UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


	☒	~~Quarterly Report~~ QUARTERLY REPORT UNDER ~~Section~~SECTION 13 ~~or 15(~~d~~) of the Securities Exchange Act of~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30,~~ ~~2021~~March 31, 2022


	☐	~~Transition Report~~ TRANSITION REPORT UNDER ~~Section~~SECTION 13 ~~or 15(~~d~~) of the Securities Exchange Act of~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 001-37564

BOXLIGHT CORPORATION

(Exact name of registrant as specified in its charter)

~~Nevada~~	~~8211~~	~~46-4116523~~
Nevada	8211	46-4116523
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)

~~1045 Progress Circle~~2750 Premiere Parkway, Suite 900

~~Lawrenceville~~Duluth, Georgia~~30043~~30097

Phone: (678)367-0809

(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BOXL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~Yes~~☒ ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ~~Yes~~☒ ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No No ☒

The number of shares outstanding of the registrant’s common stock on ~~November 9, 2021~~May 13, 2022 was 65,719,809.

~~62,059,906~~.

Table of Contents

BOXLIGHT CORPORATION

TABLE OF CONTENTS


		Page No.

	PART I. Financial Information

Item 1.	Unaudited Consolidated Condensed Financial Statements	3

	Unaudited Consolidated Condensed Statements of Operations and Comprehensive Loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~.	3

	Unaudited Consolidated Condensed Balance Sheets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	4

	Unaudited Consolidated Condensed Statements of Changes in Stockholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	5

	Unaudited Consolidated Condensed Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	7 6

	Notes to Unaudited Consolidated Condensed Financial Statements	8 7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27 28

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	36 35

Item 4.	Controls and Procedures	36

	PART II. Other Information

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

	Signatures	39

Table of Contents

PART I. ~~Financial Information~~FINANCIAL INFORMATION

Item 1. Financial Statements

Boxlight Corporation

Consolidated Condensed Statements of Operations and Comprehensive Loss

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2022		2021
Revenues, net	$	50,603	$	33,424
Cost of revenues		37,987		24,872
Gross profit		12,616		8,552

Operating expense:
General and administrative expenses		15,457		10,112
Research and development		613		474
Total operating expense		16,070		10,586

Loss from operations		(3,454)		(2,034)

Other income (expense):
Interest expense, net		(2,317)		(1,018)
Other income (expense), net		(15)		15
(Gain) loss on settlement of liabilities, net		854		(1,846)
Changes in fair value of derivative liabilities		(10)		(265)
Total other income (expense)		(1,488)		(3,114)

Loss before income taxes	$	(4,942)	$	(5,148)
Income tax benefit (expense)		86		(21)
Net loss	$	(4,856)	$	(5,169)
Fixed dividends - Series B Preferred		(317)		(317)
Net loss attributable to common stockholders		(5,173)		(5,486)

Comprehensive loss:
Net loss	$	(4,856)	$	(5,169)
Other comprehensive loss:
Foreign currency translation adjustment		(1,772)		(261)
Total comprehensive loss	$	(6,628)	$	(5,430)

Net loss per common share – basic and diluted	$	(0.07)	$	(0.09)

Weighted average number of common shares outstanding – basic and diluted		65,428		55,150

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Revenues, net $ 61,008 $ 9,477 $ 141,186 $ 23,028
Cost of revenues 45,210 7,452 104,002 16,722
Gross profit 15,798 2,025 37,184 6,306

Operating expense:
General and administrative expenses 11,933 3,307 32,844 10,444
Research and development 355 471 1,310 1,073
Total operating expense 12,288 3,778 34,154 11,517

Income (loss) from operations 3,510 (1,753 ) 3,030 (5,211 )

Other income (expense):
Interest expense, net (870 ) (531 ) (2,652 ) (1,619 )
Other income (expense), net 34 (15 ) 54 61
Changes in fair value of derivative liabilities 60 (194 ) (164 ) (239 )
Loss from settlements of liabilities (614 ) (1,718 ) (2,992 ) (579 )
Total other income (expense) (1,390 ) (2,458 ) (5,754 ) (2,376 )

Income (loss) before income taxes $ 2,120 $ (4,211 ) $ (2,724 ) $ (7,587 )
Income tax expense (1,391 ) - (3,936 ) -
Net income (loss) $ 729 $ (4,211 ) $ (6,660 ) $ (7,587 )
Fixed dividends - Series B Preferred (317 ) - (952 ) -
Deemed Contribution -Series B Preferred - - 367 -
Net income (loss) attributable to common stockholders $ 412 $ (4,211 ) $ (7,245 ) $ (7,587 )

Comprehensive loss:
Net income (loss) $ 729 $ (4,211 ) $ (6,660 ) $ (7,587 )
Foreign currency translation (loss) gain (2,008 ) 536 (1,738 ) 428
Total comprehensive loss $ (1,279 ) $ (3,675 ) $ (8,398 ) $ (7,159 )

Net income (loss) per common share – basic $ 0.01 $ (0.10 ) $ (0.12 ) $ (0.31 )

Net income (loss) per common share – diluted $ 0.01 $ (0.10 ) $ (0.12 ) $ (0.31 )

Weighted average number of common shares outstanding – basic 60,094 44,215 57,723 24,853

Weighted average number of common shares outstanding – diluted 64,710 44,215 57,723 24,853

See accompanying notes to unaudited consolidated condensed financial statements.

Table of Contents

Boxlight Corporation

Consolidated Condensed Balance Sheets

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021

(Unaudited)

(in thousands)


	March 31,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	11,265	$	17,938
Accounts receivable – trade, net of allowances		30,033		29,573
Inventories, net of reserves		49,094		51,591
Prepaid expenses and other current assets		7,913		9,444
Total current assets		98,305		108,546

Property and equipment, net of accumulated depreciation		1,447		1,073
Operating lease right of use asset		5,198		—
Intangible assets, net of accumulated amortization		62,075		65,532
Goodwill		25,783		26,037
Other assets		308		248
Total assets	$	193,116	$	201,436

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	26,131	$	33,638
Short-term debt		9,063		9,804
Operating lease liabilities, current		2,003		—
Deferred revenues, current		7,793		7,575
Derivative liabilities		3,073		3,064
Other short-term liabilities		642		667
Total current liabilities		48,705		54,748

Deferred revenues, non-current		14,547		13,952
Long-term debt		41,962		42,137
Deferred tax liabilities, net		8,313		8,449
Operating lease liabilities, non-current		3,230		—
Other long-term liabilities		334		340
Total liabilities		117,091		119,626

Commitments and contingencies (Note 15)
Mezzanine equity:
Preferred Series B, 1,586,620 shares issued and outstanding		16,146		16,146
Preferred Series C, 1,320,850 shares issued and outstanding		12,363		12,363
Total mezzanine equity		28,509		28,509

Stockholders’ equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 167,972 and 167,972 shares issued and outstanding, respectively		—		—
Common stock, $0.0001 par value, 200,000,000 shares authorized; 65,522,438 and 63,821,901 Class A shares issued and outstanding, respectively		7		6
Additional paid-in capital		111,715		110,867
Accumulated deficit		(66,162)		(61,300)
Accumulated other comprehensive income		1,956		3,728
Total stockholders’ equity		47,516		53,301

Total liabilities and stockholders’ equity	$	193,116	$	201,436

September 30, 2021 December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $ 6,223 $ 13,460
Accounts receivable – trade, net of allowances 47,913 20,869
Inventories, net of reserves 30,896 20,913
Prepaid expenses and other current assets 14,399 6,161
Total current assets 99,431 61,403

Property and equipment, net of accumulated depreciation 627 562
Intangible assets, net of accumulated amortization 50,261 55,156
Goodwill 23,076 22,742
Other assets 245 90
Total assets $ 173,640 $ 139,953

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses $ 32,946 $ 14,246
Accounts payable and accrued expenses – related parties - 1,967
Short-term debt 23,932 16,817
Earn-out payable – related party - 119
Deferred revenues – short-term 6,566 5,671
Derivative liabilities 356 363
Other short-term liabilities 3,605 1,209
Total current liabilities 67,405 40,392

Deferred revenues – long-term 13,405 10,482
Long-term debt - 7,831
Deferred tax liability 9,044 7,902
Other long-term liabilities 350 2
Total liabilities 90,204 66,609

Commitments and contingencies (Note 13) - -

Mezzanine equity:
Preferred Series B 16,146 16,513
Preferred Series C 12,363 12,363
Total mezzanine equity 28,509 28,876

Stockholders’ equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 167,972 and 167,972 shares issued and outstanding, respectively - -
Common stock, $0.0001 par value, 200,000,000 shares authorized; 61,310,899 and 53,343,518 Class A shares issued and outstanding, respectively 6 6
Additional paid-in capital 105,625 86,768
Accumulated deficit (54,157 ) (47,498 )
Accumulated other comprehensive loss 3,453 5,192
Total stockholders’ equity 54,927 44,468

Total liabilities and stockholders’ equity $ 173,640 $ 139,953

See accompanying notes to unaudited consolidated condensed financial statements.

Table of Contents

Boxlight Corporation

Consolidated Condensed Statements of Changes in Stockholders’ Equity

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021

(unaudited)

(in thousands)


									Accumulated
	Series A			Class A			Additional		Other
	Preferred Stock			Common Stock			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Income		Deficit		Total

Balance as of December 31, 2021	167,972	$	—	63,821,901	$	6	$	110,867	$	3,728	$	(61,300)	$	53,301

Shares issued for:

Stock options exercised	—		—	53,250		—		25		—		—		25

Debt issuance costs	—		—	528,169		—		—		—		—		—

Conversion of Restricted Shares	—		—	1,119,118		1		(1)		—		—		—

Stock compensation	—		—	—		—		1,135		—		—		1,135

Foreign currency translation	—		—	—		—		6		(1,772)		(6)		(1,772)

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

Net loss	—		—	—		—		—		—		(4,856)		(4,856)

Balance as of March 31, 2022	167,972		—	65,522,438	$	7	$	111,715	$	1,956	$	(66,162)	$	47,516

Balance as of December 31, 2020	167,972	$	—	53,343,518	$	6	$	86,768	$	5,192	$	(47,498)	$	44,467

Shares issued for:

Conversion of debt obligations	—		—	2,250,663		—		7,660		—		—		7,660

Conversion of accounts payable liabilities	—		—	793,375		—		—		—		—		—

Conversion of Restricted Shares	—		—	58,818		—		—		—		—		—

Stock options exercised	—		—	319,434		—		246		—		—		246

Warrants exercised	—		—	20,749		—		51		—		—		51

Stock compensation	—		—	—		—		677		—		—		677

Foreign currency translation	—		—	—		—		—		(261)		—		(261)

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

Net income	—		—	—		—		—		—		(5,169)		(5,169)

Balance as of March 31, 2021	167,972	$	—	56,786,557	$	6	$	95,085	$	4,931	$	(52,667)	$	47,354

Series A Class A Additional Accumulated Other
Preferred Stock Common Stock Paid-in Comprehensive Accumulated
Shares Amount Shares Amount Capital Income Deficit Total

Balance as of December 31, 2020 168 $ - 53,344 $ 6 $ 86,768 $ 5,192 $ (47,498 ) $ 44,468

Shares issued for:

Stock options exercised - - 319 - 246 - - 246

In lieu of payment for services rendered
In lieu of payment for services rendered, shares
Conversion of accounts payable liabilities - - 793 - 1,626 - - 1,626

Conversion of debt obligations - - 2,251 - 6,033 - - 6,033

Conversion of Restricted Shares - - 59 - - - - -

Warrants exercised - - 21 - 51 - - 51
Cash
Conversion of notes payable
Conversion of notes payable, shares
Closing fees for issuance of notes payable
Closing fees for issuance of notes payable, shares
Stock compensation - - - - 677 - - 677
Shares issued for Stemify acquisition
Shares issued for Stemify acquisition, shares
Public offering
Public offering, shares
Shares issued for Interactive Concepts acquisition
Shares issued for Interactive Concepts acquisition, shares
Foreign currency translation - - - - - (261 ) - (261 )

Deemed Contribution - Preferred Series B
Fixed dividends Preferred Series B - - - - (317 ) - - (317 )

Net loss - - - - - - (5,168 ) (5,168 )

Balance as of March 31, 2021 168 - 56,787 $ 6 $ 95,084 $ 4,931 $ (52,666 ) $ 47,355

Shares issued for:

Conversion of debt obligations - - 1,688 - 3,839 - - 3,839

Conversion of Restricted Shares - - 484 - - - - -

Stock compensation - - - - 1,182 - - 1,182

Shares issued for Interactive Concepts acquisition - - 143 - 404 - - 404

Foreign currency translation - - - - - 530 - 530

Deemed Contribution - Preferred Series B - - - - 367 - - 367

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

Net loss - - - - - - (2,220 ) (2,220 )

Balance as of June 30, 2021 168 $ - 59,102 $ 6 $ 100,559 $ 5,461 $ (54,886 ) $ 51,140

Shares issued for:

Conversion of debt obligations - - 1,755 - 3,911 - - 3,911

Conversion of Restricted Shares - - 217 - - - - -

Stock options exercised - - 162 - 159 - - 159

Warrants exercised 75 152 - - 152

Stock compensation - - - - 1,161 - - 1,161

Foreign currency translation - - - - - (2,008 ) - (2,008 )

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

Net income - - - - - - 729 729

Balance as of September 30, 2021 168 $ - 61,311 $ 6 $ 105,625 $ 3,453 $ (54,157 ) $ 54,927

See accompanying notes to unaudited consolidated condensed financial statements.

Table of Contents

Boxlight Corporation

~~Consolidated Condensed Statements of Changes in Stockholders’ Equity~~

~~For the three and nine Months Ended September 30, 2020~~

~~(unaudited)~~

~~(in thousands)~~

Series A Class A Additional Accumulated Other
Preferred Stock Common Stock Paid-in Comprehensive Accumulated
Shares Amount Shares Amount Capital Income Deficit Total

Balance as of December 31, 2019 168 $ - 11,699 $ 1 $ 30,736 $ (38 ) $ (31,346 ) $ (647 )

Shares issued for:

In lieu of payment for services rendered - - - 7 - 8 - - 8

Conversion of accounts payable liabilities - - - 1,333 - 567 - - 567

Conversion of debt obligations - - 832 - 1,182 - - 1,182

Stock compensation - - - - 271 - - 271

Foreign currency translation - - - - - (103 ) - (103 )

Net loss - - - - - - (1,950 ) (1,950 )

Balance as of March 31, 2020 168 - 13,871 $ 1 $ 32,764 $ (141 ) $ (33,296 ) $ (672 )

Shares issued for:

Conversion of accounts payable liabilities - - 870 - 703 - - 703

Conversion of debt obligations - - 1,588 - 1,189 - - 1,189

Conversion of Restricted Shares - - 52 - - - - -

Stock compensation - - - - 249 - - 249

Shares issued for Stemify acquisition - - 143 - 100 - - 100

Public Offering - - 15,333 2 10,592 - - 10,594

Foreign currency translation - - - - - (5) - (5 )

Net loss - - - - - - (1,426 ) (1,426 )

Balance as of June 30, 2020 168 - 31,857 $ 3 $ 45,597 $ (146 ) $ (34,722 ) $ 10,732

Shares issued for:

Acquisition of Preferred C shares - - - - 424 - - 424

Conversion of notes payable - - 1,407 - 4,034 - - 4,034

Closing fees for issuance of notes payable - - 310 - 438 - - 438

Public offering - - 17,250 2 32,023 - - 32,025

Stock compensation - - 47 - 346 - - 346

Foreign currency translation - - - - - 536 - 536

Net loss - - - - - - (4,211 ) (4,211 )
Net income (loss) - - - - - - (4,211 ) (4,211 )

Balance as of September 30, 2020 168 - 50,871 $ 5 $ 82,862 $ 390 $ (38,933 ) $ 44,324

~~Boxlight Corporation~~

Consolidated Condensed Statements of Cash Flows

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(unaudited)


	Three Months Ended
	March 31,		March 31,
	2022		2021

Cash flows from operating activities:
Net loss	$	(4,856)	$	(5,169)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount and issuance cost		36		544
Change in debt issuance cost		509		—
Bad debt expense (recovery)		9		(66)
Loss on settlement of liabilities		—		1,846
Changes in deferred tax assets and liabilities		(377)		(497)
Change in allowance for sales returns and volume rebate		(178)		150
Change in inventory reserve		77		(74)
Forgiveness of PPP debt		(835)		—
Change in fair value of derivative liability		10		265
Shares issued for interest payment on notes payable		—		204
Stock compensation expense		1,135		677
Depreciation and amortization		2,321		1,754
Changes in operating assets and liabilities:
Accounts receivable – trade		(796)		(1,255)
Inventories		1,490		(1,527)
Prepaid expenses and other current assets		1,558		800
Other assets		(185)		(30)
Operating lease liability and right of use asset		32		—
Accounts payable and accrued expenses		(6,910)		(533)
Other short-term liabilities		304		3
Warranty liability		(6)		(80)
Accounts payable and accrued expenses - related parties		—		16
Deferred revenues		1,236		1,411
Other liabilities		3		4
Net cash used in operating activities		(5,423)		(1,557)

Cash flows from investing activities:
Business acquisitions (net of cash acquired)		—		(148)
Purchases of furniture and fixtures, net		(526)		(46)
Net cash used in investing activities		(526)		(194)

Cash flows from financing activities:
Proceeds from short-term debt		—		8,343
Principal payments on short-term debt		(625)		(9,374)
Payments of fixed dividends to Series B Preferred stockholders		(317)		(13)
Proceeds from the exercise of options and warrants		30		297
Net cash used by financing activities		(912)		(747)

Effect of foreign currency exchange rates		188		(960)

Net decrease in cash and cash equivalents		(6,673)		(3,458)

Cash and cash equivalents, beginning of the period		17,938		13,460

Cash and cash equivalents, end of the period	$	11,265	$	10,002

Supplemental cash flow disclosures:

Cash paid for income taxes	$	150	$	179
Cash paid for interest	$	1,718	$	769

Non-cash investing and financing transactions:
Shares issued to settle accounts payable	$	—	$	1,627
Shares issued to convert notes payable – Lind Global	$	—	$	6,033
Shares issued for acquisition	$	—	$	1,493
Declared but unpaid fixed dividends on Series B Preferred Stock	$	—	$	317

~~(unaudited)~~

~~(in thousands)~~

Nine Months Ended
September 30, 2021 September 30, 2020

Cash flows from operating activities:
Net loss $ (6,660 ) $ (7,587 )
Adjustments to reconcile net loss to net cash (used) in operating activities:
Amortization of debt discount and issuance cost 1,473 768
Bad debt (recovery) expense (114 ) 168
Loss on settlement of liabilities 2,992 579
Change in allowance for sales returns and volume rebate 542 (91 )
Change in inventory reserve 56 35
Change in deferred tax assets and liabilities 912 -
Change in fair value of derivative liability 164 239
Shares issued for interest payment on notes payable 512 247
Stock compensation expense 3,020 866
Other share-based payments - 8
Depreciation and amortization 5,264 758
Changes in operating assets and liabilities:
Accounts receivable – trade (26,658 ) (1,442 )
Inventories (10,084 ) (996 )
Prepaid expenses and other current assets (8,219 ) 224
Other assets (156 ) (14 )
Accounts payable and accrued expenses 17,865 (1,323 )
Warranty liability (88 ) 4
Accounts payable and accrued expenses - related parties - 19
Other short-term liabilities 2,233 803
Deferred revenues 3,875 (271 )
Other liabilities (11 ) (11 )
Net cash used in operating activities $ (13,082 ) $ (7,017 )

Cash flows from investing activities:
Business acquisitions (net of cash acquired) (685 ) (44,953 )
Cash paid for patents - (100 )
Cash paid to settle earnout obligations (119 ) -
Purchases of furniture and fixtures, net (139 ) -
Net cash used in investing activities (943 ) (45,053 )

Cash flows from financing activities:
Net proceeds from issuance of common stock 405 42,719
Proceeds from payment protection plan loan - 1,008
Proceeds from short-term debt 43,269 5,667
Principal payments on short-term debt (35,487 ) (8,953 )
Payment on fixed dividends of class B preferred stock (952 ) -
Proceeds from convertible debt - 20,750
Debt issuance costs (70 ) (461 )
Net cash provided by financing activities $ 7,165 $ 60,730
Effect of foreign currency exchange rates (377 ) (223 )

Net (decrease) increase in cash and cash equivalents (7,237 ) 8,437

Cash and cash equivalents, beginning of the period 13,460 1,173

Cash and cash equivalents, end of the period $ 6,223 $ 9,610

Supplemental cash flow disclosures:

Cash paid for income taxes $ 1,458 $ -
Cash paid for interest $ 2,130 $ 1,364

Non-cash investing and financing transactions:
Shares issued to settle accounts payable $ 1,626 $ 1,269
Shares issued for conversion of notes payable and accrued interest $ 13,786 $ 6,326
Shares issued for closing fees related to outstanding notes payable 517
Shares issued for acquisition $ 403 $ -
Preferred share issued as consideration for acquisition of Sahara 29,295
Exercise of warrants $ 203 $ -
Deemed contribution - Series B Preferred $ 367 $ -
Deferred consideration for acquisition $ 537 $ -
Notes payable issued as consideration for acquisition of MyStemKit $ - $ 350

See accompanying notes to unaudited consolidated condensed financial statements.

Table of Contents

Boxlight Corporation

Notes to the Unaudited Consolidated Condensed Financial Statements

NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY AND RECENT ACQUISITIVE GROWTH

Boxlight Corporation (“Boxlight”) designs, produces, and distributes interactive technology solutions to the education, corporate and government markets under its Clevertouch and Mimio brands. The Company’s solutions include interactive displays, collaboration software, supporting accessories and professional services.

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its wholly owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim unaudited consolidated condensed financial information and interim financial reporting guidelines and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete consolidated condensed financial statements. The unaudited consolidated condensed financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, ~~2020~~2021 and notes thereto contained in the Company’s Annual Report on Form 10-K. Certain information and note disclosures normally included in consolidated financial statements have been condensed. The December 31, ~~2020,~~2021 balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for ~~2020~~2021 contained in the Annual Report on Form 10-K, filed with the SEC on ~~March 31, 2021,~~April 13, 2022, describes the significant accounting policies that the Company used in preparing our consolidated condensed financial statements. On an ongoing basis, the Company evaluates our estimates, including, but not limited to, those related to revenue/reserves and allowances. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable and debt. Due to the short-term nature of cash, accounts receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value. Debt approximates fair value due to either the short-term nature or recent execution of the debt agreement. The amount of consideration received is deemed to approximate the fair value of long-term debt net of any debt discount and issuance cost.

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted

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prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.


	●	Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.


	●	Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):

Markets for

Other

Significant

Carrying

Identical

Observable

Unobservable

Value as of

Assets

Inputs

March 31,

Description

(Level 1)

(Level 2)

(Level 3)

2022

Derivative liabilities - warrant instruments

—

3,073

Markets for

Other

Significant

Carrying

Identical

Observable

Unobservable

Value as of

Assets

Inputs

December 31,

Description

(Level 1)

(Level 2)

(Level 3)

2021

Derivative liabilities - warrant instruments

—

3,064

~~SCHEDULE OF FINANCIAL LIABILITIES MEASURED ON A RECURRING BASIS~~

Markets for
Identical
Assets Other
Observable
Inputs Significant
Unobservable
Inputs Carrying
Value as of September 30,
Description (Level 1) (Level 2) (Level 3) 2021
Derivative liabilities - warrant instruments $ - $ - $ 356 $ 356
$ 356 $ 356

Markets for
Identical
Assets Other
Observable
Inputs Significant
Unobservable
Inputs Carrying
Value as of December 31,
Description (Level 1) (Level 2) (Level 3) 2020
Derivative liabilities - warrant instruments $ - $ - $ 363 $ 363
Earn-out payable – related party - - 119 119

$ 482 $ 482

The following table shows the change in the Company’s warrant instruments ~~rollforward~~roll-forward for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


	Amount
	(in thousands)
Balance, December 31, 2021	$	3,064
Change in fair value of derivative liabilities		9
Balance, March 31, 2022	$	3,073

~~SUMMARY OF WARRANT INSTRUMENTS ROLLFORWARD~~

Amount
(in thousands)
Balance, December 31, 2020 $ 363
Exercise of warrants (171 )
Change in fair value of derivative liabilities 164
Balance, September 30, 2021 $ 356

~~GAIN~~INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per ~~common~~ share is computed by dividing net income (loss) ~~available to common shareholders~~ by the weighted-average number of shares of common ~~shares~~stock outstanding during the period. ~~For purposes~~Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ~~this calculation,~~shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. The dilutive effect of options to purchase common stock, restricted stock units subject to vesting and ~~warrants~~other share-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common ~~stock were considered~~shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common ~~stock equivalents. Diluted~~shares are included in the denominator of the diluted calculation for the entire period being presented.

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Since the Company was in a loss position for the periods presented, basic net ~~income (loss)~~loss per ~~common~~ share is ~~determined using~~ the ~~weighted-average number~~same as diluted net loss per share as the inclusion of all potential common shares outstanding ~~during~~would have been anti-dilutive. For the ~~period, adjusted for~~three months ended March 31, 2022, potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.7 million shares from options to purchase common shares and unvested restricted shares as well as 3.4 million shares issuable upon exercise of warrants. Additionally, potentially dilutive ~~effect~~securities from the assumed conversion of Series B and Series C convertible preferred stock (Note 12) into Class A common stock ~~equivalents. In periods when losses~~ are ~~reported,~~excluded from the ~~weighted-average number of common shares outstanding excludes common stock equivalents,~~denominator because ~~their inclusion~~they would be anti-dilutive. For the ~~quarter~~three months ended ~~September 30,~~March 31, 2021, ~~where the company had income, approximately~~ ~~1.8~~ ~~million of~~ potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.7 million shares ~~were~~from options to purchase common shares and unvested restricted shares as well as 340,000 shares issuable upon exercise of warrants. Additionally, potentially dilutive securities from the assumed conversion of Series B and Series C convertible preferred stock (Note 12) into Class A common stock are excluded from the ~~computation of diluted earnings per share due to their antidilutive effect.~~

denominator because they would be anti-dilutive.

REVENUE RECOGNITION

In accordance with the FASB’s Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), the Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and the title, and the significant risks and rewards of ownership of products or services are transferred to its customers. Product revenue is derived from the sale of projectors, interactive panels and related software and accessories to distributors, resellers, and end users. Service revenue is derived from hardware maintenance services, product installation, training, software maintenance, and subscription services.

Nature of Products and Services and Related Contractual Provisions

The Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software, and the provision of related software maintenance. In most cases, interactive devices are sold with hardware maintenance services with terms of approximately 60 months. Software maintenance includes technical support, product updates on a when and if available basis, and error correction services. At times, non-interactive projectors are also sold with hardware maintenance services with terms of approximately 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, 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’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. For most of the Company’s product sales, control transfers, and therefore, revenue is recognized when products are shipped at the point of origin. When the Company transfers control of its products to the customer prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. For many of the Company’s software product sales, control is transferred when shipped at the point of origin since the software is installed on the interactive hardware device in advance of shipping. For software product sales, control is transferred when the customer receives the related interactive hardware since the customer’s connection to the interactive hardware activates the software license at which time the software is made available to the customer. For the Company’s software maintenance, hardware maintenance, and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer.

The Company’s installation, training, and professional development services are generally sold separately from the Company’s products. 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 the sale of third-party products and services where the Company obtains control of the products and services before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of the third-party products and services including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring

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acceptability of the product or service. The Company has not historically entered into transactions where it does not take control of the product or service prior to transfer to the customer.

The Company excludes all taxes assessed by a governmental agency that are both imposed on and concurrent with the specific revenue-producing transaction from revenue (for example, sales and use taxes). In essence, the Company is reporting these amounts collected on behalf of the applicable government agency on a net basis as though they are acting as an agent. The taxes collected and not yet remitted to the governmental agency are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

Customer Financing Arrangements

Through a third-party leasing partner, we provide financing programs that are designed to offer customers a variety of options to purchase interactive technology solutions whereby customers enter into purchase agreements with us along with a separate financing or leasing contract with a third-party lender, who advances the proceeds from the sale to us upon contract execution and shipment of goods. In such situations, the sales to the customer are final and the Company bears no risk of loss regarding subsequent payments.

Significant Judgments

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”). The Company’s products and services included in its contracts with multiple performance obligations generally are not sold separately and there are no observable prices available to determine the SSP for those products and services. Since observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins. Because observable prices are generally not available for the Company’s performance obligations that are sold in bundled arrangements, the Company does not apply the residual approach to determining SSP. However, the Company does have certain performance obligations for which pricing is highly variable or uncertain, and contracts with those performance obligations generally contain multiple performance obligations with highly variable or uncertain pricing. For these contracts the Company allocates the transaction price to those performance obligations using an alternative method of allocation that is consistent with the allocation objective and the guidance on determining SSPs in Topic 606 considering, when applicable, the estimated cost to provide the performance obligation, market pricing for competing product or service offerings, residual values based on the estimated SSP for certain goods, product-specific business objectives, incremental values for bundled transactions that include a service relative to similar transactions that exclude the service, and competitor pricing and margins. A separate price has not been established by the Company for its hardware maintenance services and software maintenance services. In addition, hardware maintenance services, software solutions, and the related maintenance services are never sold separately and are proprietary in nature, and the related selling price of these products and services is highly variable or uncertain. Therefore, the SSP of these products and services is estimated using the alternative method described above, which includes residual value techniques.

The Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that are executed in the same manner, contain the same performance obligations, and are priced in a consistent manner. The Company believes that the application of the portfolio approach produces the same result as if they were applied at the contract level.

Contract Balances

The timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for the Company’s product and most service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally due within 30-60 days of contract execution. Fees for installation, training, and professional development services are fixed and generally become due as the services are performed. The Company has an established history of collecting under the terms of its contracts without providing refunds or concessions to its customers. The Company’s contractual payment terms do not vary when products are bundled with services that are provided over multiple years. In these contracts where services are expected to be transferred on an ongoing basis for several years after the related payment, the Company has determined that the contracts generally do not include a significant

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financing component. The upfront invoicing terms are designed 1) to provide customers with a predictable way to purchase products and services where the payment is due in the same timeframe as when the products, which constitute the predominant portion of the contractual value, are transferred, and 2) to ensure that the customer continues to use the related services; so that the customer will receive the optimal benefit from the products during the course of such product’s lifetime. Additionally, the Company has elected the practical expedient to exclude any financing component from consideration for contracts where, at contract inception, the period between the transfer of services and the timing of the related payment is not expected to exceed one year.

The Company has an unconditional right to consideration for all products and services transferred to the customer. That unconditional right to consideration is reflected in accounts receivable in the accompanying consolidated balance sheets in accordance with Topic 606. Contract liabilities are reflected in deferred revenue in the accompanying consolidated balance sheets and reflect amounts allocated to performance obligations that have not yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription services. The Company has no material contract assets on ~~September 30, 2021,~~March 31, 2022 or December 31, ~~2020.~~2021. During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ the Company recognized $~~4.4~~ $1.9 million and $~~0.9~~ $1.6 million, respectively of revenue that was included in the deferred revenue balance as of December 31, ~~2020,~~2021 and December 31, ~~2019,~~2020, respectively.

Variable Consideration

The Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, price protection provisions, or in connection with certain other rebate provisions. The Company generally does not allow product returns other than under assurance warranties or hardware maintenance contracts. However, the Company, on a case-by-case basis, will grant exceptions, mostly for “buyer’s remorse” where the distributor or reseller’s end customer either did not understand what they were ordering or otherwise determined that the product did not meet their needs. An allowance for sales returns is estimated based on an analysis of historical trends. In very limited situations, a customer may return previous purchases held in inventory for a specified period of time in exchange for credits toward additional purchases. The Company includes variable consideration in its transaction price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not be a significant reversal. These estimates are generally made using the expected value method based on historical experience and are measured at each reporting date. There was no material revenue recognized in the ~~third~~first quarter of ~~2021~~2022 related to changes in estimated variable consideration that existed at December 31, ~~2020.~~2021.

Remaining Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting within the contract. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract. Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $~~20.0~~ $22.3 million and $~~16.1~~ $21.5 million, respectively. The Company expects to recognize revenue on 9%35% of the remaining performance obligations during the ~~fourth quarter of 2021,~~next 24twelve months%, 26% in ~~2022,~~ 472023%, 34% in ~~2023~~ 2024and ~~2024,~~2025, with the remaining 5% recognized 20thereafter~~% recognized thereafter.~~.

In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contracts). In addition, the Company has elected not to disclose the value of remaining performance obligations for contracts with performance obligations that are expected, at contract inception, to be satisfied over a period that does not exceed one year.

Disaggregated Revenue

The Company disaggregates revenue based upon the nature of its products and services and the timing and in the manner which it is transferred to the customer. Although all products are transferred to the customer at a point in time, hardware and some software is pre-installed on the interactive device are transferred at the point of shipment, while some software is transferred to the customer at the time the hardware is received by the customer or when software product keys are delivered electronically to the customer. All service revenue is transferred over time to the customer; however, professional services are generally transferred to the customer within a year

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from the contract date as measured based upon hours or time incurred while software maintenance, hardware maintenance, and subscription services are generally transferred over five years from the contract execution date as measured based upon the passage of time.


	Three Months Ended
	March 31,
	2022		2021
	(in thousands)		(in thousands)
Product Revenues:
Hardware	$	47,294	$	30,761
Software		1,519		867
Service Revenues:
Professional Services		355		270
Maintenance and Subscription Services		1,435		1,526
	$	50,603	$	33,424

~~SCHEDULE OF DISAGGREGATES REVENUE~~

2021 2020 2021 2020
Three Months Ended Nine Months Ended

September 30, 2021
(in thousands)

September 30, 2020
(in thousands)

2021 2020 2021 2020

Product Revenues:
Hardware $ 57,400 $ 8,249 $ 131,865 $ 19,695
Software 1,395 411 3,445 855
Service Revenues:
Professional Services 534 329 1,103 1,026
Maintenance and Subscription Services 1,679 488 4,773 1,452
Revenue $ 61,008 $ 9,477 $ 141,186 $ 23,028

Contract Costs

The Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs. The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were not obtained (e.g., a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all the following criteria:

●

The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.


	●	The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.


	●	The costs are expected to be recovered.

Certain sales commissions incurred by the Company are determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the estimated economic benefit period. For these sales commissions that are incremental costs to obtain where the period of amortization would be recognized over a period that is one year or less, the Company has elected the practical expedient to expense those costs as incurred. Commission costs that are deferred are classified as current or non-current assets based on the timing of when the Company expects to recognize the expense and are included in prepaid and other assets and other assets, respectively, in the accompanying condensed consolidated balance sheets. Total deferred commissions, net of accumulated amortization, was $~~253~~$322 thousand ~~at September 30, 2021.~~on March 31, 2022.

RECENTLY ADOPTED ACCOUNTING STANDARDS

Leases

Accounting Standards Update ("ASU") No. 2016-02 "Leases” (Topic 842), as amended, requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The Company elected the modified retrospective approach which we applied on January 1, 2022, and therefore have not restated comparative periods. The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component. Finally, the Company elected the hindsight practical expedient to determine the lease term for existing leases.

Our operating leases relate primarily to office space. As a result of the adoption of ASU 2016-02, the Company recognized an operating lease right-of-use ("ROU") asset of $3.8 million and a current operating lease liability of approximately $1.6 million and a long-term operating lease liability of approximately $2.3 million as of January 1, 2022, with no impact on our Consolidated Statements

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of Comprehensive Income or Consolidated Statements of Cash Flows. The ROU asset and operating lease liabilities are recorded as separate line items in the Consolidated Condensed Balance Sheets.

SUBSEQUENT EVENTS

We reviewed all material events through the date on which these consolidated condensed financial statements were issued for subsequent event disclosure consideration as described in Note ~~15.~~17.

ACCOUNTING STANDARDS PENDING ADOPTION

~~In October 2021, The FASB issued Accounting Standards Update (ASU) No. 2021-08, “~~~~Accounting for Contract Assets and Contract Liabilities From Contracts With Customers~~”, which amends the guidance in ASC 805 to require that “an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.” At the acquisition date, an acquirer would account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The Company is currently evaluating the impact that this standard update will have on its financial statements.

~~In August 2021, The FASB issued Accounting Standards Update (ASU) 2021-06, “~~~~Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses~~~~” to amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No. 33-10786,~~ ~~Amendments to Financial Disclosures about Acquired and Disposed Businesses.~~ Among other changes, the final rule modifies the significance tests and improves the disclosure requirements for (1) acquired or to be acquired businesses, (2) real estate operations, and (3) pro forma financial information. In addition, the final rule includes amendments to financial disclosures specific to smaller reporting companies (SRCs). The Company is currently evaluating the impact that this standard update will have on its financial statements.

~~In May 2021, the FASB issued ASU No. 2021-04, “~~~~Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options~~.” The FASB issued this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this will be effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently evaluating the impact that this standard will have on its financial statements.

~~In August 2020, the FASB issued ASU No. 2020-06, “~~~~Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~.” The new guidance simplifies the accounting for certain convertible instruments and for contracts in an entity’s own equity. Key provisions include the elimination of the “cash conversion” guidance and the “beneficial conversion feature” guidance in ASC 470-20 as well as a simplification of the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification by removing certain conditions in ASC 815-40-25. Since the Company is an Emerging Growth Company, the ASU is not effective until annual reporting periods beginning after December 15, 2023. Earlier application is permitted. The Company is currently evaluating the impact that this standard will have on its financial statements, and whether it will adopt the new standard earlier than January 2024.

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~“Income Taxes” (Topic 740).~~ The new guidance modifies the requirements for the timing of adoption of enacted changes in tax law. The effects of changes on taxes currently payable or refundable for the current year must be reflected in the computation of the annual effective tax rate. Since the Company is an Emerging Growth Company, the ASU is not effective until fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted.

In June 2016, the FASB issued ASU No. 2016-13, “~~Financial~~“Financial Instruments Credit Losses” (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new guidance replaces the incurred loss methodology with the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade accounts receivable. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. This new guidance changes the impairment model for most financial assets and certain other instruments. ~~Since the~~The Company is ~~an Emerging Growth Company, the ASU is not effective until fiscal years beginning after December 15, 2022, and interim periods within that fiscal year. The Company continues to evaluate~~currently evaluating the impact that this standard will have, if any, on its financial statements.

~~In February 2016, the FASB issued ASC 842 “~~~~Leases~~” that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Under the previous guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily depended on its classification as a finance or operating lease. The new guidance also requires disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. For Emerging Growth Companies, the new standard is not effective until annual reporting periods beginning after December 15, 2021, including interim periods within that reporting period. Earlier application is permitted.

There were various other accounting standards and interpretations issued recently, some of which although applicable, are not expected to a have a material impact on our financial position, operations, or cash flows.

NOTE 2 – RECENT BUSINESS ~~ACQUISITION~~ACQUISITIONS

FrontRow Calypso LLC

On December 31, 2021, the Company, and its wholly owned subsidiary, Boxlight, Inc., consummated the acquisition of 100% of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”). FrontRow was acquired in exchange for payment of $34.7 million to Phonic Ear Inc. and Calypso Systems LLC, the equity holders of FrontRow (the “Equityholders”). The acquisition occurred pursuant to the terms of a membership interest purchase agreement, dated October 29, 2021 (the “Purchase Agreement”), between the Company, Boxlight, FrontRow and the Equityholders, which Purchase Agreement was filed as Exhibit 10.1 to our Current Report on Form 8-K dated October 29, 2021.

Based in Petaluma, California, FrontRow makes technology that improves communication in learning environments, including developing network-based solutions for intercom, paging, bells, mass notification, classroom sound, lesson sharing, AV control and management. FrontRow also has offices in Toronto, Copenhagen, Brisbane, Hamilton (UK) and Shenzhen.

In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent. Under the terms of the Credit Agreement, the Company received an initial term loan of $58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $10 million that may be provided for additional working capital purposes under certain conditions.

The assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and selection of comparable companies. The Company engaged the assistance of an independent third-party valuation specialist to determine certain fair value measurements related to acquired assets. The excess consideration over the net fair values of the assets acquired and liabilities assumed was recognized as goodwill.

The fair value or net realizable value of inventories at the date of acquisition was determined using a “top-down” approach based upon the estimated sales value, less a reasonable profit margin and less the estimated costs to dispose of the inventory, including selling costs and other disposal costs such as freight. Accordingly, the carrying amount of inventories at the acquisition date was increased to its estimated fair value based on these assumptions which will result in an increase in cost of revenues subsequent to the

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acquisition date in 2022. The fair value of accounts receivable acquired in connection with the acquisition approximated the contractual amount due from customers at that date.

The Company has early adopted ASU 2021-08, and therefore, the acquired contract liabilities of FrontRow have been recognized and measured in accordance with Topic 606 as follows.


		(in thousands)
Assets acquired:
Cash	$	2,752
Accounts receivable		3,381
Inventories		10,240
Prepaid expenses		883
Property and equipment		348
Total assets acquired		17,604

Accounts payable and accrued expenses		(1,501)
Deferred revenue		(1,225)
Other liabilities		(12)
Total liabilities assumed		(2,738)

Net tangible assets acquired	$	14,866

Identifiable intangible assets:
Customer relationships		8,195
Trademarks		3,244
Technology		5,036
Non-compete		391
Total intangible assets subject to amortization		16,866

Goodwill		2,920

Total net assets acquired	$	34,652

Consideration paid:
Cash	$	34,652

The following table presents the useful lives over which the acquired intangible assets will be amortized on a straight-line basis, which approximates the pattern by which the related economic benefits of the assets are consumed:


			Estimated
			Weighted Average
			Life (years)
Customer relationships			8
Trademarks			10
Technology			8
Non-compete agreements			3

Interactive Concepts

On March 23, 2021,, the Company acquired ~~100~~%100% of the outstanding shares of Interactive Concepts BV, a company incorporated and registered in Belgium and a distributor of interactive technologies (“Interactive”), for total consideration of

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approximately $~~3.3~~$3.3 million in cash, common stock and deferred consideration. The company has been Boxlight’s key distributor in Belgium and Luxembourg.

The following table summarizes the estimated acquisition date fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid:



	(in thousands)
Assets acquired:
Cash	$	1,647
Accounts receivable		1,045
Inventories		191
Property and equipment		37
Total assets acquired		2,920

Accounts payable and accrued expenses		(821)
Deferred tax liability		(230)
Total liabilities assumed		(1,051)

Net tangible assets acquired		1,869

Identifiable intangible assets:
Tradename		220
Customer relationships		745
Total intangible assets subject to amortization		965

Goodwill		439

Total net assets acquired	$	3,273

Consideration paid:
Cash	$	1,795
Deferred cash consideration		1,075
Common shares issued		403

Total consideration paid	$	3,273

~~SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED~~

(in thousands)
Assets acquired:
Cash $ 1,647
Accounts receivable 1,045
Inventories 191
Prepaid expenses and other current assets
Property and equipment 37
Total assets acquired 2,920

Accounts payable and accrued expenses (821 )
Deferred revenue
Deferred tax liability (230 )
Other liabilities
Total liabilities assumed (1,051 )

Net tangible assets acquired 1,869

Identifiable intangible assets:
Tradename 220
Technology
Customer relationships 745
Total intangible assets subject to amortization 965

Goodwill 439

Total net assets acquired $ 3,273

Consideration paid:
Cash $ 1,795
Preferred shares issued
Deferred cash consideration 1,075
Common shares issued 403

Total consideration paid $ 3,273

~~Sahara Presentation Systems PLC~~

~~On September 24, 2020, the Company acquired~~ ~~100~~% of the outstanding shares of Sahara Holdings Limited, a private limited company operating under the laws of the UK and all its subsidiaries, including Sahara Presentation Systems PLC (collectively, “Sahara”). Sahara is a distributor of audio and video software and equipment including the Clevertouch branded product line of interactive touch screens. This strategic acquisition expanded the Company’s geographic footprint, industry verticals served, and enhanced the Company’s technology and product offerings.

~~As consideration for the purchase of Sahara, the Company transferred GBP~~ ~~74.0~~ ~~million (approximately USD $94.9~~ ~~million) in the form of GBP~~ ~~52.0~~ ~~million (approximately USD $66.7~~ ~~million) in cash and GBP~~ ~~22.0~~ ~~million (approximately USD $28.2~~ ~~million) in our Series B convertible preferred stock and our Series C convertible preferred stock. The convertible preferred stock was comprised of~~ ~~1,586,620~~ ~~shares of Series B convertible redeemable preferred stock (the “Series B Preferred Stock”) and~~ ~~1,320,850~~ ~~shares of Series C convertible redeemable preferred stock (the “Series C Preferred Stock”). The fair value of the preferred shares issued was $16.5~~ ~~million and $12.4~~ ~~million for the Series B Preferred Stock and Series C Preferred Stock, respectively. See further discussion of the features of the preferred shares in Note 10.~~

The consideration transferred to the selling shareholders along with the assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date. The excess consideration over the net fair values of the assets acquired and liabilities assumed was recognized as goodwill.

The fair value of the deferred revenue at the date of acquisition was determined based on the estimated direct and incremental costs to fulfill the remaining performance obligations associated with the deferred revenue, plus a reasonable profit margin. Accordingly, the carrying amount of deferred revenue at the acquisition date was reduced to its estimated fair value based on the assumptions above which has resulted in and will result in a reduction in revenue that otherwise would have been recognized in periods subsequent to the acquisition date.

~~The following table summarizes the estimated fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid:~~

~~SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED~~

(in thousands)
Assets acquired:
Cash $ 6,049
Accounts receivable 16,066
Inventories 17,257
Prepaid expenses and other current assets 2,277
Property and equipment 183
Total assets acquired 41,832

Accounts payable and accrued expenses (8,624 )
Deferred revenue (9,435 )
Deferred tax liability (8,794 )
Other liabilities (293 )
Total liabilities assumed (27,146 )

Net tangible assets acquired 14,686

Identifiable intangible assets:
Customer relationships 39,629
Trademarks 5,319
Technology 3,372
Total intangible assets subject to amortization 48,320

Goodwill 16,774

Total net assets acquired $ 79,780

Consideration paid:
Cash $ 50,903
Preferred shares issued 28,877

Total consideration paid $ 79,780

~~The results of operations of Sahara following the acquisition are included in the Condensed Consolidated Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2021.~~

~~Pro Forma Financial Results~~

The following unaudited pro forma information reflects our consolidated results of operations for the three and nine months ending September 30, 2020, as if the acquisition of Sahara had taken place on January 1, 2020. The unaudited pro forma information is not necessarily indicative of the results of operations that the Company would have reported had the acquisition actually occurred at the beginning of these periods nor is it necessarily indicative of future results. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies or other operational improvements. The nature and amount of any material, nonrecurring pro forma adjustments directly attributable to the business combination are included in the pro forma revenue and net earnings reflected below.

~~SCHEDULE OF PRO FORMA INFORMATION~~

(Unaudited) in thousands As Reported (Unaudited) in thousands Proforma
Three months ended September 30, 2020
(Unaudited) in thousands as Reported (Unaudited) in thousands Proforma
Revenues, net $ 9,477 $ 33,753
Net loss attributable to common shareholders $ (4,211 ) $ (3,340 )

(Unaudited) in thousands As Reported (Unaudited) in thousands Proforma
Nine months ended September 30, 2020
(Unaudited) in thousands As Reported (Unaudited) in thousands Proforma
Revenues, net $ 23,028 $ 86,310
Net loss attributable to common shareholders $ (7,587 ) $ (8,384 )

NOTE 3 – ACCOUNTS RECEIVABLE - TRADE

Accounts receivable consisted of the following at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):


	2022		2021

Accounts receivable – trade	$	31,507	$	31,053
Allowance for doubtful accounts		(383)		(405)
Allowance for sales returns and volume rebates		(1,091)		(1,075)

Accounts receivable - trade, net of allowances	$	30,033	$	29,573

~~SCHEDULE OF ACCOUNTS RECEIVABLE - TRADE~~

2021 2020

Accounts receivable – trade $ 49,232 $ 21,768
Allowance for doubtful accounts (360 ) (473 )
Allowance for sales returns and volume rebates (959 ) (426 )

Accounts receivable - trade, net of allowances $ 47,913 $ 20,869

NOTE 4 – INVENTORIES

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

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Current Manufacturer (“CM”) or Original Equipment Manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight and import duty costs.

Inventories consisted of the following at ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):


	2022		2021

Finished goods	$	50,032	$	51,346
Spare parts		240		260
Reserve for inventory obsolescence		(1,178)		(599)
Advanced shipping costs		—		584

Inventories, net	$	49,094	$	51,591

~~SCHEDULE OF INVENTORIES~~

2021 2020

Finished goods $ 30,455 $ 20,997
Spare parts 261 265
Reserve for inventory obsolescence (406 ) (349 )
Advanced shipping costs 586 -

Inventories, net $ 30,896 $ 20,913

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):


	2022		2021

Prepayments to vendors	$	6,071	$	7,739
Prepaid licenses and other		1,842		1,705
Prepaid expenses and other current assets	$	7,913	$	9,444

~~SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS~~

2021 2020

Prepayments to vendors $ 10,599 $ 5,727
Prepaid licenses and other 3,800 339
Unbilled revenue - 95
Prepaid expenses and other current assets $ 14,399 $ 6,161

NOTE 6 – INTANGIBLE ASSETS

Intangible assets consisted of the following at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):




	Useful lives	2022		2021

Patents	4-10 years	$	182	$	182
Customer relationships	8-15 years		52,859		55,158
Technology	3-5 years		8,693		8,901
Domain	7 years		14		14
Non-compete	8-15 years		391		391
Tradenames	2-10 years		12,769		13,085

Intangible assets, at cost			74,908		77,731
Accumulated amortization			(12,833)		(12,199)
Intangible assets, net of accumulated amortization		$	62,075	$	65,532

~~SCHEDULE OF INTANGIBLE ASSETS~~

Useful lives 2021 2020

Patents 4-10 years $ 182 $ 182
Customer relationships 8-15 years 46,796 46,614
Technology 3 to 5 years 3,851 3,900
Domain 7 years 14 14
Tradenames 2-10 years 9,824 9,682

Intangible assets, at cost 60,667 60,392
Accumulated amortization (10,406 ) (5,236 )

Intangible assets, net of accumulated amortization $ 50,261 $ 55,156

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded amortization expense of $~~5.2~~ $2.2 million and $~~747~~ ~~thousand,~~$1.7 million, respectively.

NOTE 7 – LEASES

The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through February 2027. Generally, these leases have initial lease terms of five years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at our sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of our lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of our

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lease agreements provide for periodic adjustments to rental payments for inflation. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. In connection with the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At March 31, 2022, the Company had no leases classified as finance leases. The Company is not a lessor in any lease arrangement.

Operating lease cost was $469 thousand for the three months ended March 31, 2022. Variable lease cost and short-term lease cost were not material for the three months ended March 31, 2022. Cash paid for amounts included in the measurement of lease liabilities was $423 thousand for the three months ended March 31, 2022. During the three months ended March 31, 2022, the Company obtained new operating lease right-of-use assets totaling $1.8 million.

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

Fiscal year ended,


2022	$	1,641
2023		1,966
2024		1,216
2025		1,050
2026		731
Thereafter		239
		6,843
Less imputed interest		(1,610)
Total	$	5,233

Supplemental lease information


Weighted-average remaining lease term (years)	3.8
Weighted-average discount rate	15.5	%

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSE

Accounts payable and accrued expense consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):


	2022		2021
Accounts payable	$	19,398	$	25,714
Accrued expense		5,810		6,440
Other		923		1,484
Accounts payable and other liabilities	$	26,131	$	33,638

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NOTE 9 – DEBT

The following is a summary of our debt as of ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020:~~2021 (in thousands):


	2022		2021
Debt – Third Parties
Paycheck Protection Program		173		1,009
Note payable - Whitehawk		57,875		58,500
Total debt		58,048		59,509
Less: Discount and issuance cost		7,023		7,568
Current portion of debt		9,063		9,804
Long-term debt	$	41,962	$	42,137

Total debt (net of discount)	$	51,025	$	51,941

~~SCHEDULE OF DEBT~~

2021 2020
Debt – Third Parties
Note payable – Lind Global $ 11,183 $ 21,085
Paycheck Protection Program 1,009 1,008
Accounts receivable financing – Sallyport Commercial 12,470 4,512
Note payable – STEM Education Holdings - 175
Total debt 24,662 26,780
Less: Discount and issuance cost 730 2,132
Current portion of debt 23,932 16,817
Long-term debt $ - $ 7,831

Total debt (net of discount) $ 23,932 $ 24,648

Debt - Third Parties:

Whitehawk Finance LLC

In order to finance the acquisition of FrontRow, the Company and substantially all its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent. Under the terms of the Credit Agreement, the Company received an initial term loan of $58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $10 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw”). The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans”. The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to our then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital. Of the Initial Loan, $8.5 million was subject to repayment on February 28, 2022, with quarterly principal payments of $625,000 and interest payments commencing March 31, 2022 and the $40.0 million remaining balance plus any Delayed Draw loans becoming due and payable in full on December 31, 2025. The Term Loans will bear interest at the LIBOR rate plus 10.75%; provided that after June 30, 2022, if the Company’s Senior Leverage Ratio (as defined in the Credit Agreement) is less than 2.25, the interest rate would be reduced to LIBOR plus 10.25%. Such terms are subject to the Company maintaining a borrowing base in terms compliant with the Credit Agreement.

On March 29, 2022, the Company received a Notice of Events of Default and Reservation of Rights (the “Notice”) from the Collateral Agent, alleging, among other things, defaults as a result of (i) failure to repay $8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and documents. As a result of the Notice, all accrued and unpaid interest owed under the Term Loan, became subject to a post-default interest rate equal to the highest interest rate allowed for under the Credit Agreement plus 2.50% until such time as the Events of Default were either waived or cured. Following the Company’s receipt of the Notice and pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the terms of repayment of the $8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms. The principal elements of the amendment included (a) an extension of time for the Loan Parties to repay $8.5 million of the principal amount of the term loan from February 28, 2022 to February 28, 2023, and (b) forbearance on $3,500,000 in over advances to grant the Loan Parties until May 16, 2022 to allow the Company to come into compliance with the borrowing base requirements set forth in the Credit Agreement. In such connection, the Loan Parties have obtained credit insurance on certain key customers whose principal offices are located in the European Union and Australia as, without the credit insurance, their accounts owed to the Loan Parties had been deemed ineligible for inclusion in the borrowing base calculation primarily due to the perceived inability of the Collateral Agent to enforce security interests on such accounts.

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Default under the Credit Agreement. In conjunction with the amendment to the Credit Agreement, the parties entered into an amended and restated fee letter (the “Fee Letter”) pursuant to which the parties agreed to prepayment premiums of (i) 5% for payments made on or before December 31, 2022, (ii) 4% for payments made between January 1, 2023 and December 31, 2023, and (iii) 2% for payments made between January 1, 2024 and December 31, 2025 a. Furthermore, the parties agreed that no prepayment premiums would be payable with respect to the first $5.0 million paid under the Term Loan, any payments made in relation to the $8.5 million due on or before February 28, 2023, any required amortization payments under the Credit Agreement and any mandatory prepayments by way of ECF or casualty events.

In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 528,169 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to our existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 2,043,291 shares of Class A common stock (subject to increase to the extent of 3% of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $2.00 per share (the “Warrant”), which Warrant was subject to repricing on March 31, 2022 based on the arithmetic volume weighted average prices for the 30 trading days prior to March 31, 2022, in the event our stock is then trading below $2.00 per share, (iii) a 3% fee of $1,800,000, and (iv) a $500,000 original issue discount. In addition, the Company agreed to register for resale the shares issuable upon exercise of the Warrant. The Company also incurred agency fees, legal fees, and other costs in connection with the execution of the Credit Agreement totaling approximately $1.7 million. Under the terms of the warrant issued to Whitehawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect. The warrants repriced on March 31, 2022 to $1.19 per share and the shares increased to 3,434,103.

Lind Global Marco Fund and Lind Global Asset Management

On February 4, 2020, the Company and Lind Global Macro Fund, ~~L.P.~~LP (“~~Lind”~~LGMF”) entered into a securities purchase agreement pursuant to which the Company received $~~750~~ ~~thousand~~$750,000 in exchange for the issuance to Lind of (1) $~~825~~ ~~thousand~~an $825,000 convertible promissory note, payable at an 8%8% interest rate, compounded monthly, (2) certain shares of restricted Class A common stock valued at $60 ~~thousand,~~$60,000, calculated based on the 20-day volume average weighted price of the Class A common stock for the period ended February 4, 2020, and (3) a commitment fee of $~~26.25~~ ~~thousand.~~ $26,250. The Note ~~matures~~was to mature over 24 months, with repayment that commenced on August 4, 2020, after which time the Company ~~is obligated to make~~made monthly payments of $45,833 ~~thousand~~ plus ~~interest.Interest accrued during the first six months~~interest by issuing shares of ~~the note, after which time the interest payments, including accrued interest, is payable monthly in either conversion shares or in cash.~~Class A common stock. The commitment fee in the amount of $26 ~~thousand~~$26,025 was paid to ~~Lind,~~LGMF, along with legal fees in the amount of $15 ~~thousand.~~$15,000. The Company paid ~~Lind $~~60 ~~thousand~~LGMF $60,000 for closing fees by issuing 44,557 shares of ~~restricted~~ Class A common stock. During the year ended December 31, 2021, the Company paid principal of $1.1 million and interest of $32,000 by issuing a total of 671,000 shares Class A common stock with an aggregate value of $1.5 million to Lind Global and recognized a loss extinguishment of debt of approximately $430,000.

On September 21, 2020, the Company and Lind Global Asset Management, LLC (“Lind Global”) entered into a securities purchase agreement (the “Lind SPA”) pursuant to which the Company received $~~20.0~~ $20.0 million in exchange for the issuance to Lind of (1) a $~~22.0~~ $22.0 million convertible promissory note, payable at a 4%4% interest rate, compounded monthly, (2) 310,399 shares of restricted Class A common stock valued at $~~900~~ ~~thousand,~~$900,000, calculated based on the 20-day volume average weighted price of the Class A common stock for the period ended September 21, 2020, and (3) a commitment fee of $~~400~~ ~~thousand.~~ $400,000. The Note ~~matures~~was to mature over 24 months, with repayment commencing on November 22, 2020, after which time the Company became obligated to make monthly payments of $~~1.0~~ $1.0 million, plus interest.Interest accrued during the first two months of the note, after which time the interest payments, including accrued interest ~~is payable~~was paid monthly in either conversion ~~shares or in cash.~~shares. The commitment fee in the amount of ~~$400 thousand~~$400,000 was paid to Lind Global, along with legal fees in the amount of $20 ~~thousand.~~$20,000 The Company paid Lind Global a total of $~~500~~ ~~thousand~~$500,000 in closing fees consisting of commitment and legal fees, by issuing 310,399 shares of Class A common stock. The shares of Class A common stock issuable to Lind under the Note ~~are~~were registered pursuant to our effective shelf registration statement on Form S-3.

~~During~~In conjunction with our entry into the ~~nine months ended~~Lind Global SPA agreement and the issuance of the Convertible Note, on September ~~30, 2021,~~21, 2020, the Company and Lind Global Macro Fund, LP, an affiliate of Lind Global (“Lind”), entered into a third amended and restated security agreement (the “Third A&R Security Agreement”) for purposes of amending and restating a prior security agreement, dated as ~~payment for~~of February 4, 2020, between the Company and Lind in order to incorporate the Lind Global SPA and the Convertible Note therein. In addition, on September 21, 2020, the Company, Sallyport Commercial Finance, LLC (“Sallyport”), as first lien creditor, and Lind and Lind Global, ~~convertible notes,~~as second lien creditors, entered into a third amended and restated intercreditor agreement for purposes of amending and

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restating the second amended and restated intercreditor agreement, dated as of February 4, 2020, between the Company, Sallyport and Lind, in order to (i) incorporate Lind Global as a second lien creditor and (ii) reaffirm and confirm the relative priority of each creditor’s respective security interests in the Company’s assets, among other matters.

During the 12 months ended December 31, 2021, the Company repaid ~~combined~~ principal of $~~9.9~~ $12.0 million and interest of $~~510.9~~ ~~thousand~~$548,000 to ~~Lind and~~ Lind Global by issuing a total of ~~5.7~~ 7.2 million shares Class A common stock with an aggregate value of $~~13.8~~ $15.9 million to Lind Global and recognized a $~~3.4~~ loss extinguishment of det of approximately $3.3 million. Further, on December 31, 2021, the Company paid the remaining principal balance of $8.0 million ~~loss.~~in connection with the execution of the Whitehawk Credit Agreement discussed above and recognized an additional loss on extinguishment of debt of $1.2 million.

Paycheck Protection Program Loan

On May 22, 2020, the Company received loan proceeds of $~~1.09~~ $1.09 million under the Paycheck Protection Program (“PPP”) established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The loans and accrued interest received under the PPP ~~are~~were forgivable to the extent borrowers use the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains their payroll levels during the designated period prior to which the PPP would otherwise be repayable. The Company used the proceeds for purposes consistent with the PPP. ~~The unforgiven portion of the PPP loan is payable over two years at an interest rate of~~ 1~~%, with a deferral of payments for the first six months.~~

~~Everest Display, Inc~~.

~~On June 22, 2020,~~During 2021, the Company ~~entered into an agreement with Everest Display, Inc.,~~applied for forgiveness in the amount of $835,500. On March 2, 2022, we received a ~~Taiwan corporation (“EDI”), and EDI’s subsidiary, AMAGIC Holographics, Inc.,~~decision letter from our lender that our forgiveness application had been approved, leaving a ~~California corporation (“AMAGIC”), effective June 11, 2020, pursuant~~remaining balance of $173,100 to ~~which $1,000,000~~ ~~in accounts payable owed~~be paid. The remaining balance is expected to be paid by the Company ~~to EDI was settled~~ in ~~exchange for the Company’s issuance of~~ ~~869,565~~ ~~shares (the “Shares”) of its Class A common stock to AMAGIC at a $1.15~~ per share purchase price. The Shares were issued to AMAGIC pursuant to an exemption from registration provided by Rule 506 of Regulation D under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).May 2022.

Everest Display, Inc.

On January 26, 2021, the Company entered into an agreement with EDI and EDI’s subsidiary, AMAGIC, pursuant to which $~~1,983,436~~$1,983,436 in accounts payable owed by the Company to EDI was settled in exchange for the Company’s issuance of 793,375 shares (the “2021 Shares”) of its Class A common stock to AMAGIC at a $~~2.50~~$2.50 per share purchase price. The 2021 Shares were issued to AMAGIC pursuant to an exemption from registration provided by Rule 506 of Regulation D under Section 4(a)(2) of the Securities Act.

Accounts Receivable Financing – Sallyport Commercial Finance

On ~~September 30, 2020, the Company’s wholly owned~~August 15, 2017, our subsidiaries, Boxlight Inc. ~~(“Boxlight”),~~ and ~~EOS EDU LLC. (“EOSEDU”) (Boxlight and EOSEDU together, the “Subsidiaries”),~~Genesis entered into ~~an asset-based lending~~a 12-month term account sale and purchase agreement with Sallyport Commercial Finance, LLC (“Sallyport”)~~, which agreement has a 12-month term (the “Term”)~~. ~~Pursuant~~According to the agreement, Sallyport agreed to purchase ~~90%~~85% of the eligible accounts receivable ~~of the Subsidiaries~~ during the ~~Term~~term with a right of recourse back to the ~~Subsidiaries~~Company if the receivables ~~are~~were not collectible. This agreement ~~requires~~required a minimum monthly sales volume of $1,250,000 with a maximum facility limit of $~~8,000,000~~.$6,000,000. Advances against this agreement ~~accrue~~accrued interest at the rate of ~~3.50~~%4% in excess of the highest prime rate publicly announced from time to time with a floor of ~~3.25~~%4.25%. In addition, the ~~Subsidiaries are~~Company was required to pay a daily audit fee of $~~950~~ $950 per day. ~~The Subsidiaries~~In exchange, the Company granted Sallyport a security interest in all -of Boxlight Inc. and Genesis’ assets. This agreement was terminated and replaced with an asset-based lending agreement effective September 30, 2020.

On September 30, 2020, Boxlight Inc., and EOS EDU LLC. entered into a 12-month term asset-based lending agreement with Sallyport. Sallyport agreed to purchase 90% of the eligible accounts receivable of the Company with a right of recourse back to the Company if the receivables were not collectible. This agreement requires a minimum monthly sales volume of $1.25 million with a maximum facility limit of $8 million. Advances against this agreement accrued interest at the rate of 3.50% in excess of the highest prime rate publicly announced from time to time with a floor of 3.25%. In addition, the Company was required to pay a daily audit fee of $950 per day. In exchange, the Company granted Sallyport a security interest in all of the assets of Boxlight Inc. and ~~Genesis Collaboration, LLC.~~Genesis.

On July 20, 2021, Boxlight and Sallyport amended the ~~Accounts Receivable Agreement~~accounts receivable agreement (the “ARC Amendment”) for purposes of increasing the ~~Maximum Facility Limit Amount~~maximum facility limit amount to $~~13,000,000~~,$13,000,000, as well as increasing the minimum monthly sales from $~~1,250,000~~$1,250,000 to $~~3,000,000~~.$3,000,000. In exchange for entry into the ARC Amendment, Boxlight ~~agreed to~~paid a fee of $~~50,000~~,$50,000, representing ~~one~~1 percent of the increased ~~Maximum Facility Limit Amount.~~maximum facility limit amount. Other terms of the ~~Accounts Receivable Agreement~~accounts receivable agreement remain unchanged.

On August 6, 2021, Boxlight and Sallyport entered into an additional amendment of the ~~Accounts Receivable Agreement~~accounts receivable agreement (the “Second ARC Amendment”), which further increased the ~~Maximum Facility Limit Amount~~maximum facility limit amount to $~~15,000,000~~.$15,000,000. In exchange for entry into the Second ARC Amendment, Boxlight ~~agreed to~~paid a fee of $~~20,000~~,$20,000, representing ~~one~~1 percent of the increased ~~Maximum Facility Limit Amount.~~maximum facility limit amount. Other terms of the ~~Accounts Receivable~~ Agreement remained unchanged.

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On August 23, 2021, the Company and Sallyport, as first lien creditor and ~~Lind Global Macro Fund, LP (“LGMF”)~~LGMF and Lind Global, ~~Asset Management, LLC (“Lind Global”),~~ together as second lien creditors, entered into the fourth amended and restated intercreditor agreement (the “Fourth A&R Intercreditor Agreement”) for the sole purpose of increasing the permitted first lien cap thereunder from $6$6,000,000 million to $$20,000,000 million.

20 ~~million.~~

On December 31, 2021, the Company obtained funds from its new credit agreement with Whitehawk to pay off the remaining $8,400,000 owed to Sallyport. As a result of paying off the Sallyport lending agreement, the Company recorded a loss on extinguishment of debt of $812,000.

NOTE 810 – DERIVATIVE LIABILITIES

The Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company. Conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. Such warrants are measured at fair value at each reporting date, and the changes in fair value are included in determining net income (loss) for the period. ~~In determining~~The Company hired a third party to determine the fair value of the derivative liabilities ~~the Company used the Black-Scholes option pricing model~~ at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021 using a Monte Carlo Simulation model to determine the fair value.


	March 31, 2022
Common stock issuable upon exercise of warrants		3,434,103
Market value of common stock on measurement date	$	1.20
Exercise price	$	1.19
Risk free interest rate (1)		2.39	%
Expected life in years		4.75 years
Expected volatility (2)		79.5	%
Expected dividend yields (3)		0	%


	December 31, 2021
Common stock issuable upon exercise of warrants		2,043,291
Market value of common stock on measurement date	$	1.38
Exercise price	$	2.00
Risk free interest rate (1)		1.25	%
Expected life in years		5 years
Expected volatility (2)		79	%
Expected dividend yields (3)		0	%

~~SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITIES~~

September 30, 2021
Common stock issuable upon exercise of warrants 195,000
Market value of common stock on measurement date $ 2.25
Exercise price $ 0.42
Risk free interest rate (1) .04 %
Expected life in years 0.25 years
Expected volatility (2) 60 %
Expected dividend yields (3) 0 %

December 31, 2020
Common stock issuable upon exercise of warrants 295,000
Market value of common stock on measurement date $ 1.53
Exercise price $ 0.42
Risk free interest rate (1) 0.13 %
Expected life in years 1 year
Expected volatility (2) 160 %
Expected dividend yields (3) 0 %

(1)

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

(2) For March 31, 2022, the information was obtained from the third- party model.

	~~(2)~~ (3)	~~The expected volatility was determined by calculating the volatility of the Company’s common stock.~~
	~~(3)~~	The Company does not expect to pay a dividend in the foreseeable future.

The following table shows the change in the Company’s derivative liabilities ~~rollforward~~roll-forward for the ~~nine months~~period ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020~~respectively (in thousands):


	Amount
Balance, December 31, 2021	$	3,064
Change in fair value of warrants (1)		9
Balance, March 31, 2022	$	3,073

(1)

Under the terms of the warrant issued to Whitehawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect.

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	Amount
Balance, December 31, 2020	$	363
Exercise of warrants		(51)
Change in fair value of warrants		265
Balance March 31, 2021	$	577

~~SCHEDULE OF CHANGE IN DERIVATIVE LIABILITIES~~

Amount
Balance, December 31, 2020 $ 363
Exercise of warrants (171 )
Change in fair value of derivative liabilities 164
Balance, September 30, 2021 $ 356

Amount
Balance, December 31, 2019 $ 147
Change in fair value of derivative liabilities 239
Balance, September 30, 2020 $ 386

~~The change in fair value of derivative liabilities includes losses from exercise price modifications.~~

NOTE 911 – INCOME TAXES

Pretax (loss) income resulting from domestic and foreign operations is as follows (in thousands):


	Three Months		Three Months
	Ended		Ended
	March 31		March 31,
	2022		2021
United States	$	(4,457)	$	(5,192)
Foreign		(485)		44
Total pretax book income, (loss)	$	(4,942)	$	(5,148)

~~SCHEDULE OF PRETAX INCOME (LOSS)~~

Three Months Ended
September 30 Three Months Ended
September 30,
2021 2020
United States $ (3,114 ) $ (4,211 )
Foreign 5,234 -
Total pretax book income, (loss) $ 2,120 $ (4,211 )

Nine Months Ended
September 30 Nine Months Ended
September 30,
2021 2020
United States $ (8,541 ) $ (7,587 )
Foreign 5,817 -
Total pretax book loss $ (2,724 ) $ (7,587 )
Total pretax book income, (loss) $ (2,724 ) $ (7,587 )

The Company recorded an income tax benefit of $86 thousand and an expense of $~~3.9~~ ~~million and~~ 0~~tax~~$21 thousand for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ respectively. ~~The company recorded a significant tax impact of $2.2~~ million in second quarter of this year to reflect a discrete event directly pertaining to the tax impact on our UK deferred tax liability associated with the intangible assets acquired as part of the Sahara business combination, and the effect of a recent UK rate income tax rate change. Finance Bill 2021 (“the Bill”) provides for an increase in the UK statutory tax rate to 25~~% for taxpayers with profits over £250~~K beginning April 1, 2023. We expect this rate to apply to the earnings of our Sahara operations in the UK. The Bill received Royal Assent on June 10, 2021, and it is considered enacted on that date under U.S. GAAP. As such, we had to reflect the tax impact as a discrete event in our results. The year-to-date effective tax rate is (139.3)% due to there being no tax expense/benefit for the legacy Boxlight entities, but the Sahara entities are fully taxable.

The Company operates in the United States, United Kingdom, and other jurisdictions. Income taxes have been provided based upon the tax laws and rates of the countries in which operations are conducted and income is earned.

Prior to the Sahara acquisition, the Company had a net deferred tax asset position in the United States, the United Kingdom, and other jurisdictions, primarily driven by net operating losses. The recoverability of these deferred tax assets depends on the Company’s ability to generate taxable income in the jurisdiction to which the loss carryforward applies. The Company also depends on specific tax provisions in each jurisdiction that could impact utilization. The Company has evaluated both positive and negative evidence as to the ability of its legacy entities in each jurisdiction to generate future taxable income. Based on its history of cumulative losses in those jurisdictions, we believe it is appropriate to maintain a full valuation allowance on the Company’s net deferred tax asset at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Due to the Sahara and Interactive Concepts acquisitions, the Company has recognized a net deferred tax liability for the acquired entities, primarily driven by acquired intangible assets for which it does not have tax basis in the jurisdictions in which operates (primarily the United Kingdom, the Netherlands, and the United States). The Company does not expect to qualify for any consolidated filing positions in any of these countries, so there is no ability to net the deferred tax liabilities of the Sahara companies against the deferred tax assets of the legacy Boxlight companies.

The tax years from 2016 to ~~2020~~2021 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company has not identified any uncertain tax positions at this time.

During the second quarter of 2021, the Company became aware of a potential state tax exposure for failure to file minimum tax returns in a state for several years. The Company has tentatively agreed to the proposed tax assessment, but it is appealing the associated interest and penalty assessment. The Company has recorded an exposure item of $82K$82 thousand for its best estimate of the amount for which it will settle the exposure. This amount includes $24K$24 thousand of income tax and $58K$58 thousand of penalties and interest.

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NOTE 12 – EQUITY

~~NOTE 10 –~~ ~~EQUITY~~

Preferred Shares

The Company’s articles of incorporation provide that the Company is authorized to issue 50,000,000 shares of preferred stock consisting of: 1) 250,000 shares of non-voting Series A preferred stock, with a par value of $~~0.0001~~$0.0001 per share; 2) 1,200,000 shares of voting Series B preferred stock, with a par value of $~~0.0001~~$0.0001 per share; 3) 270,000 shares of voting Series C preferred stock, with a par value of $~~0.0001~~$0.0001 per share; and 4) 48,280,000 shares of “blank check” preferred stock to be designated by the Company’s ~~Board~~board of ~~Directors.~~directors.

Issuance of preferred shares

Series A Preferred Stock

At the time of the Company’s initial public offering, the Company issued 250,000 shares of the Company’s non-voting convertible Series A preferred stock to Vert Capital for the acquisition of Genesis. All of the Series A preferred stock was convertible into 398,406 shares of Class A common ~~stock.~~stock, at the discretion of the Series A stockholder. On August 5, 2019, a total of 82,028 shares of Series A preferred stock were converted into a total of 130,721 shares of Class A common stock. As of March 31, 2022, a total of 167,972 shares of Series A preferred stock remained outstanding.

Series B Preferred Stock and Series C Preferred Stock

~~As discussed in Note 2 above, on~~On September 25, 2020, in connection with the acquisition of Sahara, the Company issued 1,586,620 shares of Series B Preferred Stock and 1,320,850 shares of Series C Preferred Stock. The Series B Preferred Stock has a stated and liquidation value of $~~10.00~~$10.00 per share and pays a dividend out of the earnings and profits of the Company at the rate of 8%8% per annum, payable quarterly. The Series B Preferred Stock is convertible into the Company’s Class A common stock at a conversion price of $1.66 per share which was the closing price of the Company’s Class A common stock on the Nasdaq Stock Market on September 25, 2020 (the “Conversion Price”). Such conversion may occur either (i) at the option of the holder at any time after January 1, 2024, or (ii) automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading days (based on a volume weighted average price). The Series C Preferred Stock has a stated and liquidation value of $10.00 per share and is convertible into the Company’s Class A common stock at the Conversion Price either (i) at the option of the holder at any time after January 1, 2026, or (ii) automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading days (based on a volume weighted average price).

To the extent not previously converted into the Company’s Class A common stock, the outstanding shares of Series B Preferred Stock shall be redeemable at the option of the holders at any time or from time to time commencing on January 1, 2024, upon ~~thirty (30)~~,30 days prior written notice to the holders, for a redemption price, payable in cash, equal to the sum of (a) ($10.00) multiplied by the number of shares of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares. The Series C Preferred Stock is also subject to redemption on the same terms commencing January 1, 2026.

~~As disclosed in in Note 2, the~~ The aggregate estimated fair value of the Series B and C Preferred Stock of $~~28.9~~$28.9 million was included as part of the total $~~94.9~~$94.9 million consideration paid for the purchase of Sahara.

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

On March 24, 2021, the Company entered into a share redemption and conversion agreement with certain holders of Series B and Series C preferred stock (the “Redemption Agreement”) which allows the Company to redeem and repurchase each such stockholder’s shares of Series B preferred stock on or before June 30, 2021 for the stated or liquidation value of approximately £~~11.5~~ £11.5 million (or approximately $~~15.9~~ $15.9 million) plus accrued dividends from January 1, 2021 to the date of purchase. Such stockholders hold 96% of the Series C preferred stock. Upon redemption, the Series C shares held by such stockholders would convert into approximately 7.6 million shares of Class A Common Stock at the stated conversion price of $~~1.66~~ $1.66 per share.

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On June 14, 2021, the Company entered into an amendment to the Redemption Agreement (the “Amended Redemption Agreement”) for purposes of extending the completion date to on or before December 31, 2021. In addition, the Amended Redemption Agreement changed the definition of “Redemption Payments” such that the redemption payment schedule would begin on or before May 31, 2021, for the quarter then ended and continue quarterly until the date of completion.

Regarding these amendments, the Company applied the accounting guidance from ASC 470-50 pertaining to determining whether an amendment to an equity-classified preferred share is an extinguishment or modification, and concluded that the Amended Redemption Agreement on June 14, 2021, as it effected the Series B Preferred Stock, resulted in an extinguishment of the original equity instruments subject to redemption agreement. Accordingly, the Series B Preferred Stock subject to the Amended Redemption Agreement was recorded at its fair value as of June 14, 2021, and a $367 thousand deemed contribution was credited to additional-paid-in-capital. With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature, but in accordance with ASC 470-20, since it is dependent upon contingencies that are not solely in the control of the holder, the beneficial conversion feature was not recognized for accounting purposes. Since we early adopted (as of January 1, 2021) ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which includes a key provision eliminating the beneficial conversion feature guidance in ASC Subtopic 470-20, “Debt with Conversion and Other Options”, we will not record the beneficial conversion feature. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

Common Stock

The Company’s common stock consists of 1) 150,000,000 shares of Class A voting common stock and 2) 50,000,000 shares of Class B non-voting common stock. Class A and Class B common stock have the same rights except that Class A common stock is entitled to ~~one~~1 vote per share while Class B common stock has no0 voting rights. Upon any public or private sale or disposition by any holder of Class B common stock, such shares of Class B common stock would automatically convert into shares of Class A common stock. As of ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~61,310,899~~65,522,438 and ~~53,343,518~~63,821,901 shares of Class A common stock issued and outstanding, respectively. NoNaN Class B shares were outstanding at ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

Issuance of common stock

Credit Facility

~~Public Offering~~

~~On July 31, 2020,~~In conjunction with its receipt of the Whitehawk loan, the Company issued ~~17,250,000~~ ~~shares of~~to the ~~Company’s Class A common stock at a public offering price of $2.00~~ ~~per share. Gross proceeds from the issuances were $34,500,000, including the underwriting overallotment. Net proceeds were $32.0~~ ~~million after deducting underwriting discounts and offering expenses of $2.5~~ ~~million.~~

~~On June 11, 2020, the Company issued~~ ~~13,333,333~~ ~~shares of the Company’s Class A common stock at a public offering price of $0.75~~ ~~per share. In addition, on June 24, 2020, the Company issued an additional~~ ~~1,999,667~~Whitehawk 528,169 shares of Class A common stock, which were registered pursuant to the ~~underwriter at $0.75~~ ~~per share. Gross proceeds from~~Company’s existing shelf registration statement and were delivered to the ~~issuances were $~~Whitehawk in January 2022.

~~11.5~~ ~~million. Net proceeds were $10.6~~ ~~million after deducting underwriting discounts and offering expenses of $906~~ ~~thousand.~~

Debt Conversion

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company repaid principal of $~~9.9~~$3.6 million and interest of $~~511~~$204 thousand by issuing ~~5.7~~2.25 million shares Class A common stock ~~with an aggregate value of $13.8~~ ~~million~~ to Lind and recognized a $~~3.4~~$2.2 million loss.

Accounts Payable and Other Liabilities ~~Conversions~~Conversion

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company converted $~~2.0~~$1.98 million of EDI accounts payable in exchange for 793 thousand shares of Class A common stock with an aggregate value of $~~1.6~~$1.63 million and recognized a $~~357~~$357 thousand gain.

Conversion of restricted stock units

~~Compensation~~

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, 1,119,118 restricted stock units vested and were converted into Class A common stock. During the three months ended March 31, 2021, 58,818 restricted stock units vested and ~~in accordance with~~were converted into Class A common stock.

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Exercise of stock options

During the ~~terms~~three months ended March 31, 2022, options to purchase a total of ~~his employment agreement, Michael Pope, our Chairman and Chief Executive Officer, received~~ ~~875,000~~53,250 shares of ~~restricted~~ Class A common stock ~~which shares remain subject to certain vesting conditions. The shares will vest in substantially equal monthly installments over a period of~~ 12 ~~months.~~

~~Exercise of stock options~~

~~During~~were exercised and during the ~~nine~~three months ended ~~September 30,~~March 31, 2021, options to purchase a total of ~~485~~ ~~thousand~~319,434 shares of Class A common stock were exercised.

Exercise of warrants

NaN warrants were exercised during the three months ending March 31, 2022. During the three months ended March 31, 2021, 20,749 warrants were exercised, with an exercise price of $0.42 per share.

NOTE 1113 – STOCK COMPENSATION

~~The~~Grants made under the Equity Incentive Plans must be approved by the Company’s board of directors. As of March 31, 2022, the total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company or a subsidiary of the Company under the Company’s 2021 Equity Incentive Plan and 2014 Equity Inventive Plan, as amended (together “Equity Incentive Plans”), in the aggregate were 5,000,000 and 725,381 shares, respectively.

The 2021 Equity Incentive Plan was approved by the Company’s Board on April 12, 2021 and approved by the shareholders at the Company’s 2021 Annual Shareholders Meeting held on June ~~11,~~25, 2021. ~~All grants made~~

On April 15, 2020, the Company’s 2014 Equity Incentive Plan was amended, whereby the board of directors approved increasing the shares available for issuance under the 2014 Equity Incentive ~~Plans must be approved~~Plan by 3,700,000 shares. The Company obtained shareholder approval of the aforementioned action at the Company’s ~~Board prior to issuance.~~2020 annual meeting of stockholders, which was held on September 4, 2020. The number of underlying shares available under the 2014 Equity Incentive Plan, as amended, was 6,390,438.

Stock Options

Under our stock option program, pursuant to the Equity Incentive Plans, an employee receives an award that provides the opportunity in the future to purchase the Company’s shares at the market price of our stock on the date the award is granted (the strike price). The options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from the grant date, unless stated differently in the option agreements, if they are not exercised. Stock options have no financial statement effect on the date they are granted but rather are reflected over time through compensation expense. We record compensation expense based on the estimated fair value of the awards which is amortized as compensation expense on a straight-line basis over the vesting period. Accordingly, total expense related to the award is reduced by the fair value of options that are forfeited by employees that leave the Company prior to vesting.

The following is a summary of the option activities during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual
	Units	Exercise Price		Term (in years)
Outstanding, December 31, 2021	4,054,116	$	1.92	2.29
Granted	494,069		1.10
Exercised	(53,250)		0.70
Cancelled	(670,925)		1.67
Outstanding, March 31, 2022	3,824,010	$	1.88	2.84
Exercisable, March 31, 2022	2,262,194	$	2.50	2.27

~~SCHEDULE OF STOCK OPTION ACTIVITY~~

Number of Units Weighted
Average
Exercise Price Weighted Average
Remaining Contractual
Term (in years)
Outstanding, December 31, 2020 4,850,784 $ 1.76 3.51
Granted - - -
Exercised (484,543 ) 0.84 -
Cancelled (275,625 ) 1.02 -
Outstanding, September 30, 2021 4,090,616 $ 1.91 2.58
Exercisable, September 30, 2021 2,716,468 $ 2.42 2.06

The Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model. As of ~~September 30, 2021,~~March 31, 2022 and December 31, ~~2020,~~2021, the stock options had an intrinsic value of approximately $~~4.5~~$1.1 million and $~~2.9~~$1.9 million, respectively.

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Restricted Stock Units

Under our Equity Incentive Plans the Company may grant restricted stock units (“RSUs”) to certain employees and non-employee directors. Upon granting the RSUs, the Company recognizes a fixed compensation expense equal to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period for the RSUs. Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting. The ~~restricted stock units~~RSUs vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement.

The following is a summary of the ~~restricted stock~~RSU activities during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.


		Weighted
		Average
		Grant Date Fair
	Number of Units	Value
Outstanding, December 31, 2021	1,973,947	$	1.81
Granted	2,364,110		1.68
Vested	(450,173)		2.27
Forfeited	(24,986)		1.59
Outstanding, March 31, 2022	3,862,898	$	1.37

~~SCHEDULE OF RSU ACTIVITIES~~

Number of Units Weighted
Average
Grant Date Fair Value
Outstanding, December 31, 2020 2,721,347 $ 1.62
Granted 1,005,790 2.83
Vested (1,126,391 ) 2.19
Outstanding, September 30, 2021 2,600,746 $ 1.88

On ~~February 24, 2021,~~March 21, 2022, the Company granted an aggregate of ~~130,547~~348,840 RSUs to its board members. These RSUs vest ratably over one year and had an aggregated fair value of approximately $~~374~~$450 thousand on the grant date.

~~In addition, on March 20, 2021,~~On February 14, 2022, with an effective date of January 1, 2022, the Company ~~granted an~~entered into a letter agreement with Michael Pope, our Chairman and Chief Executive Officer, extending Mr. Pope’s term of employment with the Company. Under the terms of the agreement, Mr. Pope received a grant of 163,637 RSU’s, valued at approximately $180,000, and $420,000 in the form of options to purchase Class A Common Stock, both of which are valued using the Black-Scholes Model with the Company’s customary inputs.

On February 24, 2022, following approval by the Company’s board of directors, the Company’s senior management issued a total of 1,771,950 RSUs under the terms of Amendment No. 2 to the Boxlight Corporation 2014 Stock Incentive Plan, as long-term incentive awards to its employees in the U.S. and Europe. The aggregate fair value of the shares was $2.1 million.

~~875,245~~

During the three months ended March 31, 2022, Jens Holstebro, a former FrontRow employee, received 39,683 in restricted shares of Class A common stock, valued at $50,000, as a bonus, which immediately vested.

During the three months ended March 31, 2022, and in accordance with the terms of his employment agreement, Michael Pope, our Chairman and Chief Executive Officer, received 166,137 shares of restricted Class A common stock units, and 494,069 of stock options, which shares remain subject to certain vesting conditions. The shares vest in substantially equal monthly installments over a period of twelve months.

During the three months ended March 31, 2021 and in accordance with the terms of his employment agreement, Michael Pope, ~~the Company’s CEO~~our Chairman and ~~Chairman, pursuant to his employment agreement. These~~Chief Executive Officer, received 875,000 shares ~~were issued pursuant to the 2014 Equity Incentive Plan, vest ratably~~of restricted Class A common stock. The shares vested in substantially equal monthly installments over ~~one year, are issued monthly as they vest, and had an aggregated fair value~~a period of ~~approximately $~~12 months.

~~2.5~~ ~~million on the grant date.~~

~~Warrants~~

~~The following is a summary~~

Table of ~~the warrant activities during the nine months ended September 30, 2021:~~Contents

~~SCHEDULE OF WARRANT ACTIVITY~~

Number of Units Weighted
Average
Exercise Price Weighted Average
Remaining
Contractual
Term (in years)
Outstanding, December 31, 2020 365,000 $ 1.44 1.27
Granted - - -
Exercised (100,000 ) 0.43 -
Outstanding, September 30, 2021 265,000 $ 1.82 0.63
Exercisable, September 30, 2021 251,250 $ 1.88 0.47

Stock compensation expense

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded the following stock compensation in general and administrative expense (in thousands):


	2022		2021
Stock options	$	115	$	237
Restricted stock units		1,019		439
Warrants		1		1
Total stock compensation expense	$	1,135	$	677

~~SCHEDULE OF STOCK COMPENSATION EXPENSES~~

2021 2020
Stock options $ 544 $ 780
Restricted stock units 2,472 85
Warrants 4 1
Total stock compensation expense $ 3,020 $ 866

As of ~~September 30, 2021,~~March 31, 2022, there was approximately $~~5.7~~$6.3 million of unrecognized compensation expense related to unvested options, restricted stock units, and warrants, which expense will be amortized over the remaining vesting ~~period.~~period of such awards. Of that total, approximately $~~1.1~~$1.9 million is estimated to be recorded as compensation expense in the remaining ~~three~~nine months of ~~2021.~~2022.

NOTE 1214 – RELATED PARTY TRANSACTIONS

Management Agreement

On January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned and controlled by our Chief Executive Officer and Chairman, Michael Pope. The Management Agreement is separate and apart from Mr. Pope’s employment agreement with the Company. ~~Under the~~The Management Agreement will become effective as of the first day of the same month that Mr. Pope’s employment with the Company shall terminate. Thereafter, and for a term of 13 months, Mr. Pope shall provide consulting services to the Company including sourcing and analyzing strategic acquisitions, assisting with financing activities, and other services. As consideration for the services provided, the Company ~~shall~~will pay a management fee equal to ~~0.375~~%0.375% of the consolidated net revenues of the Company, payable in monthly installments, not to exceed $~~250,000~~$250,000 in any calendar year. At his option, Mr. Pope may defer payment until the end of each year ~~and~~and/or receive payment in the form of shares of Class A common stock of the Company.

~~On June 21, 2018, the Company issued a warrant to purchase~~ ~~270,000~~ ~~Class A common stock, at an exercise price of $1.20~~ ~~per share, to an entity wholly owned by Mr. Pope in exchange for the cancellation of a warrant that had been issued to him in November 2014 as compensation for certain advisory services rendered.~~

NOTE 1315 – COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company leases ~~six~~7 office building facilities located in Lawrenceville, Georgia and Duluth, Georgia; Poulsbo, Washington; Lexington, Massachusetts; Scottsdale, Arizona; Miami, Florida and Utica, New York in the U.S., and ~~two~~2 office building facilities in Dartford and Kent in the U.K. for sales, marketing, technical support, and service staff. All such facilities are under non-cancelable lease agreements with terms ending ~~in 2023.~~from 2023 to 2027.

~~For the nine months ended September 30, 2021, and 2020, aggregate rent expense was $1.3~~ ~~million and $351~~ ~~thousand respectively.~~

Purchase Commitments

The Company is legally obligated to fulfill certain purchase commitments made to vendors that supply materials used in the Company’s products. As of ~~September 30, 2021,~~March 31, 2022, the total amount of such open inventory purchase orders was ~~$51.5~~$55.5 million.

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NOTE 1416 – CUSTOMER AND SUPPLIER CONCENTRATION

There ~~were two customers~~was 1 customer that ~~account~~accounts for greater than 10% of the Company’s consolidated revenues for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. There was 0 one customer that accounted for greater than 10% of the Company’s consolidated revenues for the three months ended March 31, 2021. Details are as follows:


	Total revenues				Total revenues from the		Accounts
	from the customer		Accounts		customer		receivable from
	as a percentage of		receivable from		as a percentage		the customer as
	total revenues		this customer as of		of total revenues		of
	for the year ended		March 31,		for the year		March 31,
	March 31,		2022 (in		ended March		2021 (in
Customer	2022		thousands)		31, 2021		thousands)
1	10.3	%	$	1,997	-	%	$	-

~~SCHEDULE OF CONCENTRATION RISK~~

Customer
Total revenues
from the customer
as a percentage of total revenues
for the nine months ended September 30, 2021

Accounts
receivable from this customer as of
September 30, 2021 (in thousands)

1 12.8 % $ 9,815
2 10.1 % $ 5,142

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company’s purchases were concentrated ~~amongst two vendors.~~primarily with 1 vendor. Details are as follows:


	Total purchases				Total purchases
	from the vendor		Accounts payable		from the vendor		Accounts payable
	as a percentage of		(prepayment) to		as a percentage		(prepayment) to
	total cost of		the		of total cost of		the
	sales for		vendor as of		revenues for		vendor as of
	the year ended		March 31,		the year ended		March 31,
	March 31,		2022		March 31,		2021
Vendor	2022		(in thousands)		2021		(in thousands)
1	29	%	$	4,536	40	%	$	3,916

Vendor
Total purchases
from the vendor
as a percentage of
total cost of sales
for the
nine months ended
September 30, 2021

Accounts payable
(prepayment) to the
vendor as of
September 30, 2021
(in thousands)

1 47.0 % $ 4,188
2 18.4 % $ (2,070 )

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

NOTE 17 – SUBSEQUENT EVENTS

On April 5, 2022, the Company received notice from its Chief Financial Officer, Patrick Foley, that he was resigning from the Company, effective October 4, 2022. Mr. Foley provided the Company the six months advance notice in compliance with the terms of his employment agreement and stated that he is resigning for personal reasons and not due to any dispute with the Company. As of this time, the Company has not yet located an interim or permanent replacement for the position of Chief Financial Officer and Mr. Foley has agreed to assist the Company in its search.

~~NOTE 15 –~~ ~~SUBSEQUENT EVENTS~~On May 3, 2022, the Boxlight board of directors adopted a resolution, in exchange for a three year non-compete agreement, to grant James Mark Elliott, a member of the board and former CEO of the Company, an extension of previously granted stock options to purchase a total of 577,675 shares of Class A common stock, par value $0.001 per share, which had expired on January 12, 2022. The stock price on the remeasurement date was $1.04 and the fair value of the stock is $314,000.

The Company signed an agreement on October 29, 2021 to acquire FrontRow Calypso LLC, a leader in classroom and campus communication solutions for the education market. The acquisition will be effective as of October 31, 2021, and is expected to close in the fourth quarter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere herein. The Management’s Discussion and Analysis (“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. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. 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

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forward-looking statements in this form. Our actual 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 indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

Overview

~~Overview~~

We are a technology company that is seeking to become a ~~world~~world-wide leading innovator and integrator of interactive products and software for schools, education, business, and government interactive spaces. We currently design, produce and distribute interactive displays, collaboration software, supporting accessories and professional services. We also distribute science, technology, engineering, and math (or “STEM”) products, including our robotics and coding system, 3D printing solution and portable science lab. Our products are integrated into our software suite that provides tools for presentation creation and delivery, assessment, and collaboration.

To date, we have generated substantially all of our revenue from the sale of our hardware (primarily consisting of interactive displays) 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. Highlights of our plan include:

●

Integrating products of the acquired companies and cross training our sales reps to increase their offerings and productivity.


	●	Hiring new sales representatives with significant industry experience in their respective territories.


	●	Expanding our reseller partner network both in key territories and in new markets, thereby increasing our penetration and reach.

Recent Acquisitions

On December 31, 2021, the Company and its wholly owned subsidiary, Boxlight, Inc, consummated the acquisition of 100% of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”). FrontRow was acquired in exchange for payment of $34.7 million to Phonic Ear Inc. and Calypso Systems LLC, the equity holders of FrontRow (the “Equityholders”). The acquisition occurred pursuant to the terms of a membership interest purchase agreement, dated October 29, 2021 (the “Purchase Agreement”), between the Company, Boxlight, FrontRow and the Equityholders.

On March 23, 2021, the Company acquired 100% of the outstanding shares of Interactive Concepts BV, a company incorporated and registered in Belgium and a distributor of interactive technologies (“Interactive”), for total consideration of approximately $3.3 million in cash, common stock, and deferred consideration. Interactive has been the Company’s key distributor in Belgium and Luxembourg.

On September 24, 2020, the Company acquired Sahara Presentation Systems PLC, a leader in distributed and manufactured AV solutions (“Sahara”). Headquartered in the United Kingdom, Sahara is a leader in distributed AV products and a manufacturer of multi-award-winning touchscreens and digital signage products, including the globally renowned Clevertouch and Sedao brands. In consideration for the acquisition, the Company paid to the shareholders of Sahara a total purchase price of GBP 74.0 million (approximately USD $94.9 million) in the form of GBP 52.0 million (approximately USD $66.7 million) in cash and GBP 22.0 million (approximately USD $28.2 million) in our Series B convertible preferred stock and our Series C convertible preferred stock.

Acquisition Strategy and Challenges

Our 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. The process to undertake a potential acquisition is time-consuming and costly. We expect to expend significant resources to undertake business, financial and legal due diligence on our potential acquisition targets, and there is no guarantee that we will complete any acquisition that we pursue.

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We believe we can achieve significant cost-savings by merging the operations of the companies we acquire and after their acquisition leverage the opportunity to reduce costs through the following methods:

●

Staff reductions – consolidating resources, such as accounting, marketing, and human resources.


	●	Economies of scale – improved purchasing power with a greater ability to negotiate prices with suppliers.


	●	Improved market reach and industry visibility – increase in customer base and entry into new markets.

Components of our Results of Operations and Financial Condition

Revenues are comprised of hardware products, software services, and professional development revenues less sales discounts.

●

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.

	●
	●	Professional development revenue. We receive revenue from providing professional development services through third parties and our network of distributors.

Cost of revenues

Our cost of revenues is comprised of the following:

●

costs to purchase components and finished goods directly;


	●	third-party logistics costs;


	●	inbound and outbound freight costs, and customs and duties charges;

●

costs associated with the repair of products under warranty;


	●	write-downs of inventory carrying value to adjust for excess and obsolete inventory and periodic physical inventory counts; and


	●	cost of professionals to deliver professional development training related to the use of our products.

We outsource some of our warehouse operations and order fulfillment and purchase products from related and third parties. Our product costs will vary directly with volume and the costs of underlying product components as well as the prices we are able to 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. As a global company with suppliers centered in Asia and customers located worldwide, we have used, and may in the future use, air shipping to deliver our products directly to our customers. Air shipping is more costly than sea or ground shipping or other delivery options. We primarily use air shipping to meet the demand of our products during peak seasons and new product launches.

Gross profit and gross profit margin

Our 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; changes in product costs related to the release of projector models; component, contract manufacturing and supplier pricing 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. To the extent that exchange rates move unfavorably for our suppliers, they may seek to pass these additional costs on to us, which could have a material impact on our future average selling prices and unit costs. 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: general and administrative 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 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.

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, gains (losses) on the settlements of debt and trade payable obligations exchanged for common shares, and the effects of changes in the fair value of derivative liabilities.

Income tax expense

We are subject to income taxes in the jurisdictions in which we do business, including the United States, United Kingdom, Mexico, Sweden, Finland, Holland, and Germany. The United Kingdom, Mexico, Sweden, Finland, Holland, and Germany 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. Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to U.S. income, the absorption of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities and changes in tax laws. 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. 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

For the three-month periods ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

Revenues. Total revenues for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$61.0~~$50.6 million as compared to ~~$9.5~~$33.4 million for the three months ended ~~September 30, 2020,~~March 31, 2021, resulting in a ~~544%~~51.5% increase in revenue. Revenues primarily consist of hardware revenue, software revenue, and professional development. The increase in revenues was primarily due to the ~~acquisitions~~acquisition of ~~Sahara Presentation Systems~~FrontRow in ~~September 2020 and Interactive Concepts in March~~December 2021, as well as increased demand for our solutions in the U.S. and Europe. FrontRow revenue for the three months ended March 31, 2022 was $6.5 million.

Cost of Revenues. Cost of revenues for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$ 45.2~~$38.0 million compared to ~~$7.5~~$24.9 million for the three months ended ~~September 30, 2020,~~March, 31, 2021, resulting in a ~~507%~~52.6% increase. Cost of revenues consists primarily of product cost, freight expenses, customs expense, and inventory adjustments. The increase in cost of revenues was associated with the acquisitions and growth of the business ~~as outlined above~~ and was also due to additional increases in global freight/shipping which the company has experienced (as have many others) as a result of supply chain issues arising as a result of the COVID-19 pandemic. ~~In the first quarter of~~During 2021, ~~we reported~~ the cost increase ~~to be~~was approximately four times normal costs as compared to pre-pandemic levels. We expect such cost increases to continue throughout ~~2021.~~2022.

Gross Profit. Gross profit for the three months ended ~~September 30, 2021,~~March 31, 2022, was ~~$15.8~~$12.6 million, as compared to ~~$2.0~~$8.6 million for the three months ended ~~September 30, 2020.~~March 31, 2021. The gross profit margin for the three months was 24.9% which is a reduction of 7 basis points compared to the comparable three months in 2021. Gross profit margin, ~~increased from 21%~~adjusted for the net effect of acquisition-related purchase accounting, was 27.4% as compared to ~~26% despite~~ the ~~effects of~~28.0%, as adjusted, reported for the three months ended March 31, 2021. As previously reported gross margins continue to be adversely impacted by supply chain challenges with increased freight costs

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which are now expected to continue throughout 2022; however, we anticipate gross profit percentage improvements in Q2 and shipping expenses discussed above, product cost increases (which have been partially offset by increased sales prices) and certain purchase accounting adjustments stemming from the Sahara acquisition and effecting recognized revenues.beyond with reduced manufacturing costs.

General and Administrative Expenses. General and administrative expenses for the three months ended ~~September 30, 2021~~March 31, 2022 were ~~$11.9~~$15.5 million and ~~20%~~30% of revenues, as compared to ~~$3.3~~$10.1 million and ~~35%~~30% of revenues for the three months ended ~~September 30, 2020.~~March 31, 2021. The increase was mainly a result of ~~the additional personnel costs associated with the acquired Sahara operations,~~ new hires for planned growth and stock compensation issuances.

Research and Development Expenses. Research and development expenses were ~~$355~~$612 thousand and ~~0.6%~~1.2% of revenues for the three months ended ~~September 30, 2021,~~March 31, 2022, as compared to ~~$471~~$474 thousand and 5%1.4% of revenues for the three months ended ~~September 30, 2020.~~March 31, 2021. Research and development expense primarily consists of costs associated with development of our proprietary hardware and software technologies.

Other Expense (net). Other expense (net) for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$1.4~~$1.5 million, as compared to ~~$2.5~~$3.1 million for the three months ended ~~September 30, 2020.~~March 31, 2021. Other expense decreased primarily due to ~~$1.1~~$2.7 million less in losses recognized upon the settlement of certain debt obligations in exchange for issuance of common shares, offset by a ~~$339 thousand increase in interest expense associated with increased borrowings.~~

~~Income Tax Expense.~~ Income tax expense for the three months ending September 30, 2021 was $1.4 million, as compared no income tax expenses for the three months ended September 30, 2020. Income tax have been recognized in connection with our acquired Sahara operations.

~~Net Income (Loss).~~ Net income was $729 thousand in the three months ended September 30, 2021 and net loss was $4.2 million for the three months ended September 30, 2020, respectively. The Company had net income in the quarter, a result of achieving positive operating income and operating margin in the quarter.

~~For the nine-month periods ended September 30, 2021 and 2020~~

~~Revenues.~~ Total revenues for the nine months ended September 30, 2021 were $141.2 million as compared to $23.0 million for the nine months ended September 30, 2020, resulting in a 514% increase in revenue. The increase in revenues was primarily due to the acquisitions of Sahara Presentation Systems in September 2020 and Interactive Concepts in March 2021, and increased demand for our solutions in the U.S., Europe, and Australia. Organic revenue growth for the nine months of 2021 was 125%.

~~Cost of Revenues.~~ ~~Cost of revenues for the nine months ended September 30, 2021, were $104.0 million as compared to $16.7 million for the nine months ended September 30, 2020, resulting in an 52~~2% increase. The increase in cost of revenues was associated with the acquisitions and growth of the business as outlined above and was also due to additional increases in global freight/shipping which the company has experienced as have many others as following the COVID-10 pandemic. In the first quarter of 2021 we reported the cost increase to be approximately four times higher as compared to pre-pandemic levels, this is expected to continue throughout 2021.

~~Gross Profit.~~ Gross profit for the nine months ended September 30, 2021 was $37.2 million as compared to $6.3 million for the nine months ended September 30, 2020. The gross profit margin decreased from 27% for the nine months ended September 30, 2020 to 26% in for the nine months ending September 30, 2021, primarily driven by the effects of customs and freight expenses discussed above, and certain purchase accounting adjustments stemming from the Sahara acquisition and effecting recognized revenues.

~~General and Administrative Expenses.~~ General and administrative (“G&A”) expenses for the nine months ended September 30, 2021 were $32.8 million and 23% of revenue as compared to $10.4 million and 45% of revenue for the nine months ended September 30, 2020. The increase in G&A expenses resulted from additional personnel costs associated with the acquired Sahara operations, new hires for planned growth and stock compensation issuances.

~~Research and Development Expenses.~~ ~~Research and development expenses were~~ $1.3 million and 0.9% of revenue for the nine months ended September 30, 2021, as compared to $1.1 million and 5% of revenue for the nine months ended September 30, 2020. The absolute increase in research and development expense was primarily driven by an increase in contract services related to software development.

~~Other Income (Expense) Net.~~ Other expense, net, for the nine months ended September 30, 2021 was $5.8 million as compared to other expense, net, of $2.4 million for the nine months ended September 30, 2020. Other expense increased primarily due to a $1.0 million increase in interest expense associated with increased borrowings ~~and net movement year on year of $2.4 million of additional losses recognized upon~~due to the ~~settlement of certain debt obligations in exchange for issuance of common shares.~~new credit facility.

Income Tax ~~Expense.~~Expense (benefit). Income tax ~~expense~~benefit for the ~~nine~~three months ending ~~September 30,~~March 31, 2021 was ~~$3.9 million,~~$86 thousand, as compared noto $21 thousand in income tax expenses for the ~~nine~~three months ended September 30, 2020. Income tax was recognized in connection with our acquired Sahara operations. The Company recorded a significant tax impact of $2.2 million during the second quarter of 2021 to reflect a discrete event directly pertaining to the tax impact on our UK deferred tax liability associated with the intangible assets acquired as part of the Sahara business combination, and the effect of a recent UK rate income tax rate change. Finance Bill 2021 (“the Bill”) provides for an increase in the UK statutory tax rate to 25% for taxpayers with profits over £250K beginning April 1, 2023. We expect this rate to apply to the earnings of our Sahara operations in the UK. The Bill received Royal Assent on June 10, 2021 and it is considered enacted on that date under U.S. GAAP. As such, we reflected the tax impact as a discrete event in our second quarter results. The effective tax rate is (139.3)% due to there being no tax expense/benefit for the legacy Boxlight entities, but the Sahara entities are fully taxable.March 31, 2021.

Net Loss. Net loss was ~~$6.6~~$4.9 million in the three months ended March 31, 2022 and ~~$7.6~~$5.2 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021, ~~and 2020,~~ respectively. The slight decrease in the net loss was primarily due to the slightly lower gross profit margins, increased interest expense, increased tax expense, amortization of intangible assets following the Sahara acquisition, stock compensation expense, and losses incurred on the settlement of certain debt obligations in exchange for shares of our common stock.

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding operations, we supplement our condensed consolidated ~~condensed~~ financial statements which are prepared in accordance with GAAP with EBITDA and Adjusted EBITDA, ~~with~~ both non-GAAP financial measures of earnings.

EBITDA represents net income (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 non-cash losses associated with debt settlement. Our management uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of our business model, and to assess the strength of the underlying operations of our business. 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. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

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

~~Reconciliation of net loss for the three months ended~~


	March 31,		March 31,
(in thousands)	2022		2021
Net loss	$	(4,856)	$	(5,169)
Depreciation and amortization		2,321		1,754
Interest expense		2,317		1,018
Income tax expense		(86)		21
EBITDA	$	(304)	$	(2,376)
Stock compensation expense		1,086		677
Change in fair value of derivative liabilities		9		265
Acquisition costs		—		—
Restructuring costs		—		—
Purchase accounting impact of fair valuing inventory		617		15
Purchase accounting impact of fair valuing deferred revenue		649		807
Net loss on settlement of Lind debt in stock		—		2,203
Net gain on forgiveness of PPP loan		(835)		—
Adjusted EBITDA	$	1,222	$	1,591

~~September 30, 2021 and 2020 to EBITDA and adjusted EBITDA~~

(in thousands) September 30, 2021 September 30, 2020
Net income $ 729 $ (4,211 )
Depreciation and amortization 1,697 318
Interest expense 870 531
Income tax expense 1,391 -
EBITDA $ 4,687 $ (3,362 )
Stock compensation expense 1,161 346
Change in fair value of derivative liabilities (60 ) 194
Purchase accounting impact of fair valuing inventory 15 217
Purchase accounting impact of fair valuing deferred revenue 715 -
Net loss on settlement of Lind debt in stock 638 1,748
Adjusted EBITDA $ 7,156 $ (857 )

~~Reconciliation of net loss for the nine months ended~~

~~September 30, 2021 and 2020 to EBITDA and adjusted EBITDA~~

(in thousands) September 30, 2021 September 30, 2020
Net loss $ (6,660 ) $ (7,587 )
Depreciation and amortization 5,264 758
Interest expense 2,652 1,618
Income tax expense 3,936 -
EBITDA $ 5,192 $ (5,211 )
Stock compensation expense 3,020 866
Change in fair value of derivative liabilities 164 239
Purchase accounting impact of fair valuing inventory 45 236
Purchase accounting impact of fair valuing deferred revenue 2,312 -
Net loss on settlement of Lind debt in stock 3,373 2,340
Adjusted EBITDA $ 14,106 $ (1,530 )

Discussion of Effect of Seasonality on Financial Condition

Certain accounts on our financial statements are subject to seasonal fluctuations. As our business and revenues grow, we expect these seasonal trends to be reduced. The bulk of our products are shipped to our educational customers prior to the beginning of the school year, usually in July, August, or September. To prepare for the upcoming school year, we generally build up inventories during the second quarter of the year. Therefore, inventories tend to be at the highest levels at that point in time. In the first quarter of the year, inventories tend to decline significantly as products are delivered to customers and we do not need the same inventory levels during the first quarter. Accounts receivable balances tend to be at the highest levels in the third quarter, in which we record the highest level of sales.

Due to some continuing travel restrictions and concerns for the safety for our employees during the ongoing COVID-19 pandemic, we have reduced face-to-face meetings with customers and attendance at tradeshow events. We have assessed the impact that these changes will have on our peak season sales and have concluded that funding priority will be given to initiatives that provide for continuity of learning which may result in lower priority on total learning solution sales including hardware, software, and teacher training.

Liquidity and Capital Resources

As of ~~September 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$6.2~~$11.3 million, a working capital balance of ~~$32.0~~$49.6 million, and a current ratio of ~~1.48.~~2.02. This financial position represents a significant improvement from a year ago at ~~September 30, 2020~~March 31, 2021 when we had ~~$9.6~~$10.0 million of cash and cash equivalents, a working capital balance of ~~$25.1~~$21.8 million, and a current ratio of ~~1.80.~~1.56.

For the nine months ended September 30, 2021 and 2020, we had net cash used in operating activities of $13.1 million and $7.0 million, respectively, net cash used for investing activities of $943 thousand and $45.0 million respectively, and net cash provided by financing activities of $7.2 million and $60.7 million, respectively. We had accounts receivable net of allowances of $47.9 million and $20.9 million as of September 30, 2021, and year ended December 31, 2020, respectively.

In addition to the cash flows generated by our ongoing operating activities we financed our operations during ~~2021~~first quarter 2022 with aour new ~~$20.0 million tranche of debt funded by our primary lender, and~~credit facility from a pre-existing accounts receivable financing arrangement with another lender who purchases 85% of the eligible accounts receivable of the Company, for up to $15.0 million, with the right of recourse. Our accounts receivable and our ability to borrow against accounts receivable provides us with an additional source of liquidity as cash payments are collected from customers in the normal course of business. Our accounts receivable balance fluctuates throughout the year based on the seasonality of our business.Whitehawk.

In the current lingering COVID-19 pandemic environment, the availability of debt and equity capital has been reduced and the cost of capital has increased. Increasing our capital through equity issuance at this time could cause significant dilution to our existing stockholders. However, 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 customers and vendors.

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to facility leases. We lease all 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 for the majority of our inventory purchases, which further constrains our cash liquidity.

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Recent Financing

~~As disclosed below,~~To finance the acquisition of FrontRow, the Company and substantially all its direct and indirect subsidiaries, including Boxlight, Sahara and FrontRow as guarantors, entered into ~~an accounts receivable agreement, effective September 30, 2020~~a maximum $68.5 million term loan credit facility, dated December 31, 2021 and as amended April 4, 2022 (the ~~“Accounts Receivable~~“Amended Credit Agreement”), ~~between Sallyport Commercial~~with Whitehawk Finance LLC, ~~(“Sallyport”~~as lender (the “Lender”), and ~~the Company’s subsidiaries, Boxlight, Inc. and EOSEDU LLC (the Subsidiaries”).~~White Hawk Capital Partners, LP, as collateral agent. Under the terms of the ~~Accounts Receivable~~Credit Agreement, the ~~Subsidiaries were originally able to sell~~Company received an initial term loan of $58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to ~~$6,000,000~~$10 million that may be provided for additional working capital purposes under certain conditions (the ~~“Maximum Facility Limit Amount”~~“Delayed Draw”) ~~of eligible accounts receivable that~~. The Initial Loan and Delayed Draw are ~~accepted by Sallyport for up~~collectively referred to ~~90%~~as the “Term Loans.” The proceeds of the ~~face amount~~Initial Loan were used to finance the Company’s acquisition of ~~each such eligible account. On July 20, 2021, Boxlight and~~FrontRow, pay off all indebtedness owed to our existing lenders, Sallyport amended the Accounts Receivable Agreement (the “ARC Amendment”) for purposes of increasing the Maximum Facility Limit Amount to $13,000,000, as well as increasing the minimum monthly sales from $1,250,000 to $3,000,000. In exchange for entry into the ARC Amendment, Boxlight agreed to a fee of $50,000, representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remained unchanged. On August 6, 2021, Boxlight and Sallyport entered into an additional amendment of the Accounts Receivable Agreement (the “Second ARC Amendment”), which further increased the Maximum Facility Limit Amount to $15,000,000. In exchange for entry into the Second ARC Amendment, Boxlight agreed to a fee of $20,000, representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remained unchanged. ~~On August 23, 2021, the Company and Sallyport, as first lien creditor, and Lind Global Macro Fund, LP (“LGMF”)~~Commercial Finance, LLC and Lind Global Asset Management, LLC, ~~(“Lind Global”~~pay related fees and transaction costs, and provide working capital. Of the Initial Loan, $8.5 million was subject to repayment on February 28, 2022, with quarterly principal payments of $625,000 and interest payments commencing March 31, 2022 and the $50.0 million remaining balance plus any Delayed Draw loans becoming due and payable in full on December 31, 2025. The Term Loans will bear interest at the LIBOR rate plus 10.75%; provided that after June 30, 2022, if the Company’s Senior Leverage Ratio (as defined in the Credit Agreement) is less than 2.25, the interest rate would be reduced to LIBOR plus 10.25%. Such terms are subject to the Company maintaining a borrowing base in terms compliant with the Credit Agreement.

On March 29, 2022, the Company received a Notice of Events of Default and Reservation of Rights (the “Notice”)~~, together~~ from the Collateral Agent, alleging, among other things, defaults as ~~second lien creditors,~~a result of (i) failure to repay $8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and documents. As a result of the Notice, all accrued and unpaid interest owed under the Term Loan, became subject to a post-default interest rate equal to the highest interest rate allowed for under the Credit Agreement plus 2.50% until such time as the Events of Default are either waived or cured. Following the Company’s receipt of the Notice and pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the terms of repayment of the $8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms. The principal elements of the amendment included (a) an extension of time for the Loan Parties to repay $8.5 million of the principal amount of the term loan from February 28, 2022 to February 28, 2023, and (b) forbearance on $3,500,000 of over advances to grant the Loan Parties until May 16, 2022 to allow the Company to come into compliance with the borrowing base requirements set forth in the Credit Agreement. In such connection, the Loan Parties have since obtained credit insurance on certain key customers whose principal offices are located in the European Union and Australia as, without the credit insurance, their accounts owed to the Loan Parties had been deemed ineligible for inclusion in the borrowing base calculation primarily due to the perceived inability of the Collateral Agent to enforce security interests on such accounts.

In addition, the Lender and Collateral Agent agreed to (i) reduce, through June 30, 2022, the minimum cash reserve requirement for the Loan Parties, (ii) reduce the interest rate by 50 basis points (to Libor plus + 9.75%) after delivery of the Loan Parties’ June 30, 2023 financial statements, subject to the Loan Parties maintaining 1.75 EBITDA coverage ratio, and (iii) waive all prior Events of Default under the Credit Agreement. In conjunction with the amendment to the Credit Agreement, the parties entered into ~~the fourth~~an amended and restated ~~intercreditor agreement~~fee letter (the ~~“Fourth A&R Intercreditor Agreement”~~“Fee Letter”) ~~for the sole purpose of increasing the permitted first lien cap thereunder from $6 million to $20 million.~~

On January 26, 2021, we entered into an agreement with Everest Display Inc., a Taiwan corporation (“EDI”), and EDI’s subsidiary, AMAGIC Holographics Inc., a California corporation (“AMAGIC”), pursuant to which ~~$1,983,436 in accounts~~the parties agreed to prepayment premiums of (i) 5% for payments made on or before December 31, 2022, (ii) 4% for payments made between January 1, 2023 and December 31, 2023, and (iii) 2% for payments made between January 1, 2024 and December 31, 2025. Furthermore, the parties agreed that no prepayment premiums would be payable owed by us to EDI was settled in exchange for our issuance of 793,375 shares (the “2021 Shares”) of its Class A common stock to AMAGIC at a $2.50 per share purchase price. The 2021 Shares were issued to AMAGIC pursuant to an exemption from registration provided by Rule 506 of Regulation D under Section 4(a)(2) of the Securities Act.

On September 21, 2020, we and Lind Global entered into a securities purchase agreement (the “Lind Global SPA”), pursuant to which Lind Global purchased from the Company a $22,000,000 secured convertible note (the “Convertible Note”) in exchange for payment to us of $20,000,000 (the “Funding”). Under the terms of the Lind Global SPA, in additionwith respect to the ~~issuance of~~first $5.0 million paid under the ~~Convertible Note, the Company paid to Lind (i) a commitment fee of $400,000 and (ii) a bonus fee (the “Bonus Payment”) of $500,000 payable~~Term Loan, any payments made in shares of Class A common stock of the Company, with the per share price of the Bonus Payment shares calculated based on the 20-day VWAP of the Class A Common Stock prior to closing. The Convertible Note has a term of 24-months, bears a 4% interest rate (0% interest so long as the Class A Common Stock trades at $3.50 or more per share), is repayable in 22 equal instalments commencing 60 days after the Funding and, at the option of the Company, may be repaid in either cash or Class A common stock. Class A common stock issuable to Lind Global in conjunction with the Bonus Payment and the Convertible Note was registered pursuant to a shelf takedown on the Company’s existing shelf registration statement on Form S-3 (SEC File No. 333-239939).

In conjunction with our entry into the Lind Global SPA and the issuance of the Convertible Note, on September 21, 2020, the Company and Lind Global Macro Fund, LP, an affiliate of Lind Global, entered into a third amended and restated security agreement (the “Third A&R Security Agreement”) for purposes of amending and restating a prior security agreement, dated as of February 4, 2020, between the Company and Lind in order to incorporate the Lind Global SPA and the Convertible Note therein. In addition, on September 21, 2020, the Company, Sallyport Commercial Finance, LLC (“Sallyport”), as first lien creditor, and Lind and Lind Global, as second lien creditors, entered into a third amended and restated intercreditor agreement (the “Third A&R Intercreditor Agreement”) for purposes of amending and restating the second amended and restated intercreditor agreement, dated as of February 4, 2020, between the Company, Sallyport and Lind, in order to (i) incorporate Lind Global as a second lien creditor and (ii) reaffirm and confirm the relative priority of each creditor’s respective security interests in the Company’s assets, among other matters.

On July 28, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group, LLC, a Delaware limited liability company (“Maxim”), pursuant to which Maxim, as representative of the underwriters, agreed to underwrite the public offering (the “Offering”) of up to 15,000,00 shares of the Company’s Class A common stock, at a public offering price of $2.00 per share, in addition to an overallotment option (the “Overallotment Option”) of 2,250,000 shares of Common Stock. The Offering closed on July 31, 2020, with the sale of all 17,250,000 shares of the Company’s Common Stock, including the Overallotment Option, for gross proceeds of $34,500,000. Maxim acted as sole book-running manager, National Securities Corporation acted as a co-manager for the Offering, and A.G.P./Alliance Global Partners (“A.G.P.”) acted as financial advisor. As compensation for underwriting the Offering, the underwriters received an underwriting discount of 7%, equaling approximately $2,415,000, in addition to $60,000 in expenses. A.G.P.’s compensation was paid out of the underwriting discount. The Offering was made pursuantrelation to the ~~Company’s effective shelf registration statement~~$8.5 million due on ~~Form S-3 (SEC File No. 333-239939) (the “Registration Statement”)~~or before February 28, 2023, any required amortization payments under the Credit Agreement and ~~the related base prospectus included therein, as supplemented~~any mandatory prepayments by the prospectus supplement dated July 28, 2020 (the “Preliminary Prospectus”) and the final prospectus supplement, filed July 29, 2020 (the “Final Prospectus” and collectively with the Preliminary Prospectus, the “Prospectus”).way of ECF or casualty events.

On September 8, 2020, the Company entered into an underwriting agreement (the “September Underwriting Agreement”) with Maxim pursuant to which Maxim agreed to underwrite the public offering (the “September Offering”) of 13,333,333 shares (the “Shares”) of the Company’s Class A common stock at a public offering price of $0.75 per share. The September Offering closed on September 11, 2020, and the Company sold the Shares for gross proceeds of $10,000,000. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 2,000,000 shares of Class A common stock at the public offering price less discounts and commissions (the “September Over-Allotment Option”). The September Over-Allotment Option was exercised in full on September 24, 2020, for additional proceeds of $1,500,000, through the sale of an additional 1,999,667 shares of Class A common stock. Maxim acted as sole-bookrunner and National acted as co-manager for the September Offering. Gross proceeds, before underwriting discounts and commissions and estimated offering expenses, totaled $11.5 million. As compensation for underwriting the Offering, Maxim and National together received an underwriting discount of 7% of the Offering and the Over-Allotment Option and were reimbursed for up to $85,000 in underwriting expenses. The September Offering was conducted pursuant to the Company’s registration statement on Form S-1 (SEC File No. 333-238634) previously filed with and declared effective by the SEC.

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

Our consolidated condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and

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estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the 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 consolidated condensed 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. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in the notes to the unaudited consolidated condensed financial statements. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective, or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain:

Revenue recognition

Business acquisitions

Goodwill and Intangible assets

Stock-based compensation expense

Status as Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we ~~may~~were able to take advantage of certain specified reduced reporting and other regulatory requirements that are available to public companies that are emerging growth companies.

These provisions include:

(1)	an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002;


(2)	an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;


(3)	an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about our audit and our financial statements; and


(4)	reduced disclosure about our executive compensation arrangements.

We ~~have~~ elected to take advantage of the exemption from the adoption of new or revised financial accounting standards until they would apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Under Section 2(a)(19) of the Securities Act of 1933 and Section 3(a)(80) of the Securities Exchange Act of 1934, as amended, an emerging growth company will lose its status upon the earliest of several conditions, one of which is reaching the last day of the fiscal year in which the fifth anniversary of the company’s first sale of equity securities pursuant to an effective registration statement occurs. For the Company, this will occur on January 1, ~~2022.~~2023.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

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Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this report (“Evaluation Date”), pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective due to material weaknesses described in our ~~2020~~2021 Annual Report on Form 10-K.

Notwithstanding the existence of these material weaknesses, we believe that the consolidated condensed financial statements included in this ~~interim~~quarterly report on Form 10-Q fairly present in accordance with U.S. GAAP, in all material respects, our financial condition, results of operations and cash flows for the periods presented in this report.

Limitations on Effectiveness of Controls.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives.

(b) Changes in internal controls over financial reporting.

During 2022, the Company’s management has engaged professional services firms to assist with the preparation of the review of the income tax provision. Management has also engaged third-party professional services who prepared FrontRow financial statements and value warrant issued in connection with Whitehawk credit facility. There were no additional changes made in the internal controls over financial reporting for the quarter ended March 31, 2022, that have materially affected our internal control over financial ~~reporting that occurred during the nine-month period ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial~~ reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

~~None.~~

ITEM 1A. RISK FACTORS

The Company has experienced challenges within the global supply chain which has impacted the business in three key areas: (i) movement and/or delay in production schedules due to component shortages, (ii) continued delays to global shipping and receipt of goods and (iii) increased shipping costs which has reduced gross profit margin. In addition, there is presently a global silicon chip supply shortage that could potentially cause disruptions in our supply chain. While the Company’s business has not yet been affected by such disruption, in the event any of our suppliers experience such supply chain disruption, there is potential that such disruption could ultimately affect our ability to timely obtain and deliver finished goods and products. Furthermore, there is heightened uncertainty

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surrounding global supply chains, global markets and general global economic uncertainty as a result of the ongoing conflict between Russia and the Ukraine ad the continuing COVID-19 pandemic.

For additional risk factors pertinent our business please refer to the Part I Item 1A of the Company’s ~~2020~~2021 Annual Report on Form 10-K, which is incorporated by reference herein.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

~~None.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~None.~~

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

~~None.~~

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Item 6. Exhibits

The following exhibits are filed or furnished with this report:


Exhibit No.		Description of Exhibit
4.1		Form of Warrant, dated December 31, 2021, issued to Whitehawk Finance LLC. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed January 5, 2022).
10.1		~~Employment~~Credit Agreement, dated ~~September 15,~~December 31, 2021, between Boxlight Corporation, its subsidiaries, Whitehawk Finance LLC and ~~Aleksandra Leis~~Whitehawk Capital Partners, LP (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed ~~September 20, 2021)~~January 5, 2022).

10.2		Employment Agreement, dated February 14, 2022, between Boxlight ~~Inc. 2021 Equity Incentive Plan~~Corporation and Michael Pope (incorporated by reference to Exhibit 10.1 to the ~~Registration Statement~~Current Report on Form ~~S-8~~8-K filed ~~October 14, 2021)~~February 18, 2022).

10.3		~~Membership Interest Purchase Agreement,~~Notice of Default and Reservation of Rights, dated ~~October~~March 29, ~~2021, between Boxlight Corporation, Boxlight, Inc., FrontRow Calypso LLC, Phonic Ear, Inc., and Calypso Systems LLC.~~2022, from Whitehawk Capital Partners, LP (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed ~~November 1, 2021)~~February 18, 2022).
10.4		Amendment to Credit Agreement, dated April 4, 2022, between Boxlight Corporation, its subsidiaries, Whitehawk Capital Partners, LP and Whitehawk Finance LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated March 29, 2022).
~~31.1~~ 10.5		Amended and Restated Fee Letter, dated April 5, 2022, between Boxlight Corporation, its subsidiaries, Whitehawk Capital Partners, LP and Whitehawk Finance, LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated March 29, 2022).

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

~~SIGNATURES~~

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BOXLIGHT CORPORATION

~~November 10, 2021~~ May 16, 2022	By:	/s/ Michael Pope
		Michael Pope
		Chief Executive Officer

~~November 10, 2021~~
May 16, 2022	By:	/s/ Patrick Foley
		Patrick Foley
			Chief Financial Officer (Principal Financial and Accounting Officer)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues, net	$	61,008		$	9,477		$	141,186		$	23,028
Cost of revenues		45,210			7,452			104,002			16,722
Gross profit		15,798			2,025			37,184			6,306

Operating expense:
General and administrative expenses		11,933			3,307			32,844			10,444
Research and development		355			471			1,310			1,073
Total operating expense		12,288			3,778			34,154			11,517

Income (loss) from operations		3,510			(1,753	)		3,030			(5,211	)

Other income (expense):
Interest expense, net		(870	)		(531	)		(2,652	)		(1,619	)
Other income (expense), net		34			(15	)		54			61
Changes in fair value of derivative liabilities		60			(194	)		(164	)		(239	)
Loss from settlements of liabilities		(614	)		(1,718	)		(2,992	)		(579	)
Total other income (expense)		(1,390	)		(2,458	)		(5,754	)		(2,376	)

Income (loss) before income taxes	$	2,120		$	(4,211	)	$	(2,724	)	$	(7,587	)
Income tax expense		(1,391	)		-			(3,936	)		-
Net income (loss)	$	729		$	(4,211	)	$	(6,660	)	$	(7,587	)
Fixed dividends - Series B Preferred		(317	)		-			(952	)		-
Deemed Contribution -Series B Preferred		-			-			367			-
Net income (loss) attributable to common stockholders	$	412		$	(4,211	)	$	(7,245	)	$	(7,587	)

Comprehensive loss:
Net income (loss)	$	729		$	(4,211	)	$	(6,660	)	$	(7,587	)
Foreign currency translation (loss) gain		(2,008	)		536			(1,738	)		428
Total comprehensive loss	$	(1,279	)	$	(3,675	)	$	(8,398	)	$	(7,159	)

Net income (loss) per common share – basic	$	0.01		$	(0.10	)	$	(0.12	)	$	(0.31	)

Net income (loss) per common share – diluted	$	0.01		$	(0.10	)	$	(0.12	)	$	(0.31	)

Weighted average number of common shares outstanding – basic		60,094			44,215			57,723			24,853

Weighted average number of common shares outstanding – diluted		64,710			44,215			57,723			24,853

	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	6,223		$	13,460
Accounts receivable – trade, net of allowances		47,913			20,869
Inventories, net of reserves		30,896			20,913
Prepaid expenses and other current assets		14,399			6,161
Total current assets		99,431			61,403

Property and equipment, net of accumulated depreciation		627			562
Intangible assets, net of accumulated amortization		50,261			55,156
Goodwill		23,076			22,742
Other assets		245			90
Total assets	$	173,640		$	139,953

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	32,946		$	14,246
Accounts payable and accrued expenses – related parties		-			1,967
Short-term debt		23,932			16,817
Earn-out payable – related party		-			119
Deferred revenues – short-term		6,566			5,671
Derivative liabilities		356			363
Other short-term liabilities		3,605			1,209
Total current liabilities		67,405			40,392

Deferred revenues – long-term		13,405			10,482
Long-term debt		-			7,831
Deferred tax liability		9,044			7,902
Other long-term liabilities		350			2
Total liabilities		90,204			66,609

Commitments and contingencies (Note 13)		-			-

Mezzanine equity:
Preferred Series B		16,146			16,513
Preferred Series C		12,363			12,363
Total mezzanine equity		28,509			28,876

Stockholders’ equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 167,972 and 167,972 shares issued and outstanding, respectively		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized; 61,310,899 and 53,343,518 Class A shares issued and outstanding, respectively		6			6
Additional paid-in capital		105,625			86,768
Accumulated deficit		(54,157	)		(47,498	)
Accumulated other comprehensive loss		3,453			5,192
Total stockholders’ equity		54,927			44,468

Total liabilities and stockholders’ equity	$	173,640		$	139,953


	Series A					Class A				Additional			Accumulated Other
	Preferred Stock					Common Stock				Paid-in			Comprehensive			Accumulated
	Shares			Amount		Shares		Amount		Capital			Income			Deficit			Total

Balance as of December 31, 2020		168		$	-		53,344	$	6	$	86,768		$	5,192		$	(47,498	)	$	44,468

Shares issued for:

Stock options exercised		-			-		319		-		246			-			-			246

In lieu of payment for services rendered
In lieu of payment for services rendered, shares
Conversion of accounts payable liabilities		-			-		793		-		1,626			-			-			1,626

Conversion of debt obligations		-			-		2,251		-		6,033			-			-			6,033

Conversion of Restricted Shares		-			-		59		-		-			-			-			-

Warrants exercised		-			-		21		-		51			-			-			51
Cash
Conversion of notes payable
Conversion of notes payable, shares
Closing fees for issuance of notes payable
Closing fees for issuance of notes payable, shares
Stock compensation		-			-		-		-		677			-			-			677
Shares issued for Stemify acquisition
Shares issued for Stemify acquisition, shares
Public offering
Public offering, shares
Shares issued for Interactive Concepts acquisition
Shares issued for Interactive Concepts acquisition, shares
Foreign currency translation		-			-		-		-		-			(261	)		-			(261	)

Deemed Contribution - Preferred Series B
Fixed dividends Preferred Series B		-			-		-		-		(317	)		-			-			(317	)

Net loss		-			-		-		-		-			-			(5,168	)		(5,168	)

Balance as of March 31, 2021		168			-		56,787	$	6	$	95,084		$	4,931		$	(52,666	)	$	47,355

Shares issued for:

Conversion of debt obligations		-			-		1,688		-		3,839			-			-			3,839

Conversion of Restricted Shares		-			-		484		-		-			-			-			-

Stock compensation		-			-		-		-		1,182			-			-			1,182

Shares issued for Interactive Concepts acquisition		-			-		143		-		404			-			-			404

Foreign currency translation		-			-		-		-		-			530			-			530

Deemed Contribution - Preferred Series B		-			-		-		-		367			-			-			367

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

Net loss		-			-		-		-		-			-			(2,220	)		(2,220	)

Balance as of June 30, 2021		168		$	-		59,102	$	6	$	100,559		$	5,461		$	(54,886	)	$	51,140

Shares issued for:

Conversion of debt obligations		-			-		1,755		-		3,911			-			-			3,911

Conversion of Restricted Shares		-			-		217		-		-			-			-			-

Stock options exercised		-			-		162		-		159			-			-			159

Warrants exercised							75				152			-			-			152

Stock compensation		-			-		-		-		1,161			-			-			1,161

Foreign currency translation		-			-		-		-		-			(2,008	)		-			(2,008	)

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

Net income		-			-		-		-		-			-			729			729

Balance as of September 30, 2021		168	$		-		61,311	$	6	$	105,625		$	3,453		$	(54,157	)	$	54,927


	Nine Months Ended
	September 30, 2021			September 30, 2020

Cash flows from operating activities:
Net loss	$	(6,660	)	$	(7,587	)
Adjustments to reconcile net loss to net cash (used) in operating activities:
Amortization of debt discount and issuance cost		1,473			768
Bad debt (recovery) expense		(114	)		168
Loss on settlement of liabilities		2,992			579
Change in allowance for sales returns and volume rebate		542			(91	)
Change in inventory reserve		56			35
Change in deferred tax assets and liabilities		912			-
Change in fair value of derivative liability		164			239
Shares issued for interest payment on notes payable		512			247
Stock compensation expense		3,020			866
Other share-based payments		-			8
Depreciation and amortization		5,264			758
Changes in operating assets and liabilities:
Accounts receivable – trade		(26,658	)		(1,442	)
Inventories		(10,084	)		(996	)
Prepaid expenses and other current assets		(8,219	)		224
Other assets		(156	)		(14	)
Accounts payable and accrued expenses		17,865			(1,323	)
Warranty liability		(88	)		4
Accounts payable and accrued expenses - related parties		-			19
Other short-term liabilities		2,233			803
Deferred revenues		3,875			(271	)
Other liabilities		(11	)		(11	)
Net cash used in operating activities	$	(13,082	)	$	(7,017	)

Cash flows from investing activities:
Business acquisitions (net of cash acquired)		(685	)		(44,953	)
Cash paid for patents		-			(100	)
Cash paid to settle earnout obligations		(119	)		-
Purchases of furniture and fixtures, net		(139	)		-
Net cash used in investing activities		(943	)		(45,053	)

Cash flows from financing activities:
Net proceeds from issuance of common stock		405			42,719
Proceeds from payment protection plan loan		-			1,008
Proceeds from short-term debt		43,269			5,667
Principal payments on short-term debt		(35,487	)		(8,953	)
Payment on fixed dividends of class B preferred stock		(952	)		-
Proceeds from convertible debt		-			20,750
Debt issuance costs		(70	)		(461	)
Net cash provided by financing activities	$	7,165		$	60,730
Effect of foreign currency exchange rates		(377	)		(223	)

Net (decrease) increase in cash and cash equivalents		(7,237	)		8,437

Cash and cash equivalents, beginning of the period		13,460			1,173

Cash and cash equivalents, end of the period	$	6,223		$	9,610

Supplemental cash flow disclosures:

Cash paid for income taxes	$	1,458		$	-
Cash paid for interest	$	2,130		$	1,364

Non-cash investing and financing transactions:
Shares issued to settle accounts payable	$	1,626		$	1,269
Shares issued for conversion of notes payable and accrued interest	$	13,786		$	6,326
Shares issued for closing fees related to outstanding notes payable					517
Shares issued for acquisition	$	403		$	-
Preferred share issued as consideration for acquisition of Sahara					29,295
Exercise of warrants	$	203		$	-
Deemed contribution - Series B Preferred	$	367		$	-
Deferred consideration for acquisition	$	537		$	-
Notes payable issued as consideration for acquisition of MyStemKit	$	-		$	350

	Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs		Carrying Value as of September 30,
Description	(Level 1)		(Level 2)		(Level 3)		2021
Derivative liabilities - warrant instruments	$	-	$	-	$	356	$	356
					$	356	$	356

	Amount (in thousands)
Balance, December 31, 2020	$	363
Exercise of warrants		(171	)
Change in fair value of derivative liabilities		164
Balance, September 30, 2021	$	356

	(Unaudited) in thousands As Reported			(Unaudited) in thousands Proforma
	Three months ended September 30, 2020
	(Unaudited) in thousands as Reported			(Unaudited) in thousands Proforma
Revenues, net	$	9,477		$	33,753
Net loss attributable to common shareholders	$	(4,211	)	$	(3,340	)

	(Unaudited) in thousands As Reported			(Unaudited) in thousands Proforma
	Nine months ended September 30, 2020
	(Unaudited) in thousands As Reported			(Unaudited) in thousands Proforma
Revenues, net	$	23,028		$	86,310
Net loss attributable to common shareholders	$	(7,587	)	$	(8,384	)

	Useful lives	2021			2020

Patents	4-10 years	$	182		$	182
Customer relationships	8-15 years		46,796			46,614
Technology	3 to 5 years		3,851			3,900
Domain	7 years		14			14
Tradenames	2-10 years		9,824			9,682

Intangible assets, at cost			60,667			60,392
Accumulated amortization			(10,406	)		(5,236	)

Intangible assets, net of accumulated amortization		$	50,261		$	55,156

	2021		2020
Debt – Third Parties
Note payable – Lind Global	$	11,183	$	21,085
Paycheck Protection Program		1,009		1,008
Accounts receivable financing – Sallyport Commercial		12,470		4,512
Note payable – STEM Education Holdings		-		175
Total debt		24,662		26,780
Less: Discount and issuance cost		730		2,132
Current portion of debt		23,932		16,817
Long-term debt	$	-	$	7,831

Total debt (net of discount)	$	23,932	$	24,648

	September 30, 2021
Common stock issuable upon exercise of warrants		195,000
Market value of common stock on measurement date	$	2.25
Exercise price	$	0.42
Risk free interest rate (1)		.04	%
Expected life in years		0.25 years
Expected volatility (2)		60	%
Expected dividend yields (3)		0	%

	December 31, 2020
Common stock issuable upon exercise of warrants		295,000
Market value of common stock on measurement date	$	1.53
Exercise price	$	0.42
Risk free interest rate (1)		0.13	%
Expected life in years		1 year
Expected volatility (2)		160	%
Expected dividend yields (3)		0	%

	Amount
Balance, December 31, 2019	$	147
Change in fair value of derivative liabilities		239
Balance, September 30, 2020	$	386

	Three Months Ended September 30			Three Months Ended September 30,
	2021			2020
United States	$	(3,114	)	$	(4,211	)
Foreign		5,234			-
Total pretax book income, (loss)	$	2,120		$	(4,211	)

	Nine Months Ended September 30			Nine Months Ended September 30,
	2021			2020
United States	$	(8,541	)	$	(7,587	)
Foreign		5,817			-
Total pretax book loss	$	(2,724	)	$	(7,587	)
Total pretax book income, (loss)	$	(2,724	)	$	(7,587	)

	Number of Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2020		4,850,784		$	1.76		3.51
Granted		-			-		-
Exercised		(484,543	)		0.84		-
Cancelled		(275,625	)		1.02		-
Outstanding, September 30, 2021		4,090,616		$	1.91		2.58
Exercisable, September 30, 2021		2,716,468		$	2.42		2.06

	Number of Units			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2020		2,721,347		$	1.62
Granted		1,005,790			2.83
Vested		(1,126,391	)		2.19
Outstanding, September 30, 2021		2,600,746		$	1.88

	Number of Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2020		365,000		$	1.44		1.27
Granted		-			-		-
Exercised		(100,000	)		0.43		-
Outstanding, September 30, 2021		265,000		$	1.82		0.63
Exercisable, September 30, 2021		251,250		$	1.88		0.47

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company