What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-08 · 209 added, 125 removed, 615 unchanged (35% of the section changed)

1 unchanged sentence

Boxlight Corporation

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three months ended March 31, 2024 and 2023

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended June 30, 2024 and 2023

(in thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenues, net $ 38,514 $ 47,052 $ 75,608 $ 88,242

5 unchanged sentences

Total operating expense 13,306 15,752 29,725 31,080

Loss from operations ( 3,605 ) ( 180 )

Income (loss) from operations 1,222 2,076 ( 2,382 ) 1,896

Other (expense) income:

4 unchanged sentences

Loss before income taxes $ ( 1,569 ) $ ( 556 ) $ ( 7,788 ) $ ( 3,429 )

Income tax expense ( 870 ) ( 51 )

Income tax (expense) benefit 91 ( 255 ) ( 779 ) ( 306 )

Net loss $ ( 1,478 ) $ ( 811 ) $ ( 8,567 ) $ ( 3,735 )

5 unchanged sentences

Foreign currency translation adjustment ( 47 ) 1,722 ( 858 ) 2,280

Total comprehensive loss $ ( 7,900 ) $ ( 2,366 )

Net loss per common share – basic and diluted, as adjusted $ ( 0.76 ) $ ( 0.35 )

Weighted average number of common shares outstanding – basic and diluted, as adjusted 9,714 9,366

Total comprehensive income (loss) $ ( 1,525 ) $ 911 $ ( 9,426 ) $ ( 1,455 )

Net loss per common share – basic and diluted $ ( 0.18 ) $ ( 0.12 ) $ ( 0.94 ) $ ( 0.47 )

Weighted average number of common shares outstanding – basic and diluted 9,787 9,385 9,751 9,359

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

As of June 30, 2024 and December 31, 2023

(in thousands, except share and per share amounts)

46 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2024

For the three months ended June 30, 2024

(in thousands, except share amounts)

2 unchanged sentences

Capital Accumulated

Comprehensive Income

(Loss) Accumulated

Deficit Total

Shares Amount Shares Amount

Balance as of March 31, 2024 167,972 $ — 9,777,725 $ 1 $ 119,956 $ 490 $ ( 111,364 ) $ 9,083

Shares issued for:

Vesting of restricted share units — — 40,150 — — — — —

Stock compensation — — — — 243 — — 243

Foreign currency translation — — — — — ( 47 ) — ( 47 )

Fixed dividends Preferred Series B — — — — ( 317 ) — — ( 317 )

Net loss — — — — — — ( 1,478 ) ( 1,478 )

Balance as of June 30, 2024 167,972 $ — 9,817,875 $ 1 $ 119,882 $ 443 $ ( 112,842 ) $ 7,484

Boxlight Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2024

(in thousands, except share amounts)

Preferred Stock Class A

Common Stock Additional

Capital Accumulated

Comprehensive

9 unchanged sentences

Net loss — — — — — ( 8,567 ) ( 8,567 )

Balance as of March 31, 2024 167,972 $ — 9,777,725 $ 1 $ 119,956 $ 490 $ ( 111,364 ) $ 9,083

Balance as of June 30, 2024 167,972 $ — 9,817,875 $ 1 $ 119,882 $ 443 $ ( 112,842 ) $ 7,484

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2023, as adjusted

For the three months ended June 30, 2023

(in thousands, except share amounts)

2 unchanged sentences

Capital Accumulated

Comprehensive

Income (loss) Accumulated

Deficit Total

Shares Amount Shares Amount

Balance as of March 31, 2023 167,972 $ — 9,384,833 $ 1 $ 118,159 $ ( 356 ) $ ( 68,043 ) $ 49,761

Shares issued for:

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

Vesting of restricted share units — — 34,747 — — — — —

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

Stock compensation — — — — 524 — — 524

Foreign currency translation — — — — — 1,722 — 1,722

Fixed dividends Preferred Series B — — — — ( 317 ) — — ( 317 )

Net Loss — — — — — — ( 811 ) ( 811 )

Balance as of June 30, 2023 167,972 $ — 9,465,494 $ 1 $ 118,379 $ 1,366 $ ( 68,854 ) $ 50,892

Boxlight Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2023

(in thousands, except share amounts)

Preferred Stock Class A

Common Stock Additional

Capital Accumulated

Comprehensive Income

6 unchanged sentences

Shares issued for:

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

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

Vesting of restricted share units — — 79,993 — — — — —

3 unchanged sentences

Net loss — — — — — — ( 3,735 ) ( 3,735 )

Balance as of March 31, 2023 167,972 $ — 9,384,833 $ 1 $ 118,159 $ ( 356 ) $ ( 68,043 ) $ 49,761

Balance as of June 30, 2023 167,972 $ — 9,465,494 $ 1 $ 118,379 $ 1,366 $ ( 68,854 ) $ 50,892

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2024 and 2023

For the six months ended June 30, 2024 and 2023

(in thousands)

Three Months Ended

2024 March 31,

Six Months Ended

2024 June 30,

Cash flows from operating activities:

Net loss $ ( 8,567 ) $ ( 3,735 )

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

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

Amortization of debt premium, discount and issuance cost 1,175 931

15 unchanged sentences

Deferred revenues 93 ( 713 )

Net cash used in operating activities $ ( 1,942 ) $ ( 1,903 )

Net cash (used in) provided by operating activities $ ( 7,309 ) $ 10

Cash flows from investing activities:

2 unchanged sentences

Cash flows from financing activities:

Principal payments on long term debt ( 2,307 ) ( 670 )

Proceeds from short-term debt 2,000 3,000

Principal payments on debt ( 3,096 ) ( 1,378 )

Payments of fixed dividends to Series B Preferred stockholders ( 317 ) ( 635 )

Net cash used in financing activities $ ( 2,624 ) $ ( 987 )

Proceeds from the exercise of options and warrants — 13

Net cash (used in) provided by financing activities $ ( 1,413 ) $ 1,000

Effect of foreign currency exchange rates ( 606 ) 87

Net decrease in cash and cash equivalents ( 5,441 ) ( 3,317 )

Net (decrease) increase in cash and cash equivalents ( 9,739 ) 997

Cash and cash equivalents, beginning of the period 17,253 14,591

5 unchanged sentences

Addition of operating lease liabilities $ 177 $ 43

Cash dividends declared to Series B Preferred stockholders $ 317 $ —

See accompanying notes to unaudited condensed consolidated financial statements.

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Note 1 in the Notes to the Consolidated Financial Statements for 2023 contained in the 2023 Annual Report filed with the SEC on March 14, 2024, describes the significant accounting policies that the Company used in preparing its condensed consolidated financial statements.

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

On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to reserves for inventory obsolescence;

the recoverability of deferred tax assets;

the fair value and recoverability of intangible assets;

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

and variable consideration.

The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

1 unchanged sentence

REVERSE STOCK SPLIT

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

The par value of the common stock was not adjusted.

The par value of the Class A 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 share 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 condensed consolidated financial statements and the notes to the condensed consolidated financial statements have been retrospectively adjusted to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in aggregate par value of Class A common stock to additional paid-in capital on the condensed consolidated balance sheets of approximately $ 6 thousand.

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

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

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

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

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

There are presently no shares of Class B common stock outstanding, and none were outstanding as of March 31, 2024.

There are presently no shares of Class B common stock outstanding, and none were outstanding as of June 30, 2024.

GOING CONCERN

4 unchanged sentences

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 .

The Company was in compliance with all financial covenants at March 31, 2024.

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

The Company was not in compliance with its Senior Leverage Ratio financial covenant under the Credit Agreement at June 30, 2024.

The non-compliance was cured by the Company obtaining a waiver for the leverage ratio default for the quarter ended June 30, 2024.

As part of the waiver, the lender reduced the intellectual property sublimit under the borrowing base from $ 15.0 million to $ 11.2 million.

There can be no assurance that the Lender will not declare an event of default and acceleration of all of our obligations under the Credit Agreement in the event we are unable to get into full compliance with these covenants in the future.

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.

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 existing Credit Agreement with a different lender on more favorable terms.

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

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-Q.

9 unchanged sentences

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 approximates its carrying value, excluding premiums, discounts, and issuance costs.

The Company has determined that the estimated fair value of debt

approximates its carrying value, including premiums, discounts, and issuance costs.

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.

9 unchanged sentences

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

There were no transfers into or our of Level 3 measurements in 2024 and 2023.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 (in thousands):

There were no transfers into or out of Level 3 measurements in 2024 and 2023.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):

Description Markets for

10 unchanged sentences

(in thousands)

Balance, March 31, 2024 $ 13

Change in fair value of derivative liabilities ( 4 )

Balance, June 30, 2024 $ 9

(in thousands)

Balance, December 31, 2023 $ 205

Change in fair value of derivative liabilities ( 196 )

Balance, June 30, 2024 $ 9

(in thousands)

Balance, March 31, 2023 $ 696

Change in fair value of derivative liabilities ( 184 )

Balance, June 30, 2023 $ 512

(in thousands)

1 unchanged sentence

Change in fair value of derivative liabilities 40

Balance, March 31, 2023 $ 696

Balance, June 30, 2023 $ 512

See Note 9 for discussion of the valuation techniques and inputs and reconciliation of the opening and closing balances of the fair value of warrants.

LOSS PER COMMON SHARE

4 unchanged sentences

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

For the three months ended March 31, 2024, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.3 million shares issuable upon exercise of options to purchase common stock, 0.2 million of unvested shares of restricted stock and 1.4 million shares issuable upon exercise of warrants.

For the three and six months ended June 30, 2024, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.2 million shares issuable upon exercise of options to purchase common stock, 0.1 million of unvested shares of restricted stock and 1.4 million shares issuable upon exercise of warrants.

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

For t he three month ended March 31, 2023 , potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 0.8 million shares from options to purchase shares of common stock and 0.3 million of unvested restricted stock units as well as 1.4 million shares of common stock issuable upon exercise of warrants.

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

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

6 unchanged sentences

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

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

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

8 unchanged sentences

For software product sales, control is transferred when the customer receives the related interactive hardware since the customer’s connection to the interactive hardware activates the software license, at which time the software is made available to the customer.

For the Company’s software maintenance,

hardware maintenance and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer.

For the Company’s software maintenance, hardware maintenance and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer.

The Company excludes all taxes assessed by a governmental agency that are both imposed on and concurrent with the specific revenue-producing transaction from revenue (for example, sales and use taxes).

22 unchanged sentences

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

The Company had no material contract assets as of March 31, 2024 or December 31, 2023.

During the three months ended March 31, 2024 and March 31, 2023, respectively, the Company recognized $ 2.3 million and $ 2.1 million of revenue that was included in the deferred revenue balance as of December 31, 2023 and December 31, 2022, respectively.

The Company had no material contract assets as of June 30, 2024 or December 31, 2023.

During the three months ended June 30, 2024 and June 30, 2023, respectively, the Company recognized $ 2.2 million and $ 2.0 million of revenue that was included in the deferred revenue balance as of December 31, 2023 and December 31, 2022, respectively.

During the six months ended June 30, 2024 and June 30, 2023, the Company recognized $ 4.4 million and $ 4.1 million of revenue that was included in the deferred revenue balance as of December 31, 2023 and December 31, 2022, respectively.

Variable Consideration

8 unchanged sentences

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 the three months ended March 31, 2024 related to changes in estimated variable consideration that existed at December 31, 2023.

There was no material revenue recognized in the three and six months ended June 30, 2024 related to changes in estimated variable consideration that existed at December 31, 2023.

Remaining Performance Obligations

1 unchanged sentence

The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer.

The Company identifies performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract.

The Company identifies performance obligations at contract inception so that it can monitor and account for

the obligations over the life of the contract.

Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer.

As of March 31, 2024 and December 31, 2023, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 25.0 million.

The Company expects to recognize revenue on 35.5 % of the remaining performance obligations during the next 12 months, 28.8 % in the following 12 months, 20.5 % in the 12 months ended March 31, 2026, 11.4 % in the 12 months ended March 31, 2027, with the remaining 3.8 % recognized thereafter.

As of June 30, 2024 and December 31, 2023, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 25.0 million.

The Company expects to recognize revenue on 35.9 % of the remaining performance obligations during the next 12 months, 28.9 % in the following 12 months, 20.3 % in the 12 months ended June 30, 2027, 11.2 % in the 12 months ended June 30, 2028, with the remaining 3.7 % recognized thereafter.

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

6 unchanged sentences

Three Months Ended

(in thousands)

June 30, Six Months Ended

(in thousands) (in thousands)

2024 2023 2024 2023

Product revenue $ 35,822 $ 44,402 $ 70,257 $ 83,084

10 unchanged sentences

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

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

Total deferred commissions, net of accumulated amortization, as of March 31, 2024 and December 31, 2023 was $ 0.6 million.

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

Total deferred commissions, net of accumulated amortization, as of June 30, 2024 and December 31, 2023 were $ 0.5 million and $ 0.6 million, respectively.

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

1 unchanged sentence

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.

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) in deciding how to allocate resources and in assessing performance.

Our CODM is our Chief Executive Officer.

The Company’s operations are organized, managed and classified into three reportable segments – EMEA, North and Central America (the “Americas”) and all other geographic regions (“Rest of World”).

The Company’s operations are organized, managed and classified into three reportable segments – Europe, Middle East, and Africa ("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 ”) .

Our Americas segment consists primarily of the operations of Boxlight, Inc.

and its subsidiaries, and the Rest of World segment consists primarily of the operations 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.

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ACCOUNTING STANDARDS PENDING ADOPTION

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

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280):

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

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NOTE 2 – ACCOUNTS RECEIVABLE - TRADE

Accounts receivable consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

Accounts receivable consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

Accounts receivable – trade $ 31,760 $ 33,089

3 unchanged sentences

NOTE 3 – INVENTORIES

Inventories consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

Inventories consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

Finished goods $ 39,404 $ 45,461

3 unchanged sentences

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):

Prepaid expenses and other current assets consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):

Prepayments to vendors $ 2,462 $ 3,176

1 unchanged sentence

Prepaid expenses and other current assets $ 10,610 $ 9,471

Prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023 are net of reserves of $ 1.4 million related to vendor receivables.

Prepaid expenses and other current assets as of June 30, 2024 and December 31, 2023 are net of reserves of $ 1.4 million related to vendor receivables.

NOTE 5 – INTANGIBLE ASSETS

Intangible Assets

Intangible assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

Intangible assets consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

Useful lives 2024 2023

11 unchanged sentences

Intangible assets, net of accumulated amortization $ 41,999 $ 45,964

For the three months ended March 31, 2024 and 2023, the Company recorded amortization expense of $ 1.9 million and $ 2.1 million, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately ($ 0.5 ) million as of March 31, 2024 and ($ 0.1 ) million as of December 31, 2023.

For the three months ended June 30, 2024 and 2023, the Company recorded amortization expense of $ 1.9 million and $ 2.2 million, respectively.

For the six months ended June 30, 2024 and 2023, the Company recorded amortization expense of $ 3.8 million and $ 4.3 million, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately ($ 0.4 ) million as of June 30, 2024 and ($ 0.1 ) million as of December 31, 2023.

NOTE 6 – LEASES

1 unchanged sentence

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

As of March 31, 2024, the Company had no leases classified as finance leases.

As of June 30, 2024, the Company had no leases classified as finance leases.

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

Operating lease expense was $ 630 thousand and $ 564 thousand for the three months ended March 31, 2024 and 2023, respectively.

Variable and short-term lease cost was $ 528 thousand for the three months ended March 31, 2024.

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

Cash paid for amounts included in the measurement of lease liabilities was $ 466 thousand and $ 621 thousand for the three months ended March 31, 2024 and 2023, respectively.

Operating lease expense was $ 574 thousand and $ 536 thousand for the three months ended June 30, 2024 and 2023, respectively and $ 1.2 million and $ 1.1 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

Variable and short-term lease cost was $ 405 thousand and $ 933 thousand for the three and six months ended June 30, 2024.

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

Cash paid for amounts included in the measurement of lease liabilities was $ 413 thousand and $ 619 thousand for the three months ended June 30, 2024 and 2023, respectively and $ 0.9 million and $ 1.2 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

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

4 unchanged sentences

Present value of lease liabilities $ 8,874

The following is supplemental lease information as of March 31, 2024 and December 31, 2023:

The following is supplemental lease information as of June 30, 2024 and December 31, 2023:

Weighted-average remaining lease term (years) 9.9 9.9

1 unchanged sentence

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

Accounts payable and accrued expenses consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

Accounts payable $ 16,140 $ 27,448

3 unchanged sentences

NOTE 8 – DEBT

The following is a summary of the Company’s debt as of March 31, 2024 and December 31, 2023 (in thousands):

The following is a summary of the Company’s debt as of June 30, 2024 and December 31, 2023 (in thousands):

Debt – Third Parties

23 unchanged sentences

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.

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.

10 unchanged sentences

as additional guarantors under the Credit Agreement.

During the three months ended March 31, 2024, the Company repaid principal of $ 2.3 million and interest of $ 1.8 million to Whitehawk.

On April 19, 2024, the Company entered into a sixth amendment (the “Sixth Amendment”) w ith the Collateral Agent and Lender .

The Sixth Amendment provided the Company with an additional $ 2 million working capital bridge loan on April 19, 2024 and agreed to provide the Company with an additional $ 3 million working capital bridge loan in June 2024, provided, that the Company is then in compliance with certain financial covenants.

On July 2, 2024, the Company requested and received an additional $ 2 million working capital bridge loan.

The Company is required to pay a fee equal to 6 % of the aggregate amount of borrowings under the Sixth Amendment (i.e.

$ 4.0 million).

Both working capital bridge loans are due and payable in full on November 29, 2024 and are not subject to prepayment penalties.

During the six months ended June 30, 2024, the Company repaid principal of $ 3.1 million and interest of $ 3.7 million to Whitehawk.

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.

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.

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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 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 .

The Company was in compliance with all financial covenants as of March 31, 2024.

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 remained at 2.00 and thereafter will remain at 1.75 .

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 Senior Leverage Ratio financial covenant under the Credit Agreement at June 30, 2024.

The non-compliance was cured by the Company obtaining a waiver for the leverage ratio default for the quarter ended June 30, 2024.

As part of the waiver, the lender reduced the intellectual property sublimit under the borrowing base from $ 15.0 million to $ 11.2 million.

Issuance Cost and Warrants

3 unchanged sentences

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 .

The Warrants repriced on March 31, 2022 to $ 9.52 per share and the number of Warrant shares increased to 429,263 .

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 .

The Whitehawk Warrants were repriced to $ 8.80 and the number of Warrant shares increased to 464,385 .

NOTE 9 – DERIVATIVE LIABILITIES

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Conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future.

Such warrants are measured at fair value at each reporting date, and the changes in fair value are

included in determining net income (loss) for the period.

The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities as of March 31, 2024 and December 31, 2023.

March 31, 2024

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

The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities as of June 30, 2024 and December 31, 2023.

June 30, 2024

Common stock issuable upon exercise of warrants 464,385

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Three Months Ended

June 30, Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

United States $ ( 958 ) $ ( 205 ) $ ( 7,067 ) $ ( 3,720 )

1 unchanged sentence

Total pretax book loss $ ( 1,569 ) $ ( 556 ) $ ( 7,788 ) $ ( 3,429 )

The Company recorded income tax expense of $ 0.9 million and $ 51 thousand for the three months ended March 31, 2024 and 2023, respectively.

The effective tax rate was ( 14.0 )% and ( 1.8 )% for the three months ended March 31, 2024 and 2023.

The Company recorded income tax benefit of $ 91 thousand and income tax expense of $ 255 thousand for the three months ended June 30, 2024 and 2023, respectively, and income tax expense of $ 779 thousand and $ 306 thousand for the six months ended June 30, 2024 and 2023, respectively.

The effective tax rate was ( 10.0 )% and ( 8.9 )% for the six months ended June 30, 2024 and June 30, 2023.

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

The increase in income tax expense year-over-year is primarily due to higher U.S.

taxes related to interest expense and increased net operating loss ("NOL") limitations for the three months ended March 31, 2024 as compared to the prior year.

taxes related to interest expense and increased net operating loss ("NOL") limitations for the three months ended June 30, 2024 as compared to the prior year.

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

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

Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset at March 31, 2024 and December 31, 2023.

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.

Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset at June 30, 2024 and December 31, 2023.

The Company completed its IRC Sec.

382 analysis during Q2 and determined that it underwent an ownership change.

This caused a limit on the net operating losses generated before 2020.

Due to the full valuation allowance on net operating loss carryovers, there is no impact to the interim financial statements as a result of this limitation.

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.

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This amount includes $ 24 thousand of income tax and $ 71 thousand of penalties and interest.

The Company has not identified any other material uncertain tax positions during the three months ended March 31, 2024.

The Company has not identified any other material uncertain tax positions during the three months ended June 30, 2024.

The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%.

12 unchanged sentences

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

As of March 31, 2024, 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.

As of June 30, 2024, a total of 167,972 shares of Series A preferred stock remained outstanding which can be converted into 33,461 shares of Class A common stock, at the discretion of the Series A stockholder.

Series B Preferred Stock and Series C Preferred Stock

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

As of March 31, 2024, a total of 1,586,620 and 1,320,850 shares of Series B and C preferred stock remained outstanding, respectively.

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

1 unchanged sentence

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

As of March 31, 2024 and December 31, 2023, the Company had 9,777,725 and 9,704,496 shares of Class A common stock issued and outstanding, respectively.

No Class B shares were outstanding as of March 31, 2024 or December 31, 2023.

The Company had equity warrants outstanding of 921,462 and 921,306 as of March 31, 2024 and December 31, 2023, respectively.

No Class B shares were outstanding as of June 30, 2024 or December 31, 2023.

The Company had equity warrants outstanding of 921,618 and 921,306 as of June 30, 2024 and December 31, 2023, respectively.

Repurchase Plan

3 unchanged sentences

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 March 31, 2024, the Company has not utilized the Repurchase Program.

As of June 30, 2024, the Company has not utilized the Repurchase Program.

NOTE 12 – STOCK COMPENSATION

1 unchanged sentence

(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 March 2022, any shares remaining available for issuance under the 2014 Plan were cancelled, and all future grants were issued under the 2021 Plan.

Upon approval of the 2021 Plan in June 2022, 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.

During the year ended December 31, 2023, the Company cancelled 384,340 shares of previously issued awards such that the Company is under the authorized number of share awards.

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.

Stock Options

4 unchanged sentences

Accordingly, total expense related to the award is reduced by the fair value of options that are forfeited by employees that leave the Company prior to vesting as they occur.

The following is a summary of the option activities during the three months ended March 31, 2024:

The following is a summary of the option activities during the six months ended June 30, 2024:

Number of Units

1 unchanged sentence

Forfeited ( 29,302 )

Outstanding, March 31, 2024 344,121

Exercisable, March 31, 2024 303,160

Expired ( 137,750 )

Outstanding, June 30, 2024 181,207

Exercisable, June 30, 2024 174,093

Restricted Stock Units

3 unchanged sentences

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

The following is a summary of the RSU activities during the three months ended March 31, 2024:

The following is a summary of the RSU activities during the six months ended June 30, 2024:

Number of Units

Outstanding, December 31, 2023 408,451

Granted 15,999

Vested ( 113,379 )

Forfeited ( 202,059 )

Outstanding, March 31, 2024 165,020

Outstanding, June 30, 2024 109,012

Stock Compensation Expense

For the three months ended March 31, 2024 and 2023, the Company recorded the following stock compensation in general and administrative expense (in thousands):

For the three and six months ended June 30, 2024 and 2023, the Company recorded the following stock compensation in general and administrative expense (in thousands):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Stock options $ 49 $ 152 $ 153 $ 321

Restricted stock units 194 359 638 830

Warrants — — 1 1

Total stock compensation expense $ 243 $ 511 $ 792 $ 1,152

1 unchanged sentence

Management Agreement

On November 1, 2022, the Company entered into a consulting agreement with Mark Elliott, former CEO of Boxlight and a current member of the Board of Directors.

On November 1, 2022, the Company entered into a consulting agreement with Mark Elliott, former Chief Executive Officer of Boxlight and a current member of the Board of Directors.

Under the terms of the agreement, Mr.

3 unchanged sentences

The agreement, unless cancelled, will automatically renew on December 31, 2024.

For the three months ended March 31, 2024 and 2023, the Company paid $ 79 thousand and $ 12 thousand under the agreement, respectively.

For the six months ended June 30, 2024 and 2023, the Company paid $ 126 thousand and $ 36 thousand under the agreement, respectively.

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

1 unchanged sentence

Pope’s employment agreement with the Company.

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

Pope's employment with the Company terminates, and for a period of 13 months, in which Mr.

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

Pope's employment with the Company terminated, and will be in effect for a period of 13 months, in which Mr.

Pope will provide consulting services to the Company including sourcing and analyzing strategic acquisitions, assisting with financing activities, and other services.

5 unchanged sentences

Pope's employment with the Company terminated at which time his Management Agreement became effective.

For the three months ended March 31, 2024, the Company paid $ 109 thousand under the agreement.

For the six months ended June 30, 2024, the Company paid $ 250 thousand under the agreement.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

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

As of March 31, 2024, the total amount of such open inventory purchase orders was $ 25.8 million.

As of June 30, 2024, the total amount of such open inventory purchase orders was $ 31.1 million.

NOTE 15 – CUSTOMER AND SUPPLIER CONCENTRATION

There was no particular customer that accounted for greater than 10% of the Company's consolidated revenues for the three months ended March 31, 2024.

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

There was one customer that accounted for greater than 10% of the Company's consolidated revenues for the six months ended June 30, 2024.

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

Details are as follows:

3 unchanged sentences

total revenues

for the three months ended

for the six months ended

2024 Accounts

5 unchanged sentences

total revenues

for the three months ended

for the six months ended

2023 Accounts

3 unchanged sentences

1 13.0 % $ 4,235 14.6 % $ 4,071

For the three months ended March 31, 2024, the Company’s purchases were concentrated primarily with one vendor .

For the three months ended March 31, 2023, the Company's purchases were not concentrated with any particular vendor.

For the six months ended June 30, 2024, the Company’s purchases were concentrated primarily with one vendor .

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

Details are as follows:

3 unchanged sentences

total cost of

the three months ended

the six months ended

2024 Accounts payable

4 unchanged sentences

of total cost of

the three months ended

the six months ended

2023 Accounts payable

3 unchanged sentences

1 51.7 % $ 6,057 17.5 % $ 4,812

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

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

NOTE 16 – SEGMENTS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenues, net

Americas $ 22,796 $ 30,067 $ 40,326 $ 51,134

3 unchanged sentences

( 1,166 ) ( 3,300 ) ( 2,887 ) ( 8,455 )

Total Revenue, net $ 37,093 $ 41,189

(Loss) Income from Operations

Total Revenues, net $ 38,514 $ 47,052 $ 75,608 $ 88,242

Income (Loss) from Operations

Americas 1,566 2,941 ( 2,225 ) 2,794

2 unchanged sentences

Eliminations and Adjustments (1)

Total Loss from Operations $ ( 3,605 ) $ ( 180 )

( 79 ) ( 3 ) ( 46 ) ( 43 )

Total Income (loss) from Operations $ 1,222 $ 2,076 $ ( 2,382 ) $ 1,896

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

6 unchanged sentences

Total Identifiable Assets $ 138,772 $ 158,571

NOTE 17 – SUBSEQUENT EVENTS

On April 19, 2024, the Company entered into the sixth amendment with the Collateral Agent and Lender (the "Sixth Amendment").

The Sixth Amendment provided the Company with an additional $ 2.0 million working capital bridge loan on April 19, 2024 and agreed to provide the Company with an additional $ 3.0 million working capital bridge loan in June 2024, provided, that the Company is then in compliance with certain financial covenants (as defined in the Credit Agreement), including its Senior Leverage Ratio.

The Company is required to pay a fee equal to 6.00 % of the aggregate amount of borrowings under the Sixth Amendment.

Both working capital bridge loans are due and payable in full on November 29, 2024.

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

What changed 10-Q

Item 1. Financial Statements