What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-17 · 456 added, 506 removed, 651 unchanged (60% of the section changed)

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Index to Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 202 3 and 20 2 2

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Boxlight Corporation

To the Shareholders, Board of Directors, and Audit Committee of Boxlight Corporation

Opinion on the Consolidated Financial Statements

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As described in Note 1 to the financial statements, the Company has identified certain conditions relating to its outstanding debt and Series B Preferred Stock that are outside the control of the Company.

In addition, the Company has generated recent losses.

These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1 to the accompanying financial statements.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter – Fair Value of Derivative Liabilities

As described in Notes 1 and 10, the Company has issued warrants to purchase common stock which feature net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered under certain conditions.

The warrants are derivative liabilities and are remeasured at fair value at each reporting date using a Monte Carlo simulation technique.

Changes in fair value are included in operations each period.

December 31, 2022, the Company estimated the fair value to be $472 thousand and recognized a $2.6 million change in fair value in operations for the year ended December 31, 2022.

We identified the fair value of the liability-classified warrants as a critical audit matter.

The principal considerations for that determination were the unobservable inputs used in the Company’s valuation technique are highly subjectivity and involves higher measurement uncertainty.

This required a high degree of auditor effort, including specialized skills and knowledge, and significant auditor judgment in evaluating the fair value of the warrants.

The primary procedures we performed to address this critical audit matter included:

● We obtained an understanding of management’s process for determining the unobservable inputs for the fair value measurement.

● Utilizing a valuation specialist, we evaluated the significant assumptions and methods utilized in developing the fair value, including:

o We evaluated the reasonableness of the Company’s measurement technique and significant assumptions and inputs.

o We verified developed an independent calculation of the risk-free rate and volatility and compared our rates to those used by management.

o We performed independent simulations using a Monte Carlo technique to determine the fair value of the warrants and test the accuracy of management’s valuation technique and application.

Critical Audit Matter – Equity-Classified Warrants

As described in Note 12, the Company issued certain warrants and prefunded warrants in connection with a securities purchase agreement to issue and sell 7.0 million shares of the Company’s common stock.

The Company evaluated whether the warrants and pre-funded warrants were in the scope of ASC Topic 480 Distinguishing Liabilities from Equity, which discusses the accounting for instruments with characteristics of both liabilities and equity.

The guidance in Topic 480, and the resulting liability classification, is applicable to instruments when certain criteria are met.

Based on its analysis, the Company concluded that the warrants, and pre-funded warrants did not meet any of the criteria to be subject to liability classification and are therefore classified as equity.

We identified the classification of the warrants as a critical audit matter.

The principal considerations for that determination included the complexity and effort required in identifying all relevant features of and obligations under the instruments for evaluation against the criteria for classification.

This required a high degree of auditor effort, including specialized skills and knowledge, and significant auditor judgment in evaluating the features of and obligations under the warrants and the determination of whether such features meet the criteria for liability-classification.

The primary procedures we performed to address this critical audit matter included:

● We obtained an understanding of management’s process for identifying and evaluating the critical terms of the warrant agreements in determining the classification.

● With the assistance of professionals in our firm that have specialized skills and knowledge in accounting for debt and equity instruments:

o We evaluated management’s analysis and conclusions regarding the relevant provisions and features of the warrants in light of relevant guidance and the criteria for classification.

o We read the securities purchase agreement and underlying warrant agreements comprising the offering to identify the relevant features and settlement provisions for our evaluation.

o We independently evaluated the relevant features and settlement provisions of the warrants under relevant guidance considering the criteria for liability-classification.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matter – Goodwill Impairment Assessment

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We identified the quantitative impairment test of goodwill as a critical audit matter.

The principal considerations for that determination included the judgement involved in assessing management’s impairment test of goodwill due to the measurement uncertainty involved in determining the fair value of equity for the reporting units.

The principal considerations for that determination included the judgment involved in assessing management’s impairment test of goodwill due to the measurement uncertainty involved in determining the fair value of equity for the reporting units.

In particular, the fair value estimates are sensitive to changes in assumptions such as discount rates, expected future cash flows, long-term growth rates, and comparable company earnings multiples.

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• We tested management’s reconciliation of the fair value of equity of the reporting units to the market capitalization of the Company.

/s/ FORVIS, LLP (Formerly, Dixon Hughes Goodman LLP)

/s/ FORVIS, LLP

We have served as the Company’s auditor since 2018.

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(in thousands except share and per share amounts)

2023 December 31,

(as adjusted)*

Current assets:

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Intangible assets, net of accumulated amortization 45,964 52,579

Goodwill — 25,092

Other assets 906 397

Total assets $ 158,571 $ 195,395

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Operating lease liabilities, non-current 7,282 2,457

Other long-term liabilities

Total liabilities 113,311 114,993

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Preferred Series B, 1,586,620 shares issued and outstanding

16,146 16,146

Preferred Series C, 1,320,850 shares issued and outstanding

12,363 12,363

Total mezzanine equity 28,509 28,509

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Accumulated deficit ( 104,275 ) ( 65,043 )

Accumulated other comprehensive (loss) income

Accumulated other comprehensive income (loss) 1,301 ( 914 )

Total stockholders’ equity 16,751 51,893

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Cost of revenues 113,419 156,913

Gross profit 63,302 64,868

Operating expense:

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Research and development 3,155 2,482

Impairment of goodwill 25,195 —

Total operating expense 89,602 61,819

Income (loss) from operations

(Loss) income from operations ( 26,300 ) 3,049

Other income (expense):

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Other expense, net ( 417 ) ( 267 )

Gain (loss) on settlement of liabilities, net

Gain on settlement of liabilities, net — 856

Change in fair value of derivative liabilities 267 2,591

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Income tax expense ( 1,866 ) ( 49 )

Net loss ( 39,156 ) ( 3,743 )

Fixed dividends - Series B Preferred ( 1,269 ) ( 1,269 )

Deemed contribution -Series B Preferred

Net loss attributable to common stockholders $ ( 40,425 ) $ ( 5,012 )

Comprehensive loss:

Net loss ( 39,156 ) ( 3,743 )

Other comprehensive loss:

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Total comprehensive loss $ ( 36,941 ) $ ( 8,385 )

Net loss attributable to common stockholders

Net loss per common share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

Net loss per common share – basic and diluted - as adjusted $ ( 4.28 ) $ ( 0.58 )

Weighted average number of common shares outstanding – basic and diluted - as adjusted 9,455 8,644

See Accompanying Notes to Financial Statements.

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Consolidated Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2022 and 2021

For the Year Ended December 31, 2023

(in thousands except share amounts)

Accumulated Other

Preferred Stock

Comprehensive

Income (Loss)

Preferred Stock Class A

Common Stock Additional

Capital Accumulated Other

Comprehensive Income (Loss) Accumulated

Deficit Total

Shares Amount Shares Amount

Balance, December 31, 2022 167,972 $ — 9,339,587 $ 1 $ 117,849 $ ( 914 ) $ ( 65,043 ) $ 51,893

Cumulative effect of change in accounting principle, net of tax — — — — — — ( 76 ) ( 76 )

Balance, December 31, 2022 - as adjusted 167,972 — 9,339,587 1 117,849 ( 914 ) ( 65,119 ) 51,817

Shares issued for:

Conversion of liabilities

Stock options exercised — — 12,500 — 13 — — 13

Debt issuance costs

Vesting of restricted stock units — — 318,995 — — — — —

Warrant redemption, net

Reverse stock split fractional adjustment — — 33,414 — — — — —

Stock compensation — — — — 3,131 — — 3,131

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Fixed dividends for preferred shareholders — — — — ( 1,269 ) — — ( 1,269 )

Deemed contribution for preferred shareholders

Net loss — — — — — — ( 39,156 ) ( 39,156 )

Balance, December 31, 2023 167,972 $ — 9,704,496 $ 1 $ 119,724 $ 1,301 $ ( 104,275 ) $ 16,751

See Accompanying Notes to Financial Statements.

Boxlight Corporation

Consolidated Statements of Changes in Stockholders’ Equity

For the Year Ended December 31, 2022

(in thousands except share amounts) - as adjusted

Preferred Stock Class A

Common Stock Additional

Capital Accumulated Other

Comprehensive

Income (Loss) Accumulated

Deficit Total

Shares Amount Shares Amount

Balance, December 31, 2021 167,972 $ — 7,977,738 $ — $ 110,873 $ 3,728 $ ( 61,300 ) $ 53,301

Shares issued for:

Stock options exercised — — 37,105 — 81 — — 81

Acquisition — — 28,846 — 150 — — 150

Debt issuance costs — — 66,021 — — — — —

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Fixed dividends for preferred shareholders — — — — ( 1,269 ) — — ( 1,269 )

Net loss — — — — — — ( 3,743 ) ( 3,743 )

Balance, December 31, 2022 167,972 $ — 9,339,587 $ 1 $ 117,849 $ ( 914 ) $ ( 65,043 ) $ 51,893

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Cash flows from operating activities:

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

Net loss $ ( 39,156 ) $ ( 3,743 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of debt discount and issuance cost 2,303 2,158

Bad debt expense 9 266

(Gain) loss on settlement of liabilities

Gain on settlement of liabilities — ( 856 )

Changes in deferred tax assets and liabilities ( 347 ) ( 3,776 )

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Change in fair value of derivative liability ( 267 ) ( 2,591 )

Shares issued for interest payment on notes payable

Stock compensation expense 3,131 3,313

Depreciation and amortization 8,859 9,129

Impairment of goodwill 25,195 —

Change in right of use assets and lease liabilities 249 8

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Accounts receivable – trade 781 ( 3,800 )

Inventories 13,105 ( 10,272 )

Prepaid expenses and other current assets ( 1,874 ) 1,602

Other assets ( 498 ) ( 161 )

Accounts payable and accrued expenses ( 4,822 ) 5,756

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Other liabilities — ( 312 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities $ 11,581 $ 1,190

Cash flows from investing activities:

Asset acquisition — ( 100 )

Cash paid to settle earnout obligations

Purchases of furniture and fixtures, net ( 1,321 ) ( 1,106 )

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Proceeds from exercise of options and warrants 13 —

Principal payments on debt

Discount on notes payable

Principal payments on long-term debt ( 6,755 ) ( 11,141 )

Proceeds from long term debt — 2,500

Debt issuance costs

Principal payments on short-term debt ( 3,000 ) —

Payments of fixed dividends to Series B Preferred stockholders ( 1,269 ) ( 1,269 )

Proceeds from issuance of common stock — 84

Other Share based payments

Net cash (used in) provided by financing activities

Net cash used in financing activities $ ( 8,011 ) $ ( 5,126 )

Effect of foreign currency exchange rates 413 1,795

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents 2,662 ( 3,347 )

Cash and cash equivalents, beginning of the period 14,591 17,938

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Non-cash investing and financing transactions:

Shares issued to settle accounts payable

Shares issued for closing fees related to outstanding notes payable – Lind Global

Exercise of warrants

Addition of operating lease liabilities $ 5,865 $ —

Shares issued for asset acquisition $ — $ 150

Deemed contribution from Series B Preferred Stock

See Accompanying Notes to Financial Statements.

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The Company designs, produces and distributes interactive technology solutions predominantly to the education market.

On December 31, 2021, the Company acquired FrontRow Calypso LLC, a California company and a leader in classroom and campus communication solutions for the education market.

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

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the fair value of warrants;

the initial fair value of preferred stock, the fair value and recoverability of intangible assets and goodwill;

the fair value and recoverability of intangible assets and goodwill;

the fair value of stock compensation;

the fair values of assets acquired;

the relative stand-alone selling prices of goods and services;

and variable consideration.

COMPREHENSIVE INCOME

Comprehensive income (loss) reflects the change in equity during the year except those resulting from investments by and distributions to stockholders, and is comprised of all components of net income (loss) and foreign currency translation adjustments.

REVERSE STOCK SPLIT AND RECLASSIFICATIONS

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 converted into 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 the authorized shares of preferred stock remained unchanged at 50,000,000 shares.

All Class A common share and per share amounts for all periods presented in the 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 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 compensation arrangements, and the conversion features on preferred shares.

All of the agreements included 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 December 31, 2023 and 2022.

GOING CONCERN

The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business.

At September 30, 2023 the Company was not in compliance with its Senior Leverage Ratio financial covenant under the credit agreement, originally dated December 31, 2021, as amended (the "Credit Agreement"), between the Company, its direct and indirect subsidiaries, and Whitehawk Finance LLC, as lender, and White Hawk Capital Partners, LP, as collateral agent.

The Company's non-compliance with the Credit Agreement was cured by the Company paying

$ 4.3 million, inclusive of $ 0.3 million in prepayment penalties and accrued interest, in November 2023 which would have resulted in the Company being in compliance with the Senior Leverage Ratio at September 30, 2023.

At December 31, 2023, the Company was not in compliance with its financial covenant related to the Senior Leverage Ratio under the Credit Agreement.

The Senior Leverage Ratio, as stated in the Third Amendment to the Credit Agreement, decreases to 2.50 at December 31, 2023, 2.00 at March 31, 2024 and June 30, 2024 and at 1.75 thereafter.

On March 14, 2024 the Company entered into a fifth agreement (the 'Fifth Amendment') with the Collateral Agent and Lender which waived any Event of Default that may have arisen directly as a result of the financial covenant default at December 31, 2023 and in the interim two-month period ended February 29, 2024.

The Fifth Amendment also restated the Senior Leverage Ratio and Minimum Liquidity requirements.

Under the Amended agreement, the Senior Leverage Ratio requirement at March 31, 2024 was amended from 2.00 to 6.00 , at June 30, 2024 will remain at 2.00 and thereafter will remain at 1.75 .

Because of the significant decreases in the required Senior Leverage Ratio that will occur over the next twelve months, the Company’s current forecast projects the Company may not be able to maintain compliance with this ratio.

These conditions raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued.

In view of this matter, continuation as a going concern is dependent upon the Company’s ability to continue to achieve positive cash flow from operations, obtain waivers or other relief under the Credit Agreement for any future non-compliance with the Senior Leverage Ratio, or refinance its Credit Agreement with a different lender on more favorable terms.

The Company is actively working to refinance its debt with new lenders.

While the Company is confident in its ability to refinance its existing debt, it does not have written or executed agreements as of the issuance of this Form 10-K.

The Company’s ability to refinance its existing debt is based upon credit markets and economic forces that are outside of its control.

We believe we have a good working relationship with our current lender.

However, there can be no assurance that the Company will be successful in refinancing its debt, or on terms acceptable to the Company.

To the extent not converted into the Company’s Class A common stock, the outstanding shares of our Series B preferred stock became 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 Company, 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.

We are currently evaluating alternatives to refinance or restructure the Series B preferred shares including extending the maturity of the Series B preferred shares beyond the current optional conversion date.

These financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

COMPREHENSIVE LOSS

Comprehensive income (loss) reflects the change in equity during the year except those resulting from investments by and distributions to stockholders and is comprised of all components of net loss and foreign currency translation adjustments.

FOREIGN CURRENCIES

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Foreign exchange gains and losses arise from transactions denominated in currencies other than the functional currency.

Gains and losses on those foreign currency transactions are included in determining net income (loss) for the period in which the exchange rates change.

Gains and losses on those foreign currency transactions are included in determining net loss for the period in which the exchange rates change.

CASH AND CASH EQUIVALENTS

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These investments are carried at cost, which approximates fair value.

The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $ 250,000 for banks

located in the U.S.

The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $ 250,000 for banks located in the U.S.

The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are stated at contractual amounts, net of an allowance for doubtful accounts.

The allowance for doubtful accounts represents management’s estimate of the amounts that ultimately will not be realized in cash.

The Company reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical payment trends, the age of receivables and knowledge of the individual customers.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR EXPECTED CREDIT LOSS

Accounts receivable are stated at contractual amounts, net of an allowance for expected credit losses.

The allowance for credit losses represents management’s estimate of the amounts that ultimately will not be realized in cash.

The Company reviews the adequacy of the allowance for credit losses on an ongoing basis, using historical payment trends, the age of receivables and knowledge of the individual customers.

Estimated credit losses consider relevant information about past events, current conditions and reasonable and supporting forecasts that affect the collectability of financial assets.

When the analysis indicates, management increases or decreases the allowance accordingly.

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Long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell.

BUSINESS COMBINATIONS

Transactions in which the Company acquires or obtains control of one or more businesses are accounted for as business combinations in accordance with Topic 805, Business Combinations , which requires, among other things, that assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date on the balance sheet.

Income taxes, where applicable, are recognized and measured in accordance with Topic 740, Accounting for Income Taxes .

For transactions occurring on or after January 1, 2021, contract liabilities acquired in a business combination are recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers (“Topic 606”).

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgement and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, and discount rates.

Transaction costs are expensed as incurred.

Any excess consideration transferred over the assigned values of net assets acquired would be recorded as goodwill.

The amounts of revenue and earnings of the acquiree since the acquisition date are included in the consolidated statements of operations and comprehensive loss for the reporting period.

There was no impairment recognized for 2023 and 2022.

Goodwill represents the cost in excess of the fair value of the net tangible and intangible assets of acquired businesses, and represents implied synergies expected of the completed business combinations.

Goodwill is not amortized and is not deductible for tax purposes.

Most goodwill is not amortized and is not deductible for tax purposes.

Under Topic 350, Intangibles—Goodwill and Other , the Company has an option to perform a “qualitative” assessment to determine whether quantitative impairment testing is necessary.

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Otherwise, no further testing is necessary.

If the Company performs a qualitative assessment, the Company considers the following criteria:

If the Company performs a qualitative assessment, the Company

considers the following criteria:

macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events.

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However, if the fair value were to be less than carrying value, the Company would then determine the amount of the impairment charge, if any, which would be the amount that the carrying value of the goodwill exceeded its implied value.

No goodwill impairments have been identified and recognized during any of the periods presented.

We test goodwill annually for impairment during the fourth quarter.

During the year ended December 31, 2022, we began performing the annual impairment test as of October 1, compared to December 31 in previous years.

This facilitates the overall coordination and timing of our annual financial statement close cycle and the preparation of our annual report.

The change to the testing date did not represent a material change to our method of applying the accounting principle in light of requirements to monitor goodwill throughout the reporting period.

Since the acquisition of FrontRow Calypso LLC occurred December 31, 2021, the Company believes that the carrying amount does not exceed the fair value for the reporting unit.

Goodwill arising from the FrontRow Calypso LLC acquisition was not included in the goodwill impairment testing for 2022.

As of June 30, 2023, we determined that a triggering event had occurred as a result of our market capitalization that suggested one or more of the reporting units may have fallen below the carrying amounts.

In addition, changes in our reporting segments resulted in a change in the composition of our reporting units.

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

For purposes of impairment testing, we allocated goodwill to the reporting units based upon a relative fair value allocation approach and assigned approximately $ 22.4 million and $ 2.8 million of goodwill to the Americas and EMEA reporting units, respectively.

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

Based on the results of our interim test as of June 30, 2023, we concluded that the estimated fair value of each reporting unit exceeded the respective carrying value and, as such, we concluded that the goodwill assigned to each reporting unit, as of June 30, 2023, was not impaired.

As of September 30, 2023, due to further declines in the Company’s market capitalization and a reduction in cash-flows resulting from continued softening in the industry leading to a reduction in sales from interactive flat-panel displays, the Company determined that a triggering event had occurred.

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

Certain estimates and assumptions, including the Company’s operating forecast for 2023 and future periods, were revised based on current industry and Company trends.

As of September 30, 2023, the Company recorded goodwill impairment charges of $ 10.4 million and $ 2.8 million to the Americas and EMEA reporting units, respectively.

As of December 31, 2023, the Company performed goodwill impairment testing as a result of another triggering event identified.

Based upon that testing, the Company determined the remaining goodwill was fully impaired and the Company recognized goodwill impairment charges for the year ended December 31, 2023 of $ 22.4 million and $ 2.8 million in the Americas and EMEA reporting units, respectively.

INTANGIBLE ASSETS

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Impairment is measured by the amount in which the carrying value of the asset exceeds its fair value.

In addition, the Company periodically evaluates the estimated remaining useful lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization.

In addition, the Company periodically evaluates the estimated remaining useful lives of

long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization.

During the year ended December 31, 2023, the Company performed impairment testing for intangibles assets for the quarters ended September 30, 2023 and December 31, 2023 as a result of triggering events identified, including the impairment of goodwill balances.

The Company has no t recognized impairment on intangible assets as of December 31, 2023.

DERIVATIVE TREATMENT OF STOCK PURCHASE WARRANTS

The Company classifies common stock purchase warrants as equity if the contracts (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement).

The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the

contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability.

The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability.

The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

The Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company.

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

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

See Note 10 “Derivative Liabilities” for more information.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments primarily include cash, accounts receivable, warrants, accounts payable and debt.

Due to the short-term nature of cash, accounts receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value.

Debt approximates fair value due to either the short-term nature or recent execution of the debt agreement.

The amount of consideration received is deemed to be the fair value of long-term debt net of any debt discount and issuance cost.

Warrants and contingent consideration for acquired businesses are recorded at fair value on a recurring basis.

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

Due to the short-term nature of cash, accounts receivable and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value.

The Company has determined that the estimated fair value of debt is approximately $ 44.4 million when the carrying value, excluding discounts, premiums and issuance costs, of approximately $ 43.2 million.

The fair value of debt was estimated using market rates the Company believes would be available for similar types of financial instruments and represents a Level 2 measurement.

Derivative liabilities are recorded at fair value on a recurring basis.

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

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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.

There were no transfers into or out of Level 3 measurements in 2023 and 2022.

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

Description Markets for

(Level 1) Other

(Level 2) Significant

(Level 3) Carrying

Derivative liabilities - warrant instruments — — 205 $ 205

Description Markets for

(Level 1) Other

(Level 2) Significant

(Level 3) Carrying

Derivative liabilities - warrant instruments $ — $ — $ 472 $ 472

See Note 10 for discussion of the valuation techniques and inputs and reconciliation of the opening and closing balances of the fair value of warrants.

The following tables reconcile opening and closing balances of contingent consideration for which fair value is based on level 3 inputs (in thousands).

Balance, December 31, 2020

Balance, December 31, 2021

Balance, December 31, 2022

NET INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period.

NET LOSS PER COMMON SHARE

Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period.

For purposes of this calculation, options to purchase common stock, restricted stock units subject to vesting and warrants to purchase common stock were considered to be common stock equivalents.

Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.

Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.

The dilutive effect of convertible instruments is determined using the if-converted method, presuming share settlement.

1 unchanged sentence

In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

For the year ended December 31, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 3.9 million shares from options to purchase common shares and 2.4 million of unvested restricted shares, 10.8 million shares issuable upon exercise of warrants.

For the year ended December 31, 2023, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.3 million shares from options to purchase common shares, 0.4 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.

8 unchanged sentences

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

Interactive devices are generally sold with hardware maintenance services with terms of approximately 36 - 60 months .

Interactive devices are generally sold with hardware maintenance services with terms of

approximately 36 - 60 months.

Software maintenance includes technical support, product updates on a when and if available basis, and error correction services.

1 unchanged sentence

The Company also licenses software independently of its interactive devices, in which case it is bundled with software maintenance, and in some cases, subscription services that include access to on-line content, and cloud-based applications.

The Company’s software subscription services provide

access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications.

The Company’s software subscription services provide access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications.

The Company’s product sales, including those with software and related services, generally include a single payment up front for the products and services, and revenue is recorded net of estimated sales returns and rebates based on the Company’s expectations and historical experience.

18 unchanged sentences

Because observable prices are generally not available for the Company’s performance obligations that are sold in bundled arrangements, the Company does not apply the residual approach to determining SSP.

The Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that are executed in the same manner, contain the same performance obligations, and are priced in a consistent manner.

The Company believes that the application of the portfolio approach produces the same result as if they were applied at the contract level.

1 unchanged sentence

The timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets.

the Company’s product and most service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally due within 30 - 60 days of contract execution.

Fees for the Company’s product and most service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally due within 30 - 60 days of contract execution.

Fees for installation, training, and professional development services are fixed and generally become due as the services are performed.

7 unchanged sentences

Contract liabilities are reflected in deferred revenue in the accompanying consolidated balance sheets and reflect amounts allocated to performance obligations that have not yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription services.

The Company has no material contract assets on December 31, 2022 or 2021.

During the years ended December 31, 2022 and 2021, the Company recognized $ 7.5 million and $ 5.6 million, respectively, of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively.

The Company has no material contract assets at December 31, 2023 or 2022.

During the years ended December 31, 2023 and 2022, the Company recognized $ 7.9 million and $ 7.5 million, respectively, of revenue that was included in the deferred revenue balance as of December 31, 2022 and 2021, respectively.

Variable Consideration

7 unchanged sentences

The Company includes variable consideration in its transaction price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not be a significant reversal.

These estimates are generally made using the expected value method based on historical experience and are measured at each reporting date.

These estimates are generally made using the most likely method based on historical experience and are measured at each reporting date.

There was no material revenue recognized in 2023 related to changes in estimated variable consideration that existed at December 31, 2022.

5 unchanged sentences

As of December 31, 2023 and 2022, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 25.0 million and $ 23.9 million, respectively.

The Company expects to recognize revenue on approximately 33 % of the remaining performance obligations in 2023 , 27 % in 2024 , 21% in 2025 , 13 % in 2026 , with the remainder recognized thereafter.

The Company expects to recognize revenue on approximately 34 % of the

remaining performance obligations in 2024, 28 % in 2025, 21 % in 2026, 12 % in 2027, with the remainder recognized thereafter.

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

7 unchanged sentences

Product revenues:

Hardware $ 163,948 $ 206,770

Software and embedded firmware 2,402 4,306

Service revenues:

1 unchanged sentence

Maintenance and subscription services 8,891 9,247

$ 176,721 $ 221,781

Contract Costs

9 unchanged sentences

Total deferred commissions at December 31, 2023 and 2022 and the related amortization for 2023 and 2022 were less than $ 550,000 .

The Company has not historically incurred any material fulfilment costs that meet the criteria for capitalization.

Bill and Hold Arrangements

From time to time the Company enters custodial bill and hold arrangements with customers.

Each arrangement is reviewed, and revenue is recognized only when the following criteria have been met:

(1) the reason for the bill-and-hold arrangement is substantive (2) the product is identified as the customer’s asset (3) the product is ready for delivery to the customer (4) there must be a fixed schedule for delivery (5) the seller cannot use the product or direct the product to another customer.

At December 31, 2022, $ 3.2 million of revenue was recognized for goods that will be delivered to a customer during the first quarter of 2023.

The Company has not historically incurred any material fulfillment costs that meet the criteria for capitalization.

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 (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 17 - Segments.

The Company previously managed the Company as one operating segment.

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 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.

The Americas operating segment includes salaries and overhead for corporate functions that are not allocated to the Company’s individual reporting segments.

Transfers between segments are generally valued at market and are eliminated in consolidation.

WARRANTY RESERVE

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If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

STOCK-BASED COMPENSATION

The Company estimates the fair value of each stock option compensation award at the grant date by using the Black-Scholes option pricing model;

STOCK COMPENSATION

The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model;

the fair value for each restricted stock unit award is the market price of the underlying shares at the date of grant.

The fair value determined represents the cost for the award and is recognized on a straight-line basis over the vesting period during which an employee is required to provide service in exchange for the award.

Total expense is reduced by the previously recognized compensation expense for options that are forfeited prior to vesting when the forfeiture occurs.

The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through February 2027.

Generally, these leases have initial lease terms of five years or less.

Prior to the adoption of Accounting Standards Update ("ASU") No.

2016-02 "Leases” (Topic 842) on January 1, 2022, the Company recorded the difference between the rent paid and the straight-line rent expense as a deferred rent liability within accrued expenses and other current liabilities and other liabilities.

Subsequent to the adoption of Topic 842, operating lease assets and liabilities are reflected within operating lease assets, operating lease liabilities, current, and operating lease liabilities, non-current, on the consolidated balance sheets.

Total expense is reduced by the previously recognized compensation expense for options and restricted stock units that are forfeited prior to vesting when the forfeiture occurs.

Operating lease assets and liabilities are reflected within operating lease assets, operating lease liabilities, current, and operating lease liabilities, non-current, on the consolidated balance sheets.

Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

2 unchanged sentences

The exercise of lease renewal options is at our sole discretion.

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

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

Certain of our lease agreements contain early termination options.

No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities.

Certain of our lease agreements provide for periodic adjustments to rental payments for inflation.

Certain of our lease agreements provide for periodic adjustments to rental payments for inflation, which is recognized as variable lease cost when they occur.

As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.

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

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

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

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.

SUBSEQUENT EVENTS

We reviewed all material events through the date of these consolidated financial statements were issued for subsequent event disclosure consideration as described in Note 17.

The Company is not a lessor in any lease agreement.

RECLASSIFICATIONS

The Company reclassified certain 2022 amounts in the footnotes to the consolidated financial statements to conform to the 2023 presentation.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

The Company adopted Topic 842, as amended, which requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements.

The Company elected the modified retrospective approach which it applied on January 1, 2022, and therefore have not restated comparative periods.

The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).

The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component.

Finally, the Company elected not to apply the hindsight practical expedient to determine the lease term for existing leases.

The Company’s operating leases relate primarily to office space.

As a result of the adoption of ASU 2016-02, the Company recognized an operating lease right-of-use ("ROU") asset of $ 3.8 million and a current operating lease liability of approximately $ 1.6 million and a long-term operating lease liability of approximately $ 2.3 million as of January 1, 2022, with no impact on the Company’s Consolidated Statement of Operations and Comprehensive Loss or Consolidated Statement of Cash Flows.

The ROU asset and operating lease liabilities are recorded as separate line items in the Consolidated Balance Sheet.

The Company adopted ASU 2021-06, “ Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses ” to amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No.

33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses.

Among other changes, the final rule modifies the significance tests and improves the disclosure requirements for (1) acquired or to be acquired businesses, (2) real estate operations, and (3) pro forma financial information.

In addition, the final rule includes amendments to financial disclosures specific to smaller reporting companies (SRCs).

There is no immediate impact on the Company’s financial statements due to the adoption of this standard.

The Company early adopted (as of January 1, 2021) ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The new guidance simplifies the accounting for certain convertible instruments and for contracts in an entity’s own equity.

Key provisions include the elimination of the “cash conversion” guidance and the “beneficial conversion feature” guidance in ASC Subtopic 470-20, (Debt with Conversion and Other Options) , as well as a simplification of the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification by removing certain conditions in ASC Subtopic 815-40-25.

Since the beneficial conversion feature is eliminated by this guidance, it will not be recorded for our Series B preferred stock.

The amendments in ASU 2020-06 further revise the guidance in ASC Topic 260, “ Earnings Per Share, ” to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method.

In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

For the years ended December 31, 2022 and 2021, the Company has calculated diluted earnings per share using the if-converted method.

The Company early adopted (as of January 1, 2021) ASU No.

2021-08, “ Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, ” (“ASU 2021-08”), which amends the guidance in ASC Topic 805, “ Business Combinations ,” to require that “an entity (acquirer) recognize, and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, rather than at fair value.” At the acquisition date, an acquirer would account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts.

The Company applied the guidance in this ASU to the FrontRow acquisition that was completed on December 31, 2021.

The Company adopted ASU No.

2019-12, “Income Taxes” (ASU 740):

“Simplifying the Accounting for Income Taxes.” The new guidance eliminates the need for an organization to analyze whether the following apply in a given period:

(1) the exception to the

incremental approach for intraperiod tax allocation;

(2) the exceptions to accounting for basis differences when there are ownership changes in foreign investments;

and (3) the exception in interim periods income tax accounting for year-to-date losses that exceed anticipated losses.

The ASU also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, (4) enacted changes in tax laws in interim periods and (5) certain income tax accounting for employee stock ownership plans and affordable housing projects.

The standard became effective for the Company on January 1, 2021 and did not have a material impact on the financial statements.

Recent Accounting Pronouncements not yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

The new guidance replaces the incurred loss methodology with the current expected credit loss (CECL) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade accounts receivable.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842.

This new guidance changes the impairment model for most financial assets and certain other instruments.

The ASU is not effective until fiscal years beginning after December 15, 2022, and interim periods within that fiscal year.

The Company’s trade receivable terms are short term in duration and historically losses on accounts receivable have not been significant;

write-offs were approximately $ 243,000 for the year ended December 31, 2022.

Accordingly, the Company does not expect the adoption to have a material impact on the Company’s financial statements.

There were various other accounting standards and interpretations issued recently, some of which may be applicable to the Company but none of which are expected to a have a material impact on our financial position, operations, or cash flows.

NOTE 2 –BUSINESS ACQUISITIONS

The acquisitions described below were accounted for as business combinations which require, among other things, that assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date.

Deferred income taxes are recognized and measured in accordance with Topic 740 “ Accounting for Income Taxes ”.

Transaction costs are expensed as incurred.

Any excess of the consideration transferred over the assigned values of the net assets acquired would be recorded as goodwill.

FrontRow Calypso LLC.

On December 31, 2021, the Company, and its wholly owned subsidiary, Boxlight, Inc, acquired 100 % of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”) in exchange for payment of $ 34.7 million to Phonic Ear Inc.

and Calypso Systems LLC, the equity holders of FrontRow.

Based in Petaluma, California, FrontRow makes technology that improves communication in learning environments, including developing network-based solutions for intercom, paging, bells, mass notification, classroom sound, lesson sharing, AV control and management.

FrontRow also has offices in Toronto, Copenhagen, Brisbane, Hamilton (UK) and Shenzhen.

To finance the acquisition of FrontRow, the Company entered into a term loan credit facility, with WhiteHawk Finance LLC, as lender and WhiteHawk Capital Partners, LP, as collateral agent.

See Note 9 “Debt.”

The assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and selection of comparable companies.

The Company engaged the assistance of an independent third-party valuation specialist to determine certain fair value measurements related to acquired assets.

The excess consideration over the net fair values of the assets acquired and liabilities assumed was recognized as goodwill.

The fair value or net realizable value of inventories at the date of acquisition was determined using a “top-down” approach based upon the estimated sales value, less a reasonable profit margin and less the estimated costs to dispose of the inventory, including

selling costs and other disposal costs such as freight.

The fair value of accounts receivable acquired in connection with the acquisition approximated the contractual amount due from customers at that date.

The acquired contract liabilities of FrontRow have been recognized and measured in accordance with Topic 606.

The following table summarizes the estimated acquisition date fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid:

(in thousands)

Assets acquired:

Accounts receivable

Prepaid expenses

Property and equipment

Total assets acquired

Accounts payable and accrued expenses

Deferred revenue

Other liabilities

Total liabilities assumed

Net tangible assets acquired

Identifiable intangible assets:

Customer relationships

Total intangible assets subject to amortization

Total net assets acquired

Consideration paid:

The following table presents the useful lives over which the acquired intangible assets will be amortized on a straight-line basis, which approximates the pattern by which the related economic benefits of the assets are consumed:

Weighted Average

Customer relationships

Non-compete agreements

Goodwill is primarily attributable to synergies expected from the acquisition and the assembled workforce.

The Company incurred a total of $ 500,700 in acquisition-related costs and expensed all such costs incurred during the period in which the service was received.

Acquisition related costs are included in general and administrative expenses in the Consolidated Statement of Operations and Comprehensive Loss.

The results of operations of FrontRow are included in the Consolidated Statement of Operations and Comprehensive Loss beginning at the acquisition date.

There was no impact to the Consolidated Statement of Operations and

Comprehensive Loss for the year ended December 31, 2021 since the acquisition was consummated on December 31, 2021.

For the year ended December 31, 2022, revenue and net income from FrontRow were $ 24.8 million and $ 0.8 million, respectively.

Pro Forma Financials

The following unaudited pro forma information reflects our consolidated results of operations as if the acquisition of FrontRow had taken place on January 1, 2021.

The unaudited pro forma information is not necessarily indicative of the results of operations that the Company would have reported had the acquisition actually occurred at the beginning of these periods nor is it necessarily indicative of future results.

The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies or other operational improvements.

The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination are included in the pro forma revenue and net earnings reflected below.

Year ended December 31,

(in thousands)

Revenues, net

Net loss attributable common shareholders

Interactive Concepts

On March 23, 2021, the Company acquired 100 % of the outstanding shares of Interactive Concepts BV, a company incorporated and registered in Belgium and a distributor of interactive technologies (“Interactive”), for total consideration of approximately $ 3.3 million in cash, common stock and deferred consideration.

The Company has been Boxlight’s key distributor in Belgium and Luxembourg.

The following table summarizes the estimated acquisition date fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid:

(in thousands)

Assets acquired:

Accounts receivable

Property and equipment

Total assets acquired

Accounts payable and accrued expenses

Deferred tax liability

Total liabilities assumed

Net tangible assets acquired

Identifiable intangible assets:

Customer relationships

Total intangible assets subject to amortization

Total net assets acquired

Consideration paid:

Deferred cash consideration

Common shares issued

Total consideration paid

Measurement of Credit Losses on Financial Instruments,” which introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”).

The new guidance applies to loans, accounts receivable, trade receivables, other financial assets measured at amortized cost, loan commitments and other off-balance sheet credit exposures.

The new guidance also applies to debt securities and other financial assets measured at fair value through other comprehensive income.

Estimated credit losses under CECL consider relevant information about past events, current conditions and reasonable and supporting forecasts that affect the collectability of financial assets.

The new guidance was effective January 1, 2023 and was applied using a modified retrospective approach through a cumulative effect adjustment to retained earnings as of January 1, 2023.

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 year ended December 31, 2023.

Recent Accounting Pronouncements not yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280.

The enhanced disclosure requirements include:

title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances.

This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

This change will apply retrospectively to all periods presented.

The Company is currently evaluating the impact of this ASU on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid.

This change is effective for annual periods beginning after December 15, 2024.

This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date.

However, retrospective application in all prior periods presented is permitted.

The Company is currently evaluating the impact of this ASU on its financial statements.

NOTE 2 – ACCOUNTS RECEIVABLE - TRADE

1 unchanged sentence

Accounts receivable – trade $ 33,089 $ 33,198

Allowance for doubtful accounts

Allowance for credit losses ( 421 ) ( 414 )

Allowance for sales returns and volume rebates ( 3,145 ) ( 1,775 )

Accounts receivable - trade, net of allowances $ 29,523 $ 31,009

Write-offs of accounts receivable was approximately $ 243,000 and $ 525,000 for the years ended December 31, 2022 and 2021, respectively.

Write-offs of accounts receivable were approximately $ 78,000 and $ 243,000 for the years ended December 31, 2023 and 2022, respectively.

NOTE 3 – INVENTORIES

1 unchanged sentence

Finished goods $ 45,461 $ 57,967

Spare parts 1,221 775

Reserve for inventory obsolescence ( 2,551 ) ( 531 )

Advanced shipping costs

Inventories, net $ 44,131 $ 58,211

The Company wrote off inventories of approximately $ 1.2 million and $ 0.6 million for the years ended December 31, 2022 and 2021, respectively.

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

3 unchanged sentences

Prepaid expenses and other current assets $ 9,471 $ 7,433

Prepaid expenses and other current assets as of December 31, 2022 are net of reserves related to vendor receivables of $ 0.8 million.

There were no reserves related to vendor receivables as of December 31, 2021.

Prepaid expenses and other current assets as of December 31, 2023 and 2022 are net of reserves related to vendor receivables of $ 1.4 million and $ 0.8 million, respectively.

NOTE 5 – PROPERTY AND EQUIPMENT

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

Building $ 200 $ 200

Building improvements 14 14

1 unchanged sentence

Office equipment 1,242 1,057

Software 88 88

Other equipment 705 678

6 unchanged sentences

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

Useful lives 2023 2022

INTANGIBLE ASSETS

Customer relationships

Patents 4 - 10 years

Customer relationships 8 - 15 years

52,588 52,736

Technology 3 - 5 years

Domain 7 years 14 14

Non-compete 3 years

Tradenames 2 - 10 years

12,723 12,769

Intangible assets, at cost 74,842 75,035

2 unchanged sentences

Beginning Balance $ 25,092 $ 26,037

Goodwill acquired during the period

Change due to foreign currency translation 103 ( 945 )

Impairment ( 25,195 ) —

Ending Balance $ — $ 25,092

As of December 31, 2022, the company had $ 25.1 million of goodwill, of which none was allocated to a reporting unit with a negative carrying amount.

The company’s goodwill has an indefinite useful life and is tested for impairment annually.

The Company’s goodwill had an indefinite useful life and was tested for impairment annually.

For the years ended December 31, 2023 and 2022, the Company recorded amortization expense of $ 8.3 million and $ 8.6 million, respectively.

Changes to gross carrying amount of recognized intangible assets and goodwill due to translation adjustments were approximately ($ 3.1 ) million and $ 3.2 million as of December 31, 2022 and 2021, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments were approximately ($ 0.1 ) million and ($ 3.1 ) million as of December 31, 2023 and 2022, respectively.

Expected future amortization expense for intangible assets as of December 31, 2023 is as follows (in thousands):

Thereafter 10,750

Total $ 45,964

NOTE 7 – LEASES

The Company has entered into various operating leases for certain offices, support locations and vehicles with terms extending through December 2038.

Generally, these leases have initial lease terms of five years or less.

Operating lease expense was $ 2.6 million and $ 2.1 million for the years ended December 31, 2023 and 2022, respectively.

Variable lease costs and short-term lease cost were $ 1.7 million for the year ended December 31, 2023.

For the year ended December 31, 2022, variable lease cost and short-term lease cost were immaterial .

Cash paid for amounts included in the measurement of lease liabilities was $ 2.2 million and $ 2.4 million for the years ended December 31, 2023 and 2022, respectively.

Future minimum lease payments of the Company’s operating leases with a term over one year subsequent to December 31, 2023 are as follows:

Year ending December 31, (in thousands)

Thereafter 6,700

Total Lease Liabilities 14,279

Imputed Interest ( 5,170 )

Present Value of Lease Liabilities $ 9,109

During the year ended December 31, 2023, the weighted-average remaining lease term was 9.9 years, and the weighted-average discount rate was 10.8 %.

During the year ended December 31, 2022, the weighted-average remaining lease term was 3.2 years, and the weighted-average discount rate was 15.5 %.

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

2 unchanged sentences

Accrued expense 5,106 5,306

Other 345 541

Accounts payable and other liabilities $ 32,899 $ 36,566

NOTE 9 – DEBT

The following comprises debt on December 31, 2022 and 2021 (in thousands):

The following comprises debt at December 31, 2023 and 2022 (in thousands):

Debt – Third Parties

1 unchanged sentence

Note payable - Whitehawk 43,206 49,906

Discount and issuance costs

Total debt 43,278 50,033

Premium, discount and issuance costs 3,107 5,410

Current portion of debt 1,037 845

Long-term debt $ 39,134 $ 43,778

Total debt (net of discount and issuance costs)

Total debt (net of premium, discount and issuance costs) $ 40,171 $ 44,623

Debt - Third Parties:

WhiteHawk Finance LLC

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

The Company received an initial term loan of $ 58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $ 10 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw”).

The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans.” The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to the Company’s then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital.

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 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 $ 10.0 million that may be available for additional working capital purposes under certain conditions (the “Delayed Draw”).

The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans.” The Term Loans are secured by substantially all of the assets of the Company.

The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to the Company’s then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital.

Of the Initial Loan, $ 8.5 million was subject to repayment on February 28, 2022, with quarterly principal payments of $ 625,000 and interest payments commencing March 31, 2022 and the $ 40.0 million remaining balance plus any Delayed Draw loans becoming due and payable in full on December 31, 2025.

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provided that after March 31, 2022, if the Company’s Senior Leverage Ratio (as defined in the Credit Agreement) is less than 2.25 , the interest rate would be reduced to LIBOR plus 10.25 %.

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

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

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 $ 3.5 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 Company and substantially all of its direct and indirect subsidiaries (together with the Company, 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, the accounts of these key customers 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.

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 excess cash flow or casualty events.

On June 21, 2022, the Loan Parties entered into a second amendment (the “Second Amendment”) to 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.

On April 24, 2023, the Company entered into a third amendment (the “Third Amendment”) to the Credit Agreement, with the 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, and 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 the $ 3.0 million due under the terms of the Third Amendment.

There were no prepayment penalties or premiums included with this payment.

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.

As of December 31, 2023, the rate was 16.4 %.

The Fourth Amendment made no other changes to the Credit Agreement.

Covenant Compliance and Liquidity Considerations

The Company's Credit Agreement, as amended to date, 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.

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.

The Company was not in compliance with its financial covenant related to the Senior Leverage Ratio under the Credit Agreement at September 30, 2023.

The Company cured the non-compliance by paying $ 4.3 million inclusive of $ 0.3 million in prepayment penalties and accrued interest in November 2023 which would have resulted in the Company being in compliance with the Senior Leverage Ratio at September 30, 2023.

In February 2024, the Company paid $ 1.7 million, inclusive of a $ 0.1 million pre-payment penalty to Whitehawk to maintain compliance with the borrowing base covenant calculation as of January 31, 2024.

After the payment the Company was in compliance with the borrowing base covenant.

The Company was not in compliance with its financial covenant related to the Senior Leverage Ratio under the Credit Agreement at December 31, 2023.

The non-compliance was cured by a waiver applied in accordance with the Fifth Amendment to the Credit Agreement dated March 14, 2024 which waived any Event of Default that may have arisen directly as a result of the financial covenant default at December 31, 2023 and in the interim two-month period ended February 29, 2024.

The Fifth Amendment also amended and restated the Senior Leverage Ratio and Minimum Liquidity requirements.

Under the Fifth Amendment, the Senior Leverage Ratio requirement at March 31, 2024 was amended from 2.00 to 6.00 , at June 30, 2024 will remain at 2.00 and thereafter will remain at 1.75 .

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.

The Company also incurred agency fees, legal fees, and other costs in connection with the execution of the Credit Agreement totaling approximately $ 1.7 million.

Under the terms of the warrant issued to WhiteHawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which

time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect.

Under the terms of the warrant issued to Whitehawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect.

The warrants repriced on March 31, 2022 to $ 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 March 29, 2022, the Company received a notice from the collateral agent, alleging, among other things, defaults as a result of (i) failure to repay $ 8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and documents.

As a result, all accrued and unpaid interest owed under the Term Loan, became subject to a post-default interest rate equal to the highest interest rate allowed for under the Credit Agreement plus 2.50 % until such time as the events of default were either waived or cured.

In February 2022, WhiteHawk and the Company agreed in principle to an extension of the February 2022 Payment.

Pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the terms of repayment of the $ 8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms.

In July 2022, the Company and Whitehawk agreed that the notice had inadvertently included the default with respect to the failure to repay $ 8.5 million of the facility.

As a result, notwithstanding the notice, both WhiteHawk and the Company have agreed that the Company was not in default in making the February 2022 Payment to WhiteHawk.

The principal elements of the April amendment included (a) an extension of time to repay $ 8.5 million of the principal amount of the term loan from February 28, 2022 to February 28, 2023, and (b) forbearance on $ 3,500,000 in over advances until May 16, 2022 to allow the Company to come into compliance with the borrowing base requirements set forth in the Credit Agreement.

In such connection, the Loan Parties have obtained credit insurance on certain key customers whose principal offices are located in the European Union and Australia as, without the credit insurance, their accounts owed to the Loan Parties had been deemed ineligible for inclusion in the borrowing base calculation primarily due to the perceived inability of the Collateral Agent to enforce security interests on such accounts.

In addition, the Lender and Collateral Agent agreed to (i) reduce, through September 30, 2022, the minimum cash reserve requirement for the Loan Parties, (ii) reduce the interest rate by 50 basis points (to LIBOR plus 9.75 %) after delivery of the Loan Parties’ September 30, 2023 financial statements, subject to the Loan Parties maintaining 1.75 EBITDA coverage ratio, and (iii) waive all prior Events of Default under the Credit Agreement.

In conjunction with the amendment to the Credit Agreement, the parties entered into an amended and restated fee letter (the “Fee Letter”) pursuant to which the parties agreed to prepayment premiums of (i) 5 % for payments made on or before December 31, 2022, (ii) 4 % for payments made between January 1, 2023 and December 31, 2023, and (iii) 2 % for payments made between January 1, 2024 and December 31, 2025.

On June 21, 2022, the Company and substantially all of its direct and indirect subsidiaries (together with the Company, the “Loan Parties”), entered into a second amendment (the “Second Amendment”) to the four-year term loan credit facility, originally entered into December 31, 2021 and as amended on April 4, 2022 (the “Credit Agreement”), with the Collateral Agent and Lender.

The Second Amendment to the Credit Agreement was entered into for purposes of the Lender funding a $ 2.5 million delayed draw term loan and adjusting certain terms to the Credit Agreement, including adjusting the Applicable Margin (as defined in the Second Amendment) to 13.25 % for LIBOR Rate Loans and 12.25 % for Reference Rate Loans, increasing the definition of change of control from 33 % voting power to 40 % voting power, requiring the Company to engage a financial advisor, and allowing additional time, until July 15, 2022, for the Company to come into compliance with certain borrowing base requirements set forth in the Second Amendment to the Credit Agreement, among other adjustments.

As of December 31, 2022 and 2021, the Company was in compliance with all covenants and borrowing base requirements.

During the year ended December 31, 2022, the Company paid the $ 8.5 million due on February 28, 2023.

During the year ended December 31, 2022, the Company repaid total principal of $ 10.4 million (inclusive of the $ 8.5 million) and interest of $ 8.3 million to WhiteHawk.

Lind Global Marco Fund and Lind Global Asset Management

During the year ended December 31, 2021, the Company repaid principal of $ 12.0 million and interest of $ 584 thousand, to Lind Global by issuing a total of 7.2 million shares of Class A common stock with an aggregate value of $ 15.9 million to Lind Global and recognized a loss on extinguishment of debt of approximately $ 3.3 million.

Any outstanding debt owed to Lind Global was repaid in full on December 31, 2021 following the Company’s receipt of the Initial Loan from WhiteHawk.

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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On March 2, 2022, the Company received a decision letter from the lender that the forgiveness application had been approved, leaving a remaining balance of $ 173 thousand to be paid.

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

The amount remaining on the loan at December 31, 2022 was $ 127 thousand.

Everest Display, Inc.

On January 26, 2021, the Company entered into an agreement with EDI and EDI’s subsidiary, AMAGIC, settling $ 1,983,436 in accounts payable owed by the Company to EDI for 793,375 shares of Class A common stock.

During the year ended December 31, 2021, the Company recognized a $ 357 thousand gain on the settlement of the accounts payable.

Accounts Receivable Financing – Sallyport Commercial Finance

On September 30, 2020, Boxlight Inc.

and EOS EDU LLC entered into an asset-based lending agreement with Sallyport Commercial Finance, LLC (“Sallyport”).

Sallyport agreed to purchase 90 % of the eligible accounts receivable of the Company during the Term with a right of recourse back to the Company if the receivables are not collectible.

Advances against this agreement accrue interest at the rate of 3.50 % in excess of the highest prime rate publicly announced from time to time with a floor of 3.25 %.

In addition, the Company is required to pay a daily audit fee of $ 950 per day.

On July 20, 2021, Boxlight and Sallyport amended the Accounts Receivable Agreement (the “ARC Amendment”) for purposes of increasing the Maximum Facility Limit Amount to $ 13,000,000 , as well as increasing the minimum monthly sales from $ 1,250,000 to $ 3,000,000 .

In exchange for entry into the ARC Amendment, Boxlight agreed to a fee of $ 50,000 , representing one percent of the increased Maximum Facility Limit Amount.

Other terms of the Accounts Receivable Agreement remain unchanged.

On August 6, 2021, Boxlight and Sallyport entered into an additional amendment of the Accounts Receivable Agreement (the “Second ARC Amendment”), which further increased the Maximum Facility Limit Amount to $ 15,000,000 .

In exchange for entry into the Second ARC Amendment, Boxlight agreed to a fee of $ 20,000 , representing one percent of the increased Maximum Facility Limit Amount.

Other terms of the Accounts Receivable Agreement remain unchanged.

Any outstanding debt owed to Sallyport was repaid in full on December 31, 2021 following the Company’s receipt of the Initial Loan from WhiteHawk.

Debt - Related Parties:

Note Payable - STEM Education Holdings, Pty

On April 17, 2020, the Company acquired MyStemKits and STEM Education Holdings, Pty, an Australian corporation (“STEM”), the largest online collection of K-12 STEM curriculum for 3D Purchase consideration for the acquisition of STEM included a note payable in the of $ 350,000 .

The note was payable in four equal installments of $ 87,500 on July 31, 2020, October 31, 2020, January 31, 2021 and April 30, 2021.

Parties acknowledged that potential adjustments may be made to the installment payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits is materially below budget.

Accordingly, and as agreed between Boxlight and the STEM sellers the note payable was adjusted to $ 175,000 and was paid off in September 2021.

The Company received a payment schedule from the lender on May 5, 2022, extending the payoff date until May 2025 and bears 1 % interest.

Debt Maturity

Principal repayments to be made during the next five years on the Company’s outstanding debt facilities at December 31, 2023 are as follows (in thousands):

Total $ 43,278

NOTE 10 – DERIVATIVE LIABILITIES

At December 31, 2022 and December 31, 2021, the Company had warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered under certain conditions.

The Company concluded that the warrants should be accounted for as derivative liabilities.

The Company used a third party to determine the fair value of the derivative liabilities at December 31, 2022 and 2021, and they used a Monte Carlo Simulation model to determine the fair value.

Key assumptions used are as follows:

The Company engaged a third-party specialist to determine the fair value of the derivative liabilities using a Monte Carlo Simulation model.

There were no changes to the valuation techniques and the key assumptions used are as follows:

December 31, 2023

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Risk free interest rate (1) 4.02 %

Expected life in years

Expected life in years 4 years

Expected volatility (2) 83.6 %

Expected dividend yields (3) — %

__________________________________________

(1) The risk-free interest rate was determined using the applicable Treasury Bill as of the measurement date.

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United States $ ( 30,393 ) $ ( 2,569 )

Foreign ( 11,779 ) ( 2,707 )

Other Foreign Jurisdictions 4,882 1,582

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The components of income tax expense at December 31, 2023 and December 31, 2022, are as follows (in thousands):

Federal $ 855 $ 1,491

Foreign 1,589 1,399

Total Current $ 2,537 $ 3,028

Federal $ 81 $ ( 85 )

Foreign ( 752 ) ( 2,894 )

Total Deferred $ ( 671 ) $ ( 2,979 )

Total $ 1,866 $ 49

The reconciliation of the provision for income taxes at the United States Federal statutory rate compared to the Company’s income tax expense (benefit) as reported is as follows (in thousands):

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Foreign tax rate differential ( 273 ) ( 19 )

Loss on debt settlement

Section 162(m) compensation 61 61

FX Adjustment

Foreign currency adjustment ( 90 ) —

GILTI inclusion 693 160

Stock compensation 141 83

Amortization 4,845 11

Tax credits and government assistance ( 623 ) ( 179 )

Non-deductible expenses 28 186

Prior period true ups – temporary differences

Other permanent differences ( 270 ) —

Adjustments to prior periods – temporary differences 1,000 197

Rate changes and differentials ( 53 ) ( 651 )

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Deferred tax assets:

Fixed assets $ 15 $ —

Allowance for bad debts 926 507

Inventory 432 294

R&D amortization 1,172 413

Accrued expenses

Deferred revenue 6,143 5,600

Stock compensation 291 1,209

Net lease asset

Right of use liability 501 1

Interest expense limitation 6,051 3,751

Net operating loss carry-forwards 6,635 7,282

Deferred tax assets (liabilities)

Deferred tax assets $ 22,166 $ 19,260

Valuation allowance ( 18,173 ) ( 14,084 )

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Deferred tax liabilities:

Fixed assets $ — $ ( 24 )

Intangible assets ( 6,671 ) ( 8,603 )

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Prepaid expenses ( 48 ) ( 169 )

Right of use asset ( 492 ) —

Other ( 116 ) ( 308 )

Deferred tax liabilities $ ( 8,309 ) $ ( 9,856 )

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The cumulative U.S.

Federal net operating losses carryforward on tax basis income was approximately $ 23.5 million and $ 29.9 million at December 31, 2022 and 2021, respectively, of which $ 4.6 million will expire between 2029 and 2037 and $ 18.9 million will carryforward indefinitely.

Federal net operating losses carryforward on tax basis income was approximately $ 20.4 million and $ 23.5 million at December 31, 2023 and 2022, respectively, of which $ 10.6 million will expire between December 31, 2029 and December 31, 2037 and $ 9.8 million will carryforward indefinitely.

The cumulative U.S.

state net operating losses carryforward was approximately $ 45.8 million and $ 28.8 million on December 31, 2022 and 2021, respectively.

The cumulative foreign net operating losses carryforward was $ 1.8 million and $ 2.6 million on December 31, 2022 and 2021, respectively.

The legacy Boxlight entities are in a net deferred tax asset position in the United States, the United Kingdom, and other jurisdictions, primarily driven by the aforementioned net operating losses.

state net operating losses carryforward was approximately $ 41.7 million and $ 45.8 million at December 31, 2023 and 2022, respectively.

The cumulative foreign net operating losses carryforward was $ 2.1 million and $ 1.8 million at December 31, 2023 and 2022, respectively.

The legacy Boxlight entities are in a net deferred tax asset position in the United States, the United Kingdom, and other jurisdictions are primarily driven by the aforementioned net operating losses.

The recoverability of these deferred tax assets depends on the Company’s ability to generate taxable income in the jurisdiction to which the carryforward applies.

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

For example, in the United States, a change in ownership, as defined by federal income tax regulations, could significantly limit the Company's ability to utilize our U.S.

For example, in the United States, a change in ownership, under section 382 as defined by federal income tax regulations, could significantly limit the Company's ability to utilize our U.S.

net operating loss carryforwards.

Additionally, because U.S.

tax laws limit the time during which the net operating losses generated prior to 2018 may be applied against future taxes, if the Company fails to generate U.S.taxable income prior to the expiration dates the Company may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes.

The Company has evaluated both positive and negative evidence as to the ability of its legacy entities in each jurisdiction to generate future taxable income.

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The change in its valuation allowance during 2023 is approximately $ 4.1 million.

The Company has determined that it likely underwent IRC Sec 382 ownership changes in prior years.

The Company is in the process of evaluating the Section 382 impact to determine what portion of its NOLs will be utilizable in the future.

It is expected that the ownership change caused a limitation on the net operating losses generated before 2020.

Additionally, because U.S.

tax laws limit the time during which the net operating losses generated prior to 2018 may be applied against future taxes, if the Company fails to generate U.S.

taxable income prior to the expiration dates the Company may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes.

The Sahara entities have recorded a net deferred tax liability, which is primarily driven by the net deferred tax liability on the intangibles for which it does not have tax basis.

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

The Company does not qualify for any consolidated filing positions in any of these countries, so there is no ability to net the deferred tax liabilities of the Sahara companies against the deferred tax assets of the legacy Boxlight companies.

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

federal jurisdictions to which the Company is subject.

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

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted.

The CARES Act includes provisions, among others, addressing the carryback of net operating losses for specific periods, refunds of alternative minimum tax credits, temporary modifications to the limitations placed on the tax deductibility of net interest expenses, and technical amendments for qualified improvement property.

Additionally, the CARES Act provides for various payroll incentives, including Payroll Protection Program (“PPP”) loans, refundable employee retention tax credits, and the deferral of the employer-paid portion of social security payroll taxes.

The Company received a $ 1.1 million loan under the PPP, of which over $ 0.8 million was forgiven in March 2022 under the requirements of the program.

The remaining amount owed will be paid back in May 2022.

No other provisions of the CARES Act had a material impact on the Company’s tax provision.

On December 27, 2020, the Consolidated Appropriations Act of 2021 - including the COVID-related Tax Relief Act of 2020 - was enacted.

It included a provision that any expenses paid using forgiven PPP loan proceeds would be fully deductible.

This has been reflected in the Company’s tax provision.

federal jurisdictions.

The tax years from 2022 to 2023 remain open to examination in the U.K.

Statues of limitations vary in other immaterial jurisdictions.

The company has not identified any material uncertain tax positions at this time.

Effective January 1, 2022, for U.S.

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Preferred Shares

The Company’s articles of incorporation, as amended on December 15, 2016, provide that the Company is authorized to issue 50,000,000 shares of preferred stock consisting of:

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

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

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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 as may be designated from time to by the Company’s board of directors.

and 4) Remaining shares of “blank check” preferred stock as may be designated from time to by the Company’s board of directors.

Each authorized series of preferred stock is described below.

Issuance of preferred shares

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At the time of the Company’s initial public offering, 250,000 shares of the Company’s non-voting convertible Series A preferred stock were issued to Vert Capital for the acquisition of Genesis.

All of the Series A preferred stock was convertible into 398,406 shares of Class A common stock.

On August 5, 2019, 82,028 of these preferred shares were converted into 130,721 shares of Class A common stock.

As of December 31, 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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The Series C Preferred Stock has a stated and liquidation value of $ 10.00 per share and is convertible into the Company’s Class A common stock at the Conversion Price either (i) at the option of the holder at any time after January 1, 2026 or (ii) automatically upon the Company’s Class A common stock trading at 200 % of the Conversion Price for 20 consecutive trading days (based on a volume weighted average price).

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

Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares.

The Series C Preferred Stock is also subject to redemption on the same terms commencing January 1, 2026.

The aggregate estimated fair value of the Series B and C Preferred Stock of $ 28.5 million was included as part of the total consideration paid for the purchase of Sahara.

On March 24, 2021, the Company entered into a share redemption and conversion agreement with certain holders of Series B and Series C preferred stock (the “Redemption Agreement”) which allows the Company to redeem and repurchase each such stockholder’s shares of Series B preferred stock on or before June 30, 2021 for the stated or liquidation value of approximately £ 11.5 million (or approximately $ 15.9 million) plus accrued dividends from January 1, 2021 to the date of purchase.

Such stockholders hold 96 % of the Series C preferred stock.

Upon redemption, the Series C shares held by such stockholders would convert into approximately 7.6 million shares of Class A Common Stock at the stated conversion price of $ 1.66 per share.

On June 14, 2021, the Company entered into an amendment to the Redemption Agreement (the “Amended Redemption Agreement”) for purposes of extending the completion date to on or before December 31, 2021.

In addition, the Amended Redemption Agreement changed the definition of “Redemption Payments” such that the redemption payment schedule would begin on or before May 31, 2021, for the quarter then ended and continue quarterly until the date of completion.

Regarding these amendments, the Company applied the accounting guidance from ASC Subtopic 470-50, “ Debt Modifications and Extinguishments ,” pertaining to determining whether an amendment to an equity-classified preferred share is an extinguishment or

modification, and concluded that the Amended Redemption Agreement on June 14, 2021, as it effected the Series B Preferred Stock, resulted in an extinguishment of the original equity instruments subject to redemption agreement.

Accordingly, the Series B Preferred Stock subject to the Amended Redemption Agreement was recorded at its fair value as of June 14, 2021, and a $ 367,000 deemed contribution was credited to additional-paid-in-capital.

With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature, but in accordance with ASC Subtopic 470-20, since it is dependent upon contingencies that are not solely in the control of the holder, the beneficial conversion feature was not recognized for accounting purposes.

Since we early adopted (as of January 1, 2021) ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which includes a key provision eliminating the beneficial conversion feature guidance in ASC Subtopic 470-20, we have not recorded the beneficial conversion feature.

The Series B Preferred Stock has been recorded at its estimated fair value on the date of issuance of approximately $ 16.1 million, which includes the conversion and redemption features as they have not been bifurcated from the host instruments.

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Securities Purchase Agreement

On July 22, 2022, the Company, entered into a Securities Purchase Agreement with an accredited institutional investor pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7.0 million shares of the Company’s Class A common stock, par value $ 0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 352,940 shares of Common Stock at an exercise price of $ 0.0001 per share, which Pre-Funded Warrants were issued in lieu of shares of Common Stock to ensure that the Investor did not exceed certain beneficial ownership limitations, and warrants to purchase an aggregate of 7,352,940 shares of Common Stock at an exercise price of $ 0.68 per share (the “Warrants”, and collectively with the Pre-Funded Warrants and the Shares, the “Securities”).

On July 22, 2022, the Company, entered into a Securities Purchase Agreement with an accredited institutional investor pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 875,000 shares of the Company’s Class A common stock, par value $ 0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 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 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, before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants.

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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 the WhiteHawk in January 2022.

Debt Conversion

During the year ended December 31, 2021, the Company issued 7.9 million shares of Class A common stock in lieu of $ 13.7 million in principal and interest payments due in relation to notes payable to Lind Global.

These conversion transactions resulted in a $ 3.8 million loss on the settlement of debt obligations.

Accounts Payable and Other Liabilities Conversion

During the year ended December 31, 2021, the Company issued 793,375 shares of Class A common stock with an aggregate value of $ 1.6 million to Everest Display, Inc.

to convert $ 2.0 million in accounts payable owed, resulting in a gain of $ 356,700 from settlement of liabilities.

Conversion of Restricted Stock Units

During the year ended December 31, 2022 and 2021, respectively, 2,489,075 and 916,682 restricted stock units vested and were converted into Class A common stock.

Exercise of Stock Options

There were 296,841 options to purchase common stock that were exercised during the year ended December 31, 2022.

There were 492,460 options to purchase common stock exercised during the year ended December 31, 2021.

Exercise of Warrants

During the year ended December 31, 2022, pre-funded warrants to purchase 352,940 shares of Common Stock at an exercise price of $ 0.001 per share were exercised.

During the year ended December 31, 2021, 295,000 warrants were exercised with an exercise price of $ 0.42 .

The company has been Boxlight’s key distributor in Belgium and Luxembourg.

The company issued 142,882 shares of Class A Common Stock, in conjunction with the purchase of Interactive.

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 (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.

As of December 31, 2023, the Company has not utilized the Repurchase Program.

NOTE 13 – STOCK COMPENSATION

Grants made under the Equity Incentive Plans must be approved by the Company’s board of directors.

The total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company or a subsidiary of the Company under the Company’s 2021 Equity Incentive Plan was 5,000,000 shares.

The 2021 Equity Incentive Plan was approved by the Company’s Board on April 12, 2021 and approved by the shareholders at the Company’s 2021 Annual Shareholders Meeting held on June 25, 2021.

The Company has issued grants under two equity incentive plans, both of which have been approved by the Company’s shareholders:

(i) the 2014 Equity Incentive Plan, as amended (the “2014 Plan”), pursuant to which a total of 798,805 shares of the Company’s Class A common stock have been approved for issuance, and (ii) the 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which a total of 625,000 shares of the Company’s Class A common stock have been approved for issuance.

Upon approval of the 2021 Plan in September 2021, any shares remaining available for issuance under the 2014 Plan were cancelled, and all future grants were issued under the 2021 Plan.

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.

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.

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 during the year ended December 31, 2023.

Stock Options

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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.

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 as they occur.

Following is a summary of the option activities during the years ended December 31, 2023 and 2022:

Exercise Price

Units Weighted

Exercise Price Weighted

Term (in years)

Outstanding, December 31, 2021 506,765 $ 15.36 2.29

Granted 152,718 $ 8.96

Exercised ( 37,105 ) $ 2.00

Cancelled ( 132,893 ) $ 20.72

Outstanding, December 31, 2022 489,485 $ 12.88 2.17

( 1,063,142 )

Granted 364,299 $ 2.71

Exercised ( 12,500 ) $ 1.04

Cancelled ( 493,025 ) $ 10.05

Outstanding, December 31, 2023 348,259 $ 6.65 2.09

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

The Company used the following inputs to value warrants issued during the year ending December 31, 2022 using the Black Scholes option valuation method:

The Company used the following inputs to value options issued and remeasurements, as applicable during the year ending December 31, 2023 using the Black Scholes option valuation method:

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

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expected volatility, ranging from 111.45 % to 111.74 % and expected dividend yield of 0 %.

As of December 31, 2022 and December 31, 2021, the stock options had an intrinsic value of approximately $ 18 thousand and $ 1.9 million, respectively.

As of December 31, 2023 and December 31, 2022, the stock options had an intrinsic value of approximately $ 0 and $ 18 thousand, respectively.

During the year ended December 31, 2023, the Company granted 364,299 options of which 322,040 were subsequently cancelled and 42,259 vested during the year.

Also, during the year ended December 31, 2023, 59,117 out of the money options were cancelled, with such shares being returned to the 2021 Plan and becoming available for re-issuance in new grants.

During the year ended December 31, 2023, approximately 84,179 options expired during the period.

On May 3, 2022, the Boxlight board of directors adopted a resolution, in exchange for a three-year non-compete agreement, to grant Mark Elliott, a member of the board and former CEO of the Company, an extension for one-year , of previously granted stock options to purchase a total of 72,210 shares of Class A common stock, par value $ 0.001 per share, which had expired on January 12, 2022.

1 unchanged sentence

On June 13, 2022, the Boxlight board of directors granted Greg Wiggins, Chief Financial Officer, stock options for 18,750 shares of the Company’s Class A common stock will vest in equal quarterly installments over a four-year term commencing on July 5, 2022.

On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, the Chairman and Chief Executive Officer, extending Mr.

On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, our now former Chairman and Chief Executive Officer, extending Mr.

Pope’s term of employment with the Company.

1 unchanged sentence

Pope received a grant 61,759 options to purchase Class A Common Stock, which are valued at approximately $ 420 thousand.

There were no issuances of stock options in 2021.

Restricted Stock Units

1 unchanged sentence

Upon granting the RSUs, the Company records a fixed compensation expense equal to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period for the RSUs.

Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting.

Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting as they occur.

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

The following is a summary of the restricted stock activities during the years ended December 31, 2023 and 2022.

Number of Units Weighted

Grant Date Fair

Number of Units

Outstanding, December 31, 2021 246,744 $ 14.48

( 1,498,495 )

Granted 309,710 $ 9.52

Vested ( 197,941 ) $ 13.04

Forfeited ( 54,634 ) $ 10.72

Outstanding, December 31, 2022 303,879 $ 11.04

( 1,583,525 )

Granted 498,398 $ 2.05

Vested ( 318,995 ) $ 5.84

Forfeited ( 74,831 ) $ 3.56

Outstanding, December 31, 2023 408,451 $ 5.37

During fiscal year 2023, the Company granted 498,398 RSUs of which 62,300 were subsequently cancelled.

On August 25, 2023, the Company granted 211,056 RSUs to its board of directors and 214,994 RSUs to certain members of senior management.

On January 25, 2022, the Company granted an aggregate of 5,000 RSUs to new employees.

The RSUs vest over four years and the aggregate fair value of the shares was approximately $ 44 thousand.

On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, the Chairman and Chief Executive Officer, extending Mr.

On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, our now former Chairman and Chief Executive Officer, extending Mr.

Pope’s term of employment with the Company.

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These RSUs vested and were issued directly to OLORI, and such common stock issuable upon vesting of the RSUs will be reserved for issuance directly out of the authorized shares of Class A common stock and not out of the Company’s equity incentive plan.

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

These RSUs vest ratably over one year and had an aggregated fair value of approximately $ 374,000 on the grant date.

In addition, on March 20, 2021, the Company granted an aggregate of 875,245 shares of restricted common stock to Michael Pope, the Company’s CEO and Chairman, pursuant to his employment agreement.

These shares were issued pursuant to the 2014 Equity Incentive Plan, vest ratably over one year , are issued monthly as they vest, and had an aggregated fair value of approximately $ 2.5 million on the grant date.

The following is a summary of the warrant activities during the years ended December 31, 2023 and 2022:

Exercise Price

Units Weighted

Exercise Price Weighted

Term (in years)

Outstanding, December 31, 2021 264,161 $ 16.00 0.94

Granted 1,165,959 $ 5.75 —

Exercised ( 44,118 ) $ 0.08 —

Outstanding, December 31, 2022 1,386,002 $ 6.57 5.25

Granted — $ —

Exercised — $ —

Outstanding, December 31, 2023 1,386,002 $ 6.57 3.72

Exercisable, December 31, 2023 1,385,690 $ 6.57 3.72

2022 Warrants

On July 22, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited institutional investor (the “Investor”) pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7.0 million shares (the “Shares”) of the Company’s Class A common stock, par value $ 0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 352,940 shares of Common Stock at an exercise price of $ 0.0001 per share, which Pre-Funded Warrants were issued in lieu of shares of Common Stock to ensure that the Investor did not exceed certain beneficial ownership limitations, and warrants to purchase an aggregate of 7,352,940 shares of Common Stock at an exercise price of $ 0.68 per share (the “Warrants”, and collectively with the Pre-Funded Warrants and the Shares, the “Securities”).

The Securities were sold at a price of $ 0.68 per share for total gross proceeds to the Company of $ 5.0 million (the “Offering”), before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants.

The Pre-Funded Warrants were exercisable immediately and the Warrants will be exercisable six months after the date of issuance and will expire five and a half years from the date of issuance.

As such, the net proceeds to the Company from the Offering, after deducting placement agent’s fees and estimated expenses payable by the Company and excluding the exercise of any Warrants or Pre-Funded Warrants was $ 4.6 million of which the proceeds net of issuance costs were allocated based on the relative fair values of the instruments, warrants and prefunded warrants;

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

The net proceeds received by the Company will be used for working capital purposes.

2021 Warrants

On December 31, 2021, the Company granted WhiteHawk, Inc., 2,043,291 warrants, in conjunction with the issuance of a loan credit facility to the Company.

The warrants had an exercise price of $ 2.00 per share and include a provision that allows for the exercise price to be adjusted based on the Company’s stock price as of March 31, 2022.

The expiration period for these warrants is five years from the issuance date.

The warrants had an aggregated fair market value of approximately $ 3.1 million on the grant date.

Stock compensation expense

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Restricted stock units 2,023 2,505

Equity-based Warrants 3 3

Total stock compensation expense $ 3,131 $ 3,313

During the year ended December 31, 2023, certain members of senior management voluntarily forfeited certain unvested restricted stock units and stock option awards to increase share availability under the Company’s Equity Incentive Plan.

The Company recorded stock compensation expense for the fair value of these cancelled awards of $ 624 thousand during the year ended December 31, 2023.

As of December 31, 2023, there was approximately $ 2.4 million of unrecognized compensation expense related to unvested options, RSU’s, and warrants, which will be amortized over the remaining vesting period.

Of that total, approximately $ 2.0 million is estimated to be recorded as compensation expense in 2023.

Of that total, approximately $ 1.5 million is estimated to be recorded as stock compensation expense in 2024.

NOTE 14 – OTHER RELATED PARTY TRANSACTIONS

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Elliott a fixed payment of $ 4,000 per month and commissions equal to 15 % of gross profit derived by the Company based on total purchase order revenue.

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

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

The agreement, unless cancelled, will renew every year on December 31st.

For the year ended December 31, 2023, the Company paid $ 106 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 now former CEO and Chairman, Michael Pope.

The Management Agreement is separate and apart from Mr.

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

On January 4, 2024, Mr.

Pope’s employment with the Company terminated.

In accordance with the Management Agreement, Mr.

Pope is expected to continue providing consulting services to the Company for the subsequent 13 months.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through December 2027.

Generally, these leases have initial lease terms of five years or less.

Many of the leases have one or more lease renewal options.

The exercise of lease renewal options is at its sole discretion.

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

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

No renewal options

or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities.

Certain of the Company’s lease agreements provide for periodic adjustments to rental payments for inflation.

As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.

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

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

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

For these short-term leases, lease expense is recognized on a straight-line basis over the lease term.

At December 31, 2022, the Company had no leases classified as finance leases.

The Company is not a lessor in any lease arrangement.

Operating lease expense was $ 2.1 million and $ 2.3 million for the year ended December 31, 2022 and 2021, respectively.

Variable lease costs and short-term lease cost were not material for the year ended December 31, 2022.

Cash paid for amounts included in the measurement of lease liabilities was $ 2.4 million for the year ended December 31, 2022.

During the year ended December 31, 2022, the Company obtained new operating lease right-of-use assets totaling $ 1.8 million.

Future minimum lease payments of the Company’s operating leases with a term over one year subsequent to December 31, 2022 are as follows:

Year ending December 31,

(in thousands)

Less imputed interest

The weighted-average remaining lease term is 3.2 years and the weighted-average discount rate is 15.5 %.

On January 19, 2022, the Company signed a lease agreement for 64 months for approximately 12,000 feet of space for its new corporate headquarters in Duluth, Georgia.

The Company will occupy the building on approximately May 15, 2022.

The lease will replace the space previously rented by the Company for its headquarters in Lawrenceville, Georgia.

On February 4, 2022, the Company signed a lease agreement for 60 months for 24,000 feet of warehouse space in Lawrenceville, Georgia to begin March 1, 2022.

The lease will replace the space previously rented by the Company.

For the year ended December 31, 2021, if the annual amounts for these leases were added to the table above, the minimum lease payments would increase by approximately $ 2.7 million.

Purchase Commitments

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From time to time, the Company is involved in routine litigation and legal proceedings in the ordinary course of its business, such as employment matters and contractual disputes.

Currently, there is no pending litigation or proceedings that the Company’s management believes will have a material effect, either individually or in the aggregate, on its business or financial condition.

Currently, there is no pending litigation or proceedings

that the Company’s management believes will have a material effect, either individually or in the aggregate, on its business or financial condition.

NOTE 16 – CUSTOMER AND SUPPLIER CONCENTRATION

Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases.

The Company’s revenues were concentrated with a few customers for the years ended December 31, 2022 and 2021:

Total revenues

from the customers

For the year ended December 31, 2023, the Company's revenues were concentrated with one customer.

The Company’s revenues were concentrated with two customers for the year ended December 31, 2022.

Customer Total revenues

from the customer

as a percentage of

total revenues

for the year ended

2023 Accounts

receivable from

the customer as of

(in thousands) Total revenues

from the customers

as a percentage of

receivable from

total revenues

the customers as of

total revenues

the customers as of

for the year ended

(in thousands)

2022 Accounts

receivable from

the customers as of

(in thousands)

The loss of the significant customers or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition.

The Company’s purchases were concentrated among a few vendors for the years ended December 31, 2022 and 2021:

Total purchases

from the vendors

1 10 % $ 1,762 18 % $ 8,468

2 — % $ — 5 % $ 469

The loss of a significant customer or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition.

For the year ended December 31, 2023, the Company's purchases were concentrated among one vendor.

The Company’s purchases were concentrated among two vendors for the year ended December 31, 2022.

Vendor Total purchases

from the vendor

as a percentage of

Accounts payable

as a percentage

Accounts payable

total cost of

the year ended

2023 Accounts payable

(prepayment) to

the vendor as of

(in thousands) Total purchases

from the vendors

as a percentage

of total cost of

the year ended

2022 Accounts payable

(prepayment) to

the vendors as of

the year ended

(in thousands)

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

1 48 % $ 20,472 56 % $ 24,029

2 — % $ — 4 % $ 705

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

NOTE 17 - SEGMENTS

Information about our Company’s operations by operating segment is shown in the following tables (in thousands):

Americas $ 95,995 $ 100,393

EMEA 88,256 127,664

Rest of World 2,943 791

Eliminations and Adjustments (1)

( 10,473 ) ( 7,067 )

Total Revenue, net $ 176,721 $ 221,781

(Loss) Income from Operations

Americas ( 18,695 ) ( 591 )

EMEA ( 9,077 ) 3,534

Rest of World 977 144

Eliminations and Adjustments (1)

Total (Loss) Income from Operations $ ( 26,300 ) $ 3,049

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

Sales between these segments are generally valued at market.

2023 December 31,

Identifiable Assets

Americas $ 69,749 $ 88,451

EMEA 85,732 104,978

Rest of World 3,090 1,966

Total Identifiable Assets $ 158,571 $ 195,395

NOTE 18 – SUBSEQUENT EVENTS

On February 14, 2023, the board of directors of Boxlight Corporation approved the Company’s establishment of a share repurchase program (the “Repurchase Program”) authorizing the Company to purchase up to $ 15.0 million of the Company’s Class A common stock.

Pursuant to the Repurchase Program, the Company may, from time to time, repurchase its Class A common stock in the open market, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The authorization expires on January 26, 2027, may be suspended or discontinued at any time, and does not obligate the company to acquire any amount of Class A common stock.

As previously disclosed, we received a deficiency letter from the Listing Qualifications Department (the "Staff") of the Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company's Class A common stock (the "Common Stock") was trading below the minimum $ 1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Requirement").

In accordance with Nasdaq Rules, the Company was provided with an initial period of 180 calendar days, or until January 2, 2023 (the ("Initial Grace Period"), to regain compliance with the Bid Price Requirement.

Because the Initial Grace Period was coming to an end and the Company had not yet regained compliance, in December 2022, the Company submitted a request to Nasdaq to obtain an additional 180 -day grace period (the "Additional Grace Period") to regain compliance with the Bid Price Requirement.

On January 3, 2023, the Company received formal approval from Nasdaq granting it an additional 180 days , or until July 3, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.

On January 4, 2024, the board of directors appointed Dale Strang, a current member of the Board, to serve as the Company’s interim Chief Executive Officer and principal executive officer.

Strang replaced Michael Pope, whose last day as an employee of the Company was on January 12, 2024.

Pope no longer serves as Chairman of the Board but will remain as a member of the Board.

On March 14, 2024, the Company entered into a fifth amendment (the "Fifth Amendment') with the Collateral Agent and Lender for the purpose of (1) amending and restating the Senior Leverage Ratio and Minimum Liquidity (as defined in the Fifth Amendment), and (2) waiving any Event of Default that may have arisen directly as a result of the Financial Covenant Default (as defined in the Fifth Amendment).

The Fifth Amendment also added additional financial reporting obligations and potentially may include certain foreign subsidiaries of Boxlight Inc.

as additional guarantors under the Credit Agreement.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On June 1, 2022, the Company was notified by Dixon Hughes Goodman LLP ("DHG"), the Company's independent registered public accounting firm, that DHG was merging with BKD, LLP ("BKD"), and that following their merger, their combined entities would operate under the name FORVIS, LLP (“FORVIS”).

The audit committee of the Company’s board of directors approved the engagement of FORVIS, the successor in the merger of DHG and BKD, as the Company’s independent registered public accounting firm, effective June 1, 2022.

DHG’s audit report on the consolidated financial statements of the Company for the year ended December 31, 2021 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.

During the Company’s two most recent fiscal years ended December 31, 2021 and 2020 and through June 2, 2022, the Company has not had any “disagreements” (as such term is defined in Item 304 of Regulation S-K) with DHG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of DHG, would have caused DHG to make reference to the subject matter of the disagreement in its reports on the Company’s consolidated financial statements for such periods.

During the Company’s two most recent fiscal years and through June 2, 2022, there were no “reportable events” (as such term is defined in Item 304 of Regulation S-K).

On June 2, 2022, the Company provided FORVIS, as successor to DHG, with a copy of the Current Report on Form 8-K filed on June 2, 2022 (the “Form 8-K”) and has requested that FORVIS furnish it with a letter addressed to the U.S.

Securities and Exchange Commission stating whether or not FORVIS agrees with the Company’s statements in the Form 8-K .

A copy of the letter dated June 2, 2022 furnished by FORVIS in response to that request was filed as Exhibit 16.1 to the Form 8-K filed with the SEC on June 2, 2022.

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-K

Item 8. Financial Statements and Supplementary Data