What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-13 · 243 added, 190 removed, 634 unchanged (41% of the section changed)

1 unchanged sentence

Boxlight Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

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

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three and nine months ended September 30, 2024 and 2023

(in thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Research and development 1,022 979 3,178 2,101

Impairment of goodwill — 13,226 — 13,226

Total operating expense 13,111 29,613 42,837 60,693

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

Loss from operations ( 859 ) ( 11,599 ) ( 3,242 ) ( 9,703 )

Other (expense) income:

Interest expense, net ( 2,550 ) ( 2,987 ) ( 7,723 ) ( 8,222 )

Other expense, net ( 229 ) ( 28 ) ( 429 ) ( 50 )

Other income (expense), net 330 ( 181 ) ( 98 ) ( 231 )

Change in fair value of derivative liabilities 6 90 202 50

1 unchanged sentence

Loss before income taxes $ ( 3,073 ) $ ( 14,677 ) $ ( 10,861 ) $ ( 18,106 )

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

Income tax benefit (expense) 12 ( 3,073 ) ( 767 ) ( 3,379 )

Net loss $ ( 3,061 ) $ ( 17,750 ) $ ( 11,628 ) $ ( 21,485 )

5 unchanged sentences

Foreign currency translation adjustment 2,270 ( 2,854 ) 1,412 ( 574 )

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

Total comprehensive loss $ ( 791 ) $ ( 20,604 ) $ ( 10,216 ) $ ( 22,059 )

Net loss per common share – basic and diluted $ ( 0.34 ) $ ( 1.90 ) $ ( 1.29 ) $ ( 2.39 )

3 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

As of September 30, 2024 and December 31, 2023

(in thousands, except share and per share amounts)

September 30,

2024 December 31,

45 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended June 30, 2024

For the three months ended September 30, 2024

(in thousands, except share amounts)

2 unchanged sentences

Capital Accumulated

Comprehensive Income

(Loss) Accumulated

Comprehensive Income 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

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

Shares issued for:

4 unchanged sentences

Net loss — — — — — — ( 3,061 ) ( 3,061 )

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

Balance as of September 30, 2024 167,972 $ — 9,842,315 $ 1 $ 119,731 $ 2,713 $ ( 115,903 ) $ 6,542

Boxlight Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

(in thousands, except share amounts)

3 unchanged sentences

Comprehensive

Income (loss) Accumulated

Income Accumulated

Deficit Total

7 unchanged sentences

Net loss — — — — — — ( 11,628 ) ( 11,628 )

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

Balance as of September 30, 2024 167,972 $ — 9,842,315 $ 1 $ 119,731 $ 2,713 $ ( 115,903 ) $ 6,542

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 June 30, 2023

For the three months ended September 30, 2023

(in thousands, except share amounts)

6 unchanged sentences

Shares Amount Shares Amount

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

Shares issued for:

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

Vesting of restricted share units — — 139,866 — — — — —

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

Stock compensation — — — — 671 — — 671

2 unchanged sentences

Net Loss — — — — — — ( 17,750 ) ( 17,750 )

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

Balance as of September 30, 2023 167,972 $ — 9,605,360 $ 1 $ 118,733 $ ( 1,488 ) $ ( 86,604 ) $ 30,642

Boxlight Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

(in thousands, except share amounts)

2 unchanged sentences

Capital Accumulated

Comprehensive Income

Comprehensive

Loss Accumulated

12 unchanged sentences

Net loss — — — — — — ( 21,485 ) ( 21,485 )

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

Balance as of September 30, 2023 167,972 $ — 9,605,360 $ 1 $ 118,733 $ ( 1,488 ) $ ( 86,604 ) $ 30,642

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2024 and 2023

For the nine months ended September 30, 2024 and 2023

(in thousands)

Six Months Ended

2024 June 30,

Nine Months Ended

September 30,

2024 September 30,

Cash flows from operating activities:

Net loss $ ( 11,628 ) $ ( 21,485 )

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

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

Amortization of debt premium, discount and issuance cost 1,806 1,800

Provision for credit losses 168 ( 197 )

Paid-in-kind accrual on short-term debt 240 —

Changes in deferred tax assets and liabilities ( 324 ) 907

4 unchanged sentences

Depreciation and amortization 6,187 6,893

Impairment of goodwill — 13,226

Change in right of use assets and lease liabilities 330 249

13 unchanged sentences

Proceeds from short-term debt 4,000 3,000

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

Principal payments on short-term debt ( 3,509 ) ( 3,000 )

Principal payments on long term debt ( 3,915 ) ( 2,048 )

Payments of fixed dividends to Series B Preferred stockholders ( 952 ) ( 952 )

Proceeds from the exercise of options and warrants — 13

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

Net cash used in financing activities $ ( 4,376 ) $ ( 2,987 )

Effect of foreign currency exchange rates ( 16 ) ( 1,206 )

7 unchanged sentences

Addition of operating lease liabilities $ 585 $ 5,369

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

See accompanying notes to unaudited condensed consolidated financial statements.

6 unchanged sentences

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its direct and indirect wholly owned subsidiaries (collectively, the “Company”).

The accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its direct and indirect wholly owned subsidiaries (collectively, the “Company,” "we," "us," and "our").

All significant intercompany balances and transactions have been eliminated in consolidation.

13 unchanged sentences

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

and variable consideration.

variable consideration;

and long-term incentive plans.

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.

8 unchanged sentences

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

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

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

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 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, decreased to 2.50 at December 31, 2023, 2.00 at March 31, 2024 and June 30, 2024 and 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 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 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.

As described in Note 8, the Company was not in compliance with the Senior Leverage Ratio financial covenant under its Credit Agreement at December 31, 2023, June 30, 2024 and September 30, 2024.

Non-compliance was waived by the Agent and Lender under amendments to the Credit Agreement.

On November 14, 2024, the Company obtained a waiver for the Credit Agreement with the Collateral Agent and Lender (the “November 2024 Waiver”) which waived any Event of Default that may have arisen directly as a result of the financial covenant default at September 30, 2024 and in the interim period ended October 31, 2024.

In conjunction with obtaining the waiver, the Company paid down approximately $ 1.1 million under the Credit Agreement, inclusive of $ 60 thousand of prepayment penalties.

In addition, 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.

Because of the significant decreases in the required Senior Leverage Ratio that have occurred over the past twelve months under the Credit Agreement, the Company’s current forecast projects the Company may not be able to maintain compliance with this ratio.

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 comply with the Senior Leverage Ratio financial covenant, borrowing base covenant or any other related covenants thereunder, in the future.

In addition, 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 conditions raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date of the accompanying unaudited condensed consolidated financial statements.

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 and other financial covenants, 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 or existing lenders prior to its maturity.

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

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

1 unchanged sentence

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.

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.

2 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, including premiums, discounts, and issuance costs.

The Company has determined that the estimated fair value of debt is approximately $ 41.2 million while the carrying value, excluding premiums, discounts, and issuance costs, is approximately

$ 40.1 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.

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 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):

Transfers into Level 3 measurements during the three and nine months ended September 30, 2024 of $ 0.3 million were related to the Company's long-term incentive plan.

There were no transfers into or out of Level 3 measurements in 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 September 30, 2024 and December 31, 2023 (in thousands):

Description Markets for

2 unchanged sentences

(Level 3) Carrying

September 30,

Derivative liabilities - warrant instruments — — 3 $ 3

Long-term incentive plan — — 274 274

Description Markets for

3 unchanged sentences

Derivative liabilities - warrant instruments — — $ 205 $ 205

The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy:

The following tables reconcile the beginning and ending balances of the warrant instruments and long-term incentive plan within Level 3 of the fair value hierarchy, respectively:

Derivative Liabilities

(in thousands) Long-term incentive plan

(in thousands)

Balance, March 31, 2024 $ 13

Change in fair value of derivative liabilities ( 4 )

Balance, June 30, 2024 $ 9 $ —

(in thousands)

Change in fair value ( 6 ) 274

Balance, September 30, 2024 $ 3 $ 274

(in thousands) (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 )

Change in fair value ( 202 ) 274

Balance, September 30, 2024 $ 3 $ 274

(in thousands) (in thousands)

Balance, June 30, 2023 $ 512 $ —

(in thousands)

Change in fair value ( 90 ) —

Balance, September 30, 2023 $ 422 $ —

(in thousands) (in thousands)

Balance, December 31, 2022 $ 472 $ —

Change in fair value of derivative liabilities 40

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.

Change in fair value ( 50 ) —

Balance, September 30, 2023 $ 422 $ —

See Note 9 and Note 12 for discussion of the valuation techniques and inputs and reconciliation of the opening and closing balances of the fair value of warrants and long-term incentive plan, respectively.

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 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.

For the three and nine months ended September 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 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.

For the nine months ended September 30, 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 shares of common stock and 0.5 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.

42 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 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.

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

During the three months ended September 30, 2024 and September 30, 2023, respectively, the Company recognized $ 2.1 million and $ 1.9 million of revenue that was included in the deferred revenue balance as of December 31, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized $ 6.5 million and $ 6.0 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 and six months ended June 30, 2024 related to changes in estimated variable consideration that existed at December 31, 2023.

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

Remaining Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting within the contract.

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

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

the obligations over the life of the contract.

the customer.

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

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

As of 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.

As of September 30, 2024 and December 31, 2023, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $ 25.8 million and $ 25.0 million, respectively.

The Company expects to recognize revenue on 36.6 % of the remaining performance obligations during the next 12 months, 29.0 % in the following 12 months, 19.9 % in the 12 months ended September 30, 2027, 11.1 % in the 12 months ended June 30, 2028, with the remaining 3.4 % 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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) (in thousands)

13 unchanged sentences

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.

Total deferred commissions, net of accumulated amortization, as of September 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.

ADVERTISING COSTS

Advertising costs are expensed as incurred and included in General and Administrative expenses in the accompanying consolidated statements of operations.

Advertising expense for the three and nine months ended September 30, 2024 totaled $ 80 thousand and $ 135 thousand, respectively.

Advertising expense for the three and nine months ended September 30, 2023 totaled $ 31 thousand and $ 196 thousand respectively.

SEGMENT REPORTING

17 unchanged sentences

This change will apply retrospectively to all periods presented.

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

The adoption of this ASU is not expected to result in significant changes to the Company's current segment disclosures.

5 unchanged sentences

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

In November 2024, the FASB issued ASU 2024-03, Income Statement-reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40) , which improves the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development).

This change is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

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

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

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

Accounts receivable – trade $ 27,050 $ 33,089

3 unchanged sentences

NOTE 3 – INVENTORIES

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

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

Finished goods $ 44,021 $ 45,461

3 unchanged sentences

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

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

Prepayments to vendors $ 1,096 $ 3,176

1 unchanged sentence

Prepaid expenses and other current assets $ 9,157 $ 9,471

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.

Prepaid expenses and other current assets as of September 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 June 30, 2024 and December 31, 2023 (in thousands):

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

Useful lives 2024 2023

11 unchanged sentences

Intangible assets, net of accumulated amortization $ 41,702 $ 45,964

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.

For the three months ended September 30, 2024 and 2023, the Company recorded amortization expense of $ 1.9 million and $ 2.1 million, respectively.

For the nine months ended September 30, 2024 and 2023, the Company recorded amortization expense of $ 5.7 million and $ 6.4 million, respectively.

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $ 2.5 million as of September 30, 2024 and ($ 0.1 ) million as of December 31, 2023.

During the quarter ended September 30, 2024, the Company determined that a triggering event had occurred as a result of a decline in the Company’s revenues resulting from lower sales volume primarily resulting from lower global demand for interactive flat panel displays, which suggested one or more of the reporting units may have fallen below the carrying amounts.

As a result, the Company performed an interim impairment test on its finite-lived intangible assets using undiscounted cash flows.

There was no impairment recorded on finite-lived intangible assets during the nine months ended September 30, 2024.

During the quarter ended September 30, 2023, due to further declines in the Company’s market capitalization and a reduction in cashflows 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 events identified.

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

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

For the three and nine months ended 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, which also represents total accumulated goodwill impairment charges for each reporting unit.

NOTE 6 – LEASES

1 unchanged sentence

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

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

As of September 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 $ 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.

Operating lease expense was $ 595 thousand and $ 712 thousand for the three months ended September 30, 2024 and 2023, respectively and $ 1.8 million for the nine months ended September 30, 2024 and September 30, 2023.

and short-term lease cost was $ 470 thousand and $ 1.4 million for the three and nine months ended September 30, 2024, respectively.

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

Cash paid for amounts included in the measurement of lease liabilities was $ 426 thousand and $ 660 thousand for the three months ended September 30, 2024 and 2023, respectively and $ 1.3 million and $ 1.9 million for the nine months ended September 30, 2024 and September 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 $ 9,374

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

The following is supplemental lease information as of September 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 June 30, 2024 and December 31, 2023 (in thousands):

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

Accounts payable $ 19,102 $ 27,448

3 unchanged sentences

NOTE 8 – DEBT

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

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

Debt – Third Parties

8 unchanged sentences

Whitehawk Finance LLC

In order to finance the acquisition of FrontRow Calypso LLC (“FrontRow”), which closed on December 31, 2021, and to refinance the Company's then existing note payable, 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 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.

The Term Loans bear interest at the LIBOR rate plus 10.75 %;

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

Such terms are subject to the Company maintaining a borrowing base in 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, 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.

In December 2021, the Company and substantially all of its direct and indirect subsidiaries (the “Loan Parties”) entered into a 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”).

Under the Credit Agreement, the Company received an initial term loan of $ 58.5 million and a subsequent delayed draw facility of up to $ 10 million (collectively, the “Term Loans”).

The Term Loans are secured by substantially all of the assets of the Company.

Portions of the Term Loans were subject to repayment in February 2022, and quarterly principal payments of $ 625,000 and interest payments commenced March 31, 2022, with the remaining balance becoming due and payable in full on December 31, 2025.

The Term Loans bore interest at the LIBOR rate plus 10.75 %;

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

In April 2022, the Company entered into a First Amendment to the Credit Agreement with the Collateral Agent and Lender (the “First Amendment”), pursuant to which the Collateral Agent and Lender agreed to extend the terms of repayment of $ 8.5 million originally due in February 2022 until February 2023.

The First Amendment also included forbearance on certain over-advances to allow the Company to come into compliance with the borrowing base requirements set forth in the Credit Agreement.

In addition, the Collateral Agent and Lender agreed to (i) reduce, through September 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 a 1.75 EBITDA coverage ratio, and (iii) waive all prior events of default under the Credit Agreement.

The parties also 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 2023, any required amortization payments under the Credit Agreement and any mandatory prepayments by way of excess cash flow or casualty events.

In June 2022, the Loan Parties entered into a second amendment to the Credit Agreement with the Collateral Agent and Lender (the “Second Amendment”).

Under the Second Amendment, the Lender funded a $ 2.5 million delayed draw term loan and adjusted certain terms of the Credit Agreement, including 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 2022, for the Company to come into compliance with certain borrowing base requirements set forth in the Second Amendment, among other adjustments.

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

Under the Third Amendment, the Lender funded an additional $ 3.0 million delayed draw term loan, which was required to be repaid on or prior to September 29, 2023, and adjusted certain terms of the Credit Agreement, including the test period end dates and corresponding Senior Leverage Ratios (as defined in the Credit Amendment) and the minimum liquidity requirements that the Company must maintain compliance with pertaining to certain Borrowing Base Requirements (as defined in the Credit Agreement), among other adjustments.

Following this

additional draw, no further delayed draws remained under the Credit Agreement.

In July 2023, the Company repaid the $ 3.0 million delayed draw term loan with no prepayment penalties or premiums.

In June 2023, the Company entered into a fourth amendment to the Credit Agreement with the Collateral Agent and the Lender (the “Fourth Amendment”) to replace LIBOR-based rates with a SOFR-based rate.

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

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.

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.

On March 14, 2024, the Company entered into a fifth amendment to the Credit Agreement with the Collateral Agent and Lender (the "Fifth Amendment") to (i) amend and restate the Senior Leverage Ratio and Minimum Liquidity (each as defined in the Fifth Amendment), and (ii) waive any event of default that may have arisen directly as a result of the Company’s Financial Covenant Default (as defined in the Fifth Amendment) at December 31, 2023.

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 remained at 1.75 .

The Fifth Amendment also added additional financial reporting obligations and additional guarantors under the Credit Agreement.

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

The Sixth Amendment provided the Company with an additional $ 2 million working capital bridge loan in April 2024, and an additional $ 3 million working capital bridge loan in June 2024, of which $ 2 million was advanced to the Company.

The Company was 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.

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

On August 12, 2024, the Company entered into a seventh amendment to the Credit Agreement with the Collateral Agent and Lender (the “Seventh Amendment”) to (i) reduce the intellectual property sublimit under the borrowing base from $ 15.0 million to $ 11.2 million, and (ii) waive the event of default that may have arisen directly as a result of the Financial Covenant Default (as defined in the Seventh Amendment) at June 30, 2024.

On November 14, 2024, the Company obtained a waiver for the Credit Agreement from the Collateral Agent and Lender (the “November 2024 Waiver”) to waive any events of default that may have arisen directly as a result of (i) the Financial Covenant Default (as defined in the November 2024 Waiver) at September 30, 2024 and (ii) the Borrowing Base Default (as defined in the November 2024 Waiver) for the month ended October 31, 2024.

In conjunction with obtaining the waiver, the Company paid down approximately $ 1.1 million under the Credit Agreement, inclusive of $ 60 thousand of prepayment penalties.

During the three months ended September 30, 2024, the Company repaid $ 3.5 million of the $ 4.0 million additional borrowings under the Sixth Amendment.

In October 2024, the Company repaid the remaining $ 0.5 million borrowings under the Sixth Amendment and $ 0.2 million in financing fees related to the borrowing.

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 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 June 2023, in connection with obtaining a waiver of compliance with those covenants, 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 also increased the prepayment premium from the amount included in the original Credit Agreement.

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

The Company’s financial statements do not include any adjustments that might result from the outcome of the Company’s activities 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 at September 30, 2023 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.

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 remained at 2.00 and thereafter will remain at 1.75 .

The non-compliance was cured through a waiver under the Fifth Amendment.

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.

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

The non-compliance was cured through a waiver under the Seventh Amendment.

The Company also was not in compliance with its financial covenant related to the Senior Leverage Ratio under the Credit Agreement at September 30, 2024 and its borrowing base covenant for the month ended October 31, 2024.

The non-compliance was cured through a waiver under the November 2024 Waiver.

In conjunction with obtaining the waiver, the Company paid down approximately $ 1.1 million under the Credit Agreement, inclusive of $ 60 thousand of prepayment penalties.

Issuance Cost and Warrants

11 unchanged sentences

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

The Company used a Model Monte Carlo Simulation model to determine the fair value of the derivative liabilities.

September 30, 2024

Common stock issuable upon exercise of warrants 464,385

19 unchanged sentences

Three Months Ended

June 30, Three Months Ended

June 30, Six Months Ended

September 30, Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

Total pretax book loss $ ( 3,073 ) $ ( 14,677 ) $ ( 10,861 ) $ ( 18,106 )

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 Company recorded income tax benefit of $ 12 thousand and income tax expense of $ 3.1 million for the three months ended September 30, 2024 and 2023, respectively, and income tax expense of $ 767 thousand and $ 3.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The effective tax rate was ( 7.1 )% and ( 18.7 )% for the nine months ended September 30, 2024 and September 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 June 30, 2024 as compared to the prior year.

The decrease in income tax expense year-over-year is primarily due to an increase in the forecasted worldwide net loss for the nine months ended September 30, 2024 as compared to the prior year.

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

9 unchanged sentences

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 June 30, 2024 and December 31, 2023.

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 September 30, 2024 and December 31, 2023.

The Company completed its IRC Sec.

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

382 analysis during the second quarter of 2024 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.

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.

8 unchanged sentences

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 June 30, 2024.

The Company has not identified any other material uncertain tax positions during the three months ended September 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%.

11 unchanged sentences

Series A Preferred Stock

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 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.

As of September 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

4 unchanged sentences

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, 30 days prior written notice to the holders, for a redemption price, payable in cash, equal to the sum of (a) $ 10.00 multiplied by the number of shares of Series B preferred stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares.

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, 30 days prior written notice from the holders, for a redemption price, payable in cash, equal to the sum of (a) $ 10.00 multiplied by the number of shares of Series B preferred stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares.

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

4 unchanged sentences

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.

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.

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

The Company had equity warrants outstanding of 921,618 and 921,306 as of September 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 June 30, 2024, the Company has not utilized the Repurchase Program.

As of September 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 June 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 September 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 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

2 unchanged sentences

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

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.

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 as they occur.

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

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

Number of Units

2 unchanged sentences

Expired ( 138,125 )

Outstanding, June 30, 2024 181,207

Exercisable, June 30, 2024 174,093

Outstanding, September 30, 2024 180,832

Exercisable, September 30, 2024 173,013

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 six months ended June 30, 2024:

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

Number of Units

3 unchanged sentences

Forfeited ( 202,488 )

Outstanding, June 30, 2024 109,012

Outstanding, September 30, 2024 84,592

Stock Compensation Expense

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):

Long-term incentive plan

On August 15, 2024, the Company granted a long-term incentive plan (LTIP) cash award pursuant to its 2021 Equity Incentive Plan to members of the Company’s Board of Directors and senior management.

The amount of each award earned will depend on the performance of the Company relative to certain performance targets related to share price appreciation of the Company’s Class A common stock during the respective performance cycles.

The LTIP awarded to the Company's Board of Directors have a performance period ending on March 31, 2025, whereas the LTIP awarded to senior management have three consecutive 12-month performance periods ending June 30, 2025, June 30, 2026, and June 30, 2027.

If the Company’s performance relative to the performance goal during the performance cycle is not equal to the performance target, the target Cash LTIP Award will be adjusted based on actual performance.

At no time during the performance cycle shall the payout be less than 1/3 or exceed 3 times the target cash LTIP Award, unless a change a control has occurred.

Cash payments are subject to the Company’s compliance with all covenants contained in the Company’s credit facilities in effect at the conclusion of each performance cycle.

There have been no cash payments as of September 30, 2024.

As amounts earned for the awards are based on changes in the Company's stock price, the Company will recognize a liability for compensation cost each reporting period based on the fair value as of each reporting date proportionally with the elapsed time at each reporting period.

The liability is recognized in other short-term liabilities in the consolidated balance sheets.

The Company used a Model Monte Carlo Simulation model to determine the fair value of the

LTIP as of September 30, 2024 to be $ 274 thousand.

Key inputs to the valuation of the awards include the stock price as of the award effective date and the valuation date, the discount rate, and historical volatility in the Company’s stock price.

September 30, 2024

Market value of common stock on measurement date $ 0.53

Risk free interest rate (1) 3.54 % - 4.29 %

Expected life in years 0.5 - 2.75 years

Expected volatility (2) 60 % - 76 %

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

(2) The historical trading volatility was based on historical fluctuations in stock price for Boxlight and certain peer companies.

For the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

Warrants — 1 1 2

Long-term incentive plan 274 — 274 —

Total stock compensation expense $ 441 $ 671 $ 1,233 $ 1,823

7 unchanged sentences

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

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

For the nine months ended September 30, 2024 and 2023, the Company paid $ 189 thousand and $ 92 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.

10 unchanged sentences

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

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

For the nine months ended September 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 June 30, 2024, the total amount of such open inventory purchase orders was $ 31.1 million.

As of September 30, 2024, the total amount of such open inventory purchase orders was $ 12.9 million.

NOTE 15 – CUSTOMER AND SUPPLIER CONCENTRATION

There was one customer that accounted for greater than 10% of the Company's consolidated revenues for the 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.

There was one customer that accounted for greater than 10% of the Company's consolidated revenues for the nine months ended September 30, 2024 and 2023.

Details are as follows:

3 unchanged sentences

total revenues

for the six months ended

for the nine months ended

September 30,

2024 Accounts

1 unchanged sentence

the customer as of

September 30,

(in thousands) Total revenues

2 unchanged sentences

total revenues

for the six months ended

for the nine months ended

September 30,

2023 Accounts

1 unchanged sentence

the customer as of

September 30,

(in thousands)

1 10.0 % $ 581 12.8 % $ 5,417

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.

For the nine months ended September 30, 2024 and 2023, the Company’s purchases were concentrated primarily with one vendor .

Details are as follows:

3 unchanged sentences

total cost of

the six months ended

the nine months ended

September 30,

2024 Accounts payable

to the vendor

September 30,

(in thousands) Total purchases

2 unchanged sentences

of total cost of

the six months ended

the nine months ended

September 30,

2023 Accounts payable

(prepayment) to

the vendors as of

the vendor as of

September 30,

(in thousands)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

12 unchanged sentences

16 69 ( 31 ) 26

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

Total Loss from Operations $ ( 859 ) $ ( 11,599 ) $ ( 3,242 ) $ ( 9,703 )

(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.

September 30,

2024 December 31,

4 unchanged sentences

Total Identifiable Assets $ 141,395 $ 158,571

NOTE 17 – SUBSEQUENT EVENTS

Subsequent to the end of the third quarter of 2024, the Company was not in compliance with its borrowing base covenant under the Credit Agreement for the month ended October 31, 2024.

On November 14, 2024, the Company a waiver for the Credit Agreement to waive any events of default that may have arisen directly as a result of (i) the Financial Covenant Default (as defined in the November 2024 Waiver) at September 30, 2024 and (ii) the Borrowing Base Default (as defined in the November 2024 Waiver) for the month ended October 31, 2024.

In conjunction with obtaining the waiver, the Company paid down approximately $ 1.1 million under the Credit Agreement, inclusive of $ 60 thousand of prepayment penalties.

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