What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-13 · 82 added, 74 removed, 207 unchanged (43% of the section changed)

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These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this report.

The actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

Historical results may not be indicative of future performance.

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Unless the context otherwise requires, the terms “the Company,” “we,” “us,” and “our” in this Quarterly Report refer to Boxlight Corporation and its consolidated direct and indirect subsidiaries, and the term “Boxlight” refers to Boxlight Inc., a Washington corporation and a wholly owned subsidiary of Boxlight Corporation.

The terms “quarter” and “year to date” refer to our quarter ending June 30 th .

The terms “quarter” and “year to date” refer to our quarter ending September 30 th .

FORWARD LOOKING STATEMENTS

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

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

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

We have also implemented a comprehensive plan to reach and maintain profitability both from our core business operations and as a result of making strategic business acquisitions.

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Acquisition Strategy and Challenges

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

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

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

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• Product revenue.

Product revenue is derived from the sale of our hardware (interactive projectors), flat panels, peripherals, and accessories, along with other third-party products, directly to our customers, as well as through our network of domestic and international distributors.

Product revenue is derived from the sale of our hardware (interactive displays), peripherals, and accessories, along with other third-party products, directly to our customers, as well as through our network of domestic and international distributors.

• Professional service revenue.

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Gross profit and gross profit margin have been, and may in the future be, influenced by several factors including:

product, channel and geographical revenue mix;

competitive pricing within the industry, product, channel and geographical revenue mix;

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

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Operating Results – Boxlight Corporation

For the three-month periods ended June 30, 2024 and 2023

Total revenues for the three months ended June 30, 2024 were $38.5 million as compared to $47.1 million for the three months ended June 30, 2023, resulting in a 18.1% decrease.

For the three-month periods ended September 30, 2024 and 2023

Total revenues for the three months ended September 30, 2024 were $36.3 million as compared to $49.7 million for the three months ended September 30, 2023, resulting in a 26.9% decrease.

The decrease in revenues was primarily due to lower sales volume across all markets primarily resulting from lower global demand for interactive flat panel displays.

Cost of Revenues.

Cost of revenues for the three months ended June 30, 2024 were $24.0 million as compared to $29.2 million for the three months ended June 30, 2023, resulting in a 17.9% decrease.

Cost of revenues for the three months ended September 30, 2024 were $24.0 million as compared to $31.7 million for the three months ended September 30, 2023, resulting in a 24.1% decrease.

The decrease in cost of revenues was attributable to the decrease in units sold.

Gross Profit.

Gross profit for the three months ended June 30, 2024 was $14.5 million as compared to $17.8 million for the three months ended June 30, 2023, a decrease of 18.5%.

The gross profit margin was 37.7% for the three months June 30, 2024 and 37.9% for the three months ending June 30, 2023.

The decrease in gross profit margin is primarily related to the decrease in sales volume noted above.

Gross profit for the three months ended September 30, 2024 was $12.3 million as compared to $18.0 million for the three months ended September 30, 2023, a decrease of 32.0%.

The gross profit margin was 33.8% for the three months September 30, 2024 and 36.3% for the three months ending September 30, 2023.

The decrease in gross profit margin percentage is primarily related to competitive industry pricing in the interactive flat panel market coupled with a shift in product mix as audio revenues comprised a smaller percentage of total sales for the quarter compared with the prior year.

General and Administrative Expenses.

General and administrative expenses for the three months ended June 30, 2024 were $12.3 million, representing 32.0% of revenue as compared to $15.2 million or 32.4% of revenue for the three months ended June 30, 2023.

The decrease was due to planned initiatives to reduce operating expenses across all cost groups, with the largest declines in employee-related expenses of $0.7 million, professional fees of $0.5 million, and stock compensation expense of $0.3 million.

General and administrative expenses for the three months ended September 30, 2024 were $12.1 million, representing 33.3% of revenue as compared to $15.4 million or 31.0% of revenue for the three months ended September 30, 2023.

The decrease was due to planned initiatives to reduce operating expenses across all cost groups, with the largest declines in employee-related expenses of $2.0 million, sales and marketing expense of $0.4 million, travel expense of $0.3 million, depreciation and amortization expense of $0.2 million, and stock compensation expense of $0.2 million.

Research and Development Expenses.

Research and development expenses were $985 thousand and $525 thousand for the three months ended June 30, 2024 and 2023 , respectively, and representing 2.6% of revenue for the three months ended June 30, 2024, and 1.1% of revenue for the three months ended June 30, 2023.

Other Expense.

Other expense, net for the three months ended June 30, 2024 was $2.8 million as compared to $2.6 million for the three months ended June 30, 2023 , representing an increase of $0.2 million .

Research and development expenses were $1.0 million and $979 thousand for the three months ended September 30, 2024 and 2023 , respectively, and representing 2.8% of revenue for the three months ended September 30, 2024, and 2.0% of revenue for the three months ended September 30, 2023.

Other Income (Expense).

Other expense, net for the three months ended September 30, 2024 was $2.2 million as compared to $3.1 million for the three months ended September 30, 2023 , representing a decrease of $0.9 million .

Other income for the three months ended September 30, 2024 consisted primarily of realized foreign currency gains and losses.

Other expense consists primarily of interest expense on our term loan.

Income Tax Benefit (Expense).

Income tax benefit for the three months ended June 30, 2024 was $91 thousand , as compared to income tax expense of $255 thousand for the three months ended June 30, 2023.

The decrease in tax expense year-over-year is largely due to foreign pretax book income for the three months ended June 30, 2024 as compared to foreign pretax loss for the three months ended June 30, 2023 .

Income tax benefit for the three months ended September 30, 2024 was $12 thousand , as compared to income tax expense of $3.1 million for the three months September 30, 2023 .

The decrease in tax expense year-over-year is largely due to foreign pretax book income for the three months ended September 30, 2024 as compared to foreign pretax loss for the three months ended September 30, 2023 .

Net (Loss) Income.

Net loss was $1.5 million and $0.8 million for the three months ended June 30, 2024 and June 30, 2023 and was a result of the changes noted above.

For the six-month periods ended June 30, 2024 and 2023

Total revenues for the six months ended June 30, 2024 were $75.6 million as compared to $88.2 million for the six months ended June 30, 2023, resulting in a 14.3% decrease.

Net loss was $3.1 million and $17.8 million for the three months ended September 30, 2024 and September 30, 2023 and was a result of the changes noted above.

For the nine-month periods ended September 30, 2024 and 2023

Total revenues for the nine months ended September 30, 2024 were $111.9 million as compared to $137.9 million for the nine months ended September 30, 2023, resulting in a 18.9% decrease.

The decrease in revenues was due to lower sales volum e across all markets primarily resulting from lower global demand for interactive flat panel displays.

Cost of Revenues.

Cost of revenues for the six months ended June 30, 2024 were $48.3 million as compared to $55.3 million for the six months ended June 30, 2023, resulting in a 12.7% decrease.

Cost of revenues for the nine months ended September 30, 2024 were $72.3 million as compared to $86.9 million for the nine months ended September 30, 2023, resulting in a 16.8% decrease.

The decrease in cost of revenues was attributable to the decrease in units sold.

Gross Profit.

Gross profit for the six months ended June 30, 2024 was $27.3 million as compared to $33.0 million for the six months ended June 30, 2023, a decrease of 17.1%.

Gross profit margin was 36.2% for the six months ended June 30, 2024 and 37.4% for the six months ended June 30, 2023.

The decrease in gross profit margin is primarily related to a difference in product mix compared to the prior year quarter.

Gross profit for the nine months ended September 30, 2024 was $39.6 million as compared to $51.0 million for the nine months ended September 30, 2023, a decrease of 22.3%.

Gross profit margin was 35.4% for the nine months ended September 30, 2024 and 37.0% for the nine months ended September 30, 2023.

The decrease in gross profit margin is primarily related to the continuous increase in pricing pressure within the industry as well as a difference in product mix compared to the prior year quarter.

General and Administrative Expenses.

General and administrative expenses for the six months ended June 30, 2024 were $27.6 million, representing 36.5% of revenue as compared to $30.0 million representing 33.9% of revenue for the six months ended June 30, 2023.

The decrease in general and administrative expenses for the period ended June 30, 2024 was due to planned initiatives to reduce operating expenses across all cost groups, with the largest declines in employee-related expenses of $0.4 million, stock compensation expense of $0.4 million, and distribution costs of $0.6 million.

General and administrative expenses for the nine months ended September 30, 2024 were $39.7 million, representing 35.4% of revenue as compared to $45.4 million representing 32.9% of revenue for the nine months ended September 30, 2023.

The decrease in general and administrative expenses for the period ended September 30, 2024 was due to planned initiatives to reduce operating expenses across all cost groups, with the largest declines in employee-related expenses of $2.4 million, sales and marketing expense of $0.8 million, stock compensation expense of $0.6 million, depreciation and amortization expense of $0.7 million, and travel expense of $0.6 million.

Research and Development Expenses.

Research and development expenses for the six months ended June 30, 2024 and 2023 were $2.2 million and $1.1 million, respectively and represented 2.9% and 1.3% of revenue, respectively.

Research and development expenses for the nine months ended September 30, 2024 and 2023 were $3.2 million and $2.1 million, respectively and represented 2.8% and 1.5% of revenue, respectively.

The increase can be attributable to the allocation of certain general and administrative expenses to new and ongoing research and development projects.

Other Expense.

Other expense, net for the six months ended June 30, 2024 was $5.4 million as compared to $5.3 million for the six months ended June 30, 2023 , representing a decrease of $0.1 million.

Other expense, net for the nine months ended September 30, 2024 was $7.6 million as compared to $8.4 million for the nine months ended September 30, 2023 , representing a decrease of $0.8 million.

Other expense consists primarily of interest expense on our term loan.

Income Tax Expense.

Income tax expense for the six months ended June 30, 2024 was $779 thousand, as compared to a $306 thousand for the six months ended June 30, 2023.

The increase in tax expense is primarily due to higher U.S.

taxes related to interest expense and increased net operating loss limitations.

Net loss was $8.6 million and $3.7 million for the six months ended June 30, 2024 and 2023, respectively, and was a result of the changes noted above.

Income tax expense for the nine months ended September 30, 2024 was $767 thousand, as compared to a $3.4 million for the nine months ended September 30, 2023.

The decrease in tax expense is primarily due to an increase in the forecasted worldwide net loss as compared to the prior year.

Net loss was $11.6 million and $21.5 million for the nine months ended September 30, 2024 and 2023, respectively, and was a result of the changes noted above.

Use of Non-GAAP financial measures

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

Adjusted EBITDA represents EBITDA, plus stock compensation expense, the change in fair value of derivative liabilities, purchase accounting impact of fair valuing inventory and deferred revenue, and severance charges.

Adjusted EBITDA represents EBITDA, plus stock compensation expense, the change in fair value of

derivative liabilities, purchase accounting impact of fair valuing inventory and deferred revenue, goodwill impairment and severance charges.

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

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Investors should consider the Company’s non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains reconciliations of net income and losses to EBITDA and adjusted EBITDA for the periods presented:

The following table contains reconciliations of net losses to EBITDA and adjusted EBITDA for the periods presented:

(in thousands) Three Months Ended

June 30, 2024 Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

September 30, 2024 Three Months Ended

September 30, 2023 Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

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

Depreciation and amortization 2,075 2,332 6,187 6,893

Interest expense 2,566 2,788 5,173 5,235

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

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

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Severance charges — — 943 —

Impairment of goodwill — 13,226 — 13,226

Adjusted EBITDA $ 2,195 $ 4,928 $ 6,026 $ 13,652

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Liquidity and Capital Resources

As of June 30, 2024, we had cash and cash equivalents of $7.5 million, a working capital balance of $46.7 million, and a current ratio of 2.21.

On June 30, 2023, we had $15.6 million of cash and cash equivalents, a working capital balance of $64.8 million, and a current ratio of 2.79.

For the six months ended June 30, 2024 and 2023, we had net cash used in and provided by operating activities of $7.3 million and $10 thousand.

Cash used in operating activities primarily relates to an increase in net loss due to a decrease in sales volume.

We had net cash used in investing activities of $411 thousand and $100 thousand for the six months ended June 30, 2024 and 2023, respectively.

As of September 30, 2024, we had cash and cash equivalents of $10.5 million, a working capital balance of $45.8 million, and a current ratio of 2.10.

As of September 30, 2023, we had $18.4 million of cash and cash equivalents, a working capital balance of $61.4 million, and a current ratio of 2.24.

For the nine months ended September 30, 2024 and 2023, we had net cash used in and provided by operating activities of $2.1 million and $8.2 million, respectively.

Cash used in operating activities primarily relates to net loss for the nine months ended September 30, 2024 as well as changes in working capital primarily related to a reduction in accounts payable in 2024 resulting from large inventory purchases in 2023.

We had net cash used in investing activities of $279 thousand and $226 thousand for the nine months ended September 30, 2024 and 2023, respectively.

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

For the six months ended June 30, 2024 and 2023, we had net cash used in financing activities of $1.4 million and cash provided by financing activities of $1.0 million, respectively.

For the nine months ended September 30, 2024 and 2023, we had net cash used in financing activities of $4.4 million and $3.0 million, respectively.

Cash used in financing activities in 2024 is related to principal payments on debt of $7.4 million and $0.9 million in payments of fixed dividends to our Series B preferred shareholders, partially offset by $4.0 million proceeds from short-term debt.

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In addition to the cash flows generated by our ongoing operating activities we financed our operations during 2024 and 2023 with our credit facility pursuant to our Credit Agreement with Whitehawk.

On April 19, 2024, we entered into a working capital loan with Whitehawk for $5.0 million, with $2.0 million funded on April 19, 2024 and the remaining $3.0 million to be made available in June 2024 provided the Company was in compliance with certain covenants.

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

We are required to pay a fee equal to 6% of the aggregate amount of borrowings under the Sixth Amendment.

On April 19, 2024, as a part of the Sixth Amendment to the Credit Agreement, we entered into a working capital loan with Whitehawk for $5.0 million, with $2.0 million funded on April 19, 2024 and the remaining $3.0 million to be made available in June 2024 provided the Company was in compliance with certain covenants.

On July 2, 2024, we requested and received $2 million of the $3 million working capital bridge loan.

We were required to pay a fee equal to 6% 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.

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

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

To the extent not previously converted into the Company’s Class A common stock, the outstanding shares of our Series B preferred stock are redeemable at the option of the holders at any time or from time to time commencing on January 1, 2024 upon, 30 days’ prior written notice to the 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.

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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.

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

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

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

Our current levels of indebtedness and market conditions may affect our ability to access funding sources and credit arrangements in amounts adequate to finance our current and future business operations.

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

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

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

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

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.

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

Although on March 14, 2024, the Loan Parties entered into the Fifth Amendment with the Collateral Agent and the Lender mainly 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), 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.

Following the Fifth Amendment to the Credit Agreement, the Senior Leverage ratio increased to 6.00 at March 31, 2024, remained at 2.00 at June 30, 2024 and 1.75 thereafter.

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.

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

Our 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.

We were not in compliance with our financial covenant related to the Senior Leverage Ratio under the Credit Agreement at December 31, 2023.

On March 14, 2024, we entered into the Fifth Amendment with the Collateral Agent and the Lender to (1) amend and restate the Senior Leverage Ratio and Minimum Liquidity (as defined in the Fifth Amendment), and (2) waive any event of default that may have arisen directly as a result of the 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 it remained at 2.00, and thereafter it remained at 1.75.

We were also not in compliance with our Senior Leverage Ratio financial covenant under the Credit Agreement at June 30, 2024.

On August 12, 2024, we entered into the Seventh Amendment with the Collateral Agent and the Lender to (1) reduce the intellectual property sublimit under the borrowing base from $15.0 million to $11.2 million, and (2) 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.

We were also not in compliance with our Senior Leverage Ratio financial covenant under the Credit Agreement at September 30, 2024.

Subsequent to the end of the third quarter of 2024, we were also not in compliance with our borrowing base covenant under the Credit Agreement for month ended October 31, 2024.

On November 14, 2024, we 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.

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 maintain full compliance with these covenants in the future.

Because of the significant decreases in the required Senior Leverage Ratio that have occurred within the past twelve months, our current forecast projects that we 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 a basis with more favorable terms.

The Company is actively working to refinance its debt with new lenders on terms more favorable to the Company.

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.

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

The Company has a good working relationship with its current banking partner and has seen a positive trend in the credit markets as of late.

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

In view of this matter, continuation as a going concern is dependent upon our 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 our Credit Agreement with a different lender on a basis with more favorable terms.

We are actively working to refinance our debt with new lenders.

While we are confident in our ability to refinance our existing debt, we do not have written or executed agreements as of the issuance of this Form 10-Q.

Our ability to refinance our existing debt is based upon credit markets and economic forces that are outside of our control.

We have a good working relationship with our current banking partner and have seen a positive trend in the credit markets as of late.

However, there can be no assurance that we will be successful in refinancing our debt, or on terms acceptable to us.

Because our Class A common stock is listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing.

At present, we are in the initial period of 180-day compliance period provided by Nasdaq relating to our failure to maintain the $1.00 minimum bid price requirement.

On February 29, 2024, we received a letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq notifying us that we no longer meet the Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

We have been provided an initial period of 180 calendar days, or until August 26, 2024, to regain compliance with the Bid Price Rule.

If we are not in compliance with the Bid Price Rule by August 26, 2024, we may be afforded a second 180 calendar day period to regain compliance.

We will continue to actively monitor the closing bid price of our Class A common stock and will evaluate available options, including, without limitation, seeking to effect a reverse stock split, in order to resolve the deficiency and regain compliance with the Bid Price Rule.

On February 28, 2024, we received a letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, based upon the closing bid price of our Class A Common Stock for the previous 30 consecutive business days, we no longer met the requirements of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until August 26, 2024, to regain compliance with the Bid Price Rule.

On August 27, 2024, Nasdaq advised us in writing that, while we had not regained compliance with the Bid Price Rule, we had been granted an additional 180 calendar day extension, or until February 24, 2025, to regain compliance with the Bid Price Rule.

Nasdaq’s determination was based on our having met the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market, with the exception of the Bid Price Rule, and on our written notice to Nasdaq of our intention to cure the deficiency during the extended compliance period by effecting a reverse stock split, if necessary.

If we do not regain compliance with the Bid Price Rule by the end of the extended compliance period, the Staff will provide written notification to us that our Class A Common Stock will be subject to delisting.

At that time, we may appeal the Staff’s delisting determination to a hearings panel.

There can be no assurance that we will regain compliance with the Bid Price Rule or that we will otherwise maintain compliance with any of the other listing requirements for The Nasdaq Capital Market.

In the event our stock is delisted from Nasdaq, whether by choice or otherwise, the delisting of our Class A common stock could significantly impair our ability to raise capital and stockholder value.

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

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis