What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-09 · 85 added, 117 removed, 103 unchanged (66% of the section changed)

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

The following Management’s Discussion and Analysis should be read in conjunction with the financial statements and the related notes thereto included elsewhere herein.

The Management’s Discussion and Analysis (“MD&A”) contains forward-looking statements that involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, and intentions.

The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the financial statements and the related notes thereto included elsewhere herein.

The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, and intentions.

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

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The Company’s forward-looking statements reflect its current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.

We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof

that may bear upon forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.

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

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We currently design, produce and distribute interactive displays, collaboration software, supporting accessories and professional services.

We also distribute science, technology, engineering, and math (or “STEM”) products, including a robotics and coding system, 3D printing solution and portable science lab.

We also distribute science, technology, engineering,

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

The Company’s products are integrated into its software suite that provides tools for presentation creation and delivery, assessment, and collaboration.

Effective January 1, 2023, we changed our segment reporting to align with the geographic markets in which we operate.

Our operations are now organized, managed, and classified into three reportable segments – Europe, Middle East and Africa (“EMEA”), North and Central America (“Americas”), and all other geographic regions (“Rest of World”).

Our EMEA segment consists of the operations of Sahara Holding Limited and its subsidiaries.

Our Americas segment consists primarily of Boxlight, Inc.

and its subsidiaries, and the Rest of World segment consists primarily of Boxlight Australia , PTY LTD ("Boxlight Australia”) .

Each of our operating segments are primarily engaged in the sale of education technology products and services in the education market but which are also sold into the health, government and corporate sectors and derive a majority of their revenues from the sale of flat-panel displays, audio and other hardware accessory products, software solutions and professional services.

Generally, our displays produce higher net operating revenues but lower gross profit margins than our accessory solutions and professional services.

To date, we have generated substantially all of the Company’s revenue from the sale of hardware (primarily consisting of interactive displays) and software to the educational market in the United States and Europe.

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● Integrating products of the acquired companies and cross training sales representatives to increase their offerings and productivity;

● Hiring new sales representatives with significant industry experience in their respective territories.

● Hiring new sales representatives with significant industry experience in their respective territories, and

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

Recent Acquisitions

On December 31, 2021, the Company and its wholly owned subsidiary, Boxlight, Inc, consummated the acquisition of 100% of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”).

FrontRow was acquired in exchange for payment of $34.7 million to Phonic Ear Inc.

and Calypso Systems LLC, the equity holders of FrontRow (the “Equityholders”).

The acquisition occurred pursuant to the terms of a membership interest purchase agreement, dated October 29, 2021 (the “Purchase Agreement”), between the Company, Boxlight, FrontRow and the Equityholders.

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.

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 Concepts”), for total consideration of approximately $3.3 million in cash, common stock, and deferred consideration.

Interactive has been the Company’s key distributor in Belgium and Luxembourg.

Acquisition Strategy and Challenges

The Company’s growth strategy includes acquiring assets and technologies of companies that have products, technologies, industry specializations or geographic coverage that extend or complement existing business.

The Company has completed multiple acquisitions from 2015 through 2021 and may target additional acquisition opportunities in future periods.

The process to undertake a potential acquisition is time-consuming and costly.

We expect to expend significant resources to undertake business, financial and legal due diligence on our potential acquisition targets, and there is no guarantee that we will complete any acquisition that we pursue.

In the event we pursue additional acquisitions, we expect to expend significant resources to undertake business, financial and legal due diligence on our potential acquisition targets, and there is no guarantee that we will complete any acquisition that we pursue.

We believe we can achieve significant cost-savings by merging the operations of the companies we acquire and after their acquisition, leverage the opportunity to reduce costs through the following methods:

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● Economies of scale – improved purchasing power with a greater ability to negotiate prices with suppliers;

● Improved market reach and industry visibility – increase in customer base and entry into new markets.

● Improved market reach and industry visibility – increasing out customer base and entry into new markets.

Components of our Results of Operations and Financial Condition

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changes in product costs related to the release of projector models;

component, contract manufacturing and supplier pricing and foreign currency exchange.

and component, contract manufacturing and supplier pricing and foreign currency exchange.

As we primarily procure our product components and manufacture our products in Asia, our suppliers incur many costs, including labor costs, in other currencies.

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Other income (expense), net

Other income (expense), net primarily consists of interest expense associated with our debt financing arrangements, gains (losses) on the settlements of debt and trade payable obligations exchanged for common shares, and the effects of changes in the fair value of derivative liabilities.

Income tax expense

Other income (expense), net primarily consists of interest expense associated with our debt financing arrangements, gains (losses) on the settlements of debt, and the effects of changes in the fair value of derivative liabilities.

Income tax (expense) benefit

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

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

Additionally, certain of the Company’s international earnings are also taxable in the United States.

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

Additionally, certain jurisdictions of the Company’s international earnings are also taxable in the United States.

Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to U.S.

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Operating Results – Boxlight Corporation

For the three-month periods ended September 30, 2022 and 2021

Total revenues for the three months ended September 30, 2022 were $68.7 million as compared to $61.0 million for the three months ended September 30, 2021, resulting in a 12.7% increase in revenue.

Revenues primarily consist of hardware revenue, software revenue, and professional development.

The increase in revenues was primarily due to the acquisition of FrontRow in December 2021, as well as increased demand for the Company’s solutions in the U.S.

FrontRow revenue for the three months ended September 30, 2022 was $5.6 million.

Cost of Revenues.

Cost of revenues for the three months ended September 30, 2022 was $47.7 million compared to $45.2 million for the three months ended September, 30, 2021, resulting in a 5.5% increase.

Cost of revenues consists primarily of product cost, freight expenses, customs expense, and inventory adjustments.

The increase in cost of revenues was associated with increased sales and the FrontRow acquisition.

Gross Profit.

Gross profit for the three months ended September 30, 2022, was $21.0 million, as compared to $15.8 million for the three months ended September 30, 2021.

The gross profit margin for the three months ended September 30, 2022 was 30.6% which is an increase of 470 basis points compared to the comparable three months in 2021.

Gross profit margin, adjusted for the net effect of acquisition-related purchase accounting of $698 thousand and $730 thousand, was 31.6% as compared to the 27.1%, as adjusted, reported for the three months ended September 30, 2022 and September 30, 2021, respectively.

General and Administrative Expenses.

General and administrative expenses for the three months ended September 30, 2022 were $14.0 million and 20.4% of revenues, as compared to $11.9 million and 19.6% of revenues for the three months ended September 30, 2021.

The increase was primarily a result of new hires for planned growth and equity-based compensation issuances.

Research and Development Expenses.

Research and development expenses were $604 thousand and 0.9% of revenues for the three months ended September 2022, as compared to $355 thousand and 0.6% of revenues for the three months ended September 30, 2021.

Other Income (Expense).

Other expense (net) for the three months ended September 30, 2022 was $2.8 million, as compared to $1.4 million for the three months ended September 30, 2021.

Other expense increased primarily due to a $1.7 million increase in interest expense associated with increased borrowings due to the new credit facility.

Income Tax Expense.

Income tax expense for the three months ending September 30, 2022 was $520 thousand and was $1.4 million for the nine months ended September 30, 2021

Net income was $3.1 million for the three months ended September 30, 2022 and $729 thousand for the three months ended September 30, 2021.

For the nine-month periods ended September 30, 2022 and 2021

Total revenues for the nine months ended September 30, 2022 were $179.0 million as compared to $141.2 million for the nine months ended September 30, 2021, resulting in a 26.8% increase.

The increase in revenues was primarily due to the acquisition of FrontRow in December 2021, as well as increased demand for our solutions across all markets.

Organic revenue growth for Boxlight for the nine months ended September 30, 2022 was 13.3%.

FrontRow revenue for the first nine months of 2022 was $19.0 million.

For the three-month periods ended March 31, 2023 and 2022

Total revenues for the three months ended March 31, 2023 were $41.2 million as compared to $50.6 million for the three months ended March 31, 2022, resulting in an 18.6% decrease.

The decrease in revenues was primarily due to lower sales volume across all markets and a decrease in foreign exchange rates during the first quarter of 2023 compared to the first quarter of 2022.

Cost of Revenues.

Cost of revenues for the nine months ended September 30, 2022 were $128.5 million as compared to $104.0 million for the nine months ended Septembers 30, 2021, resulting in an 23.6% increase.

The increase in cost of revenues was associated with the acquisitions and growth of the business as discussed above and was also due to additional increases in global freight/shipping which the Company has experienced following the COVID-19 pandemic.

In 2021 we reported the cost increase to be approximately four times higher compared to pre-pandemic levels, this continued through the first half of 2022 but has recently begun to decline.

Cost of revenues for the three months ended March 31, 2023 were $26.0 million as compared to $38.0 million for the three months ended March 31, 2022, resulting in a 31.4% decrease.

The decrease in cost of revenues was attributable to the decrease in revenues, described above, along with lower manufacturing and shipping costs in the first quarter of 2023 compared to the prior year’s first quarter.

Gross Profit.

Gross profit for the nine months ended September 30, 2022 was $50.5 million as compared to $37.2 million for the nine months ended September 30, 2021, an increase of $13.3 million.

The gross profit margin was 28.2% for the nine months ended September 30, 2022 and $26.3% for the nine months ending September 30, 2021.

The increase in gross profit and an increase in demand for the Company’s services.

margin during the nine months ended September 30, 2022 was a result increased margin associated with FrontRow products

Gross profit for the three months ended March 31, 2023 was $15.1 million as compared to $12.6 million for the three months ended March 31, 2022, an increase of $2.5 million.

The gross profit margin was 36.8% for the three months ended March 31, 2023 and 24.9% for the three months ending March 31, 2022.

The increase in gross profit is primarily related to the decrease in manufacturing and shipping costs noted above.

General and Administrative Expenses.

General and administrative (“G&A”) expense for the nine months ended September 30, 2022 were $44.7 million and 25% of revenue as compared to $32.8 million and 23.3% of revenue for the nine months ended September 30, 2021.

The increase in G&A expenses resulted from additional personnel costs associated with the acquired FrontRow operations, new hires for planned growth and stock compensation issuances.

General and administrative (“G&A”) expenses for the three months ended March 31, 2023 were $14.7 million and 35.8% of revenue as compared to $15.5 million and 30.5% of revenue for the three months ended March 31, 2022.

The decrease can be attributed primarily to a decrease in stock compensation expense.

Research and Development Expenses.

Research and development expenses were $1.9 million and 1.0% of revenue for the nine months ended September 30, 2022 as compared to $1.3 million and 0.9% of revenue for the nine months ended September 30, 2021.

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

The acquisition of FrontRow contributed $180 thousand to the increase.

Research and development expenses for the three months ended March 31, 2023 were $0.6 million which was comparable to the three months ended March 31, 2022 and represented 1.4% and 1.2% of revenue for the three months ended March 31, 2023 and 2022, respectively.

Other Income (Expense).

Other expense, net for the nine months ended September 30, 2022 was $5.1 million as compared to other expense, net, of $5.8 million for the nine months ended September 30, 2021, representing a decrease of $0.7 million.

The decrease was primarily due to a $1.7 million change in the fair value of derivative liabilities, a $3.8 million reduction in gain recognized upon the settlement of certain debt obligations, offset by a $4.7 million increase in interest expense associated with increased borrowings due to the new credit facility.

Income Tax Expense.

Income tax expense for the nine months ending September 30, 2022 was $475 thousand, as compared to $3.9 million in income tax expense for the nine months ending September 30, 2021.

This significant decrease in income tax expense year-over-year was primarily due to the Company’s recording the discrete impact of a change in UK tax rates that was

enacted during second quarter 2021.The Company recorded $2.2 million of income tax expense in 2021 to adjust its deferred tax liability in the UK to this new rate.

The remaining decrease in income tax expense is due to the lower earnings in 2022 as compared to 2021 in our foreign jurisdictions.

The year-to-date effective tax rate is (34.7)% due to there being no material tax expense/benefit for the legacy Boxlight entities, due to their valuation allowance position, while the Sahara entities are fully taxable.

Net loss was $1.7 million and $6.6 million for the nine months ended September 30, 2022 and 2021 respectively.

The decrease in net loss was primarily due to a $1.7 million change in the fair value of the Whitehawk derivative liability, and a $3.8 million decrease in loss on settlement of liabilities, partially offset by an increase in interest expense due to the new credit facility.

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding operations, we supplement our condensed consolidated financial statements which are prepared in accordance with GAAP with EBITDA and Adjusted EBITDA, both non-GAAP financial measures of earnings.

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

Adjusted EBITDA represents EBITDA, plus stock compensation expense, the change in fair value of derivative liabilities, purchase accounting impact of fair valuing inventory and deferred revenue, and non-cash losses associated with debt settlement and gain on the forgiveness of our PPP loan.

Other expense, net for the three months ended March 31, 2023 was $2.7 million as compared to other expense, net, of $1.5 million for the three months ended March 31, 2022, representing an increase of $1.2 million.

The increase was primarily due to a gain in the prior year of $0.9 million recognized upon the settlement of certain debt obligations, a $0.2 million change in the fair value of derivative liabilities, and a $0.1 million increase in interest expense.

Income Tax (Expense) Benefit.

Income tax expense for the three months ended March 31, 2023 was $51 thousand, as compared to $86 thousand in income tax benefit for the three months ended March 31, 2022.

The increase in tax expense year-over-year is largely due to foreign pretax book income for the three months ended March 31, 2023 as compared to foreign pretax loss for the three months ended March 31, 2022.

Net loss was $2.9 million and $4.9 million for the three months ended March 31, 2023 and 2022 respectively and was a result of the changes noted above.

Use of Non-GAAP financial measures

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

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

Management uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of the Company’s business model, and to assess the strength of the underlying operations of our business.

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Net income (loss)

Depreciation and amortization

Interest expense

Income tax expense

Income tax expense (benefit)

Stock compensation expense

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Purchase accounting impact of fair valuing deferred revenue

Net (gain) loss on settlement of debt

Gain on settlement of debt

Adjusted EBITDA

Discussion of Effect of Seasonality on Financial Condition

Certain accounts on our financial statements are subject to seasonal fluctuations.

Certain accounts in our financial statements are subject to seasonal fluctuations.

As our business and revenues grow, we expect these seasonal trends to be reduced.

The bulk of our products are shipped to our educational customers prior to the beginning of the school year, usually in July, August, or September.

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

the second quarter of the year.

Therefore, inventories tend to be at the highest levels at that point in time.

To prepare for the upcoming school year, we generally build up inventories during the second quarter of the year.

As a result, inventories tend to be at the highest levels at that point in time.

In the first quarter of the year, inventories tend to decline significantly as products are delivered to customers and we do not need the same inventory levels during the first quarter.

Accounts receivable balances tend to be at the highest levels in the third quarter, in which we record the highest level of sales.

Accounts receivable balances tend to be at the highest levels in the third quarter, at which point we record the highest level of sales.

Liquidity and Capital Resources

As of September 30, 2022, we had cash and cash equivalents of $22.0 million, a working capital balance of $62.3 million, and a current ratio of 1.90.

This financial position represents a significant improvement from a year ago on September 30, 2021 when we had $6.2 million of cash and cash equivalents, a working capital balance of $32.0 million, and a current ratio of 1.48.

In addition to the cash flows generated by our ongoing operating activities we financed our operations during first nine months of 2022 with our credit facility from Whitehawk.

Given uncertainty surrounding global supply chains, global markets and general global economic uncertainty as a result of the ongoing conflict between Russia and the Ukraine and the continuing COVID-19 pandemic, the availability of debt and equity capital has been reduced and the cost of capital has increased.

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

However, we are confident that the Company will be able to manage through the current challenges in the equity and debt finance markets by managing payment terms with customers and vendors.

As of March 31, 2023, we had cash and cash equivalents of $11.3 million, a working capital balance of $61.6 million, and a current ratio of 2.75.

On March 31, 2022 we had $11.3 million of cash and cash equivalents, a working capital balance of $49.6 million, and a current ratio of 2.02.

For the three months ended March 31, 2023 and 2022, we had net cash used in operating activities of $1.9 million and $5.4 million, respectively.

Cash used in operating activities decreased year over year as a result of higher margins on our products leading to increased operating income.

We had net cash used in investing activities of $81 thousand and $526 thousand for the three months ended March 31, 2023 and 2022, respectively.

Cash used in investing activities is related to purchases of property and equipment.

In addition, for the three months ended March 31, 2023 and 2022, we had net cash used in financing activities of $987 thousand and $912 thousand,

respectively.

Cash used in financing activities is primarily related to principal payments on our credit facility and payments of fixed dividends to our Series B preferred shareholders.

Our liquidity needs are funded by operating cash flow and available cash.

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

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We expect to make future payments on existing leases from cash generated from operations.

We have limited credit available from our major vendors and are required to prepay for the majority of our inventory purchases, which further constrains our cash liquidity.

Recent Financing;

See Footnote 9 – Debt for a discussion of recent financing.

We have limited credit available from our major vendors and are required to prepay the majority of our inventory purchases, which further constrains our cash liquidity.

In addition, our industry is seasonal with many sales to educational customers occurring during the second and third quarters when schools make budget appropriations and classes are not in session limiting disruptions related to product installation.

This seasonality makes our needs for cash vary significantly from quarter to quarter.

In addition to the cash flows generated by our ongoing operating activities we financed our operations during 2023 and 2022 with our Credit Facility with Whitehawk.

Prior to April 24, 2023 we maintained a delayed draw term loan of which we had $7.5 million available as of March 31, 2023.

On April 24, 2023, we drew $3.0 million on our delayed draw term loan that will be used for working capital purposes.

The completion of the additional draw eliminates further delayed draws under the term loan agreement.

The $3.0 million is required to be repaid prior to September 29, 2023.

To the extent not previously converted into the Company’s Class A common stock, the outstanding shares of our Series B preferred stock are redeemable at the option of the holders at any time or from time to time commencing on January 1, 2024 upon, 30 days prior written notice to the holders, for a redemption price, payable in cash, equal to the sum of (a) ($10.00) multiplied by the number of shares of Series B preferred stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares.

We may be required to seek alternative financing arrangements or restructure the terms of the agreement with the Series B preferred shareholders on terms that are not favorable to us if cash and cash equivalents are not sufficient to fully redeem the Series B preferred shares.

Given uncertainty surrounding global supply chains, global markets, and general global uncertainty as a result of the ongoing conflict between Russia and Ukraine and the continuing COVID-19 pandemic, the availability of debt and equity capital has been reduced and the cost of capital has increased.

Furthermore, recent adverse developments affecting the financial services industry including events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions may lead to market-wide liquidity problems.

This in turn, could result our access to funding sources and credit arrangements in amounts adequate to finance our current and future business operations.

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

However, while there can be no guarantee we will be able to access capital when needed, we are confident that the Company will be able to manage through the current challenges in the equity and debt finance markets by managing payment terms with our customers and vendors.

Cash and cash equivalents, along with anticipated cash flows from operations, are expected to provide sufficient liquidity for working capital needs and debt service requirements.

See Footnote 8 – Debt for a discussion of our existing debt financing arrangements.

Off Balance Sheet Arrangements

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Critical Accounting Policies and Estimates

Our consolidated condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures.

We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated condensed financial statements are prepared.

On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP.

We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared.

On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in

accordance with GAAP.

However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

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

Our significant accounting policies are discussed in the notes to the unaudited condensed consolidated financial statements and in Note 1 in the Company’s 2022 Annual Report on Form 10-K, which was filed with the SEC on March 17, 2023.

We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective, or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain :

Revenue Recognition

Business acquisitions

Goodwill and Intangible assets

Stock-based Compensation Expense

Status as Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

As an emerging growth company, we were able to take advantage of certain specified reduced reporting and other regulatory requirements that are available to public companies that are emerging growth companies.

These provisions include:

(1) an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002;

(2) an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;

(3) an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about our audit and our financial statements;

(4) reduced disclosure about our executive compensation arrangements.

We elected to take advantage of the exemption from the adoption of new or revised financial accounting standards until they would apply to private companies.

As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Under Section 2(a)(19) of the Securities Act of 1933 and Section 3(a)(80) of the Securities Exchange Act of 1934, as amended, an emerging growth company will lose its status upon the earliest of several conditions, one of which is reaching the last day of the fiscal year in which the fifth anniversary of the company’s first sale of equity securities pursuant to an effective registration statement occurs.

For the Company, this will occur on January 1, 2023.

Derivative Warrant Liabilities

Recent Accounting Pronouncements

For information on accounting pronouncements that have impacted or are expected to materially impact our consolidated financial condition, results of operations or cash flows, see Note 1 to our condensed consolidated financial statements.

Quantitative and Qualitative Disclosure About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis