Boxlight Corp 10-Q

ITEM 1A. RISK FACTORS For information regarding other risk factors pertinent to the Company’s business please refer to Part I Item 1A of the Company’s 2024 Annual Report on Form 10-K, which was filed with the SEC on March 28, 2025 and is incorporated by reference herein, as further updated and supplemented by the risk factors set forth below. We have a substantial amount of indebtedness maturing December 31, 2025. We do not anticipate being able to repay such indebtedness by such date. We have a significant amount of indebtedness. As September 30, 2025, we owed $36.7 million to the lender under our credit agreement, all of which is secured. The loans mature on December 31, 2025. As of September 30, 2025, our cash and cash equivalents were approximately $11.8 million. We do not expect to be in a position to be able to repay the loans by December 31, 2025. While the Company is actively working to refinance its debt, there can be no assurance that these efforts will be successful prior to the maturity date, at which time all amounts under the credit agreement will become due. If the lender forecloses on the loan, it is unlikely that the Company will able to continued as a going concern, and the Company would be insolvent, and common stockholders could lose most or all of their investment. Our substantial amount of indebtedness could have other important consequences. For example, it could: • increase our vulnerability to adverse economic, industry or competitive developments; • require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use cash flow to fund our operations, capital expenditures and future business opportunities; • limit our ability to service our indebtedness; or 49 Table of Contents • limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or general corporate purposes. The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations or prospects. In addition, borrowings under the credit agreement bear interest at variable rates. If these rates were to increase significantly, the risk related to our substantial indebtedness would intensify. While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection for this risk. We have not complied with certain covenants, including minimum liquidity and borrowing base requirements, under the credit agreement and, if the lender declared an event of default and accelerated the loans, this could cause us to be unable to continue to operate as a going concern. As of September 30, 2025, we owed $36.7 million to the lender under our credit agreement. As previously disclosed, we have been unable to comply with certain covenants under our credit agreement with the lender. Although, to date, we have been successful in obtaining forbearance agreements with respect to these matters and avoid defaults under the agreement, there can be no assurance that the lender will not declare an event of default and accelerate all of our obligations under the credit agreement in the event that we are unable to get into full compliance with these covenants in the future. Recently, the Company was not in compliance with the senior leverage ratio financial covenant under its credit agreement at June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025 and September 30, 2025. In addition, the Company was also not in compliance with its borrowing base covenant under the credit agreement at December 31, 2024, January 31, 2025, February 28, 2025, March, 31, 2025, April 30, 2025, May 31, 2025, June 30, 2025, July 31, 2025, August 31, 2025 or September 30, 2025. On March 24, 2025, the Company entered into an eighth amendment to the credit agreement with the collateral agent and lender to (i) provide the Company with an additional $2.5 million working capital bridge loan in March 2025 and (ii) waive any events of default that may have arisen directly as a result of (1) the financial covenant event of default (as defined in the eighth amendment) for the periods ended December 31, 2024 and March 31, 2025 and (2) the borrowing base defaults described in the eighth amendment for the months ended December 31, 2024, January 31, 2025 and February 28, 2025. The bridge loan, including the related fee, was due and payable in full on August 31, 2025. In conjunction with obtaining the waiver, the Company also was required to comply with the following covenants: • Initiate recapitalization efforts and/or other financing arrangements with target completion milestones starting on March 21, 2025 through an expected completion of the recapitalization and/or repayment of the debt by June 16, 2025. Not meeting these dates was an event of default under the credit facility. The Company did not meet this requirement. • Provide budgets to the lender with variances in excess of specified thresholds resulting in an event of default at the discretion of the lender. The Company is also required to meet with a financial advisor, as designated by the lender, if requested. In addition, the eighth amendment prohibited the Company from paying dividends or distributions to the preferred stockholders and reduced the borrowing base calculations by reducing the value assigned to its intellectual property to $11.2 million. As noted above, the Company was not in compliance with its financial covenant related to the borrowing base under the credit agreement at March 31, 2025. However, the noncompliance was cured by the payment of approximately $1.3 million under the credit agreement in April and May 2025. The Company applied these payments to the bridge loan and related fee, leaving a balance due on August 29, 2025 of $1.4 million, which the Company paid by the due date. 50 Table of Contents On August 13, 2025, the Company entered into a forbearance agreement and ninth amendment and waiver to the credit agreement with the collateral agent and lender to waive any events of default that may have arisen directly as a result of (1) the financial covenant event of default (as defined in the ninth amendment) for the period ended June 30, 2025, (2) the borrowing base defaults described in the ninth amendment for the months ended April 30, 2024, May 31, 2025, June 30, 2025, and July 31, 2025, and (3) the failure to comply with the recapitalization requirement set forth in the eighth amendment. Pursuant to the ninth amendment, the Company agreed to increase its quarterly principal payment due on September 30, 2025 from the scheduled $0.7 million to $1.0 million and to change interest payments from being due quarterly to being due monthly beginning in August 2025. Although prior defaults have been waived or cured as set forth above, the Company’s noncompliance with the borrowing base covenant at August 31, 2025 and September 30, 2025 and the Senior Leverage Ratio at September 30, 2025 remain open, as well as noncompliance with certain non-financial covenants. Because of the significant decreases in the required senior leverage ratio that have occurred within the past 18 months, our current forecast projects that we may not be able to maintain compliance with this ratio. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. In view of these matters, 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, borrowing base requirements or any other covenants or requirements under the credit agreement, or refinance our credit agreement with a different lender. Furthermore, in the event the lender refuses to grant waivers to avoid a future default, the lender might accelerate our obligations under the credit agreement. In order to satisfy such obligations, we would similarly have to refinance our obligations or seek additional capital, which we might not be able to do on acceptable terms or on a timely basis, or at all. Our ability to refinance our existing debt is based upon credit markets and economic forces that are outside of our control. There can be no assurance that we will be successful in refinancing our debt or raising additional capital, whether on acceptable terms, or on a timely basis, or at all. Furthermore, if we were attempting to refinance our obligations or raise capital in response to an imminent or declared acceleration and default, we might have to do so on an expedited basis, which might further jeopardize our ability to successfully refinance or obtain capital. In the event we fail in any of the efforts described in the preceding sentences, our business may materially suffer or even cease operations. We may not be able to maintain a listing of our Class A common stock on Nasdaq. Because our Class A common stock is listed on the Nasdaq Capital Market, we must meet certain financial and liquidity criteria to maintain such listing. From time to time, the Company has been out of compliance with Nasdaq’s listing standards. On April 7, 2025, the Company received a letter from Nasdaq notifying the company that it did not satisfy the continued listing requirements under Nasdaq Listing Rule 5550(b), specifically the requirements that listed companies maintain stockholders’ equity of at least $2.5 million. The Company subsequently submitted a compliance plan to Nasdaq and took steps to remedy the noncompliance, which resulted in Nasdaq confirming on October 8, 2025 that the Company was in compliance with the stockholders’ equity rule. Nasdaq however indicated that it will continue to monitor the Company’s compliance with the minimum stockholders’ equity requirements and, if at the time of its next periodic report the Company does not comply, the Company may be subject to delisting. T he Company also previously reported, due to director resignations, noncompliance with Nasdaq Rule 5605(c)(2)(A), which requires, among other things, that audit committees have at least three members, of which at least one member have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication. The resignations also resulted in the Company not being in compliance with Nasdaq Rule 5605(b)(1), which requires that a majority of the board of directors must be comprised of independent directors as defined in Nasdaq listing standards. The Company was subsequently able to regain compliance with these requirements through election of new directors, as confirmed by Nasdaq on October 8, 2025. In addition, the Company has previously not been compliant with Nasdaq Listing Rule 5550(a)(2), which requires that listed companies maintain a minimum closing bid price. The Company resolved that issue with a reverse stock split of 51 Table of Contents its authorized, issued and outstanding shares of Class A common stock, at a ratio of 1-for-5 which became effective on February 14, 2025. While the Company has resolved prior instances of Nasdaq listing noncompliance, and the Company believes, as of the date hereof, that it is in compliance with Nasdaq’s listing standards, the Company’s history of noncompliance could suggest that further incidents of noncompliance could occur in the future. In particular, Nasdaq has informed the Company that it will review this Quarterly Report on Form 10-Q for compliance with the stockholders’ equity standard. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASE OF EQUITY SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. MINE SAFETY DISCLOSURES Not Applicable.