What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 240 added, 170 removed, 512 unchanged (44% of the section changed)

1 unchanged sentence

Boxlight Corporation

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three months ended March 31, 2023 and 2022

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss )

For the three and six months ended June 30, 2023 and 2022

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

Revenues, net

4 unchanged sentences

Total operating expense

Loss from operations

Income (loss) from operations

Other income (expense):

4 unchanged sentences

Total other expense

Loss before income taxes

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Fixed dividends - Series B Preferred

Net loss attributable to common stockholders

Comprehensive loss:

Other comprehensive loss:

Comprehensive income (loss):

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustment

Total comprehensive loss

Net loss per common share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

Total comprehensive income (loss)

Net loss per common share – basic and diluted, as adjusted

Weighted average number of common shares outstanding – basic and diluted, as adjusted

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

As of March 31, 2023 and December 31, 2022

As of June 30, 2023 and December 31, 2022

(in thousands, except share and per share amounts)

(as adjusted)

Current assets:

33 unchanged sentences

Accumulated deficit

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Total stockholders’ equity

3 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2023

For the three and six months ended June 30, 2023, as adjusted

(in thousands, except share amounts)

2 unchanged sentences

(Loss) Income

Balance as of March 31, 2023

Shares issued for:

Stock options exercised

Vesting of restricted share units

Reverse stock split fractional adjustment

Stock compensation

Foreign currency translation

Fixed dividends Preferred Series B

Balance as of June 30, 2023

Balance as of December 31, 2022

2 unchanged sentences

Shares issued for:

Stock options exercised

Vesting of restricted share units

Reverse stock split fractional adjustment

Stock compensation

1 unchanged sentence

Fixed dividends Preferred Series B

Balance as of March 31, 2023

Balance as of June 30, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2022

For the three and six months ended June 30, 2022, as adjusted

(in thousands, except share amounts)

1 unchanged sentence

Comprehensive

Balance as of March 31, 2022

Shares issued for:

Stock options exercised

Conversion of restricted shares

Stock compensation

Foreign currency translation

Fixed dividends Preferred Series B

Balance as of June 30, 2022

Balance as of December 31, 2021

6 unchanged sentences

Fixed dividends Preferred Series B

Balance as of March 31, 2022

Balance as of June 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2023 and 2022

For the six months ended June 30, 2023 and 2022

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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

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

Amortization of debt discount and issuance cost

Change in debt issuance costs

Bad debt expense

1 unchanged sentence

Changes in deferred tax assets and liabilities

Change in allowance for sales returns and volume rebate

Change in allowance for sales returns and volume rebates

Change in inventory reserve

Change in fair value of derivative liability

Change in fair value of derivative liabilities

Stock compensation expense

3 unchanged sentences

Accounts receivable – trade

Prepaid expenses and other current assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

1 unchanged sentence

Deferred revenues

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

2 unchanged sentences

Cash flows from financing activities:

Proceeds from short-term debt

Proceeds from long-term debt

Principal payments on debt

1 unchanged sentence

Proceeds from the exercise of options and warrants

Net cash used in financing activities

Net cash provided by financing activities

Effect of foreign currency exchange rates

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of the period

16 unchanged sentences

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim unaudited condensed consolidated financial information and interim financial reporting guidelines and rules and regulations of the Securities and Exchange Commission (“SEC”).

Accordingly, they do not include all the information and notes required by GAAP for complete condensed consolidated financial statements.

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

The unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

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

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2022 and notes thereto contained in the Company’s Annual Report on Form 10-K.

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

The December 31, 2022 balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Effective January 1, 2023, the Company’s internal reporting structure used by the Chief Operating Decision Maker changed that resulted in changes to the Company’s segment reporting to align with the geographic markets in which it operates, as further discussed below and in Note 16 - Segments.

The December 31, 2022 balance sheet included herein was derived from the Company’s audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Effective January 1, 2023, the Company’s internal reporting structure used by the chief operating decision maker (or CODM) changed resulting in changes to the Company’s segment reporting to align such reporting with the geographic markets in which the Company operates, as further discussed below and in Note 16 - Segments.

Corresponding prior period amounts have been restated to conform to current period classification.

1 unchanged sentence

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Note 1 in the Notes to the Consolidated Financial Statements for 2022 contained in the Annual Report on Form 10-K, filed with the SEC on March 17, 2023, describes the significant accounting policies that the Company used in preparing its condensed consolidated financial statements.

Note 1 in the Notes to the consolidated financial statements for 2022 contained in the 2022 Annual Report filed with the SEC on March 17, 2023, describes the significant accounting policies that the Company used in preparing its condensed consolidated financial statements.

On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to revenue, reserves, and allowances.

1 unchanged sentence

Actual results could differ materially from these estimates under different assumptions or conditions.

REVERSE STOCK SPLIT

On June 14, 2023, the Company effected a reverse stock split of the Company’s Class A common stock whereby each eight shares of the Company’s authorized and outstanding Class A common stock was replaced with one share of common stock.

The par value of the common stock was not adjusted.

Following the reverse split, the authorized shares for Class A common stock was adjusted to 18,750,000 , the authorized shares for Class B common stock remained at 50,000,000 shares, and preferred shares remained unchanged at 50,000,000 .

All Class A common share and per share amounts for all periods presented in the condensed consolidated financial statements and the notes to the consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock

split, including reclassifying an amount equal to the reduction in aggregate par value of Class A common stock to additional paid-in capital on the condensed consolidated balance sheets of approximately $ 6 thousand.

The quantity of Class A common stock equivalents and the conversion and exercise ratios were adjusted for the effect of the reverse stock split for warrants, stock-based compensation arrangements, and the conversion features on preferred shares.

All of the agreements include existing conversion language in the event of a stock split and thus did not result in modification accounting or additional incremental expense as a result of this transaction.

The Company issued 33,414 shares of Class A common stock to adjust fractional shares following the reverse stock split to the nearest whole share.

There are presently no shares of Class B common stock outstanding and none were outstanding as of June 30, 2023.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):

Derivative liabilities - warrant instruments

2 unchanged sentences

(in thousands)

Balance, March 31, 2023

Change in fair value of derivative liabilities

Balance, June 30, 2023

(in thousands)

Balance, December 31, 2022

Change in fair value of derivative liabilities

Balance, June 30, 2023

(in thousands)

Balance, March 31, 2022

Change in fair value of derivative liabilities

Balance, June 30, 2022

(in thousands)

1 unchanged sentence

Change in fair value of derivative liabilities

Balance, March 31, 2022

Balance, June 30, 2022

INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock 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.

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 share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive.

1 unchanged sentence

The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted calculation for the entire period being presented.

For the three months ended March 31, 2023, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 6.4 million shares from options to purchase common shares, 2.6 million of unvested restricted shares and 11.1 million shares issuable upon exercise of warrants.

For the three and six months ended June 30, 2023, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.4 million shares from options to purchase common shares, 0.2 million of unvested restricted shares and 1.4 million shares issuable upon exercise of warrants.

Additionally, potentially dilutive securities of 2.2 million shares from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive.

For the three months ended March 31, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 3.8 million shares from options to purchase common shares, 3.9 million of unvested restricted shares and 3.4 million shares issuable upon exercise of warrants.

For the three and six months ended June 30, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.5 million shares from options to purchase common shares, 0.4 million of unvested restricted shares and 0.4 million shares issuable upon exercise of warrants.

Additionally, potentially dilutive securities of 2.2 million shares from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive.

2 unchanged sentences

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 the products or services, have been transferred to its customers.

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

Product revenue is derived from the sale of interactive devices and related software and accessories to distributors, resellers and end users.

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

Nature of Products and Services and Related Contractual Provisions

The Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software, and the provision of related software maintenance.

The Company’s sales of interactive devices, including panels, whiteboards, and other interactive devices generally include hardware maintenance services, a license to use software, and the provision of related software maintenance.

In most cases, interactive devices are sold with hardware maintenance services with terms of approximately 30 - 60 months .

11 unchanged sentences

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”).

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.

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.

21 unchanged sentences

Contract liabilities are reflected in deferred revenue in the accompanying condensed 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 had no material contract assets as of March 31, 2023 or December 31, 2022.

During the three months ended March 31, 2023 and March 31, 2022, the Company recognized $ 2.1 million and $ 1.9 million of revenue that was included in the deferred revenue balance as of December 31, 2022 and December 31, 2021, respectively.

The Company had no material contract assets as of June 30, 2023 or December 31, 2022.

During the three months ended June 30, 2023 and June 30, 2022, respectively, the Company recognized $ 2.0 million and $ 1.8 million of revenue that was included in the deferred revenue as of December 31, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2023 and June 30, 2022, the Company recognized $ 4.1 million and $ 3.7 million of revenue that was included in the deferred revenue balance as of December 31, 2022 and December 31, 2021, respectively.

Variable Consideration

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However, the Company, on a case-by-case basis, will grant exceptions, mostly for “buyer’s remorse” where the distributor or reseller’s end customer either did not understand what they were ordering or otherwise determined that the product did not meet their needs.

An allowance for sales returns is estimated based on an

analysis of historical trends.

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.

1 unchanged sentence

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 the three months ended March 31, 2023 related to changes in estimated variable consideration that existed at December 31, 2022.

There was no material revenue recognized in the three and six months ended June 30, 2023 related to changes in estimated variable consideration that existed at December 31, 2022.

Remaining Performance Obligations

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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 March 31, 2023 and December 31, 2022, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 24.1 million and $ 23.9 million, respectively.

The Company expects to recognize revenue on 34 % of the remaining performance obligations during the next twelve months , 28 % in the following twelve months , 21 % in 2025 , 13 % in 2026 , with the remaining 4 % recognized thereafter .

As of June 30, 2023 and December 31, 2022, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 23.9 million.

The Company expects to recognize revenue on 34.4 % of the

remaining performance obligations during the next twelve months , 28.1 % in the following twelve months , 21.2 % in the twelve months ended June 30, 2026, 12.6 % in the twelve months ended June 30, 2027, with the remaining 3.7 % recognized thereafter .

In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contracts).

6 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Product revenues:

11 unchanged sentences

For these sales commissions that are incremental costs to obtain where the period of amortization would be recognized over a period that is one year or less, the Company has elected the practical expedient to expense those costs as incurred.

Commission costs that are deferred are classified as current or non-current assets based on the timing of when the Company expects to recognize the expense and are included in prepaid and other assets and other assets, respectively, in the accompanying condensed consolidated balance sheets.

Total deferred commissions, net of accumulated amortization, on March 31, 2023 and December 31, 2022 was less than $ 300,000 .

respectively, in the accompanying condensed consolidated balance sheets.

Total deferred commissions, net of accumulated amortization, at June 30, 2023 and December 31, 2022 was $ 0.5 million.

Bill and Hold Arrangements

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(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 is a fixed schedule for delivery, and (5) the seller cannot use the product or direct the product to another customer.

As of March 31, 2023, $ 2.0 million of revenue was previously recognized for goods that are expected to be delivered to a customer during the second quarter.

As of June 30, 2023, $ 0.1 million of revenue was previously recognized for goods that are expected to be delivered to a customer during the third quarter.

SEGMENT REPORTING

ASC 280, Segment Reporting , establishes standards for reporting information about operating segments.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

Our chief operating decision maker (CODMs) is our Chief Executive Officer.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance.

Our CODM is our Chief Executive Officer.

Effective January 1, 2023, the Company changed its segment reporting to align with the geographic markets in which it operates, as further discussed in Note 16 - Segments .

1 unchanged sentence

Following the integration of recent acquisitions which further expanded the Company’s operations into Europe, Middle East and Africa (“EMEA”) and other international markets, the Company’s operations are now organized, managed and classified into three reportable segments – EMEA, North and Central America (the “Americas”) and all other geographic regions (“Rest of World”).

Our EMEA segment consists of the operations of Sahara Holding Limited.

and its subsidiaries (the “Sahara Entities”).

Our EMEA segment consists of the operations of Sahara Holding Limited and its subsidiaries (the “Sahara Entities”).

Our Americas segment consists primarily of Boxlight, Inc.

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Prior period comparative information has not been recast and continues to be reported under the accounting guidance in effect for those periods.

The Company recognized a

cumulative-effect adjustment to reduce retained earnings by $ 76 thousand, net of taxes.

The change in the allowance for credit losses was not significant during the three months ended March 31, 2023.

The Company recognized a cumulative-effect adjustment to reduce retained earnings by $ 76 thousand, net of taxes.

The change in the allowance for credit losses was not significant during the three and six months ended June 30, 2023.

ACCOUNTING STANDARDS PENDING ADOPTION

1 unchanged sentence

NOTE 2 – ACCOUNTS RECEIVABLE - TRADE

Accounts receivable consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):

Accounts receivable consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Accounts receivable – trade

6 unchanged sentences

Cost includes direct cost from the Current Manufacturer (“CM”) or Original Equipment Manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight and import duty costs.

Inventories consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):

Inventories consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Finished goods

3 unchanged sentences

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):

Prepaid expenses and other current assets consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Prepayments to vendors

1 unchanged sentence

Prepaid expenses and other current assets

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):

NOTE 5 – INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

INTANGIBLE ASSETS

Customer relationships

2 unchanged sentences

Intangible assets, net of accumulated amortization

For the three months ended March 31, 2023 and 2022, the Company recorded amortization expense of $ 2.1 million and $ 2.2 million, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $ 1.4 million reduction as of March 31, 2023 and $ 3.1 million reduction as of December 31, 2022.

For the three months ended June 30, 2023 and 2022, the Company recorded amortization expense of $ 2.2 million.

For the six months ended June 30, 2023 and 2022, the Company recorded amortization expense of $ 4.3 million and $ 4.4 million, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $ 0.3 million reduction as of June 30, 2023 and $ 3.1 million reduction as of December 31, 2022.

The Company determined that a triggering event had occurred as a result of the Company’s market capitalization that suggested one or more of the reporting units may have fallen below the carrying amounts.

In addition, the Company’s change in reporting segments resulted in a change in the composition of the Company’s reporting units.

As a result of these changes, the Company determined it has two reporting units for purposes of testing based upon entities that comprise the Americas and EMEA reporting segments.

For purposes of impairment testing, the Company allocated goodwill to the reporting units based upon a relative fair value allocation approach and has assigned approximately $ 22.5 million and $ 2.9 million of goodwill to the America and EMEA reporting units, respectively.

However, the allocation used for purposes of segment information disclosures in Note 16 differs from these values used for impairment testing as the information used by the Chief Operating Decision Maker does not assign goodwill in the same manner.

As of June 30, 2023, the Company performed an interim goodwill impairment test as a result of the triggering events identified.

In analyzing goodwill for potential impairment in the quantitative impairment test, the Company used a combination of the income and market approaches to estimate the fair value.

Under the income approach, the Company calculated 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 and include the discount rate, projected average revenue growth and projected long-term growth rates in the determination of terminal values.

Under the market approach, the Company estimated 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.

Based on the results of the quantitative interim impairment test, the Company concluded that the reporting unit’s goodwill was not impaired as of June 30, 2023.

NOTE 6 – LEASES

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The exercise of lease renewal options is at the Company’s sole discretion.

The Company does not consider the exercise of any lease renewal options reasonably certain.

Certain of the Company’s lease agreements contain early termination options.

The Company does not consider the exercise

of any lease renewal options reasonably certain.

In addition, certain of the Company’s 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.

2 unchanged sentences

The incremental borrowing rate is based on the term of the lease.

In connection with the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date.

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 March 31, 2023, the Company had no leases classified as finance leases.

At June 30, 2023, the Company had no leases classified as finance leases.

The Company is currently not a lessor in any lease arrangement.

Our corporate headquarters is located at 2750 Premiere Parkway, Duluth, GA, 30097 in an office space of approximately 12,000 square feet, for which we pay approximately $ 23,000 per month as rent pursuant to a rental agreement.

Our corporate headquarters house our administrative offices.

The Company leases warehouse space in Lawrenceville, Georgia, for approximately $ 13,000 per month.

We also maintain offices in Scottsdale, Arizona and Utica, New York in the U.S., and in Dartford, London, Leeds and Livingston and Belfast in the United Kingdom.

for sales, marketing, technical support and service staff.

In addition, we also maintain sales, marketing and technical support offices in Apeldoorn, Netherlands, Anzegem, Belgium, Helsinki, Finland, Oskarshamn Kalmar, Sweden, and Düsseldorf, Germany

Operating lease expense was $ 564 thousand and $ 469 thousand for the three months ended March 31, 2023 and March 31, 2022, respectively.

Variable lease costs and short-term lease cost were not material for the three months ended March 31, 2023 and March 31, 2022.

Cash paid for amounts included in the measurement of lease liabilities was $ 621 thousand and $ 423 thousand for the three months ended March 31, 2023 and March 31, 2022, respectively.

Operating lease expense was $ 536 thousand and $ 579 thousand for the three months ended June 30, 2023 and June 30, 2022, respectively and $ 1.1 million and $ 1.0 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

Variable lease costs and short-term lease cost were not material for the three and six months ended June 30, 2023 and June 30, 2022.

Cash paid for amounts included in the measurement of lease liabilities was $ 619 thousand and $ 684 thousand for the three months ended June 30, 2023 and June 30, 2022, respectively and $ 1.2 million and $ 1.1 million for the six months ended June 30, 2023 and June 30, 2022.

Future maturities of the Company's operating lease liabilities are summarized as follows (in thousands):

1 unchanged sentence

Less imputed interest

The following is supplemental lease information at March 31, 2023:

The following is supplemental lease information at June 30, 2023:

Weighted-average remaining lease term (years)

1 unchanged sentence

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expense consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):

Accounts payable and accrued expense consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Accounts payable

Accrued expense

Accrued expense and other

Accounts payable and other liabilities

NOTE 8 – DEBT

The following is a summary of the Company’s debt as of March 31, 2023 and December 31, 2022 (in thousands):

The following is a summary of the Company’s debt as of June 30, 2023 and December 31, 2022 (in thousands):

Debt – Third Parties

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Whitehawk Finance LLC

In order to finance the acquisition of FrontRow Calypso LLC (“FrontRow”), the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $ 68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent (“WhiteHawk”).

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”).

In order to finance the acquisition of FrontRow Calypso LLC (“FrontRow”), which closed on December 31, 2021, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $ 68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent (“Whitehawk” or the “Collateral Agent”).

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.

2 unchanged sentences

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.

Such terms are subject to the Company maintaining a borrowing base in compliance with the Credit Agreement.

In the event of non-compliance with the borrowing base, the Company would be subject to an increased interest rate as stated in the Credit Agreement.

On 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.

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.

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 $ 3.5 million 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 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.

During the three-month period ending March 31, 2023, the Company repaid principal of $ 656 thousand and interest of $ 2.0 million to Whitehawk.

As of March 31, 2023, the Company was in compliance with all financial covenants under the Credit Facility.

In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 528,169 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to its existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 2,043,291 shares of Class A common stock (subject to increase to the extent of 3 % of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $ 2.00 per share (the “Warrant”), which Warrant was subject to repricing on March 31, 2022 based on the arithmetic volume weighted average prices for the 30 trading days prior to September 30, 2022, in the event the Company’s stock is then trading below $ 2.00 per share, (iii) a 3 % fee of $ 1,800,000 , and (iv) a $ 500,000 original issue discount.

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.

During the six months ended June 30, 2023, the Company repaid principal of $ 1.4 million and interest of $ 4.0 million to Whitehawk.

On April 24, 2023, the Company entered into a third amendment (the “Third Amendment”) to the Credit Agreement, with Collateral Agent and the Lender.

The Third Amendment was entered into for purposes of the Lender funding an additional $ 3.0 million delayed draw term loan (the “Additional Draw”).

The Additional Draw was funded on April 24, 2023, must be repaid on or prior to September 29, 2023, is not subject to any prepayment penalties, and adjusts certain terms to the Credit Agreement, including adjusting the test period End dates and corresponding Senior Leverage Ratios (as defined in the Credit Amendment) and revising the minimum liquidity requirements that the Company must maintain compliance with pertaining to certain Borrowing Base Requirements, among other adjustments.

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

As discussed in Note 17, on July 20, 2023, the Company paid the $ 3.0 million due under the terms of the Third Amendment.

On June 26, 2023, the Company entered into a fourth amendment (the “Fourth Amendment”) with the Collateral Agent and the Lender for the sole purpose of replacing LIBOR-based rates with a SOFR-based rate.

Following the Fourth Amendment, the Company’s interest rate is calculated as the Daily Simple SOFR, subject to a floor of 1 %, plus the SOFR Term Adjustment and Applicable Margin, as defined in the Credit Agreement, as amended.

At such time, no other changes were made to the Credit Agreement.

Covenant Compliance and Liquidity Considerations

The Company's Credit Agreement requires compliance with certain monthly covenants, which include provisions regarding over advance limitations based upon a borrowing base.

In the second quarter of 2023, as part of obtaining an appropriate waiver, the Company agreed to engage a financial advisor and to use commercial reasonable efforts to refinance the Credit Agreement with an alternative lender and repay the Credit Facility by September 30, 2023, or as soon thereafter as practical.

The waiver did not amend the maturity date of the Credit Agreement.

Upon repayment, the Company will be subject to a prepayment premium that is higher than the prepayment premium included in the original Credit Agreement, as defined in the waiver.

At period end, considering the waivers obtained, the Company was in compliance with all such financial covenants of the Credit Agreement, as amended.

The Company has either implemented or initiated appropriate plans regarding refinancing procedures that are within management’s control to comply with the waiver requirements.

The financial statements do not include any adjustments that might result from the outcome of the Company’s ability to refinance and repay the credit facility by September 30, 2023.

Issuance Cost and Warrants

In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 66,022 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to its existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 255,411 shares of Class A common stock (subject to increase to the extent that 3 % of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $ 16.00 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 $ 16.00 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.

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The warrants repriced on March 31, 2022 to $ 9.52 per share and the shares increased to 429,263 .

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 July 22, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited institutional investor.

According to the terms of the Credit Agreement, as amended, the Purchase Agreement triggered a reduction of the exercise price of the warrants and a revaluation of the derivative liability.

The Whitehawk warrants were repriced to $ 8.80 and shares increased to 464,385 .

Paycheck Protection Program Loan

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The Company received a payment schedule from our lender on May 5, 2022, extending the payoff date until May 2025.

As of March 31, 2023, the amount remaining on the loan was $ 113 thousand.

As of June 30, 2023, the amount remaining on the loan was less than $ 100 thousand.

NOTE 9 – DERIVATIVE LIABILITIES

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

The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities as of March 31, 2023 and December 31, 2022.

March 31, 2023

The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities as of June 30, 2023 and December 31, 2022.

June 30, 2023

Common stock issuable upon exercise of warrants

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Three Months Ended

Six Months Ended

United States

Total pretax book loss

The Company recorded income tax expense of $ 51 thousand and income tax benefit of $ 86 thousand for the three months ended March 31, 2023 and March 31, 2022, respectively.

The year-to-date effective tax rate is ( 1.8 )% due to there being no tax expense/benefit for the legacy Boxlight entities, but the Sahara entities are fully taxable.

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.

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 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.

Total pretax book income

The Company recorded income tax expense of $ 255 thousand and $ 41 thousand for the three months ended June 30, 2023 and 2022, respectively, and income tax expense of $ 306 thousand and income tax benefit of $ 45 thousand for the six months ended June 30, 2023 and 2022, respectively.

The year-to-date effective tax rate is 8.9 % while the June 30, 2022 year-to-date effective rate

was ( 0.9 )%.

The negative effective tax rate for 2023 is due to the Company paying income taxes in various jurisdictions while incurring a worldwide net loss.

The increase in tax expense year-over-year is largely due to the decrease in the estimated annual effective tax rate of the US legacy Boxlight entities for the three months ended June 30, 2023 as compared to the estimated annual effective tax rate of the US legacy Boxlight entities for the three months ended June 30, 2022.

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

Income taxes have been provided in accordance with ASC-740-270, based upon the tax laws and rates of the countries in which operations are conducted.

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 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.

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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 its net deferred tax asset at March 31, 2023 and December 31, 2022.

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.

Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset as of June 30, 2023 and December 31, 2022.

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 the Sahara entities do not have tax basis.

This includes the deferred tax liability recorded during 2021 for the acquisition of Interactive Concepts.

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The tax years from 2009 to 2023 remain open to examination in the U.S.

federal jurisdiction.

federal jurisdiction and in most U.S.

state jurisdictions.

The tax years from 2020 to 2023 remain open to examination in the U.K.

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We currently do not expect the tax-related provisions of the IRA to have a material effect on our financial results.

During the second quarter of 2021, the Company became aware of a potential state tax exposure for failure to file minimum tax returns in a state for several years.

The Company has recorded an exposure item of $ 82 thousand for its best estimate of the amount for which it will settle the exposure.

This amount includes $ 24 thousand of income tax and $ 58 thousand of penalties and interest.

The Company has not identified any other material uncertain tax positions during the three months ended March 31, 2023.

NOTE 11 – EQUITY

Preferred Shares

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

The Company’s articles of incorporation, as amended, provide that the Company is authorized to issue 50,000,000 shares of preferred stock, with such 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) 1,586,620 shares of

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

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

(3) 1,320,850 shares of voting Series C preferred stock, with a par value of $ 0.0001 per share;

and (4) 48,280,000 shares of “blank check” preferred stock to be designated by the Company’s board of directors.

Each authorized series of preferred stock is described below.

Issuance of Preferred Shares

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On August 5, 2019, a total of 82,028 shares of Series A preferred stock were converted into a total of 16,341 shares of Class A common stock.

As of March 31, 2023, a total of 167,972 shares of Series A preferred stock remained outstanding which can be converted into 267,684 shares of Class A common stock, at the discretion of the Series A stockholder.

As of June 30, 2023, a total of 167,972 shares of Series A preferred stock remained outstanding which can be converted into 33,461 shares of Class A common stock, at the discretion of the Series A stockholder.

Series B Preferred Stock and Series C Preferred Stock

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As the redemption features in the Series B preferred stock and Series C preferred stock are not solely within the control of the Company, the Company has classified the Series B preferred stock and Series C preferred stock as mezzanine or temporary equity in the Company’s condensed consolidated balance sheet.

As of March 31, 2023, a total of 1,586,620 and 1,320,850 shares of Series B and C preferred stock remained outstanding, respectively.

The Company’s common stock consists of 1) 150,000,000 shares of Class A voting common stock and 2) 50,000,000 shares of Class B non-voting common stock.

As of June 30, 2023, a total of 1,586,620 and 1,320,850 shares of Series B and C preferred stock remained outstanding, respectively.

The Company’s authorized common stock consists of 1) 18,750,000 shares of Class A voting common stock and 2) 50,000,000 shares of Class B non-voting common stock.

Class A and Class B common stock have the same rights except that Class A common stock is entitled to one vote per share while Class B common stock has no voting rights.

Upon any public or private sale or disposition by any holder of Class B common stock, such shares of Class B common stock would automatically convert into shares of Class A common stock.

As of March 31, 2023 and December 31, 2022, the Company had 75,078,661 and 74,716,696 shares of Class A common stock issued and outstanding , respectively.

No Class B shares were outstanding at March 31, 2023 or December 31, 2022.

As of June 30, 2023 and December 31, 2022, the Company had 9,465,494 and 9,339,587 shares of Class A common stock issued and outstanding , respectively.

No Class B shares were outstanding at June 30, 2023 or December 31, 2022.

Issuance of Common Stock

Securities Purchase Agreement

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 of the Company’s Class A common stock, par value $ 0.0001 per share, 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”).

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, (i) 875,000 shares of the Company’s Class A common stock, par value of $ 0.0001 per share, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 44,118 shares of common stock at an exercise price of $ 0.0008 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 (iii) warrants to purchase an aggregate of 919,118 shares of common stock at an exercise price of $ 5.44 per share (the “Warrants,” and collectively with the Pre-Funded Warrants and the Shares, the “Securities”).

The Securities were sold at a price of $ 5.44 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.

The Pre-Funded Warrants were exercisable immediately and the Warrants were 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.

with $ 2.4 million allocated to common stock, $ 2.2 million allocated to warrants and $ 118 thousand allocated to the pre-funded warrants.

The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties.

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On August 9, 2022, the Investor exercised the prefunded warrants.

The Company evaluated whether the Warrants, Pre-Funded Warrants and/or Shares were in the scope of ASC 480 which discusses the accounting for instruments with characteristics of both liabilities and equity.

The Company evaluated whether the Warrants, Pre-Funded Warrants and/or Shares were within the scope of ASC 480 which discusses the accounting for instruments with characteristics of both liabilities and equity.

The guidance in ASC 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 ASC 480 and are therefore classified as equity.

The Company had equity warrants outstanding of 920,993 and 920,680 at June 30, 2023 and December 31, 2022, respectively.

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.

In conjunction with its receipt of the Whitehawk loan, the Company issued to Whitehawk 66,022 shares of Class A common stock, which were registered pursuant to the Company’s existing shelf registration statement and were delivered to Whitehawk in January 2022.

Repurchase Plan

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.

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 (the “Exchange Act”), 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.

The Company had equity warrants outstanding of 7,366,690 and 7,365,440 at March 31, 2023 and December 31, 2022, respectively.

As of June 30, 2023, the Company has not utilized the Repurchase Program.

NOTE 12 – STOCK COMPENSATION

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The 2021 Plan allows for issuance of shares of our Class A common stock, whether through restricted stock, restricted stock units, options, stock appreciation rights or otherwise, to the Company’s officers, directors, employees and consultants.

As of March 31, 2023, the Company has issued 6,199,231 shares under the 2021 Plan, such that the Company is over the authorized share number.

The Company intends to increase the number of shares available for issuance under the 2021 Plan in May 2023.

The fair value of any shares issued in excess of the approved shares under the 2021 Plan was less than $ 15 thousand and have been recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets at March 31, 2023.

Prior to the second quarter of 2023, the Company had issued 774,904 shares under the 2021 Plan such that the Company was over the authorized share number.

During the three months ended June 30, 2023, the Company cancelled 384,340 shares of previously issued awards such that the Company is under the authorized number of share awards.

The fair value of shares previously issued in excess of the approved shares under the 2021 Plan of approximately $ 13 thousand was reclassed from liability to equity as of June 30, 2023.

Stock Options

Under the Company’s stock option program, pursuant to the 2014 Plan and 2021 Plan, an employee receives an award that provides the opportunity in the future to purchase the Company’s shares at the market price of the stock on the date the award is granted (the strike price).

The options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from the grant date, unless stated differently in the option agreements, if they are not exercised.

Stock options have no financial statement effect on the date they are granted but rather are reflected over time through compensation expense.

Under the Company’s stock option program, pursuant to the 2014 Plan and 2021 Plan, employees may be eligible to receive awards that provides the opportunity in the future to purchase the Company’s shares at the market price of the stock on the date the award is granted (the strike price).

Following the issuance, such options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from the grant date, unless stated differently in the option agreements, if they are not exercised.

Stock options have no financial statement effect on the date they are granted but rather are reflected over time through compensation

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.

The following is a summary of the option activities during the three months ended March 31, 2023:

The following is a summary of the option activities during the six months ended June 30, 2023:

Outstanding, December 31, 2022

Outstanding, March 31, 2023

Exercisable, March 31, 2023

On January 1, 2023, the company granted 2,041,098 options which vest ratably over three years .

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 options issued during the three months ended March 31, 2023:

Outstanding, June 30, 2023

Exercisable, June 30, 2023

During the six months ended June 30, 2023, the Company granted 364,299 options of which 322,040 were subsequently cancelled and 42,259 vested during the period.

The Company estimated 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 options issued during the six months ended June 30, 2023:

market value on measurement date, $ 1.68 to $ 2.24 ;

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The RSUs vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement.

The following is a summary of the RSU activities during the three months ended March 31, 2023:

The following is a summary of the RSU activities during the six months ended June 30, 2023:

Number of Units

Outstanding, December 31, 2022

Outstanding, March 31, 2023

On January 1, 2023, the Company granted 578,778 RSU’s to our Chief Executive Officer, in accordance with his employment agreement.

The RSU’s vest ratably over a three-year period.

Outstanding, June 30, 2023

During the six months ended June 30, 2023, the Company granted 72,348 RSUs of which 62,300 were subsequently cancelled and 10,048 vested during the period.

Stock Compensation Expense

For the three months ended March 31, 2023 and 2022, the Company recorded the following stock compensation in general and administrative expense (in thousands):

For the three and six months ended June 30, 2023 and 2022, the Company recorded the following stock compensation in general and administrative expense (in thousands):

Three months ended June 30,

Six months ended June 30,

Stock options

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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.

Under the terms of the agreement, Mr.

Elliott is 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.

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The agreement, unless renewed or extended, will expire on December 31, 2023.

For the three months ended March 31, 2023, the Company paid $ 12 thousand under the agreement.

On January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned and controlled by the Chief Executive Officer and Chairman, Michael Pope.

For the six months ended June 30, 2023, the Company paid $ 36 thousand under the agreement.

On January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned and controlled by our Chief Executive Officer and Chairman, Michael Pope.

The Management Agreement is separate and apart from Mr.

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The Management Agreement will become effective as of the first day of the same month that Mr.

Pope’s employment with the Company shall terminate.

Pope’s employment with the Company terminates.

Thereafter, and for a term of 13 months , Mr.

Pope shall 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.

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 Mr.

Pope 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.

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The Company assesses its exposure related to legal matters and other items that arise in the regular course of its business.

If the Company determines that it is probable a loss has been incurred, the amount of the loss, or an amount within the range of loss, that

can be reasonably estimated is recorded.

If the Company determines that it is probable a loss has been incurred, the amount of the loss, or an amount within the range of loss, that can be reasonably estimated is recorded.

The Company has not identified any legal matters that could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

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

As of March 31, 2023, the total amount of such open inventory purchase orders was $ 22.1 million.

As of June 30, 2023, the total amount of such open inventory purchase orders was $ 30.6 million.

NOTE 15 – CUSTOMER AND SUPPLIER CONCENTRATION

There was one customer that accounted for greater than 10% of the Company’s consolidated revenues for the three months ended March 31, 2023 and 2022.

There was one customer that accounted for greater than 10% of the Company’s consolidated revenues for the six months ended June 30, 2023 and 2022.

Details are as follows:

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Total revenues

from the customers

from the customer

as a percentage of

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total revenues

the customers as of

the customer as of

total revenues

the customers as of

for the three months ended

the customer as of

for the six months ended

(in thousands)

For the three months ended March 31, 2023, the Company’s purchases did not exceed 10% with any particular vendor.

For the three months ended March 31, 2022, the Company’s purchases were concentrated primarily with one vendor.

For the six months ended June 30, 2023, the Company’s purchases were concentrated primarily with one vendor .

For the six months ended June 30, 2022, the Company’s purchases were concentrated primarily with two vendors.

Details are as follows:

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the vendors as of

the three months ended

the year ended

the six months ended

(in thousands)

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

The Company believes there are other suppliers that could be substituted should the above cited vendor become unavailable or non-competitive.

NOTE 16 – SEGMENTS

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Three Months Ended

Six Months Ended

Rest of World

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Eliminations and Adjustments (1)

Total Loss from Operations

Total Income (Loss) from Operations

(1) Eliminations and adjustments represent net sales between the Americas, EMEA and Rest of World segments.

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NOTE 17 – SUBSEQUENT EVENTS

On April 24, 2023, the Company entered into a third amendment (the “Third Amendment”) to the Credit Agreement, with Whitehawk Capital Partners, LP, as collateral agent, and Whitehawk Finance LLC as the Lender.

The Third Amendment serves to amend the Credit Agreement, originally entered into on December 31, 2021, as amended on April 4, 2022 and June 21, 2022, between the Company and all of its direct and indirect subsidiaries, the Collateral Agent and the Lender pursuant to which the Company received an initial $ 58.5 million term loan on December 31, 2021.

The Third Amendment was entered into for purposes of the Lender funding an additional $ 3.0 million delayed draw term loan (the “Additional Draw”).

The Additional Draw was funded on April 24, 2023, must be repaid on or prior to September 29, 2023, is not subject to any prepayment penalties, and adjusts certain terms to the Credit Agreement, including adjusting the Test Period End dates and corresponding Senior Leverage Ratios (as defined in the Credit Amendment) and revising the minimum liquidity requirements that the Company must maintain compliance with pertaining to certain Borrowing Base Requirements, among other adjustments.

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

On July 20, 2023, the Company paid $ 3.0 million on its Credit Agreement with Whitehawk.

The payment was for amounts borrowed under the Third Amendment to the Credit Agreement that were required to be repaid by September 29, 2023.

There were no pre-payment penalties or premiums included with this payment.

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What changed 10-Q

Item 1. Financial Statements