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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-03-28 · 139 added, 113 removed, 198 unchanged (56% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis ("MD&A") should be read in conjunction with our financial statements and the related notes thereto included elsewhere herein MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions.

The following Management’s Discussion and Analysis ("MD&A") should be read in conjunction with our financial statements and the related notes thereto included elsewhere herein.

MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions.

Any statements that are not statements of historical fact are forward-looking statements.

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The majority of our products are backed by nearly 30 years of research and development.

Advances in technology and new options for the introduction of technology into the classroom have forced school districts to look for solutions that allow teachers and students to bring their own devices into the classroom, provide school districts with information technology departments with the means to access data with or without internet access, handle higher demand for video, as well as control cloud and data storage challenges.

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higher demand for video, as well as control cloud and data storage challenges.

Our design teams are able to quickly customize systems and configurations to serve the needs of clients so that existing hardware and software platforms can communicate with one another.

Our goal is to become a single source solution to satisfy the needs of educators around the globe and provide a holistic approach to the modern classroom.

In late 2024, the Company announced a unified worldwide display brand as Clevertouch by Boxlight as part of our long-term growth strategy.

This strategic initiative is aimed at optimizing our operational efficiency and streamlining product development costs.

We are excited about the long-term outlook for the Industry and believe our recent initiatives to streamline our brands and unify our go-to-market message will position the Company for further success.

Components of our Results of Operations and Financial Condition

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In most cases, interactive devices are sold with hardware maintenance services.

The Company’s installation, training and professional development service include third-party products and services and are generally sold separately from the Company’s products.

The Company’s installation, training, and professional development services include third-party products and services and are generally sold separately from the Company’s products.

Cost of revenue

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We outsource some of our warehouse operations and order fulfillment, and we purchase products from related entities and third parties.

Our product costs vary directly with volume and based on the costs of underlying product components as well as the prices we negotiate with our contract manufacturers.

Our product costs vary directly with volume and are based on the costs of underlying product components as well as the prices we negotiate with our contract manufacturers.

Shipping costs fluctuate with volume as well as with the method of shipping chosen in order to meet customer demand.

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

component, contract manufacturing and supplier pricing, competitive industry pricing, foreign currency exchange and shipping costs.

component, contract manufacturing and supplier pricing, freight, duties, and other shipping costs, and foreign currency exchange.

As we primarily procure our product components and manufacture our products in Asia, our suppliers incur many costs, including labor costs, in other currencies.

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Gross profit and gross profit margin may fluctuate over time based on the factors described above.

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Operating expenses

We classify our operating expenses into two categories:

research and development and general and administrative.

Research and development.

Research and development expense consists primarily of personnel related costs, prototype and sample costs, design costs and global product certifications mostly for wireless certifications.

We classify our operating expenses into three categories:

general and administrative, depreciation and amortization, and research and development.

General and administrative .

General and administrative expense consists of personnel related costs, which include salaries and stock-based compensation, as well as the costs of professional services, such as accounting and legal, facilities, information technology, depreciation and amortization and other administrative expenses.

General and administrative expense consists of personnel-related costs, which include salaries, commissions, and stock-based compensation, as well as the costs of professional services, such as accounting and legal, facilities, information technology, and other administrative expenses.

General and administrative expense may fluctuate as a percentage of revenue, notably in the second and third quarters of our fiscal year when we have historically experienced our highest levels of revenue.

Depreciation and amortization .

Depreciation and amortization expense consists of depreciation of our property and equipment and amortization of our intangible assets.

Research and development .

Research and development expense consists primarily of personnel-related costs, prototype and sample costs, design costs, and global product certifications, mostly for wireless certifications.

Other income (expense), net

Other income (expense), net primarily consists of interest expense associated with our debt financing arrangements and the effects of changes in the fair value of derivative liabilities.

Other (expense) income, net, primarily consists of interest expense associated with our debt financing arrangements, certain impacts of changes in foreign exchange rates, and the effects of changes in the fair value of derivative liabilities and changes in the fair value of warrants.

Income tax expense

We are subject to income taxes in the United States, Canada, United Kingdom, Mexico, Sweden, Finland, Holland, Australia, Denmark and Germany where we do business.

The United Kingdom, Mexico, Sweden, Finland, Holland and Germany, Australia, Canada and Denmark have a statutory tax rate different from that in the United States.

We are subject to income taxes in the United States, Canada, the United Kingdom, Mexico, Sweden, Finland, Holland, Australia, Denmark, and Germany, where we do business.

The United Kingdom, Mexico, Sweden, Finland, Holland, Germany, Australia, Canada, and Denmark have a statutory tax rate different from that in the United States.

Additionally, certain of our international earnings are also taxable in the United States.

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We regularly assess the likelihood of adverse outcomes resulting from the examination of our tax returns by the U.S.

Internal Revenue Service, or IRS, and other tax authorities to determine the adequacy of our income tax reserves and expense.

Internal Revenue Service, or IRS, and other tax authorities to determine the adequacy of our income tax reserves and expenses.

Should actual events or results differ from our current expectations, charges or credits to our income tax expense may become necessary.

Any such adjustments could have a significant impact on our results of operations.

Operating Results – Boxlight Corporation

Operating Results

For the years ended December 31, 2025, and 2024

Total revenues for the year ended December 31, 2025 were $109.2 million as compared to $135.9 million for the year ended December 31, 2024, resulting in a 19.6% decrease.

The decrease in revenues was due to lower sales volume across all markets resulting from lower global demand for interactive flat panel displays as well as competitive industry pricing.

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

Cost of Revenues.

Cost of revenues for the year ended December 31, 2025 was $75.6 million as compared to $89.0 million for the year ended December 31, 2024, resulting in a 15.0% decrease.

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

The decrease in cost of revenues was attributable to the decrease in units sold, offset by increases in tariffs expense.

Gross Profit .

Gross profit for the year ended December 31, 2025 was $33.6 million as compared to $46.9 million for the year ended December 31, 2024.

Gross profit margin declined to 34.5% for the year ended December 31, 2024 compared to 35.8% for the year ended December 31, 2023, primarily related recent increases in pricing pressure within the industry as well as a difference in product mix compared to the prior year.

Gross profit margin declined to 30.8% for the year ended December 31, 2025 compared to 34.5% for the year ended December 31, 2024, primarily related to changes in the product mix, increases in pricing pressure within the industry, and the impact of a $1.5 million increase in tariffs on the cost of our products compared to the prior year.

General and Administrative Expense.

General and administrative expense for the year ended December 31, 2025 was $35.5 million and 32.5% of revenue, as compared to $41.8 million and 30.7% of revenue for the year ended December 31, 2024.

The increase was primarily related to the $12.3 million accelerated amortization expense resulting from an adjustment in the useful lives of certain intangible assets from the EMEA and Americas reporting segments offset by a decrease in personnel related expenses of approximately $4.3 million, a reduction in occupancy costs of approximately $1.5 million, a decrease in sales and marketing expenses of approximately $1.1 million, a reduction in stock compensation of $1.7 million, and a decrease in travel expenses of approximately $1 million.

The decrease was primarily related to a decrease in personnel-related expenses of approximately $4.2

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million, a reduction in sales and marketing expenses of approximately $1.3 million, and a decrease in professional fees of approximately $0.6 million.

Depreciation and Amortization Expenses.

Depreciation and amortization expenses for the year ended December 31, 2025 were $10.3 million, representing 9.4% o f revenue as compared to $20.5 million re presenting 15.1% of revenue for the year ended December 31, 2024.

The decrease in de preciation and amortization expenses for the year ended December 31, 2025 was primarily related to the $12.3 million accelerated amortization expense in the year ended December 31, 2024.

Research and Development Expense.

Research and development expense was $4.3 million or 3.9% of revenue for the year ended December 31, 2025, as compared to $4.1 million or 3.0% of revenue for the year ended December 31, 2024 .

Research and development expense primarily consists of costs associated with development of proprietary technology.

Research and development expense primarily consists of costs associated with the development of proprietary technology.

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

Impairment of Goodwill.

Impairment of goodwill for the year ended December 31, 2023 was $25.2 million and related to both the Americas and EMEA reporting segments.

There was no impairment of goodwill for the year ended December 31, 2024.

Other Expense, net.

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These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time.

We find this especially useful when reviewing results of operations, which include large non-cash amortizations of intangibles assets from acquisitions.

We find this especially useful when reviewing results of operations, which include large non-cash amortizations of intangible assets from acquisitions.

Investors should consider our 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 losses to EBITDA and adjusted EBITDA for the periods presented.

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Reconciliation of net loss for the years ended

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Interest expense 10,032 10,252

Income tax (benefit) expense

(1,909) 1,866

Income tax (benefit) (920) (1,909)

EBITDA $ (4,418) $ 537

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Change in fair value of derivative liabilities 4 (205)

Change in fair value of related party derivative liabilities 211 —

Change in fair value of common warrants (1,394) —

Loss on warrant issuance 578 —

Purchase accounting impact of fair valuing inventory — 225

Purchase accounting impact of fair valuing deferred revenue 219 939

Impairment of Goodwill — 25,195

Severance charges 806 1,383

Adjusted EBITDA $ (3,526) $ 4,268

Discussion of Effect of Seasonality on Financial Condition

Discussion of the Effect of Seasonality on Financial Condition

Certain accounts on our balance sheets are subject to seasonal fluctuations.

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Liquidity and Capital Resources

As of December 31, 2024, we had cash and cash equivalents o f $8.0 million , a working capital balance of $1.3 million, and a current ratio of 1.02.

Credit Agreement Amendments and Covenant Relief

As of December 31, 2025, we had cash and cash equivalents of $9.4 million, a working capital balance of $26.6 million, and a current ratio of 1.62.

At December 31, 2024, we had $8.0 million of cash and cash equivalents, a working capital balance of $1.3 million, and a current ratio of 1.02.

For the years ended December 31, 2024 and 2023, we had net cash used in operating activities of $0.4 million and net cash provided by $11.6 million, respectively.

For the years ended December 31, 2025 and 2024, we had net cash used in operating activities of $3.3 million and $0.4 million, respectively.

Cash used in operating activities increased year over year as a result of a change in working capital management.

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

For the years ended December 31, 2024 and 2023, we had net cash used in financing activities of $7.1 million and $8.0 million, respectively.

Cash used in financing activities for the year ended December 31, 2024 is primarily related to principal payments on debt of $9.9 million, and $1.3 million in payments of fixed dividends to our Series B preferred shareholders, partially offset by proceeds from short-term debt.

Cash used in financing activities for the year ended December 31, 2023 was primarily related to principal payments on debt, and payments of fixed dividends to our Series B preferred shareholders, partially offset by proceeds from short-term debt and stock option exercises.

For the years ended December 31, 2025 and 2024, we had net cash provided by financing activities of $3.4 million and net cash used in financing activities of $7.1 million, respectively.

Cash provided by financing activities for the year ended December 31, 2025 was primarily related to net proceeds from the issuance of common stock and prefunded warrants of $9.0 million and proceeds from the issuance of short-term debt of $2.5 million, partially offset by $8.1 million in principal payments.

Cash used in financing activities for the year ended December 31, 2024 was primarily related to principal payments on debt of $9.9 million and $1.3 million in payments of fixed dividends to our Series B preferred shareholders, partially offset by $4.0 million proceeds from short-term debt.

Our liquidity needs are funded by operating cash flow and available cash.

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures, and contractual obligations with respect to facility leases.

We lease all of our office facilities.

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all of our office facilities.

We expect to make future payments on existing leases from cash generated from operations.

We have limited credit available from our major vendors and are required to prepay a percentage of our inventory purchases, which further constrains our cash liquidity.

In addition, our industry is seasonal with many sales to educational customers

occurring during the second and third quarters when schools make budget appropriations and classes are not in session limiting disruptions related to product installation.

In addition, our industry is seasonal with many sales to educational customers occurring during the second and third quarters when schools make budget appropriations and classes are not in session, limiting disruptions related to product installation.

This seasonality makes our needs for cash vary significantly from quarter to quarter.

On April 19, 2024, the Company entered into a sixth amendment to the Credit Agreement with 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, including the related fee were paid in full by November 2024, and were not subject to prepayment penalties.

As of December 31, 2025, the Company had approximately $32.2 million of indebtedness outstanding under its Credit Agreement with Whitehawk Capital Partners, LP, as Collateral Agent, and Whitehawk Finance LLC, as Lender.

During the fiscal year ended December 31, 2025, the Company entered into the Eighth, Ninth, Tenth, and Eleventh Amendments to the Credit Agreement (collectively, the “2025 Amendments”) to address prior instances of non-compliance with certain financial covenants and to restructure key terms of the facility.

In particular, the Company had not maintained compliance with the Senior Leverage Ratio and borrowing base covenants at various measurement dates during 2025.

The Lender waived each of these events of default in connection with the respective amendments.

Most significantly, on December 18, 2025, the Company entered into the Eleventh Amendment.

The Eleventh Amendment extended the final maturity date of the loans from December 31, 2025, to April 1, 2027, suspended mandatory quarterly amortization payments through June 30, 2026, and replaced the Senior Leverage Ratio financial covenant with a Minimum Consolidated Adjusted EBITDA covenant commencing with the quarter ending March 31, 2026.

The Company is also required to maintain qualified cash of at least $1.5 million The Company is also required to meet Borrowing Base covenants with allowed over advances of for the month ending December 31, 2025, $4,000,000;

for the month ending January 31, 2026, $4,500,000;

for the month ending February 28, 2026, $5,500,000 and (from and after the month ending March 31, 2026 (and each Fiscal Month thereafter), $4,000,000 (the “Permitted Over Advance”).

The Eleventh Amendment includes revised mandatory prepayment provisions requiring 50% (or 100% if in default) of net cash proceeds from equity offerings and certain debt to be applied to loan prepayments, with up to $5.0 million allocable for working capital and general corporate purposes.

Capital Raise

In September 2025, the Company completed a registered direct offering of 222,222 shares of Class A common stock at $18.00 per share, generating approximately $4.0 million in gross proceeds.

Net proceeds were used for working capital and debt reduction pursuant to the Company’s agreement with its senior lender.

This offering was conducted through the Company’s effective shelf registration statement on Form S-3.

In December 2025 and until exhaustion of the “at the market” equity offering program (“ATM Program”) in January 2026 the Company has shown the ability to raise capital to fund operations.

Past success is not indicative of future results and the Company has evaluated the going concern consideration as such.

Tariff Environment

On February 20, 2026, the Supreme Court of the United States ruled that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the imposition of tariffs, effectively invalidating IEEPA-based tariffs that had been in effect since February 2025.

The Company’s diversified supply chain and global revenue base have historically provided a degree of insulation from direct tariff impacts.

The elimination of these tariffs is expected to reduce input cost pressures and improve the purchasing environment for the Company’s education and government customers, and may result in refund recoveries for IEEPA tariffs previously paid by the Company or its suppliers during the applicable period.

The tariff environment is in a state of flux and the Company is actively pursuing refund recovery activities as further clarity is provided by the Court of International Trade and the US Customs and Border Protection releases the process for recovery.

Going Concern Assessment

The Company has evaluated conditions and events, in the aggregate, that may raise doubt about its ability to continue as a going concern within one year after the date these financial statements are issued, in accordance with ASC 205-40.

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The Company acknowledges that it has a history of operating losses, has incurred recurring negative cash flows from operations, and has required multiple amendments and waivers under its Credit Agreement due to non-compliance with financial covenants in prior periods.

The Company acknowledges it is a reasonable concern that compliance will be maintained at all future measurement dates.

Management believes that the following factors provide potential upside to help alleviate cash restrictions over the next year:

• The extension of the Credit Agreement maturity to April 1, 2027, pursuant to the Eleventh Amendment, eliminates the near-term risk of debt maturity acceleration and provides the Company with an extended runway within which to execute its operational and any recapitalization, if necessary, plans;

• The replacement of the Senior Leverage Ratio covenant with the Minimum Consolidated Adjusted EBITDA covenant establishes a financial compliance framework that management believes is more achievable based on the Company’s current and projected operating performance;

• The suspension of mandatory quarterly amortization payments through June 30, 2026, provides near-term cash flow relief;

• The September 2025 capital raise of approximately $4.0 million in gross proceeds demonstrated continued access to the equity capital markets and provided additional liquidity;

• The invalidation of IEEPA tariffs by the Supreme Court in February 2026 reduces supply chain cost pressures seen during 2025 and provides for a non-insignificant, cash injection into the Company in 2026;

• Management’s continued focus on operational efficiency, expense reduction, and revenue diversification into the corporate and government markets as well expansion as with a new product offering coming to market in 2026.

Notwithstanding the foregoing, there is substantial doubt as to the Company’s ability to continue as a going concern as the Company is dependent upon its ability to maintain compliance with the financial covenants under the Credit Agreement as amended, achieve positive cash flow from operations, and, if necessary, access additional financing.

There can be no assurance that the Company will be successful in maintaining compliance with its financial covenants, achieving profitability, or raising additional capital on acceptable terms or at all.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Preferred Stock and Capital Structure Considerations

To the extent not previously 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.

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Pursuant to the Amendments, neither the Series B Preferred Stock nor the Series C Preferred Stock shall be convertible into Class A Common Stock until the earlier of (1) the effectiveness of an amendment to the articles of incorporation of the Company increasing the number of shares of authorized Class A Common Stock to at least 25,000,000 shares (subject to adjustments as set forth therein) and (2) August 19, 2025.

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On October 1, 2025, the Company converted all outstanding Series C preferred stock into common stock and amended the Series B preferred stock to eliminate redemption and conversion features, reducing potential future cash obligations.

At-the-Market Offering (“ATM Program”)

During the year ended December 31, 2025, the Company raised approximately $0.66 million of net proceeds through sales of its Class A Common Stock under its “at the market” offering program (“ATM Program”).

The proceeds were used for working capital and general operating purposes.

See Note 12 – Stockholders’ Equity to the consolidated financial statements for additional information regarding the Company’s ATM program.

Given the uncertainty surrounding global supply chains, global markets, and general global uncertainty as a result of new U.S.

tariff policy, trade wars, and the ongoing conflicts between Russia and Ukraine and Israel and Hamas, the availability of debt and equity capital has been reduced and the cost of capital has increased.

tariff policy, trade wars, and the ongoing and widespread conflicts across multiple regions , 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.

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Cash and cash equivalents, along with anticipated cash flows from operations, may not provide sufficient liquidity for our working capital needs, debt service requirements, or to maintain minimum liquidity requirements under our Credit Agreement, and we may need to raise capital to meet current working capital requirements including maintaining sufficient inventory levels to meet future sales demand.

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.

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 rise 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.

The Company was not in compliance with its 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.

The Company was also not in compliance with its 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.

The Company was also not in compliance with its financial covenant related to the Senior Leverage Ratio under the Credit Agreement at December 31, 2024, and believes it will not be in compliance with this covenant at March 31, 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, 2024 and February 28, 2025.

On March 24, 2025, the Company entered into an eighth amendment to the Credit Agreement with the Collateral Agent and Lender (the “Eighth Amendment”) to (i) provide the Company with an additional $2.5 million working capital bridge loan and (ii) waive any events of default that may have arisen as a result of the Company’s failure to (A) maintain the required ratio of indebtedness to adjusted EBITDA (defined more specifically as the “Senior Leverage Ratio” in the Credit Agreement) for the periods ended December 31, 2024 and March 31, 2025 and (B) maintain a value of specified assets in excess of certain borrowings (defined more specifically as a “Borrowing Base” in the Credit Agreement) for the months ended December 31, 2024, January 31, 2025 and February 28, 2025.

In addition, no payments were required to be made by the Company to pay down the borrowing base defaults for December 2024, January 2025 and February 2025.

The Company is required to pay a fee equal to 6% of the working capital bridge loan under the Eighth Amendment.

The bridge loan, including the related fee, is due and payable in full on August 31, 2025, and is not subject to prepayment penalties.

In conjunction with obtaining the waiver, the Company must also comply with additional covenants, including meeting target completion milestones related to the Company’s recapitalization process, most notably achieving an expected completion of the recapitalization and/or repayment of its term loan by June 16, 2025.

In addition, the Company is required to provide budgets to the lender with variance analysis in excess of specified thresholds resulting in an event of default at the discretion of the lender.

The amendment also prohibits the Company from paying dividends or distributions to its preferred stockholders and reduces the value assigned to its intellectual property under its borrowing base calculation.

Because of the significant decreases in the required Senior Leverage Ratio that have occurred within the past fifteen 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 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, the borrowing base covenant, or any other financial covenants, or refinance our Credit Agreement with a different lender on a basis with more favorable terms.

As part of our ongoing efforts to strengthen our financial position, the Company has initiated plans to recapitalize its balance sheet and refinance our current Credit Agreement.

This initiative is part of our broader strategy to improve financial flexibility, reduce our cost of capital, and position the Company for sustainable growth in the long term.

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

While we have currently engaged financial advisors and are actively working to refinance our existing debt, we do not have written or executed agreements as of the issuance of this Form 10-K.

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

Inventory Financing Agreement

On November 3, 2025, we entered into an amended and restated inventory finance agreement with J.J.

(the “Inventory Purchaser”), pursuant to which the Inventory Purchaser may, from time to time, finance up to $9.0 million of our finished goods inventory purchases from our contract manufacturers.

Under this arrangement, we are required to pay a deposit equal to 20% of the purchase price of the applicable inventory, and the Inventory Purchaser funds the remaining balance directly to the supplier and takes title to the inventory.

We have determined that this arrangement results in the recognition of the financed inventory and a corresponding financing obligation on our consolidated balance sheets, as the risks and rewards of ownership are substantially retained by us during the financing period.

Accordingly, financed inventory is included within inventories, net of reserves, and the related payment obligations are presented as related party accounts payable on our consolidated balance sheets.

For each inventory purchase financed under the agreement, we are obligated to pay the Inventory Purchaser an amount equal to the funded purchase amount plus a contractual premium within 90 days of the funding date.

The agreement also requires us to pay monthly monitoring fees and provides for additional fees based on unused financing availability.

In the event we fail to satisfy our payment obligations when due, the Inventory Purchaser may accelerate amounts owed, impose default interest and penalties, and sell the inventory collateral.

We would remain liable for any deficiency resulting from such sale.

The agreement further provides the Inventory Purchaser with the right, at its election, to convert certain outstanding payment obligations into shares of our Class A common stock, subject to ownership limitations and other contractual restrictions.

As of December 31, 2025, the aggregate outstanding obligation under this arrangement was $3.7 million, recorded as related party accounts payable on our consolidated balance sheet.

This arrangement represents a form of short-term inventory financing and exposes us to material liquidity, cash flow, and operational risks.

On April 1, 2026, we entered into an amendment to the inventory finance agreement, pursuant to which $556,200 of the outstanding balance was converted into 600,000 shares of common stock (the “Conversion Shares”) at a conversion price of $0.927 per share.

Further, the parties agreed that, if the aggregate proceeds from the sale of the Conversion Shares are less than $556,200, the Company shall pay the shortfall in cash within five trading days.

Michael Pope, Chairman of

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the Company’s Board of Directors, and its former president and chief executive officer, is the chief executive officer of J.J.

Astor is beneficially owned, directly or indirectly, by a private investment fund managed by Mr.

Additional information regarding this inventory financing arrangement is included in Note 15 - Commitments and Contingencies to our consolidated financial statements.

Recent Financing

See Note 9 to the consolidated financial statements.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations or liquidity and capital resources.

Critical Accounting Policies and Estimates

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Revenue Recognition

Inventory Reserve

Goodwill and Intangible Assets

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At times, non-interactive projectors are also sold with hardware maintenance services with terms ranging from 36-60 months.

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

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

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

The Company’s software subscription services provide

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

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

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Control of these services is transferred to our customers over time with hours/time incurred in providing the service being the best depiction of the transfer of services since the customer is receiving the benefit of the services as the work is performed.

For contracts with multiple performance obligations, each of which represent promises within a contract that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”).

For contracts with multiple performance obligations, each of which represents promises within a contract that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”).

INVENTORY RESERVE

Inventories are stated at the lower of cost or net realizable value and include spare parts and finished goods.

Inventories are primarily determined using specific identification and the first-in, first-out (“FIFO”) cost methods.

Cost includes direct cost from the Contract Manufacturer (“CM”) or Original Equipment Manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight, and import duty costs.

We continuously review our inventory levels to identify slow-moving merchandise and markdowns necessary to clear slow-moving merchandise, which reduces the cost of inventories to its estimated net realizable value.

Consideration is given to several quantitative and qualitative factors, including current pricing levels and the anticipated need for subsequent markdowns, aging of inventories, historical sales trends, and the impact of market trends and economic conditions.

Estimates of markdown requirements may differ from actual results due to changes in quantity, quality, and mix of products in inventory, as well as changes in consumer preferences, market and economic conditions.

As of December 31, 2025 and December 31, 2024, our reserve for inventory obsolescence was $2.5 million and $3.2 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

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Under ASC Topic 350 “ Business Combinations ,” we have an option to perform a “qualitative” assessment of the Company to determine whether further impairment testing is necessary.

If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of the business is less than carrying amount, the quantitative impairment test is required.

If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of the business is less than the carrying amount, the quantitative impairment test is required.

Otherwise, no further testing is required.

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Based on these assessments, we determine whether the likelihood that a current fair value determination would be less than the current carrying amount is not more likely than not.

Because the qualitative assessment is an option, we may bypass it for any reporting unit in any period as begin our analysis with the quantitative impairment test.

We may elect to perform a quantitative impairment test based on the period of time that has passed since the most recent determination of fair value, even when we do not believe that it is more-likely-than-not that the fair value of the business is less than carrying amount.

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

Under the income approach, we calculate the fair value based on estimated future discounted cash flows.

The assumptions we use are based on what we believe a hypothetical marketplace participant would use in estimating fair value.

Under the market approach, we estimate the fair value based on market multiples of revenue or earnings before interest, income taxes, depreciation and amortization for benchmark companies.

If the fair value exceeds carrying value, then no further testing is required.

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

The Company's annual impairment testing date normally occurs as of October 1, which facilitates the overall coordination and timing of our annual financial statement close cycle and the preparation of our annual report.

During the year ended December 31, 2023, due to triggering events, the Company performed Goodwill testing as of June 30, September 30, and December 31, 2023.

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

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

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

For purposes of impairment testing, we allocated goodwill to the reporting units based

upon a relative fair value allocation approach and assigned approximately $22.4 million and $2.8 million of goodwill to the Americas and EMEA reporting units, respectively.

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

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

Under the income approach, we calculated the fair value based on estimated future discounted cash flows.

The assumptions used are based on what we believe a hypothetical marketplace participant would use in estimating fair value and include the discount rate, projected average revenue growth and projected long-term growth rates in the determination of terminal values.

Under the market approach, we estimated the fair value based on market multiples of revenue or earnings before interest, income taxes, depreciation, and amortization for benchmark companies.

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

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

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

The Company’s methodology for estimating fair value was consistent with the income and market approaches used as of June 30, 2023.

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.

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

The Company’s methodology for estimating fair value was consistent with the income and market approaches used as of June 30, 2023 and September 30, 2023.

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

For the year ended December 31, 2023, the Company recorded goodwill impairment charges of $22.4 million and $2.8 million in the Americas and EMEA reporting units, respectively, which also represents total accumulated goodwill impairment charges for each reporting unit.

During the year ended December 31, 2023, the Company identified multiple triggering events, including declines in market capitalization, changes in reporting units, and deteriorating industry conditions, and performed interim goodwill

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impairment testing.

As a result of these tests, the Company recorded goodwill impairment charges that fully eliminated the goodwill balances of its Americas and EMEA reporting units.

As of December 31, 2025, the Company had no remaining goodwill, and therefore no goodwill impairment testing was required during the year ended December 31, 2025.

Intangible assets are amortized using the straight-line method over their estimated period of benefit.

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The modification in useful lives resulted in accelerated amortization of approximately $12.3 million for both the Americas and EMEA reporting segments during the year ended December 31, 2024.

For the year ended December 31, 2025, the Company identified certain triggering events and circumstances that required it to evaluate its finite‑lived intangible assets for impairment.

Management performed a recoverability test and concluded that the carrying amounts were recoverable;

accordingly, no impairment losses were recognized related to the Company’s finite‑lived intangible assets during the year ended December 31, 2025.

SHARE-BASED COMPENSATION

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

The Company estimates the fair value of the long-term incentive plan by using a Model Monte Carlo Simulation model.

The Company estimates the fair value of the long-term incentive plan by using a Monte Carlo Simulation Model.

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.

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

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

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

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

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

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As a “smaller reporting company,” this item is not required.

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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-K

Item 7. Management’s Discussion and Analysis