured in accordance with Topic 740 “ Accounting for Income Taxes ”. Transaction 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. FrontRow Calypso LLC. On December 31, 2021, the Company, and its wholly owned subsidiary, Boxlight, Inc, acquired 100 % of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”) in exchange for payment of $ 34.7 million to Phonic Ear Inc. and Calypso Systems LLC, the equity holders of FrontRow. Based in Petaluma, California, FrontRow makes technology that improves communication in learning environments, including developing network-based solutions for intercom, paging, bells, mass notification, classroom sound, lesson sharing, AV control and management. FrontRow also has offices in Toronto, Copenhagen, Brisbane, Hamilton (UK) and Shenzhen. To finance the acquisition of FrontRow, the Company entered into a term loan credit facility, with WhiteHawk Finance LLC, as lender and WhiteHawk Capital Partners, LP, as collateral agent. See Note 9 “Debt.” The assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date. Determining the fair value of assets acquired and liabilities assumed 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 excess consideration over the net fair values of the assets acquired and liabilities assumed was recognized as goodwill. The fair value or net realizable value of inventories at the date of acquisition was determined using a “top-down” approach based upon the estimated sales value, less a reasonable profit margin and less the estimated costs to dispose of the inventory, including F-18 Table of Contents selling costs and other disposal costs such as freight. The fair value of accounts receivable acquired in connection with the acquisition approximated the contractual amount due from customers at that date. ​ The acquired contract liabilities of FrontRow have been recognized and measured in accordance with Topic 606. ​ 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: ​ ​ ​ ​ ​ ​ ​ (in thousands) Assets acquired: ​ Cash ​ $ 2,752 Accounts receivable ​ 3,381 Inventories ​ 10,240 Prepaid expenses ​ 883 Property and equipment ​ ​ 348 Total assets acquired ​ 17,604 ​ ​ ​ ​ Accounts payable and accrued expenses ​ ​ ( 1,501 ) Deferred revenue ​ ​ ( 1,225 ) Other liabilities ​ ​ ( 12 ) Total liabilities assumed ​ ( 2,738 ) ​ ​ ​ ​ Net tangible assets acquired ​ $ 14,866 ​ ​ ​ ​ Identifiable intangible assets: ​ ​ ​ Customer relationships ​ ​ 8,195 Trademarks ​ ​ 3,244 Technology ​ ​ 5,036 Non-compete ​ ​ 391 Total intangible assets subject to amortization ​ ​ 16,866 ​ ​ ​ ​ Goodwill ​ ​ 2,920 ​ ​ ​ ​ Total net assets acquired ​ $ 34,652 ​ ​ ​ ​ Consideration paid: ​ ​ ​ Cash ​ $ 34,652 ​ The 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: ​ ​ ​ ​ ​ Estimated ​ ​ Weighted Average ​ ​ Life (years) Customer relationships 8 Trademarks 10 Technology ​ 8 Non-compete agreements ​ 3 ​ Goodwill is primarily attributable to synergies expected from the acquisition and the assembled workforce. The Company incurred a total of $ 500,700 in acquisition-related costs and expensed all such costs incurred during the period in which the service was received. Acquisition related costs are included in general and administrative expenses in the Consolidated Statement of Operations and Comprehensive Loss. The results of operations of FrontRow are included in the Consolidated Statement of Operations and Comprehensive Loss beginning at the acquisition date. There was no impact to the Consolidated Statement of Operations and F-19 Table of Contents Comprehensive Loss for the year ended December 31, 2021 since the acquisition was consummated on December 31, 2021. For the year ended December 31, 2022, revenue and net income from FrontRow were $ 24.8 million and $ 0.8 million, respectively. ​ Pro Forma Financials ​ The following unaudited pro forma information reflects our consolidated results of operations as if the acquisition of FrontRow had taken place on January 1, 2021. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2021 ​ ​ ​ ​ (Unaudited) ​ ​ (in thousands) ​ (in thousands) ​ ​ As Reported ​ Pro Forma Revenues, net ​ $ 185,177 ​ $ 214,636 ​ ​ ​ ​ ​ ​ ​ Net loss attributable common shareholders ​ $ ( 14,704 ) ​ $ ( 12,868 ) ​ ​ Interactive Concepts ​ 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. The Company has been Boxlight’s key distributor in Belgium and Luxembourg. ​ F-20 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ (in thousands) Assets acquired: ​ ​ ​ Cash ​ $ 1,647 Accounts receivable ​ ​ 1,045 Inventories ​ ​ 191 Property and equipment ​ ​ 37 Total assets acquired ​ ​ 2,920 ​ ​ ​ ​ Accounts payable and accrued expenses ​ ​ ( 821 ) Deferred tax liability ​ ​ ( 230 ) Total liabilities assumed ​ ​ ( 1,051 ) ​ ​ ​ ​ Net tangible assets acquired ​ ​ 1,869 Identifiable intangible assets: ​ ​ ​ Tradename ​ ​ 220 Customer relationships ​ ​ 745 Total intangible assets subject to amortization ​ ​ 965 ​ ​ ​ ​ Goodwill ​ ​ 439 ​ ​ ​ ​ Total net assets acquired ​ $ 3,273 ​ ​ ​ ​ Consideration paid: ​ ​ ​ Cash ​ $ 1,795 Deferred cash consideration ​ ​ 1,075 Common shares issued ​ ​ 403 ​ ​ ​ ​ Total consideration paid ​ $ 3,273 ​ ​ ​ ​ ​ NOTE 3 – ACCOUNTS RECEIVABLE - TRADE Accounts receivable consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Accounts receivable – trade ​ $ 33,198 ​ $ 31,053 Allowance for doubtful accounts ​ ( 414 ) ​ ( 405 ) Allowance for sales returns and volume rebates ​ ( 1,775 ) ​ ( 1,075 ) Accounts receivable - trade, net of allowances ​ $ 31,009 ​ $ 29,573 ​ Write-offs of accounts receivable was approximately $ 243,000 and $ 525,000 for the years ended December 31, 2022 and 2021, respectively. ​ F-21 Table of Contents NOTE 4 – INVENTORIES Inventories consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Finished goods ​ $ 56,583 ​ $ 51,346 Spare parts ​ 775 ​ 260 Reserve for inventory obsolescence ​ ​ ( 531 ) ​ ​ ( 599 ) Advanced shipping costs ​ 1,384 ​ 584 Inventories, net ​ $ 58,211 ​ $ 51,591 ​ The Company wrote off inventories of approximately $ 1.2 million and $ 0.6 million for the years ended December 31, 2022 and 2021, respectively. ​ NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Prepayments to vendors ​ $ 4,131 ​ $ 7,739 Prepaid licenses and other ​ 3,302 ​ 1,705 Prepaid expenses and other current assets ​ $ 7,433 ​ $ 9,444 ​ ​ Prepaid expenses and other current assets as of December 31, 2022 are net of reserves related to vendor receivables of $ 0.8 million. There were no reserves related to vendor receivables as of December 31, 2021. ​ ​ NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Building ​ $ 200 ​ $ 200 Building improvements ​ 14 ​ 14 Leasehold improvements ​ 450 ​ 176 Office equipment ​ 1,057 ​ 467 Software ​ ​ 88 ​ ​ 88 Other equipment ​ 678 ​ 335 Construction in progress ​ ​ 14 ​ ​ 85 ​ ​ ​ ​ ​ ​ ​ Property and equipment, at cost ​ 2,501 ​ 1,365 Accumulated depreciation ​ ( 768 ) ​ ( 292 ) ​ ​ ​ ​ ​ ​ ​ Property and equipment, net of accumulated depreciation ​ $ 1,733 ​ $ 1,073 ​ For the years ended December 31, 2022 and 2021, the Company recorded depreciation expense of $ 484,000 and $ 156,000 , respectively. ​ F-22 Table of Contents NOTE 7 – INTANGIBLE ASSETS AND GOODWILL Intangible assets and goodwill consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Useful lives ​ 2022 ​ 2021 INTANGIBLE ASSETS ​ ​ ​ ​ ​ ​ ​ ​ Patents ​ 4 - 10 years ​ $ 182 ​ $ 182 Customer relationships ​ 8 - 15 years ​ 52,736 ​ ​ 55,158 Technology ​ 3 - 5 years ​ 8,943 ​ ​ 8,901 Domain ​ 7 years ​ 14 ​ ​ 14 Non-compete ​ 8 - 15 years ​ ​ 391 ​ ​ 391 Tradenames ​ 2 - 10 years ​ 12,769 ​ ​ 13,085 Intangible assets, at cost ​ ​ ​ ​ 75,035 ​ ​ 77,731 Accumulated amortization ​ ​ ​ ​ ( 22,456 ) ​ ​ ( 12,199 ) Intangible assets, net of accumulated amortization ​ ​ ​ $ 52,579 ​ $ 65,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ GOODWILL ​ ​ ​ ​ ​ ​ ​ ​ Beginning Balance ​ ​ $ 26,037 ​ $ 22,742 Goodwill acquired during the period ​ ​ — ​ ​ 3,359 Change due to foreign currency translation ​ ​ ​ ​ ( 945 ) ​ ​ ( 64 ) Impairment ​ ​ ​ ​ — ​ ​ — Ending Balance ​ ​ ​ $ 25,092 ​ $ 26,037 ​ As of December 31, 2022, the company had $ 25.1 million of goodwill, of which none was allocated to a reporting unit with a negative carrying amount. The company’s goodwill has an indefinite useful life and is tested for impairment annually. For the years ended December 31, 2022 and 2021, the Company recorded amortization expense of $ 8.6 million and $ 7.0 million, respectively. Changes to gross carrying amount of recognized intangible assets and goodwill due to translation adjustments were approximately ($ 3.1 ) million and $ 3.2 million as of December 31, 2022 and 2021, respectively. ​ Expected future amortization expense for intangible assets as of December 31, 2022 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 $ 8,857 2024 ​ 7,916 2025 ​ 7,804 2026 ​ 7,290 2027 ​ 6,886 Thereafter ​ 13,826 ​ ​ ​ Total $ 52,579 ​ ​ ​ F-23 Table of Contents NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable consisted of the following at December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Accounts payable ​ $ 30,719 ​ $ 25,714 Accrued expense ​ ​ 5,306 ​ ​ 6,440 Other ​ ​ 541 ​ ​ 1,484 Accounts payable and other liabilities ​ $ 36,566 ​ $ 33,638 ​ ​ NOTE 9 – DEBT The following comprises debt on December 31, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Debt – Third Parties ​ ​ Paycheck Protection Program ​ $ 127 ​ $ 1,009 Note payable - Whitehawk ​ ​ 49,906 ​ ​ 58,500 Total debt ​ 50,033 ​ 59,509 Less: Discount and issuance costs ​ 5,410 ​ 7,568 Current portion of debt ​ 845 ​ 9,804 Long-term debt ​ $ 43,778 ​ $ 42,137 Total debt (net of discount and issuance costs) ​ $ 44,623 ​ $ 51,941 ​ Debt - Third Parties: WhiteHawk Finance LLC ​ 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 WhiteHawk 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”). 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. 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. ​ 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 the Company’s 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 being 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. The Company also incurred agency fees, legal fees, and other costs in connection with the execution of the Credit Agreement totaling approximately $ 1.7 million. Under the terms of the warrant issued to WhiteHawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which F-24 Table of Contents time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect. The warrants repriced on March 31, 2022 to $ 1.19 per share and the shares increased to 3,434,103 . ​ On July 22, 2022, the Company entered into a Securities Purchase Agreement with an accredited institutional investor. 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. The warrants were repriced to $ 1.10 and shares increased to 3,715,075 . ​ 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. 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. 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. As a result, notwithstanding the notice, both WhiteHawk and the Company have agreed that the Company was not in default in making the February 2022 Payment to WhiteHawk. ​ The principal elements of the April amendment included (a) an extension of time to repay $ 8.5 million of the principal amount of the term loan from February 28, 2022 to February 28, 2023, and (b) forbearance on $ 3,500,000 in over advances until May 16, 2022 to allow the Company to come into compliance with the borrowing base requirements set forth in the Credit Agreement. 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. 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. 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. ​ On June 21, 2022, the Company and substantially all of its direct and indirect subsidiaries (together with the Company, the “Loan Parties”), entered into a second amendment (the “Second Amendment”) to the four-year term loan credit facility, originally entered into December 31, 2021 and as amended on April 4, 2022 (the “Credit Agreement”), with the Collateral Agent and Lender. 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. As of December 31, 2022 and 2021, the Company was in compliance with all covenants and borrowing base requirements. ​ During the year ended December 31, 2022, the Company paid the $ 8.5 million due on February 28, 2023. During the year ended December 31, 2022, the Company repaid total principal of $ 10.4 million (inclusive of the $ 8.5 million) and interest of $ 8.3 million to WhiteHawk. ​ ​ F-25 Table of Contents Lind Global Marco Fund and Lind Global Asset Management ​ During the year ended December 31, 2021, the Company repaid principal of $ 12.0 million and interest of $ 584 thousand, to Lind Global by issuing a total of 7.2 million shares of Class A common stock with an aggregate value of $ 15.9 million to Lind Global and recognized a loss on extinguishment of debt of approximately $ 3.3 million. Any outstanding debt owed to Lind Global was repaid in full on December 31, 2021 following the Company’s receipt of the Initial Loan from WhiteHawk. ​ Paycheck Protection Program Loan ​ On May 22, 2020, the Company received loan proceeds of $ 1.1 million under the Paycheck Protection Program. During 2021, the Company applied for forgiveness in the amount of $ 836 thousand. On March 2, 2022, the Company 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. The amount remaining on the loan at December 31, 2022 was $ 127 thousand. ​ Everest Display, Inc. ​ 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. During the year ended December 31, 2021, the Company recognized a $ 357 thousand gain on the settlement of the accounts payable. ​ Accounts Receivable Financing – Sallyport Commercial Finance ​ On September 30, 2020, Boxlight Inc. and EOS EDU LLC entered into an asset-based lending agreement with Sallyport Commercial Finance, LLC (“Sallyport”). 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. 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 . In exchange for entry into the ARC Amendment, Boxlight agreed to a fee of $ 50,000 , representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remain unchanged. On August 6, 2021, Boxlight and Sallyport entered into an additional amendment of the Accounts Receivable Agreement (the “Second ARC Amendment”), which further increased the Maximum Facility Limit Amount to $ 15,000,000 . In exchange for entry into the Second ARC Amendment, Boxlight agreed to a fee of $ 20,000 , representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remain unchanged. Any outstanding debt owed to Sallyport was repaid in full on December 31, 2021 following the Company’s receipt of the Initial Loan from WhiteHawk. ​ Debt - Related Parties: Note Payable - STEM Education Holdings, Pty On April 17, 2020, the Company acquired MyStemKits and STEM Education Holdings, Pty, an Australian corporation (“STEM”), the largest online collection of K-12 STEM curriculum for 3D Purchase consideration for the acquisition of STEM included a note payable in the of $ 350,000 . The note was payable in four equal installments of $ 87,500 on July 31, 2020, October 31, 2020, January 31, 2021 and April 30, 2021. Parties acknowledged 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. Accordingly, and as agreed between Boxlight and the STEM sellers the note payable was adjusted to $ 175,000 and was paid off in September 2021. F-26 Table of Contents Debt Maturity Principal repayments to be made during the next five years on the Company’s outstanding debt facilities at December 31, 2022 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ $ 2,680 2024 ​ ​ 2,681 2025 ​ ​ 44,672 2026 ​ ​ — 2027 ​ ​ — Total ​ $ 50,033 ​ ​ ​ NOTE 10 – DERIVATIVE LIABILITIES At December 31, 2022 and December 31, 2021, the Company had warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered under certain conditions. The Company concluded that the warrants should be accounted for as derivative liabilities. The Company used a third party to determine the fair value of the derivative liabilities at December 31, 2022 and 2021, and they used a Monte Carlo Simulation model to determine the fair value. Key assumptions used are as follows: ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Common stock issuable upon exercise of warrants ​ 3,715,075 ​ Market value of common stock on measurement date ​ $ 0.31 ​ Exercise price ​ $ 1.10 ​ Risk free interest rate (1) ​ 4.02 % Expected life in years ​ 4 years ​ Expected volatility (2) ​ 83.6 % Expected dividend yields (3) ​ — % ​ ​ ​ ​ ​ ​ ​ December 31, 2021 Common stock issuable upon exercise of warrants ​ 2,043,291 ​ Market value of common stock on measurement date ​ $ 1.38 ​ Exercise price ​ $ 2.00 ​ Risk free interest rate (1) ​ 1.25 % Expected life in years ​ 5 years ​ Expected volatility (2) ​ 79.3 % Expected dividend yields (3) ​ — % (1) The risk-free interest rate was determined using the applicable Treasury Bill as of the measurement date. (2) The historical trading volatility for 2022 and 2021 was based on historical fluctuations in stock price for Boxlight and certain peer companies. (3) The Company does not expect to pay a dividend in the foreseeable future. The following table shows the change in the Company’s derivative liabilities for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ Amount ​ ​ (in thousands) Balance, December 31, 2021 ​ $ 3,064 ​ Exercise of warrants ​ ​ ( 1 ) ​ Issuance of warrants ​ — ​ Change in fair value of derivative liabilities ​ ( 2,591 ) ​ Balance, December 31, 2022 ​ $ 472 ​ F-27 Table of Contents ​ ​ ​ ​ ​ ​ Amount ​ ​ (in thousands) Balance, December 31, 2020 ​ $ 363 Exercise of warrants ​ ​ ( 348 ) Issuance of warrants ​ 3,064 Change in fair value of derivative liabilities ​ ( 15 ) Balance, December 31, 2021 ​ $ 3,064 ​ The change in fair value of derivative liabilities includes losses from exercise price modifications. ​ NOTE 11 – INCOME TAX Pretax income (loss) resulting from domestic and foreign operations is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 United States ​ $ ( 2,569 ) ​ $ ( 18,130 ) Foreign ​ ( 2,707 ) ​ 6,032 Other Foreign Jurisdictions ​ ​ 1,582 ​ ​ 1,606 Total pretax book loss ​ $ ( 3,694 ) ​ $ ( 10,492 ) ​ The components of income tax expense at December 31, 2022 and December 31, 2021, are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Current: ​ ​ Federal ​ $ 1,491 ​ $ — State ​ 138 ​ 62 Foreign ​ 1,399 ​ 2,722 Total Current ​ $ 3,028 ​ $ 2,784 ​ ​ ​ ​ ​ ​ ​ Deferred: ​ ​ Federal ​ $ ( 85 ) ​ $ — State ​ — ​ — Foreign ​ ( 2,894 ) ​ 526 Total Deferred ​ $ ( 2,979 ) ​ $ 526 ​ ​ ​ ​ ​ ​ ​ Total ​ $ 49 ​ $ 3,310 ​ F-28 Table of Contents The reconciliation of the provision for income taxes at the United States Federal statutory rate compared to the Company’s income tax expense (benefit) as reported is as follows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Loss before income taxes $ ( 3,694 ) $ ( 10,492 ) ​ ​ ​ ​ ​ ​ ​ Income tax benefit computed at the statutory rate ​ ​ ( 776 ) ​ ​ ( 2,203 ) State income taxes-net of federal tax benefit ​ ​ 73 ​ ​ 49 Foreign tax rate differential ​ ( 19 ) ​ ( 107 ) Loss on debt settlement ​ — ​ 788 Section 162(m) compensation ​ ​ 61 ​ ​ 168 FX Adjustment ​ ​ — ​ ​ ( 265 ) GILTI Inclusion ​ ​ 160 ​ ​ 102 Meals ​ ​ 39 ​ ​ 12 Stock compensation ​ ​ 83 ​ ​ ( 75 ) Amortization ​ ​ 11 ​ ​ ( 4 ) PPP loan ​ ​ ( 179 ) ​ ​ — Non-deductible expenses ​ 186 ​ ( 10 ) Prior period true ups – temporary differences ​ 197 ​ ( 35 ) Rate changes and differentials ​ ( 651 ) ​ 2,193 Change in valuation allowance ​ 864 ​ 2,697 ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ $ 49 ​ $ 3,310 ​ Tax effects of temporary differences at December 31, 2022 and December 31, 2021 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax assets: 2022 2021 Fixed assets ​ $ — ​ $ 13 Allowance for bad debts ​ 507 ​ 442 Inventory ​ 294 ​ 192 R&D amortization ​ ​ 413 ​ ​ — Accrued expenses ​ — ​ — Deferred revenue ​ 5,600 ​ 4,232 Stock compensation ​ 1,209 ​ 645 Net lease asset ​ ​ 1 ​ ​ — Other ​ 203 ​ — Interest expense limitation ​ 3,751 ​ 1,903 Net operating loss carry-forwards ​ 7,282 ​ 8,165 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets (liabilities) ​ $ 19,260 ​ $ 15,592 Valuation allowance ​ ( 14,084 ) ​ ( 11,294 ) Deferred tax assets, net ​ $ 5,176 ​ $ 4,298 ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: 2022 2021 Fixed assets ​ $ ( 24 ) ​ $ — Intangible assets ​ ​ ( 8,603 ) ​ ​ ( 11,452 ) Accrued expenses ​ ( 752 ) ​ ( 413 ) Prepaid expenses ​ ( 169 ) ​ ( 137 ) Other ​ ​ ( 308 ) ​ ​ ( 745 ) Deferred tax liabilities ​ $ ( 9,856 ) ​ $ ( 12,747 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities, net ​ $ ( 4,680 ) ​ $ ( 8,449 ) ​ F-29 Table of Contents The 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. The cumulative U.S. Federal net operating losses carryforward on tax basis income was approximately $ 23.5 million and $ 29.9 million at December 31, 2022 and 2021, respectively, of which $ 4.6 million will expire between 2029 and 2037 and $ 18.9 million will carryforward indefinitely. The cumulative U.S. state net operating losses carryforward was approximately $ 45.8 million and $ 28.8 million on December 31, 2022 and 2021, respectively. The cumulative foreign net operating losses carryforward was $ 1.8 million and $ 2.6 million on December 31, 2022 and 2021, respectively. The legacy Boxlight entities are in 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. It also depends on specific tax provisions in each jurisdiction that could impact utilization. For example, in the United States, a change in ownership, as defined by federal income tax regulations, could significantly limit the Company's ability to utilize our U.S. net operating loss carryforwards. Additionally, because U.S. tax laws limit the time during which the net operating losses generated prior to 2018 may be applied against future taxes, if the Company fails to generate U.S.taxable income prior to the expiration dates the Company may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes. 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. Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on the net deferred tax asset of its legacy Boxlight entities at December 31, 2022 and 2021. The change in its valuation allowance during 2022 is approximately $ 0.6 million. ​ 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. This includes the deferred tax liability recorded during 2021 for the acquisition of Interactive Concepts. The Company does not 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. Therefore, the net deferred tax liability of $ 4.7 million at December 31, 2022 is primarily based on the Sahara acquired entities. ​ The tax years from 2009 to 2022 remain open to examination in the U.S. federal jurisdictions to which the Company is subject. The Company has not identified any uncertain tax positions at this time. ​ On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted. The CARES Act includes provisions, among others, addressing the carryback of net operating losses for specific periods, refunds of alternative minimum tax credits, temporary modifications to the limitations placed on the tax deductibility of net interest expenses, and technical amendments for qualified improvement property. Additionally, the CARES Act provides for various payroll incentives, including Payroll Protection Program (“PPP”) loans, refundable employee retention tax credits, and the deferral of the employer-paid portion of social security payroll taxes. The Company received a $ 1.1 million loan under the PPP, of which over $ 0.8 million was forgiven in March 2022 under the requirements of the program. The remaining amount owed will be paid back in May 2022. No other provisions of the CARES Act had a material impact on the Company’s tax provision. On December 27, 2020, the Consolidated Appropriations Act of 2021 - including the COVID-related Tax Relief Act of 2020 - was enacted. It included a provision that any expenses paid using forgiven PPP loan proceeds would be fully deductible. This has been reflected in the Company’s tax provision. ​ Effective January 1, 2022, for U.S. tax purposes research and development costs, including software development costs, are required to be capitalized and will be deductible over five years for costs incurred domestically and over fifteen years for costs incurred in a foreign country. Additionally, the first year of amortization requires that amortization begin with the midpoint of the taxable year. As of December 31, 2022, the Company has recorded a deferred tax asset of $ 0.4 million related to capitalized research and development costs. ​ F-30 Table of Contents NOTE 12 – EQUITY Preferred Shares The Company’s articles of incorporation, as amended on December 15, 2016, provide that the Company is authorized to issue 50,000,000 shares of preferred stock consisting of: 1) 250,000 shares of non-voting Series A preferred stock, with a par value of $ 0.0001 per share; 2) 1,200,000 shares of voting Series B preferred stock, with a par value of $ 0.0001 per share; 3) 270,000 shares of voting Series C preferred stock, with a par value of $ 0.0001 per share; and 4) 48,280,000 shares of “blank check” preferred stock as may be designated from time to by the Company’s board of directors. Issuance of preferred shares Series A Preferred Stock At 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. Series B Preferred Stock and Series C Preferred Stock 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 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 price). 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). To the extent not previously converted into the Company’s Class A common stock, the outstanding shares of Series B Preferred Stock shall be redeemable at the option of the Holders at any time or from time to time commencing on January 1, 2024, upon thirty ( 30 ) days prior written notice to the Holders, for a redemption price, payable in cash, equal to sum of (a) Ten ($ 10.00 ) multiplied by the number of shares of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares. The Series C Preferred Stock is also subject to redemption on the same terms commencing January 1, 2026. The aggregate estimated fair value of the Series B and C Preferred Stock of $ 28.5 million was included as part of the total consideration paid for the purchase of Sahara. 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 (the “Redemption Agreement”) which allows the Company to redeem and repurchase each such 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. Such stockholders hold 96 % of the Series C preferred stock. Upon redemption, the Series C shares held by such stockholders would convert into approximately 7.6 million shares of Class A Common Stock at the stated conversion price of $ 1.66 per share. On June 14, 2021, the Company entered into an amendment to the Redemption Agreement (the “Amended Redemption Agreement”) for purposes of extending the completion date to on or before December 31, 2021. In addition, the Amended Redemption Agreement changed the definition of “Redemption Payments” such that the redemption payment schedule would begin on or before May 31, 2021, for the quarter then ended and continue quarterly until the date of completion. ​ Regarding these amendments, the Company applied the accounting guidance from ASC Subtopic 470-50, “ Debt Modifications and Extinguishments ,” pertaining to determining whether an amendment to an equity-classified preferred share is an extinguishment or F-31 Table of Contents modification, and concluded that the Amended Redemption Agreement on June 14, 2021, as it effected the Series B Preferred Stock, resulted in an extinguishment of the original equity instruments subject to redemption agreement. 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 $ 367,000 deemed contribution was credited to additional-paid-in-capital. With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature, but in accordance with ASC Subtopic 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. Since we early adopted (as of January 1, 2021) ASU No. 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, we have not recorded the beneficial conversion feature. ​ The Series B Preferred Stock has been recorded at its estimated fair value on the date of issuance of approximately $ 16.1 million, which includes the conversion and redemption features as they have not been bifurcated from the host instruments. The Series C Preferred Stock has been recorded at its estimated fair value on the date of issuance of approximately $ 12.4 million, which includes the redemption features as they have not been bifurcated from the host instrument. As 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. Common Stock The Company’s common stock consists of 150,000,000 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. As of December 31, 2022, and December 31, 2021, the Company had 74,716,696 and 63,821,901 shares of Class A common stock issued and outstanding , respectively. No Class B shares were outstanding at December 31, 2022 and December 31, 2021. Issuance of common stock Securities Purchase Agreement On July 22, 2022, the Company, entered into a Securities Purchase Agreement with an accredited institutional investor pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7.0 million 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”). The Securities were sold at a price of $ 0.68 per share for total gross proceeds to the Company of $ 5.0 million, before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants. 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. 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; $ 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. On August 9, 2022, the Investor exercised the prefunded warrants. F-32 Table of Contents The Company evaluated whether the Warrants, Pre-Funded Warrants and/or Shares were in the scope of ASC Topic 480 “ Distinguishing Liabilities from Equity, ” which discusses the accounting for instruments with characteristics of both liabilities and equity. The guidance in Topic 480, and the resulting liability classification, is applicable to such instruments when certain criteria are met. 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 Topic 480 and are therefore classified as equity. Credit Facility 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 During the year ended December 31, 2021, the Company issued 7.9 million shares of Class A common stock in lieu of $ 13.7 million in principal and interest payments due in relation to notes payable to Lind Global. These conversion transactions resulted in a $ 3.8 million loss on the settlement of debt obligations. Accounts Payable and Other Liabilities Conversion During the year ended December 31, 2021, the Company issued 793,375 shares of Class A common stock with an aggregate value of $ 1.6 million to Everest Display, Inc. to convert $ 2.0 million in accounts payable owed, resulting in a gain of $ 356,700 from settlement of liabilities. Conversion of Restricted Stock Units During the year ended December 31, 2022 and 2021, respectively, 2,489,075 and 916,682 restricted stock units vested and were converted into Class A common stock. Exercise of Stock Options There were 296,841 options to purchase common stock that were exercised during the year ended December 31, 2022. There were 492,460 options to purchase common stock exercised during the year ended December 31, 2021. Exercise of Warrants During the year ended December 31, 2022, pre-funded warrants to purchase 352,940 shares of Common Stock at an exercise price of $ 0.001 per share were exercised. During the year ended December 31, 2021, 295,000 warrants were exercised with an exercise price of $ 0.42 . Other 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. The company has been Boxlight’s key distributor in Belgium and Luxembourg. The company issued 142,882 shares of Class A Common Stock, in conjunction with the purchase of Interactive. ​ ​ F-33 Table of Contents NOTE 13 – STOCK COMPENSATION Grants made under the Equity Incentive Plans must be approved by the Company’s board of directors. 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 was 5,000,000 shares. ​ The 2021 Equity Incentive Plan was approved by the Company’s Board on April 12, 2021 and approved by the shareholders at the Company’s 2021 Annual Shareholders Meeting held on June 25, 2021. ​ Stock Options Under our Equity Incentive Plans, an employee may receive an award of stock grants 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 price). 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. 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 option activities during the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Weighted ​ Remaining ​ ​ Number of ​ Average ​ Contractual ​ ​ Units ​ Exercise Price ​ Term (in years) Outstanding, December 31, 2020 4,850,784 ​ $ 1.76 3.51 Granted — ​ $ — Exercised ( 492,460 ) ​ $ 0.84 Cancelled ( 304,208 ) ​ $ 1.01 Outstanding, December 31, 2021 4,054,116 ​ $ 1.92 ​ 2.29 Granted 1,221,744 ​ $ 1.12 ​ ​ Exercised ( 296,841 ) ​ $ 0.25 ​ ​ Cancelled ( 1,063,142 ) ​ $ 2.59 ​ ​ Outstanding, December 31, 2022 3,915,877 ​ $ 1.61 ​ 2.17 Exercisable, December 31, 2022 2,782,384 ​ $ 1.90 ​ 1.77 ​ The Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model. The Company used the following inputs to value warrants issued during the year ending December 31, 2022 using the Black Scholes option valuation method: market value on measurement date of $ 0.00 to $ 0.91 ; exercise price of $ 0.13 to $ 5.01 ; risk free interest rate of 1.45 % to 2.87 %; expected term, 3 to 4 years; expected volatility, ranging from 49 % to 148 % and expected dividend yield of 0 %. ​ As of December 31, 2022 and December 31, 2021, the stock options had an intrinsic value of approximately $ 18 thousand and $ 1.9 million, respectively. 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. The stock price on the remeasurement date was $ 1.04 and the incremental compensation recognized was approximately $ 314 thousand. ​ On June 13, 2022, the Boxlight board of directors granted Greg Wiggins, 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. ​ F-34 Table of Contents On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, the Chairman and Chief Executive Officer, extending Mr. Pope’s term of employment with the Company. Under the terms of the agreement, Mr. Pope received a grant 494,069 options to purchase Class A Common Stock, which are valued at approximately $ 420 thousand. There were no issuances of stock options in 2021. ​ Restricted Stock Units Under our Equity Incentive Plans, the Company may grant restricted stock units (“RSUs”) to certain employees, contractors and non-employee directors. Upon granting the RSUs, the Company records a fixed compensation expense equal to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period for the RSUs. Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting. The restricted stock units vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement. The following is a summary of the restricted stock activities during the years ended December 31, 2022 and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date Fair ​ ​ Number of Units ​ Value Outstanding, December 31, 2020 ​ 2,721,347 ​ $ 1.62 Granted ​ 1,019,583 ​ $ 2.81 Vested ​ ( 1,498,495 ) ​ $ 2.18 Forfeited ​ ( 268,491 ) ​ $ 1.66 Outstanding, December 31, 2021 1,973,947 ​ $ 1.81 Granted 2,477,675 ​ $ 1.19 Vested ​ ( 1,583,525 ) ​ $ 1.63 Forfeited ( 437,067 ) ​ $ 1.34 Outstanding, December 31, 2022 2,431,030 ​ $ 1.38 ​ 2022 Grants ​ On January 25, 2022, the Company granted an aggregate of 40,000 RSUs to new employees. The RSUs vest over four years and the aggregate fair value of the shares was approximately $ 44 thousand. On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, the Chairman and Chief Executive Officer, extending Mr. Pope’s term of employment with the Company. Under the terms of the agreement, Mr. Pope received a grant of 163,637 RSU’s, valued at approximately $ 180 thousand, and vesting over three years . On February 24, 2022, following approval by the Company’s board of directors, the Company’s senior management issued a total of 1,771,950 RSUs under the terms of Amendment No. 2 to the Boxlight Corporation 2014 Stock Incentive Plan, vesting over four years , as long-term incentive awards to its employees in the U.S. and Europe. The aggregate fair value of the shares was $ 2.1 million. ​ F-35 Table of Contents On March 21, 2022, the Company granted an aggregate of 348,840 RSUs to its board members. These RSUs vest ratably over one year and had an aggregated fair value of approximately $ 450 thousand on the grant date. ​ On May 26, 2022, the company granted 73,565 RSUs to a company owned and controlled by Karel Callens named OLORI. Mr. Callens performs certain sales and marketing functions in our EMEA markets. These RSUs vested and were issued directly to OLORI, and such common stock issuable upon vesting of the RSUs will be reserved for issuance directly out of the authorized shares of Class A common stock and not out of the Company’s equity incentive plan. ​ 2021 Grants ​ On 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 $ 374,000 on the grant date. In addition, on March 20, 2021, the Company granted an aggregate of 875,245 shares of restricted common stock to Michael Pope, the Company’s CEO and Chairman, 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. ​ Warrants The following is a summary of the warrant activities during the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Weighted ​ Remaining ​ ​ Number of ​ ​ Average ​ Contractual ​ ​ Units ​ ​ Exercise Price ​ Term (in years) Outstanding, December 31, 2020 365,000 ​ $ 1.44 1.27 Granted 2,043,291 ​ $ 2.00 — Exercised ( 295,000 ) ​ $ 0.45 — Outstanding, December 31, 2021 2,113,291 ​ $ 2.00 ​ 0.94 Granted 7,705,880 ​ $ 0.65 ​ ​ Exercised ( 352,940 ) ​ $ 0.01 ​ ​ Outstanding, December 31, 2022 9,466,231 ​ $ 0.68 ​ 5.25 Exercisable, December 31, 2022 71,250 ​ $ 0.70 ​ 2.56 ​ 2022 Warrants 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”). 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. 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. 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; $ 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. The net proceeds received by the Company will be used for working capital purposes. ​ F-36 Table of Contents 2021 Warrants On December 31, 2021, the Company granted WhiteHawk, Inc., 2,043,291 warrants, in conjunction with the issuance of a loan credit facility to the Company. The warrants had an exercise price of $ 2.00 per share and include a provision that allows for the exercise price to be adjusted based on the Company’s stock price as of March 31, 2022. The expiration period for these warrants is five years from the issuance date. The warrants had an aggregated fair market value of approximately $ 3.1 million on the grant date. Stock compensation expense For the years ended December 31, 2022 and 2021, the Company recorded the following stock compensation expense which is included in general and administrative expense in the Company’s consolidated statement of operations and comprehensive loss (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Stock options ​ $ 805 ​ $ 660 Restricted stock units ​ 2,505 ​ ​ 3,399 Warrants ​ 3 ​ ​ 1 Total stock compensation expense ​ $ 3,313 ​ $ 4,060 ​ As of December 31, 2022, there was approximately $ 4.0 million of unrecognized compensation expense related to unvested options, RSU’s, and warrants, which will be amortized over the remaining vesting period. Of that total, approximately $ 2.0 million is estimated to be recorded as compensation expense in 2023. ​ NOTE 14 – OTHER RELATED PARTY TRANSACTIONS Management Agreements On November 1, 2022, the Company entered into a consulting agreement with Mark Elliott, former CEO of Boxlight and a current member of the board of directors. The agreement is for Mr. Elliott to provide sales, marketing, management and related consulting services to assist the Company in sourcing and entering into agreements with one or more customers to provide products and services for specified school districts. The Company will pay Mr. Elliott a fixed payment of $ 4,000 per month and commissions equal to 15 % of gross profit derived by the Company based on total purchase order revenue. The agreement, unless renewed or extended will expire on December 31, 2023. On January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned and controlled by our CEO and Chairman, Michael Pope. The Management Agreement is separate and apart from Mr. Pope’s employment agreement. The Management Agreement is 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 , Mr. Pope will provide consulting services to the Company including sourcing and analyzing strategic acquisitions, assisting with financing activities, and other services. As consideration for the services provided, the Company will pay a management fee equal to 0.375 % of the consolidated net revenues of the Company, payable in monthly installments, not to exceed $ 250,000 in any calendar year. At his option, Mr. 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. ​ NOTE 15 – COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through December 2027. Generally, these leases have initial lease terms of five years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at its sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of the Company’s lease agreements contain early termination options. No renewal options F-37 Table of Contents or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of the Company’s lease agreements provide for periodic adjustments to rental payments for inflation. 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. In connection with the adoption of Topic 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. At December 31, 2022, the Company had no leases classified as finance leases. The Company is not a lessor in any lease arrangement. ​ Operating lease expense was $ 2.1 million and $ 2.3 million for the year ended December 31, 2022 and 2021, respectively. Variable lease costs and short-term lease cost were not material for the year ended December 31, 2022. Cash paid for amounts included in the measurement of lease liabilities was $ 2.4 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company obtained new operating lease right-of-use assets totaling $ 1.8 million. ​ Future minimum lease payments of the Company’s operating leases with a term over one year subsequent to December 31, 2022 are as follows: ​ ​ ​ ​ ​ Year ending December 31, (in thousands) 2023 ​ $ 1,995 2024 ​ 1,313 2025 ​ 1,099 2026 ​ ​ 743 2027 ​ ​ 246 Thereafter ​ ​ 6 Less imputed interest ​ ​ ( 1,046 ) Total ​ $ 4,356 ​ The weighted-average remaining lease term is 3.2 years and the weighted-average discount rate is 15.5 %. ​ On January 19, 2022, the Company signed a lease agreement for 64 months for approximately 12,000 feet of space for its new corporate headquarters in Duluth, Georgia. The Company will occupy the building on approximately May 15, 2022. The lease will replace the space previously rented by the Company for its headquarters in Lawrenceville, Georgia. ​ On February 4, 2022, the Company signed a lease agreement for 60 months for 24,000 feet of warehouse space in Lawrenceville, Georgia to begin March 1, 2022. The lease will replace the space previously rented by the Company. ​ For the year ended December 31, 2021, if the annual amounts for these leases were added to the table above, the minimum lease payments would increase by approximately $ 2.7 million. Purchase Commitments The Company is legally obligated to fulfill certain purchase commitments made to vendors that supply materials used in the Company’s products. At December 31, 2022 the total amount of such open inventory purchase orders was $ 56.2 million. ​ Legal Proceedings From time to time, the Company is involved in routine litigation and legal proceedings in the ordinary course of its business, such as, employment matters and contractual disputes. Currently, there is no pending litigation or proceedings that the Company’s management believes will have a material effect, either individually or in the aggregate, on its business or financial condition. ​ ​ ​ ​ F-38 Table of Contents NOTE 16 – CUSTOMER AND SUPPLIER CONCENTRATION Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. The Company’s revenues were concentrated with a few customers for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues ​ ​ ​ ​ Total revenues ​ ​ ​ ​ ​ from the customers ​ Accounts ​ from the customer ​ Accounts ​ ​ as a percentage of ​ receivable from ​ as a percentage of ​ receivable from ​ ​ total revenues ​ the customers as of ​ total revenues ​ the customers as of ​ ​ for the year ended ​ December 31, ​ for the year ended ​ December 31, ​ ​ December 31, ​ 2022 ​ December 31, ​ 2021 Customer ​ 2022 ​ (in thousands) ​ 2021 ​ (in thousands) 1 ​ 18 % $ 8,468 11 % $ 3,245 2 5 % $ 469 4 % $ 1,223 ​ The loss of the significant customers or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition. The Company’s purchases were concentrated among a few vendors for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total purchases ​ ​ Total purchases ​ ​ ​ ​ from the vendors ​ ​ ​ ​ from the vendors ​ ​ ​ ​ ​ as a percentage of ​ ​ Accounts payable ​ as a percentage ​ ​ Accounts payable ​ ​ total cost of ​ ​ (prepayment) to ​ of total cost of ​ ​ (prepayment) to ​ ​ revenues for ​ ​ the vendors as of ​ revenues for ​ ​ the vendors as of ​ ​ the year ended ​ ​ December 31, ​ the year ended ​ ​ December 31, ​ ​ December 31, ​ ​ 2022 ​ December 31, ​ ​ 2021 Vendor ​ 2022 ​ ​ (in thousands) ​ 2021 ​ ​ (in thousands) 1 ​ 56 % $ 24,029 ​ 16 % $ ( 1,185 ) 2 ​ 4 % $ 705 ​ 4 % $ ( 805 ) ​ The Company believes there are numerous other suppliers that could be substituted should for the above suppliers become unavailable or non-competitive. ​ NOTE 17 – SUBSEQUENT EVENTS ​ On February 14, 2023, the board of directors of Boxlight Corporation approved the Company’s establishment of a share repurchase program (the “Repurchase Program”) authorizing the Company to purchase up to $ 15.0 million of the Company’s Class A common stock. Pursuant to the Repurchase Program, the Company may, from time to time, repurchase its Class A common stock in the open market, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of any repurchases made under the Repurchase Program will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The authorization expires on January 26, 2027, may be suspended or discontinued at any time, and does not obligate the company to acquire any amount of Class A common stock. ​ As previously disclosed, we received a deficiency letter from the Listing Qualifications Department (the "Staff") of the Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company's Class A common stock (the "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 5550(a)(2) (the "Bid Price Requirement"). ​ In accordance with Nasdaq Rules, the Company was provided with an initial period of 180 calendar days, or until January 2, 2023 (the ("Initial Grace Period"), to regain compliance with the Bid Price Requirement. Because the Initial Grace Period was coming to an end and the Company had not yet regained compliance, in December 2022, the Company submitted a request to Nasdaq to obtain an additional 180 -day grace period (the "Additional Grace Period") to regain compliance with the Bid Price Requirement. On January 3, 2023, the Company received formal approval from Nasdaq granting it an additional 180 days , or until July 3, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement. ​ ​ F-39 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On June 1, 2022, the Company was notified by Dixon Hughes Goodman LLP ("DHG"), the Company's independent registered public accounting firm, that DHG was merging with BKD, LLP ("BKD"), and that following their merger, their combined entities would operate under the name FORVIS, LLP (“FORVIS”). The audit committee of the Company’s board of directors approved the engagement of FORVIS, the successor in the merger of DHG and BKD, as the Company’s independent registered public accounting firm, effective June 1, 2022. ​ DHG’s audit report on the consolidated financial statements of the Company for the year ended December 31, 2021 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. ​ During the Company’s two most recent fiscal years ended December 31, 2021 and 2020 and through June 2, 2022, the Company has not had any “disagreements” (as such term is defined in Item 304 of Regulation S-K) with DHG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of DHG, would have caused DHG to make reference to the subject matter of the disagreement in its reports on the Company’s consolidated financial statements for such periods. ​ During the Company’s two most recent fiscal years and through June 2, 2022, there were no “reportable events” (as such term is defined in Item 304 of Regulation S-K). ​ On June 2, 2022, the Company provided FORVIS, as successor to DHG, with a copy of the Current Report on Form 8-K filed on June 2, 2022 (the “Form 8-K”) and has requested that FORVIS furnish it with a letter addressed to the U.S. Securities and Exchange Commission stating whether or not FORVIS agrees with the Company’s statements in the Form 8-K . A copy of the letter dated June 2, 2022 furnished by FORVIS in response to that request was filed as Exhibit 16.1 to the Form 8-K filed with the SEC on June 2, 2022. ​