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

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 [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, 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 [X] 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 [X]

The number of shares outstanding of the registrant’s common stock on November ~~11, 2019~~13, 2020 was ~~11,023,870.~~

See accompanying notes to ~~the~~unaudited consolidated condensed financial statements.

For the ~~Three~~three and ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019

See accompanying notes to ~~the~~unaudited consolidated condensed financial statements.

Consolidated Condensed Statements of Changes in Stockholders’ Equity (Deficit)

For the ~~Three~~three and ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019

See accompanying notes to ~~the~~unaudited consolidated condensed financial statements.

For the ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019

See accompanying notes to ~~the~~unaudited consolidated condensed financial statements.

Boxlight Corporation (the “Company” or “Boxlight Parent”) is a leading provider of interactive technology solutions under its award-winning brands Clevertouch^®, and Mimio^®. The Company aims to improve engagement and communication products and solution for use in diverse business and education environments. Boxlight develops, sells, and services its integrated solution suite including interactive displays, collaboration software, supporting accessories and professional services.

The Company is headquartered in Atlanta, Georgia and was incorporated in the State of Nevada on September 18, ~~2014 with its headquarters in Atlanta, Georgia for the purpose of becoming a technology company that sells interactive educational products.~~2014. In 2016, the Company acquired Boxlight, Inc., Boxlight Latinoamerica, S.A. DE C.V. ~~(“BLA”)~~ and Boxlight Latinoamerica Servicios, S.A. DE C.V. ~~(“BLS”)~~ (together, “Boxlight Group”), Mimio LLC (“Mimio”) and Genesis Collaboration, LLC (“Genesis”). In 2018, the Company acquired Cohuborate Ltd. (“Cohuba”), Qwizdom Inc. and its subsidiary Qwizdom UK Limited ~~(“Qwizdom~~(the “Qwizdom Companies”), and EOSEDU, LLC (“EOS”). In 2019, the Company acquired Modern Robotics, Inc. (“MRI”). ~~The~~In 2020, the Company ~~currently designs, produces~~acquired MyStemKits Inc. (“MyStemKits”) and ~~distributes interactive~~Sahara Presentation Systems PLC (“Sahara”). MyStemKits is in the business of developing, selling and distributing 3D printable science, technology, ~~solutions~~engineering and math curriculums incorporating 3D printed project kits for education, and owns the right to manufacture, market and distribute Robo 3D branded 3D printers and associated hardware for the global education market. Sahara is a leader in distributed AV products and a global manufacturer of multi-award winning touchscreens and digital signage products. See Note 3 for further discussion regarding acquisitions.

The accompanying consolidated condensed financial statements include the accounts of Boxlight Parent, Boxlight Group, Mimio, Genesis, Cohuba, Qwizdom Companies, EOS, MRI, MyStemKits, and ~~MRI.~~Sahara. Transactions and balances among all of the companies have been eliminated.

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 of the information and notes required by GAAP for complete consolidated 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, ~~2018~~2019 and notes thereto contained in the Company’s Annual Report on Form 10-K. Certain information and note disclosures normally included in the consolidated financial statements have been condensed. The December 31, ~~2018~~2019 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.

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. Actual amounts could differ from those estimates.

The coronavirus disease (“COVID-19”) pandemic has negatively impacted, and may continue to negatively impact, the macroeconomic environment in the United States and globally, including our business, financial condition and results of operations. Due to the evolving and uncertain nature of COVID-19 and its effects on the U.S. and global economy, it is reasonably possible that it could materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near to medium term. These estimates relate to certain accounts including, but not limited to, the valuation allowance related to deferred taxes, intangible assets, and other long-lived assets. The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict or prepare for, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions taken in response to the pandemic, changes in consumer behavior in response to the pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19.

Accounts receivable are stated at contractual amounts, net of an allowance for doubtful accounts. The allowance for doubtful accounts represents management’s estimate of the amounts that ultimately will not be realized in cash. The Company reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical payment trends, the age of receivables and knowledge of the individual customers. When the analysis indicates, management increases or decreases the allowance accordingly. However, if the financial condition of our customers were to deteriorate, additional allowances might be required.

Inventories are stated at the lower of cost or net realizable value and includes spare parts and finished goods. Inventories are primarily determined using the specific identification method and the first-in, first-out (“FIFO”) cost method. Cost includes direct cost from the contract manufacturer (“CM”) or original equipment received from the manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight and import duty costs.

The Company continuously reviews its inventory levels to identify slow-moving merchandise and markdowns necessary to clear slow-moving merchandise, which reduces the cost of inventories to its estimated net realizable value. Consideration is given to a number of quantitative and qualitative factors, including current pricing levels and the anticipated need for subsequent markdowns, aging of inventories, historical sales trends, and the impact of market trends and economic conditions. Estimates of markdown requirements may differ from actual results due to changes in quantity, quality and the mix of products in inventory, as well as changes in consumer preferences, market and economic conditions.

Intangible assets, other than goodwill are amortized using the straight-line method over their estimated period of benefit. We periodically evaluate the recoverability of intangible assets, other than goodwill, ~~periodically~~ and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. No material impairments of intangible assets have been identified during any of the periods presented. Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist, using a market approach. Goodwill is not amortized and is not deductible for tax purposes.

The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

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.

The Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable, earn-out payable, debt, and ~~debt.~~redeemable preferred stock. 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 be the fair value of long-term debt net of any debt discount and issuance cost.

Derivative liabilities, ~~and~~ the earn–out payable, and certain related party debt are recorded at fair value at each period end.The Company’s redeemable preferred stock was issued in conjunction with a business combination and was recorded at fair value at issuance (less the intrinsic value of a beneficial conversion feature embedded in the Series C preferred shares). The redeemable preferred stock is not measured at fair value on a recurring basis. See further discussion in Note 3 and Note 11.

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 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, ~~2019~~2020 and December 31, ~~2018:~~2019:

The following table shows the change in the Company’s earn-out payable rollforward for the nine months ended September 30, ~~2019 and 2018:~~2020:

In accordance with the FASB’s Accounting Standards Update (“ASU”) No. 2014-09, Revenue ~~is comprised of product sales and service revenue, net of sales returns, early payment discounts, and volume rebate payments paid to~~from Contracts with Customers (Topic 606), the ~~value-added resellers (“VARs”). The~~ Company recognizes revenue at the amount to which it expects to be entitled when ~~persuasive evidence~~control of ~~an arrangement exists, delivery~~the products or services is transferred to its customers. Control is generally transferred when the Company has ~~occurred,~~a present right to payment and the ~~sales price is fixed~~title and the significant risks and rewards of ownership of products or ~~determinable and collectability is reasonably assured.~~

services are transferred to its customers. Product revenue is derived from the sale of projectors, interactive panels and related ~~accessories. Evidence of an arrangement consists of an order from its~~software and accessories to distributors, resellers, orand end users. ~~The Company considers delivery to have occurred once title and risk of loss has been transferred.~~

Service revenue is ~~comprised of~~derived from hardware maintenance services, product installation, training, software maintenance, and subscription services.

The Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software, and ~~training~~the provision of related software maintenance. In most cases, interactive devices are sold with hardware maintenance services with terms ranging from 36–60 months. Software maintenance includes technical support, product updates on a when and if available basis, and error correction services. ~~These service revenues~~At times, non-interactive projectors are ~~normally entered into at the time products are sold. Service prices are established depending on product equipment~~also sold ~~and include a cost value for the estimated~~with hardware maintenance services ~~to be performed based on historical experience. The Company outsources installation and training services to third parties and recognizes revenue upon completion of the services.~~with terms ranging from 36-60 months. The Company also ~~performs~~licenses software independently of its interactive devices, in which case it is bundled with software maintenance, and in some cases, subscription services that include access to on-line content, access to replacement parts, and cloud-based applications. The Company’s software subscription services provide access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications.

The Company’s products 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 other 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 ~~upon completion~~based on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of the ~~services.~~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 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 ~~evaluates~~excludes from revenue all taxes assessed by a governmental agency that are both imposed on and concurrent with the ~~criteria outlined~~specific revenue-producing transaction from revenue (for example, sales and use taxes). 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 condensed balance sheets.

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. When pricing is highly variable or uncertain, the Company applies the residual approach to determining SSP by subtracting the SSP of other products or services from the total transaction price to arrive at the SSP for the performance obligations with highly variable or uncertain pricing. When multiple performance obligations in a contract have highly variable or uncertain pricing, the Company allocates the residual value 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, 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 period, 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.

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 condensed balance sheets. Fees for the Company’s products and most of its 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 such contracts, services are expected to be transferred on an ongoing basis for several years after the related payment, and the Company has determined that the contracts generally do not include a significant 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 over their lives. 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 condensed balance sheets in accordance with Accounting Standards ~~Codification (“ASC”) Subtopic 605-45, “Principal Agent Considerations,”~~Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Contract liabilities are reflected in ~~determining whether it is appropriate~~deferred revenue in the accompanying consolidated condensed balance sheets and reflect amounts allocated to ~~record~~performance obligations that have not yet been transferred to the ~~gross amount~~customer related to software maintenance, hardware maintenance, and subscription services. The Company had no material contract assets as of ~~product sales~~September 30, 2020 or December 31, 2019. During the nine months ended September 30, 2020 and ~~related costs or the net amount earned as revenue. Generally, when~~September 30, 2019, the Company ~~is primarily obligated~~recognized $0.9 million and $0.8 million, respectively, of revenue that was included in ~~a transaction, is subject to inventory risk, has latitude in establishing prices and selecting suppliers, or has several but not all of these indicators,~~the deferred revenue ~~is recorded~~balance at January 1, 2019, as adjusted for Topic 606, at the ~~gross amount. If the Company is not primarily obligated and amounts earned are determined using a fixed percentage, a fixed-payment schedule, or a combination~~beginning of the ~~two, the Company generally records the net amounts as revenue earned.~~period.

The Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, or in connection with certain rebate provisions. The Company generally does not allow product returns other than under ~~warranty.~~assurance warranties or hardware maintenance contracts. However, the Company, on a case by case basis, will grant exceptions, ~~mostly for~~most often in cases of “buyer’s remorse” where the ~~VAR’s~~distributor or reseller’s end ~~user~~ customer either did not understand what they were ordering or determined that the product did not meet their ~~specific~~ 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. In addition, rebates are provided to certain customers when specified volume purchase thresholds have been met. 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 2020 related to changes in estimated variable consideration that existed at December 31, 2019.

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, 2020, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was approximately $11.6 million. The Company expects to recognize revenue on approximately 20% of the remaining performance obligations in 2020, 55% in 2021 and 2022, with the remainder 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, for 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.

The Company ~~uses resellers~~disaggregates revenue based upon the nature of its products and ~~distributors~~services and the timing and manner in which it is transferred to ~~sell its products. Resellers’ sale agreements~~the customer. Although all product revenue is transferred to the customer at a point in time, hardware revenue is generally dotransferred 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 from the contract date as measured based upon hours or time incurred while software maintenance, hardware maintenance, and subscription services are generally transferred over 3-5 years from the contract execution date as measured based upon the passage of time.

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 ~~contain any special pricing incentives, right~~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 of ~~return~~the following criteria:

Certain sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the estimated economic benefit period. For those sales commissions that are incremental costs to obtain where the period of amortization would have been recognized over a period that is one year or ~~other post shipment obligations. Distributors’ sale agreements,~~less, the Company 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 ~~hand, generally contain an inventory stock rotation clause, which gives~~assets and other assets, respectively, in the ~~distributor~~accompanying consolidated condensed balance sheets. Total deferred commissions as of September 30, 2020 and December 31, 2019 and the ~~right to rotate its inventory within a specified period~~related amortization for 2019 were less than $0.1 million. No impairment losses were recognized for the nine months ended September 30, 2020 and ~~in accordance to the Company’s current return procedures.~~2019.

The Company has ~~a warranty policy~~not historically incurred any material fulfillment costs that meet the criteria for capitalization.

The Company’s consolidated condensed statements of operations and cash flows for the nine months ended September 30, 2019 were recorded under the prior GAAP, without including the adjustments now required under Topic 606. As such, we have revised these statements to ~~provide 12~~be comparable to ~~36-month~~the September 30, 2020 period which are recorded under Topic 606.

The following table presents the effects of adopting Topic 606 on the Company’s consolidated condensed statement of operations for the three and nine months ended September 30, 2019:

The following table presents the effects of adopting Topic 606 on the Company’s consolidated condensed statement of cash flows for the nine months ended September 30, 2019:

For customers that do not purchase hardware maintenance services, the Company generally provides warranty coverage on projectors ~~displays,~~and accessories, batteries and ~~computers except when sold through a “Premier Education Partner” or sold to certain schools where~~computers. This warranty coverage does not exceed 24 months, and the Company ~~provides 60-month warranty coverage. The Company~~ establishes a liability for estimated product warranty costs, included in other short-term liabilities in the consolidated condensed statements of operations, at the time the related product revenue is ~~recognized if the potential liability is expected to be material.~~recognized. The ~~projected~~ warranty obligation is affected by historical product failure rates and the related use of materials, labor costs and freight incurred in correcting any product failure. Should actual product failure rates, use of materials, or other costs differ from the Company’s estimates, additional warranty liabilities could be required, which would reduce ~~the Company’s overall~~its gross profit.

~~The Company offers sales incentives where the Company via offering discounted products~~RESEARCH AND DEVELOPMENT EXPENSES

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

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to ~~Company’s resellers and distributors that are redeemable only if the resellers and distributors achieve specified cumulative levels~~recognition of revenue ~~which were formally agreed to~~and expenses in ~~their reseller~~different periods for financial and ~~distributor agreements through an executed addendum. The resellers~~tax accounting purposes and ~~distributors have to submit~~are measured using currently enacted tax rates and laws. In addition, a ~~request for the discounted products. Thevalue~~deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of ~~the award products as compared to the value of the transactions necessary to earn the award~~a deferred tax asset will not be realized, a valuation allowance is generally insignificant in relation to the value of the transactions necessary to earn the award. The Company estimates and records the cost of the products related to the incentive as revenues based on analyses of historical data.recognized.

The Company estimates the fair value of each ~~share-based compensation~~stock option award at the grant date by using the Black-Scholes option pricing model. The fair value ~~determined~~of each restricted stock unit award is equal to the market value of the underlying shares at the grant date. The fair value determination represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. ~~As share-based compensation expense is recognized based on awards ultimately expected to vest, excess tax benefits, if any, are recognized as an addition to paid-in capital.~~

In May 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” The new guidance provides new criteria for recognizing revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance requires expanded disclosures to provide greater insight into both revenue that has been recognized and revenue that is expected to be recognized in the future from existing contracts. Quantitative and qualitative information will be provided about the significant judgments and changes in those judgments that management made to determine the revenue that is recorded. Since the Company is an Emerging Growth Company, the ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Earlier application is permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently assessing the provisions of the guidance and has not determined the impact of the adoption of this guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). 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. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. Since the Company is an Emerging Growth Company, the ASU is effective for annual reporting periods beginning after December 15, ~~2020,~~2021, and interim periods within annual reporting periods beginning after December 15, ~~2021.~~2022. Earlier application is permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements.

In ~~February 2017,~~June 2016, the FASB issued ASU ~~2017-04~~No. 2016-13, “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 ~~simplify how all entities assess goodwill~~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 ~~by eliminating Step 2 from~~model for most financial assets and certain other instruments. Since the ~~goodwill impairment test. As amended,~~Company is an Emerging Growth Company, the ~~goodwill impairment test~~ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within that fiscal year. The Company is currently evaluating the impact that this standard will ~~consist of one step comparing~~have, if any, on its financial statements.

In December 2019, the ~~fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge~~FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740). The new guidance modifies the requirements for the ~~amount~~timing of adoption of enacted change in tax law. The effects of changes on taxes currently payable or refundable for the current year must be reflected in the computation of annual effective tax rate. Since the Company is an Emerging Growth Company, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact that this standard will have, if any, 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 ~~which~~removing certain conditions in ASC 815-40-25. Since the ~~carrying amount exceeds~~Company is an Emerging Growth Company, the ~~reporting unit’s fair value. The~~ ASU is effective for annual reporting periods beginning after December 12, 2019. The new pronouncement has no impact to the Company’s procedure in measuring the fair value of goodwill and will continue to perform goodwill impairment test through both quantitative and qualitative assessment.

~~In March 2019, the Company adopted ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements~~15, 2023. Earlier application is permitted for Fair Value Measurement.” The new guidance modifies the disclosure requirements for fair value measurement, most notably eliminating the need to disclose the amount and reasons for transfers between Level 1 and Level 2, the policy for timing of transfers between levels, and the valuation processes for Level 3 measurements. Certain disclosure modifications are not yet applicable to the Company as an emerging growth company. Those include the requirements added to Topic 820, such as enhanced disclosures regarding uncertainty, providing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 measurements, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

~~In June 2018, the FASB issued ASU 2018-07,~~~~Improvements to Non-employee Share-Based Payment Accounting~~to simplify the accounting of share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of FASB ASC Topic 718,~~Compensation - Stock Compensation~~~~, to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations. The ASU supersedes the guidance in Subtopic 505-50,~~~~Equity – Equity-Based Payments to Non-Employees.~~Awards to nonemployees are measured by estimating the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. The guidance is effective for calendar-year public business entities in annualfiscal periods beginning after December 15, ~~2018, and interim periods within those years.~~2020. The Company ~~adopted~~is currently evaluating the impact that this ~~pronouncement in the first quarter of 2019 and it did not~~standard will have ~~a material impact~~ on its ~~consolidated condensed~~ financial statements.

There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.

These consolidated condensed financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company had an accumulated deficit of $38,932,954 and a working capital surplus of $25,055,980 as of September 30, 2020. The long-term continuation of the Company as a going concern is dependent upon ~~the continued financial support from its shareholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the~~ attainment of profitable operations. AsDuring June, July and September of ~~September 30, 2019,~~2020, the Company ~~had an accumulated deficit~~raised significant capital which was primarily used for the acquisition of ~~$25,350,392~~Sahara and ato meet working capital ~~deficit of $5,166,264. During~~requirements. The Company has the ~~nine months ended September 30, 2019, the Company incurred a net loss of $6,144,121 and net cash used in operations was $6,280,556. These factors raise substantial doubt regarding the Company’s~~ ability to continue as a going concern within one year after the issuance date of these consolidated condensed financial statements. These consolidated condensed financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is seeking to obtainraise additional funds ~~for operations~~ through public or private sales of equity orand debt securities or ~~from bank or other loans.~~leveraging its asset based lending agreement.

The ~~acquisition~~acquisitions described below ~~was~~were accounted for as a business ~~combination~~combinations which requires, among other things, that assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition date on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired would be recorded as goodwill.

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 of 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 expands the Company’s geographic footprint, industry verticals served, and enhances the Company’s technology and product offerings.

As consideration for the purchase of Sahara, the Company transferred $74.2 million to the Sellers, including $44.9 million in cash (net of $6.0 million in cash acquired) and $29.3 million in convertible preferred stock. The Company issued 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”). No contingent consideration was issued.

The estimated preliminary fair value of the preferred shares issued was approximately $18.2 million and $11.1 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 11.

The transaction was accounted for using the acquisition method, and as a result, assets acquired and liabilities assumed are recorded at their estimated fair values in addition to any consideration transferred to the Sellers at the acquisition date. Determining the fair value of assets acquired and liabilities assumed and the Series B Preferred Stock and Series C Preferred Stock 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 Series B Preferred Stock, and the Series C Preferred Stock. Any excess consideration over the fair values of the assets acquired and liabilities assumed is 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 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 will result in a reduction in revenue that otherwise would have been recognized in periods subsequent to the acquisition date.

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 in periods subsequent to the acquisition date.

The Company has not yet finalized its evaluation and determination of the fair value of certain assets acquired and liabilities ~~assumed. The Company~~assumed, and has recorded provisional amounts based on initial measurements using currently available information. The Company has not received a final valuation report from the independent valuation expert for acquired intangible assets, as well as the valuation of the preferred shares consideration. In addition, the Company is still gathering information about certain items including income taxes and deferred income tax assets ~~acquired~~ and liabilities, ~~assumed.~~based on facts that existed as of the date of acquisition. The provisional amounts are subject to change and could result in changes to goodwill, which could be significant. The Company will finalize the amounts recognized no later than one year from the acquisition date.

~~On March 12, 2019,~~The following table summarizes the ~~Company entered into an asset purchase agreement with MRI, based in Miami, Florida. MRI is engaged in the business~~preliminary estimated fair values of ~~developing, selling and distributing science, technology, engineering and math (STEM), robotics and programming solutions to the global education market. The Company purchased~~ the net assets ~~of MRI in exchange for 200,000 shares~~acquired and liabilities assumed, and the preliminary estimate of the ~~Company’s Class A common stock~~fair value of consideration paid:

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:

Goodwill is primarily attributable to synergies expected from the acquisition and the assembled workforce. The Company incurred a total of $0.2 million in merger related costs for the acquisition and expensed all such costs incurred during the period in which the service was received. Merger related costs are included in general and administrative expenses in the Consolidated Condensed Statement of Operations and Comprehensive Loss. The results of operations of Sahara since the acquisition are included in the Consolidated Condensed Statement of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020. Revenue and net loss attributable to Sahara in the period from the acquisition date of September 24, 2020 through September 30, 2020 were approximately $1.1 million and $0.3 million, respectively.

The Company is also required to present a pro forma balance sheet assuming the transaction was consummated on the date of the latest balance sheet included in the filing and a ~~$70,000 note payable.~~pro forma statement of operations assuming the transaction was consummated at the beginning of the fiscal year presented and carried forward through any interim period presented. However, due to the limited time since the date of acquisition, it is impracticable for the Company to gather the necessary information for this disclosure. The Company intends to disclose the pro forma information on a future Form 8-K filing with the SEC.

The Company is currently assessing its aggregation of operating segments for the newly combined entity on a go-forward basis.

On April 17, 2020, the Company acquired the assets, and assumed certain liabilities of MyStemKits and STEM Education Holdings, Pty, an Australian corporation (“STEM”) which is the sole shareholder of MyStemKits, for consideration of $450,000, after working capital adjustments of $150,000. Consideration included $100,000 paid in cash at closing with the balance payable in the form of a $350,000 purchase note payable in four equal installments of $87,500 (the “Installment Payments”) on July 31, 2020, October 31, 2020, January 31, 2021 and April 30, 2021. Further, acknowledging the ongoing COVID-19 pandemic, the Letter Agreement states that potential adjustments may be made to the Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits is materially below budget.

The following table summarizes the fair values of the net assets acquired and the fair value of consideration paid:

Accounts receivable consisted of the following at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Inventories consisted of the following at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

~~During the nine months ended September 30, 2019 and 2018, no obsolete inventories were written off.~~

Prepaid expenses and other current assets consisted of the following at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Property and equipment consisted of the following at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded depreciation expense of $10,947 and $20,500, ~~and $47,944,~~ respectively.

Intangible assets and goodwill consisted of the following at September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded amortization expense of ~~$668,543~~$747,232 and ~~$582,447,~~$668,543, respectively.

The following is a summary of our debt atas of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

On March 22, 2019, the Company entered into a securities purchase agreement with Lind ~~Global Marco Fund, LP (the “Investor”)~~ that contemplates a $4,000,000 working capital ~~financing for Boxlight Parent and its subsidiaries.~~financing. The investment is in the form of a $4,400,000 principal amount convertible secured Boxlight Parent note, payable at an 8% interest rate, compounded monthly with a maturity date of 24 months. The note is convertible at the option of ~~the Investor~~Lind into the Company’s Class A voting common stock at a fixed conversion price of $4.00 per share. The Company ~~will have~~has the right ~~to force the Investor~~ to convert up to 50% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades above $8.00 for 30 consecutive days; and convert up to 100% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades above $12.00 for 30 consecutive days. A commitment fee in the amount of $125,000 was paid to Lind. The Company paid Lind $275,428 for closing fees by issuing 108,091 shares of Class A common stock. As of September 30, 2020 and December 31, 2019, the Company had paid principal of $2,200,000 and $977,778, respectively, interest of $143,407 and $106,643, respectively, through issuance of Class A common stock to Lind.

On December 13, 2019, the Company entered into a second securities purchase agreement with Lind that contemplates a $1,250,000 working capital financing. The investment is in the form of a $1,375,000 principal amount convertible secured Boxlight Parent note, payable at an 8% interest rate, compounded monthly with a maturity date of 24 months. The note is convertible at the option of Lind into the Company’s Class A common stock at a fixed conversion price of $2.50 per share. The Company has the right to convert up to 50% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades above $5.00 for 30 consecutive days; and convert up to 100% of the outstanding amount of the note if the volume weighted average closing price of our Class A common stock trades above $6.25 for 30 consecutive days. A commitment fee in the amount of $43,750 was paid to Lind. The Company paid Lind $93,022 for closing fees by issuing 69,420 shares of Class A common stock. As of September 30, 2020 and December 31, 2019, the Company paid principal of $152,778 and $0, respectively, and interest of $64,582 and $0, respectively, through issuance of Class A common stock to Lind.

On February 4, 2020, the Company and Lind entered into a third securities purchase agreement pursuant to which the Company is to receive on February 6, 2020 $750,000 in exchange for the issuance to Lind of (1) an $825,000 convertible promissory note, payable at an 8% interest rate, compounded monthly, (2) certain shares of restricted Class A common stock valued at $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 $26,250. The Note matures over 24 months, with repayment to commence on August 4, 2020, after which time the Company will be obligated to make monthly payments of $45,833, plus interest. Interest shall accrue during the first six months of the note, after which time the interest payments, including accrued interest will be payable monthly in either conversion shares or in cash. A commitment fee in the amount of $26,250 was paid to Lind, along with legal fees in the amount of $15,000. The Company paid Lind $60,000 for closing fees by issuing 44,557 shares of Class A common stock. As of September 30, 2020, the Company paid principal of $91,667 and interest of $38,749 through issuance of Class A common stock to Lind.

On September 21, 2020, the Company and Lind entered into a fourth securities purchase agreement pursuant to which the Company received on September 22, 2020 $20,000,000 in exchange for the issuance to Lind of (1) a $22,000,000 convertible promissory note, payable at an 4% interest rate, compounded monthly, (2) 310,399 shares of restricted Class A common stock valued at $500,000, 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 $400,000. The Note matures over 24 months, with repayment to commence on November 22, 2020, after which time the Company will be obligated to make monthly payments of $1,000,000, plus interest. Interest will accrue during the first two months of the note, after which time the interest payments, including accrued interest will be payable monthly in either conversion shares or in cash. A commitment fee in the amount of $400,000 was paid to Lind, along with legal fees in the amount of $20,000. The Company paid Lind $500,000 for closing fees by issuing 310,399 shares of Class A common stock.

As of September 30, 2020, the outstanding principal net of debt issuance costs and discounts, and accrued interest owed to Lind were $20,965,300 and $33,059, respectively. As of December 31, 2019, the outstanding principal net of debt issuance cost and discount, and accrued interest owed to Lind were ~~$3,915,674~~$4,185,866 and ~~$178,960,~~$5,425, respectively. Principal of ~~$2,933,332~~$13,453,408 is due within one year from September 30, ~~2019.~~2020.

On August 15, 2017, Boxlight Inc., and Genesis Collaboration, LLC (“Genesis”) entered into a 12-month term account sale and purchase agreement with Sallyport Commercial Finance, LLC (“Sallyport”). Pursuant to the agreement, Sallyport agreed to purchase 85% of the eligible accounts receivable of the Company with a right of recourse back to the Company if the receivables are not collectible. This agreement requires a minimum monthly sales volume of $1,250,000 with a maximum facility limit of $6,000,000. Advances against this agreement accrue interest at the rate of 4%4.00% in excess of the highest prime rate publicly announced from time to time with a floor of 4.25%. In addition, the Company is required to pay a daily audit fee of $950 per day. The Company granted Sallyport a security interest in all of the assets of Boxlight Inc. and ~~Genesis’ assets.~~Genesis. 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 Commercial Finance, LLC (“Sallyport”). Pursuant to the agreement, 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 are not collectible. This agreement requires a minimum monthly sales volume of $1,250,000 with a maximum facility limit of $6,000,000. Advances against this agreement accrue 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 is required to pay a daily audit fee of $950 per day. The Company granted Sallyport a security interest in all of the assets of Boxlight Inc. and Genesis.

As of September 30, ~~2019,~~2020, outstanding principal and accrued interest were ~~$4,384,536~~$0 and $0, respectively. For the nine months ended September 30, ~~2019,~~2020, the Company incurred interest expense of ~~$573,796.~~$499,671.

On ~~September 20, 2018,~~May 22, 2020, the Company ~~entered into~~received loan proceeds of $1,008,575 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 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 eight-week period prior to which the PPP would otherwise be repayable. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during the eight-week period.

The unforgiven portion of the PPP loan is payable over two years at an ~~agreement~~interest rate of 1%, with a deferral of payments for the ~~purchase and sale of future receipts with Radium Capital. Pursuant to the agreement, Radium provided proceeds of $1,000,000 to the~~first six months. The Company ~~based on expected future revenue. The cost of~~is using the proceeds ~~was 26% of~~for purposes consistent with the loan amount plus a $10,000 origination fee. The origination fee was recorded as original issue discount and fully amortized due to the short-term nature of the agreement. In order to repay the debt, the Company made weekly payments of $26,636 that commenced on October 3, 2018 and continued until August 28, 2019. PPP.

As of September 30, ~~2019, the~~2020, outstanding principal and accrued interest were $0$1,008,575 and ~~$0,~~$3,698, respectively.

On ~~September 20, 2018,~~April 17, 2020, the Company issued a note to STEM Education Holdings, the sole shareholder of MyStemKits, in the amount of $350,000 bearing a 7% interest rate. The note was issued as part of the purchase price pursuant to the asset purchase agreement (“MyStemKits Asset Purchase Agreement”). The principal owed under the MyStemKits Asset Purchase Agreement is payable in four equal installments of $87,500 (the “Installment Payments”). Further, acknowledging the ongoing COVID-19 pandemic, on April 17, 2020, the Company and the sellers entered into ~~an unsecured promissory~~a letter agreement which stated that potential adjustments may be made to the Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of MyStemKits continues to be materially below budget. The Company failed to make the July 31, 2020 payment and is presently in negotiations with the note ~~agreement~~holder for ~~£98,701 with Whitebirk Finance Limited. The note bears interest at~~purposes of determining a ~~rate~~suitable adjustment as a result of ~~5% and matures on August 31, 2019. This note was executed to settle outstanding accounts payable between Cohuba and Whitebirk related to inventory purchases.~~the COVID-19-related sales decline. As of September 30, ~~2019, the~~2020, outstanding principal and accrued interest due under this note were $0$350,000 and ~~$0,~~$11,297, respectively.

On May 16, 2018, the Company entered into an unsecured promissory note agreement for $500,000 with Harbor Gates Capital. The note bore an interest at the rate of 7% per annum and matured on February 16, 2019. In addition, the Company issued 5,715 shares of its Class A common stock valued at $56,236 to the lender in lieu of payment of origination fees. The note was recorded at original issue discount and fully amortized because of its short-term nature. The Company failed to pay the note on the maturity date. As such on March 14, 2019, the note was converted into 133,750 shares of Class A common stock including the accrued interest valued at $2.86 per share.

On June 22, 2018, the Company issued a note to Darin and Silvia Beamish, the previous 100% shareholders of Qwizdom, in the amount of $656,000 bearing an 8% interest rate. The note was issued as a part of the purchase price pursuant to a stock purchase agreement. The principal and accrued interest of the $656,000 note is due and payable in 12 equal quarterly ~~payments.~~installments. The first quarterly payment was due September 2018 and subsequent quarterly payments are due through June 2021. Principal and accrued interest become due and payable in full upon the completion of a public offering of Class A common stock or private placement of debt or equity securities for $10,000,000 or more. As of ~~September 30, 2019, outstanding principal and accrued interest under this note were $381,563 and $0, respectively. As of~~ December 31, ~~2018,~~2019, outstanding principal and accrued interest under this agreement was ~~$601,333~~$381,563 and ~~$12,126,~~$7,334, respectively. ~~Principal~~The note was paid in ~~the amount~~full on August 14, 2020 as a result of ~~$218,668 is due within~~ a ~~year from September 30, 2019.~~public offering completed in June 2020.

On March 12, 2019, the Company purchased the ~~MRI~~ net assets of MRI for 200,000 shares of the Company’s Class A common stock and a $70,000 note payable. As of ~~September 30,~~December 31, 2019, outstanding principal and accrued interest under this ~~agreement~~note were $17,500 and $206, respectively. The note was ~~$35,000 and $0, respectively.~~paid in full on March 31, 2020.

On May 21, 2014, the Company entered into a line of credit agreement (the “LCC Line of Credit”) with Logical Choice ~~Corporation-Delaware~~Corporation, a-Delaware corporation (“LCC-Delaware”), the former sole member of Genesis. The LCC Line of Credit allowed the Company to borrow up to $500,000 for working capital and business expansion. The funds when borrowed accrued interest at the rate of 10% per annum. Interest accrued on any advanced funds was due monthly and the outstanding principal and any accrued interest were due in full on May 21, 2015. In May 2016, the maturity date was extended to May 21, 2018. The LCC Line of Credit is currently in default. The assets of Genesis have been pledged, but subordinated to Sallyport financing, as a security interest against any advances on the line of credit. As of ~~September 30,~~December 31, 2019, outstanding principal and accrued interest under this ~~agreement was~~note were $54,000 and ~~$25,355,~~$26,716, respectively. ~~As of December 31, 2018, outstanding principal and accrued interest under this agreement~~The note was ~~$54,000 and $21,316, respectively.~~

On January 16, 2015, the Company issued a note to James Mark Elliott, the Company’s Chief Executive Officer, in the amount of $50,000. The note, as later amended, was due on December 31, ~~2018~~2019 and bears interest at an annual rate of 10%, compounded monthly. The note is convertible into the Company’s common stock at the lesser of (i) $6.28 per share, (ii) a discount of 20% to the stock price if the Company’s common stock is publicly traded, or (iii) if applicable, such other amount negotiated by the Company. The note holder may convert all, but not less than all, of the outstanding principal and interest due under this note. On July 3, 2018, Mr. Elliott and the Company amended the note to eliminate the conversion provision of the note. As of ~~September 30,~~December 31, 2019, outstanding principal and accrued interest under this note were ~~$50,000~~$23,548 and ~~$23,548,~~$593, respectively. The note ~~is currently~~was paid in ~~default. As of December 31, 2018, outstanding principal and accrued interest under this note were $50,000 and $19,808, respectively.~~full on July 17, 2020.

The Company ~~had~~ issued warrants that contain net cash settlement provisions or do not have fixed settlement provisions because their conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. The Company concluded that the warrants should be accounted for as derivative liabilities. In determining the fair value of the derivative liabilities, the Company used the Black-Scholes option pricing model at September 30, ~~2019~~2020 and ~~2018:~~2019:

The following table shows the change in the Company’s derivative liabilities rollforward for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

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

The Company’s articles of incorporation, as amended on September 18, 2020, 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 per share; 2) ~~1,200,000~~1,586,620 shares of voting Series B preferred stock, with a par value of $0.0001 per share; 3) ~~270,000~~1,320,850 shares of voting Series C preferred stock, with a par value of $0.0001 per share; and 4) ~~48,280,000~~46,842,530 shares of “blank check” preferred stock to be designated by the Company’s Board of Directors.

As stated in Note 3, 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 per share and pays a dividend out of the earnings and profits of the Company at the rate of 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 which was the closing price of BOXL’s Class A common stock on the Nasdaq stock market on September 25, 2020 (the “Conversion Price”) 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) days prior written notice to the Holders, for a redemption price, payable in cash, equal to sum of (a) Ten ($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.

The Series B Preferred Stock has been recorded at its estimated fair value on the date of issuance of approximately $18.2 million, which includes the conversion and redemption features as they have not been bifurcated from the host instruments.

The Company ~~issued 1,000,000 shares~~determined that the Series C Preferred Stock included a beneficial conversion feature with an intrinsic value of approximately $0.4 million. The beneficial conversion feature has been separately recorded as a component of Additional Paid-in Capital at its intrinsic value. The Series C Preferred Stock has been recorded at its estimated fair value on the date of issuance (less the intrinsic value of the beneficial conversion feature described above) of approximately $10.7 million, which includes the redemption features as they have not been bifurcated from the host instrument.

As the redemption features in the Series B ~~preferred stock for the acquisition of Genesis~~Preferred Stock and ~~270,000 shares of~~ Series C ~~preferred stock for~~Preferred Stock are not solely with the ~~acquisition of Boxlight Group. Upon the completion~~control of the ~~initial public offering (“IPO”) in November 2017, all shares of~~Company, the Company has classified the Series B Preferred Stock and Series C ~~preferred stock related to~~Preferred Stock in temporary equity on the ~~acquisitions of Genesis and Boxlight Group were converted to Class~~Company’s consolidated balance sheet.

~~Upon completion~~At the time of the Company’s ~~IPO, an aggregate of~~initial public offering, 250,000 shares of the Company’s non-voting convertible Series A preferred stock were issued to Vert Capital for the acquisition of Genesis. All of the Series A preferred stock ~~shall be converted~~was convertible into 398,406 shares of Class A common stock. On August 5, 2019, 82,028 of these preferred shares were converted into 130,721 shares of Class A common stock.

The Company’s common stock consists ~~of:~~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 vote per share while Class B common stock has no 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 shall automatically convert into shares of Class A common stock. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had ~~10,849,966~~50,871,711 and ~~10,176,433~~11,698,697 shares of Class A common stock issued and outstanding, respectively. No Class B shares were outstanding at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

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 shares of Class A common stock to the underwriter at $0.75 per share. Gross proceeds from the issuances were $11,499,750. Net proceeds were $10,593,937 after deducting underwriting discounts and offering expenses of $905,814.

On July 31, 2020, the Company issued 17,250,000 shares of 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 $32,025,000 after deducting underwriting discounts and offering expenses of $2,475,000.

During the ~~nine months~~quarter ended March 31, 2020, the Company issued 787,489 shares of Class A common stock in lieu of $1,133,515 in principal and interest payments due in relation to notes payable to Lind Global. In addition, the Company issued 44,557 shares of Class A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $49,013 to Lind Global.

During the quarter ended June 30, 2020, the Company issued 1,552,567 shares of Class A common stock in lieu of $1,158,854 in principal and interest payments due in relation to notes payable to Lind Global. In addition, the Company issued 35,910 shares of Class A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $30,358 to Lind Global.

During the quarter ended September 30, ~~2019,~~2020, the Company issued ~~14,380~~1,407,364 shares of Class A common stock in lieu of $4,033,869 in principal and interest payments due in relation to notes payable to Lind Global. In addition, the Company issued 310,399 shares of Class A common stock in lieu of payment of the closing fees of the convertible debt with an aggregate amount of $437,663 to Lind Global.

During the quarter ended March 31, 2020, the Company entered into an agreement with a related party, Everest Display, Inc., to convert $2.0 million in accounts payable owed in exchange for 1,333,333 shares of Class A common stock with an aggregate value of $566,667 resulting in the Company recording a $1,433,333 gain from settlement of liabilities.

During the quarter ended June 30, 2020, the Company entered into an agreement with a related party, Everest Display, Inc., to convert $1.0 million in accounts payable owed in exchange for 869,565 shares of Class A common stock with an aggregate value of $702,608 resulting in the Company recording a $297,392 gain from settlement of liabilities.

During the quarter ended March 31, 2020, the Company issued 7,111 shares of Class A common stock in lieu of payment for services with an aggregate amount of ~~$36,000.~~$8,000.

On ~~March 12, 2019,~~April 17, 2020, the Company issued ~~200,000~~142,857 shares to Stemify at a purchase price of ~~common stock to the shareholder of Modern Robotics, Inc. valued at $2.50~~$0.70 per share ~~related to the asset purchases agreement.~~for total proceeds of $100,000.

On ~~March 14, 2019,~~June 30, 2020, the Company issued ~~133,750~~52,241 shares to Michael Pope as part of ~~common~~his stock ~~valued at $2.86 per share to Harbor Gates Capital to settle~~compensation as the ~~$500,000 outstanding convertible note including accrued interest.~~

Chief Executive Officer. The shares vested during the second quarter of the year. On ~~March 22, 2019,~~September 30, 2020, the Company issued ~~71,766~~an additional 46,621 shares ~~of common stock valued at $2.78 per share in lieu of payment of the closing fees of the convertible debt issued~~ to ~~Lind Global.~~

~~On August 6, 2019, the Company issued 122,916 shares of common stock valued at $2.40 per share~~Mr. Pope as part of ~~executive~~his stock compensation.

~~On August 6, 2019,~~ The shares vested during the ~~company issued 130,721 shares~~third quarter of ~~common stock to convert 82,028 shares of preferred stock issued to Vert Capital for~~ the ~~acquisition of Genesis.~~year.

No options to purchase common stock were exercised during the nine months ended September 30, ~~2019.~~2020.

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 ~~plan is~~Company’s 2014 Equity Inventive Plan, as amended (the “Equity Incentive Plan”), was 2,690,438 shares. Grants made under ~~this plan~~the Equity Incentive Plan must be approved by the Company’s Board of Directors. On April 15, 2020, the Equity Incentive Plan was amended, whereby the Board of Directors approved increasing the shares available for issuance under the Equity Incentive Plan by 3,700,000 shares. The Company obtained shareholder approval of the aforementioned action at the Company’s annual meeting, which was held on September 4, 2020. The number of underlying shares available, as amended, was 6,390,438. As of September 30, ~~2019,~~2020, the Company had ~~461,966~~issued all of the shares reserved for issuance under the ~~plan.~~Equity Incentive Plan and, as such, there no longer shares available for issuance under the Equity Incentive Plan.

Under our stock option program, pursuant to the Equity Incentive Plan, an employee ~~receives~~may receive 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 (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.

Following is a summary of the option activities during the nine months ended September 30, ~~2019:~~2020:

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, ~~2019,~~2020, the options had an intrinsic value of approximately ~~$0.9~~$3.0 million.

On January 2, ~~2019,~~2020, the Company granted 100,000 stock options each, for a total of 300,000 options to purchase common stock, to its President, Chairman and Chief Executive Officer, its Chief Commercial Officer and its Chief Operating Officer; such options have an exercise price of $1.30 per share, and vest monthly over one-year period. The expiration date of these options is five years from the grant date. These options had an aggregated fair value of approximately $268,512 on the grant date that was calculated using the Black-Scholes option-pricing model.

On January 13, 2020, the Company granted 50,000 stock options to Mark Elliott as part of his new employment agreement as the Company’s Chief Commercial Officer with an exercise price of ~~$1.30~~$1.20 per share, which options vest monthly over one-year period. The expiration date of these options is five years from the grant date. These options had an aggregated fair value of approximately ~~$186,411~~$46,700 on the grant date that was calculated using the Black-Scholes option-pricing model.

On March 12, 2019, the Company issued 20,000 stock options to Steve Barker, Vice President of Robotics at Boxlight with an exercise price of $2.50 per share. The expiration date of these options is ten years from the grant date. These options had an aggregate fair value of approximately $31,436 on the grant date.

~~On June 22, 2019, the Company granted 60,000 stock options to employees from the Qwizdom acquisition with an exercise price of $2.85 per share vesting annually over four years commencing June 22,~~April 15, 2020, ~~as part of their compensation. The expiration date of these options is ten years from grant date. These options have an aggregate fair value of approximately $106,861on the grant date.~~

~~On August 6, 2019,~~ the Company granted an aggregate of ~~131,250~~2,550,000 stock options in total to ~~each of~~ its ~~directors~~employees with an exercise price of ~~$2.40~~$0.70 per share vesting monthly over ~~one year.~~four years. The expiration date of these options is five years from the grant date. These options had an aggregated fair value of approximately ~~$146,380~~$1,503,645 on the grant date.

On April 20, 2020, the Company granted an aggregate of 20,000 stock options in total to a new employee with an exercise price of $0.67 per share vesting quarterly over four years. The expiration date ~~that was calculated using~~of these options is five years from the ~~Black-Scholes option-pricing model.~~grant date. These options had an aggregated fair value of approximately $11,264 on the grant date.

On September 17, ~~2019,~~2020, the Company granted ~~32,000~~an aggregate of 16,000 stock options in total to ~~employees from the EOS acquisition~~an employee with an exercise price of ~~$2.09~~$1.46 per share vesting annually over four ~~years commencing September 17, 2020 as part of their compensation.~~years. The expiration date of these options is ten years from the grant date. These options ~~have~~had an ~~aggregate~~aggregated fair value of approximately ~~$41,811on~~$20,135 on the grant date.

Variables used in the Black-Scholes option-pricing model for options granted during the nine months ended September 30, ~~2019~~2020 include: (1) discount rate of ~~1.54 - 2.47%~~0.29% – 1.61%, (2) expected life, using a simplified method, of ~~3 to 6~~3- 4 years, (3) expected volatility of ~~69 - 70%~~136-148%, and (4) zero expected dividends.

Under our stock option program, pursuant to the Equity Incentive Plan, the Company grants restricted stock units (“RSUs”) to certain employees and non-employee directors. Upon granting the RSUs, the Company records 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 vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement.

Following is a summary of the RSU activities during the nine months ended September 30, 2020:

On March 20, 2020, the Company granted an aggregate of 186,484 RSUs to Michael Pope. These RSUs vest over one year, and had an aggregated fair value of approximately $76,458 on the grant date.

On June 30, 2020, the Company granted an aggregate of 108,696 RSUs to new board members. These RSUs vest over one year, and had an aggregated fair value of approximately $100,000 on the grant date.

On September 18, 2020, the Company granted an aggregate of 34,483 RSUs to a new employee. These RSUs vest over four years, and had an aggregated fair value of approximately $50,000 on the grant date.

On September 25, 2020, the Company granted an aggregate of 2,725,400 RSUs to its new employees retained in relation to the Sahara acquisition. These RSUs vest over four years, and had an aggregated fair value of approximately $4,524,164 on the grant date.

Following is a summary of the warrant activities during the nine months ended September 30, ~~2019:~~2020:

~~During the nine months ended September 30, 2019,~~On April 20, 2020, the Company ~~issued 60,827~~granted 20,000 warrants to ~~Dynamic Capital,~~Ryan Legudi, the managing director of Stemify, as part of his compensation with an exercise price of $0.70 per share, which warrants ~~were issued in accordance with~~vest quarterly over four-year period. The expiration of these options is five years from the ~~terms~~grant date. The warrants had an aggregated fair market value of approximately $16,444 on the ~~warrant agreement that required the issuance of additional shares when the Company issues shares to either raise additional capital or complete an acquisition.~~grant date.

Variables used in the Black-Scholes option-pricing model for warrants granted during the nine months ended September 30, 2019 include: (1) discount rate of 2.45 - 2.52% (2) expected life of 0.78 – 0.81 years, (3) expected volatility of 74%, and (4) zero expected dividends.

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded the following stock compensation in general and administrative expense:

As of September 30, ~~2019,~~2020, there was approximately ~~$1.5~~$6.6 million of unrecognized compensation expense related to unvested options, restricted stock units, and warrants, which will be amortized over the remaining vesting period. Of that total, approximately ~~$0.2~~$0.6 million is estimated to be recorded as compensation expense in the remaining three months of ~~2019.~~2020.

On November 30, 2017, the Company entered into a management agreement with Dynamic Capital, LLC, a Nevada limited liability company owned by the AEL Irrevocable Trust and managed by Adam Levin (“Dynamic Capital”). Pursuant to the agreement, Dynamic Capital was to perform consulting services for the Company relating to, among other things, sourcing and analyzing strategic acquisitions and introductions to various financing sources. In consideration for its services, Dynamic Capital was to receive a management fee payable in cash equal to 1.125% of total consolidated net revenues for the fiscal years ended December 31, 2017 and 2018, payable in monthly installments. The annual fee is subject to a cap of $750,000 in each of 2017 and 2018. At its option, Dynamic Capital may defer payment until the end of each year and receive payment in the form of shares of Class A common stock of the Company. As of September 30, 2019, and December 31, 2018, the Company had a payable to Dynamic Capital $0 and $425,619, respectively.

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, President and Director, Michael Pope. The Management Agreement is separate and apart from Mr. Pope’s employment agreement with the ~~Company’s~~Company. The Management Agreement, effective as of the first day of the same month that Mr. Pope’s employment with the Company ~~shall terminate,~~terminates, and, for a term of 13 months thereafter, Mr. Pope ~~shall~~will 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% of the consolidated net revenues of the Company, payable in monthly installments, not to exceed $250,000 in any calendar year. At his option, Mr. Pope may defer payment until the end of each year and receive payment in the form of shares of the Company’s Class A common ~~stock of the Company.~~stock.

Everest Display Inc. (“EDI”), an affiliate of the Company’s major shareholder K-Laser Technology, Inc., is a major supplier of products to the Company. For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company had purchases of ~~$855,947~~$339,267 and ~~$3,296,797,~~$855,947, respectively, from EDI. For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company had sales of ~~$37,360~~$35,654 and ~~$18,546,~~$37,360, respectively, to EDI. The Company entered into agreements with EDI during the first and second quarters of 2020, to convert a total of $3.0 million in accounts payable owed in exchange for 2,202,898 shares of common stock valued at $1,269,275 resulting in the Company recording a $1,730,725 gain from settlement of liabilities.

As of September 30, ~~2019,~~2020, and December 31, ~~2018,~~2019, the Company had accounts payable of ~~$5,077,670~~$2,066,848 and ~~$5,491,616,~~$5,037,569, respectively, to EDI.

The Company leases ~~three~~four offices under non-cancelable lease agreements. The leases provide that the Company pays ~~only a~~ monthly rental ~~and is not responsible for taxes, insurance or maintenance expenses~~fees related to the ~~property.~~properties. Future minimum lease payments of the Company’s operating leases with a term over one year subsequent to September 30, ~~2019~~2020 are as follows:

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, aggregate rent expense was ~~$312,910~~$350,836 and ~~$216,466~~$312,910 respectively.

Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases.

The Company’s revenues were concentrated among ~~few~~three significant customers for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

The loss of one of the above significant ~~customer~~customers or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition.

The Company’s purchases were concentrated among ~~a few~~two vendors for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

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

On October 1, ~~2019,~~2020, the Company granted an aggregate of ~~207,000 stock options~~20,000 RSUs to ~~its employees with~~a new employee. These RSUs vest over four years, and had an ~~exercise price~~aggregated fair value of ~~$1.84 per share, which options vest quarterly in equal installments over a period of four years. The expiration date of these options is five years from~~approximately $37,000 on the grant date.

On October 5, 2020, the Company issued 39,597 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate amount of $50,722.

On October 19, 2020, the Company granted an aggregate of 18,634 RSUs to a new employee. These RSUs vest over four years, and had an aggregated fair value of approximately $30,000 on the grant date.

On October 22, 2020, the Company issued 180,812 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate amount of $252,593.

On November 5, 2020, the Company issued 42,015 shares of Class A common stock in lieu of principal and interest payment of notes payable with an aggregate amount of $50,417.

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

In addition to historical information, this Form 10-Q may contain forward-looking statements relating to Boxlight Corporation. All statements, trend analyses and other information relative to markets for our products and trends in revenue, gross margins and anticipated expense levels, as well as other statements including words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, “trend” “intend”, and other similar expressions, constitute forward-looking statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those factors described below under “Factors That May Affect Future Operations”, and that actual results may differ materially from those contemplated by such forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

We are ~~an educational technology company that is seeking to become~~ a ~~world~~ leading ~~innovator and integrator~~provider of interactive ~~products~~ technology solutions under our award-winning brands Clevertouch^TM, Mimio^®and ~~software for schools, as well as for~~Sedao^TM. We aim to improve engagement and communication in diverse business and ~~government learning spaces.~~education environments. We ~~currently design, produce~~develop, sell, and ~~distribute~~service our integrated solution suite including interactive ~~projectors~~displays, collaboration software, supporting accessories and distribute interactive technologies, including flat panels, projectors, whiteboards and peripherals to the education market. We also distribute science, technology, engineering and math (or “STEM”) products, including a portable science lab. All of our products are integrated into our classroom software suite that provides tools for whole class learning, assessment and collaboration.professional services.

To date, we have generated substantially all of our revenue from ~~the sale of our software and interactive displays~~sales to the K-12 U.S. educational market.

We have also implemented a comprehensive plan to reach profitability both from our core business operations and as a result of making strategic business acquisitions. ~~We have already started to implement this strategy as set forth below.~~ Highlights of our plan include:

On September 24, 2020, the Company entered into a share purchase agreement (the “Sahara SPA”) with the stockholders (the “Sellers”) of Sahara Holdings Limited, a private limited company operating under the laws of the UK (“Sahara”), pursuant to which the Company purchased 100% of the outstanding shares of Sahara, thereby acquiring Sahara, its operating company, Sahara Presentations Limited PLC, a UK private limited company and its subsidiaries (together with “Sahara,” the “Sahara Entities”). Sahara Presentations is a cutting-edge audio-visual technology company operating out of Dartford, England, with operations in the U.K., the Netherlands, Germany, Sweden, Finland and the U.S.

As consideration for the purchase of the Sahara Entities, the Company paid to the Sellers total consideration of £74,000,000 (approximately US$94,900,000) consisting of: (i) £52,000,000 (approximately US$66,700,00) in cash; (ii) 1,586,620 shares of Series B convertible preferred stock (the “Series B Preferred Stock”); and (iii) 1,320,850 shares of Series C non-voting convertible and redeemable preferred shares (the “Series C Preferred Stock”). The Series B Preferred Stock has a stated and liquidation value of $10.00 per share and pays a dividend out of the earnings and profits of the Company at the rate of 8% per annum, payable quarterly. The Series B Preferred Stock is convertible into the Company’s Class A common stock at a conversion price set at the closing price of BOXL’s Class A common stock on the Nasdaq stock market on September 25, 2020 (the “Conversion Price”) 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. 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. In addition, the Company issued some 3,000,000 restricted stock units (“RSUs”) to certain Sahara employees, which RSUs will vest in equal monthly instalments over a period of 48-months.

To the extent not previously converted into Conversion Shares, 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) days prior written notice to the Holders, for a redemption price, payable in cash, equal to sum of (a) Ten ($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.

The Sahara acquisition was financed through a $22,000,000 convertible note (the “Lind Convertible Note”) sold to Lind Global Asset Management, LLC, a Delaware limited liability company (“Lind”), which closed on September 21, 2020 and through which the Company received proceeds of $20,000,000. Under the terms of the Lind Convertible Note offering, in addition to the issuance of the Lind 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 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 Common Stock prior to closing. The Lind Convertible Note has a term of 24-months, bears a 4% interest rate (0% interest so long as the 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 Common Stock. The Class A common stock issuable to Lind in conjunction with the Bonus Payment and the Lind Convertible Note are issuable pursuant to the Company’s existing shelf registration statement on Form S-3.

On ~~March 12, 2019, we and our subsidiary, Boxlight Inc.~~April 17, 2020, the Company acquired the assets, and ~~business~~assumed certain liabilities of ~~Modern Robotics, Inc., a New York~~MyStemKits and STEM Education Holdings, Pty, an Australian corporation (“~~MRI”~~STEM”)~~. The MRI assets were purchased~~ which is the sole shareholder of MyStemKits, for consideration ~~including (i) $70,000~~of $450,000, after working capital adjustments of $150,000. Consideration included $100,000 paid in cash at closing with the balance payable in the form of a ~~promissory~~$350,000 purchase note payable in four equal installments of $87,500 (the “Installment Payments”) on July 31, 2020, October 31, 2020, January 31, 2021 and ~~(ii) Two Hundred Thousand (200,000) shares of our Class A common stock. At closing, Boxlight Inc.~~April 30, 2021. Further, acknowledging the ongoing COVID-19 pandemic, on April 17, 2020, the Company and the sellers entered into ~~an employment~~a letter agreement ~~with Stephen Barker, MRI’s Chief Executive Officer,~~ pursuant to which ~~Mr. Barker will serve as Vice President~~potential adjustments may be made to the Installment Payments due on July 31, 2020 and October 31, 2020 in the event the actual gross revenue of ~~Robotics at Boxlight Inc. In addition, we granted options to Mr. Barker to purchase 20,000 shares of our Class A common stock at an exercise price of $2.50 per share.~~MyStemKits is materially below budget.

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.

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:

Components of our Results of Operations and Financial Condition

Revenuess

Our revenue is comprised of ~~product, installation~~hardware, software and ~~professional development~~service revenues less sales discounts.

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

	●	~~Installation~~Software revenue.We receive revenue from ~~installation and that we outsource to third parties.~~the sale of our software platforms in the form of licensing fees. We have also introduced a subscription-based model for our MimioConnect software platform.

	●	~~Professional development~~ Services revenue. We receive revenue from providing professional development, ~~services through third parties~~training and ~~our network of distributors.~~other services.

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 duties;

	●	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.~~products; and

	●	cost of installation services.

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.

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~~expenses consist 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~~expenses 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~~expenses consist 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, consists of interest expense associated with our debt financing arrangements, changes in fair value of derivative liabilities, gain from settlements of liabilities and interest income earned on our cash. We do not utilize derivatives to hedge our foreign exchange risk, as we believe the risk to be immaterial to our results of operations.

Income tax expense

We are subject to income taxes in the countries in which we do business, including the United States, United Kingdom and Mexico. The United Kingdom and Mexico have a statutory tax rate different from those in the United States. Additionally, certain of our international earnings are also taxable in the United States. Our effective tax rates will vary depending on the relative proportion of foreign to U.S. income, 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 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. The Company has cumulative losses and there is no assurance of future taxable income, therefore, valuation allowances have been recorded to fully offset the deferred tax assets.

Operating Results – Boxlight Corporation

As discussed in Note 3, the Company acquired 100% of the outstanding shares of Sahara on September 24, 2020. Included in the three-month and nine-month periods of 2020 below are Sahara’s operating results from September 25 through September 30. Sahara contributed approximately $1,052 thousand in revenue and approximately $92 thousand in gross profit. Sahara’s total operating expenses were $308 thousand and they incurred a net loss of approximately $276 thousand. Sahara’s gross profit and net loss was negatively impacted by the purchase accounting impact of $213 thousand as a result of marking the inventory up to fair value at acquisition date.

For the nine-month periods ended September 30, ~~2019~~2020 and ~~2018~~2019

Revenues.Total revenues for the nine months ended September 30, ~~2019~~2020 were ~~$27,711,452,~~$23,027,723, as compared to ~~$25,856,310~~$27,099,654 for the nine months ended September 30, ~~2018,~~2019, resulting in a ~~7% increase.~~15% decrease. The ~~increase~~decrease in revenues in ~~2019~~2020 is related to the reduction in sales of panels, projectors, software and STEM products primarily attributable to school closures as a result of the ~~increase in sales volume.~~ongoing COVID-19 global pandemic.

Cost of Revenues. Cost of revenues for the nine months ended September 30, ~~2019~~2020 was ~~$19,439,775,~~$16,721,610, as compared to ~~$20,217,670~~$19,204,342 for the nine months ended September 30, ~~2018,~~2019, resulting in a 4%13% decrease. The decrease in cost of revenues were ~~mainly~~driven by the ~~result of lower margins on the initial delivery of two large projects~~decrease in ~~2018~~ sales.

Gross Profit.Gross profit for the nine months ended September 30, ~~2019~~2020 was ~~$8,271,677,~~$6,306,113 as compared to ~~$5,638,640~~$7,895,312 for the nine months ended September 30, ~~2018. The~~2019. Gross margin decrease from 29% to 27% was related to changes in the Company’s product mix with a reduction in higher margin products such as software and STEM products coupled with a 15% increase in ~~gross margin from 22%~~distributor sales compared to ~~30% was largely driven by the lower margins on initial deliveries for two large projects during 2018 and renegotiated freight costs.~~2019.

General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, ~~2019 was $11,912,432~~2020 were $10,444,060 as compared to ~~$11,183,305~~$11,892,814 for the nine months ended September 30, ~~2018.~~2019. The ~~slight increase~~decrease was driven primarily by reductions in tradeshows of ~~$0.7~~$0.3 million, ~~was primarily attributable to the increase in employee salaries~~contract services of $0.6 million, ~~increase in cash bonus~~compensation and benefits of ~~$0.3~~$0.4 million and ~~an increase in contract services~~travel and entertainment of ~~$0.2 million, which was offset by a decrease in stock-based compensation of $0.7~~$0.4 million.

Research and Development ~~Expenses.~~Expense. Research and development ~~expense~~expenses were ~~$911,682~~$1,073,095 and ~~$368,555~~$911,682 for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The increase in research and development expense was ~~related to contract~~driven primarily by an increase in contact services ~~primarily~~ for software ~~consultant costs of $0.3 million for Qwizdom and salaries of $0.1 million each for Qwizdom and MRI engineers.~~consultants.

Other ~~Expense.~~Income (Expense). Other ~~expense~~income (expense) for the nine months ended September 30, ~~2019~~2020 was ~~$1,591,684,~~($2,375,481), as compared to ~~$670,201~~($1,591,684) for the nine months ended September 30, ~~2018. Other~~2019. The increase in other expense ~~increased primarily due~~was related to loss on settlement of the Lind debt $2.3 million, increased interest expense of ~~$0.7~~$0.3 million ~~from loans entered into with Lind Global for $4.4~~offset by a gain on settlement of EDI accounts payable by $1.7 million and ~~Radium for $1.0 million,~~ a decrease in the change in fair value of derivative ~~liability~~liabilities of ~~$0.2 million resulting from the quarterly mark to market adjustment driven by the change in the stock price.~~$0.3 million.

Net loss.Net loss was ~~$6,144,121~~$7,586,523 and ~~$6,583,421~~$6,500,868 for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~decrease~~increase in the net loss was primarily ~~due to an~~driven by a decrease of gross profit, decrease in operating expenses and increase in ~~gross profit offset by increase in the operating expense and interest~~other expense.

For the three-month periods ended September 30, ~~2019~~2020 and ~~2018~~2019

Revenues.Total revenues for the three months ended September 30, ~~2019 were $11,602,722,~~2020 was $9,476,956, as compared to ~~$10,195,968~~$11,304,731 for the three months ended September 30, ~~2018,~~2019, resulting in a ~~14% increase.~~15% decrease. The ~~increase is~~decrease in revenues in 2020 was related to the reduction in sales of panels, software and STEM products primarily attributable to ~~$0.7 million increase in sales~~the widespread school closures as a result of ~~hardware, $0.4 increase in sales of software and $0.3 million increase in professional development services.~~the ongoing COVID-19 global pandemic.

Cost of Revenues.Cost of revenues for the three months ended September 30, ~~2019~~2020 was ~~$8,163,811,~~$7,452,453, as compared to ~~$7,763,617~~$8,070,930 for the three months ended September 30, ~~2018.~~2019, resulting in a 18% decrease. The decrease in cost of revenues ~~decreased from 76% to 70% as a percentage of revenue due to lower margins on~~were driven by the ~~initial delivery of two large projects~~decrease in ~~2018~~ sales. ~~In addition, the Company renegotiated the cost of goods with its primary vendors~~.

Gross Profit.Gross profit for the three months ended September 30, ~~2019~~2020 was ~~$3,438,911,~~$2,024,503, as compared to ~~$2,432,351~~$3,233,801 for the three months ended September 30, ~~2018. Gross~~2019. The decrease in gross margin ~~increased~~ from ~~24%~~29% to ~~30%. The~~21% related to changes in the Company’s product mix with a reduction in higher margin products such as software and STEM products coupled with a 33% increase in ~~gross profit was the result of higher profit margin from sale of software and professional development services.~~distributor sales compared to 2019.

General and Administrative Expenses. General and administrative expenses for the three months ended September 30, ~~2019~~2020 was ~~$4,258,166~~$3,306,845 as compared to ~~$4,262,707~~$4,230,372 for the three months ended September 30, ~~2018, which remained relatively flat.~~2019. The decrease was primarily driven by reductions in compensation and benefits of $0.7 million, travel and entertainment of $0.2 million and stock compensation of $0.2 million.

Research and Development Expenses.Research and development ~~expense~~expenses were ~~$351,104~~$471,129 and ~~$98,952~~$351,104 for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~increase~~change in research and development expense was primarily ~~due~~driven by the increase in contract services related to software ~~and engineering cost.~~consultants.

Other ~~Income.~~Income (Expense). Other ~~Income~~income (expense) for the three months ended September 30, ~~2019~~2020 was ~~$875,863~~($2,457,433), as compared to ~~$707,947~~$875,863 for the three months ended September 30, ~~2018. Other income mainly consists of interest~~2019. The increase in other expense ~~and~~was related to a change in ~~the~~ fair value of derivative ~~liabilities. The change in the fair value~~liabilities of ~~derivative liability~~$1.6 million and loss from settlement of ~~$0.6 million was a result~~liabilities of ~~the quarterly mark to market adjustment impacted by the change in the stock price. This was offset by the increase of $0.3 million in interest expense from the loan entered in 2019 with Lind Partners.~~$1.7 million.

Net loss.Net loss was ~~$294,496~~$4,210,904 and ~~$1,221,361~~$471,812 for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The decrease in the net loss was ~~mainly due to the~~primarily driven by a decrease of gross profit, decrease in operating expenses and increase in ~~sales and higher margins and change in FV of derivative liabilities.~~other expense.

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 consolidated condensed financial statements which are prepared in accordance with GAAP with EBITDA and Adjusted EBITDA, both non-GAAP financial measures of earnings.

~~EBITDA represents net loss before income tax expense, interest income, interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA, plus change~~Boxlight reports its financial results in ~~fair value of derivative liabilities, stock compensation expense and non-recurring expenses. Our~~accordance with accounting principles generally accepted in the United States (“GAAP”). However, our management also uses EBITDA and Adjusted EBITDA as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing results of operations, which include large non-cash amortizations of ~~intangibles~~intangible assets from acquisitions. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Management has determined Adjusted EBITDA is most useful as a measure of performance when defined and presented consistently across reporting periods. EBITDA represents net loss before income tax expense, interest income, interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA, plus certain adjustments as described in the note to the tables presented below.

The following table contains reconciliations of net losses to EBITDA for the periods presented.

Reconciliation of net loss for the three months ended

September 30, ~~2019~~2020 and ~~2018~~2019 to EBITDA and adjusted EBITDA

(in thousands)	September 30, 2019			September 30, 2018			September 30, 2020			September 30, 2019
Net loss	$	(294	)	$	(1,221	)	$	(4,211	)	$	(472	)
Depreciation and amortization		222			248			318			222
Interest expense		517			188			531			517
EBITDA	$	445		$	(785	)	$	(3,362	)	$	267
Stock compensation expense(1)		574			457			346			574
Change in fair value of derivative liabilities(2)		(1,372	)		(822	)		194			(1,372	)
Purchase accounting impact of fair valuing inventory (3)								217			16
Net loss on settlement of Lind debt in stock (4)								1,748			-
Adjusted EBITDA	$	(353	)	$	(1,150	)	$	(857	)	$	(515	)

Reconciliation of net loss for the nine months ended

September 30, ~~2019~~2020 and ~~2018~~2019 to EBITDA and adjusted EBITDA

(in thousands)	September 30, 2019			September 30, 2018			September 30, 2020			September 30, 2019
Net loss	$	(6,144	)	$	(6,583	)	$	(7,587	)	$	(6,501	)
Depreciation and amortization		689			630			758			689
Interest expense		1,277			543			1,618			1,277
EBITDA	$	(4,178	)	$	(5,410	)	$	(5,211	)	$	(4,535	)
Stock compensation expense(1)		896			1,567			866			896
Change in fair value of derivative liabilities(2)		527			335			239			527
Purchase accounting impact of fair valuing inventory (3)								236			40
Net loss on settlement of Lind debt in stock (4)								2,340			-
Adjusted EBITDA	$	(2,755	)	$	(3,508	)	$	(1,530	)	$	(3,072	)

	(1)	Stock compensation expense has been excluded from Adjusted EBITDA. Although stock-based compensation is a key incentive to our employees, management evaluates our business performance excluding this non-cash expense.

	(2)	The change in the fair value of derivatives has been excluded from Adjusted EBITDA. We believe it is useful to understand the effect of this non-cash item in Other Income (Expense).

	(3)	In connection with the accounting related to our acquisitions, business combinations rules require the acquired inventory be recorded at fair value on the opening balance sheet. This is different from historical cost. Essentially, we are required to write the inventory up to the end customer price less a reasonable margin as a distributor. We have excluded the resulting adjustments in inventory and cost of goods sold as the historic and forward gross margin trends will differ as a result of the adjustments. We believe it is useful to understand the effects of this on cost of goods sold and margin.

	(4)	The non-cash losses associated with settling debt using common shares has been excluded from Adjusted EBITDA. This non-cash gain or loss can vary significantly depending on the stock price, and management feels it is useful to understand the impact on the operations.

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 June, 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.

We have been very proactive, and will continue to be proactive, in obtaining contracts during the fourth and first quarters that will help offset the seasonality of our business.

Liquidity and Capital Resources

As of September 30, ~~2019,~~2020, we had cash and cash equivalents of ~~$806,245~~$9,609,667 and a net working capital ~~deficit~~surplus of ~~$5,166,264.~~$25,055,980. For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we had net cash used in operating activities of ~~$6,280,556~~$7,017,682 and ~~$3,786,881,~~$6,280,556, respectively, net cash (used in) provided by investing activities of ~~$6,650~~($45,052,970) and ~~$900,196~~$6,650 respectively, and net cash provided by financing activities of ~~$6,205,441~~$60,729,949 and ~~$2,467,436,~~$6,205,441, respectively. We had accounts receivable net of allowances of ~~$8,415,106~~$21,095,910 and ~~$3,634,726~~$3,665,057 as of September 30, ~~2019~~2020 and year ended December 31, ~~2018.~~2019.

We financed our operations in ~~2019~~2020 primarily with an accounts receivable financing arrangement entered into with a lender. The lender agreed to purchase 85% of the eligible accounts receivable of the Company, up to $6 million, with the right of recourse. Our accounts receivable and our ability to borrow against accounts receivable provides 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 the business.

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to facility leases and other operating leases. We lease all of our office facilities. We expect to make future payments on existing leases from cash generated from operations. We have limited credit available from our major vendors and are required to prepay for the majority of our inventory purchases, which further constrains our cash liquidity.

The Company had an accumulated deficit of $38,932,954 and a net working capital ~~deficit~~surplus of approximately ~~$5,166,264 for the nine months ended~~$25,055,980 as of September 30, ~~2019. These factors raise substantial doubt regarding~~2020. The long-term continuation of the ~~Company’s ability to continue~~Company as a going concern ~~within one year after the issuance date~~is dependent upon attainment of ~~these consolidated condensed financial statements. These consolidated condensed financial statements do not include any adjustments to the recoverability~~profitable operations. During June, July and ~~classification~~September of ~~recorded asset amounts and classification of liabilities that might be necessary should~~2020, the Company ~~be unable~~raised significant capital which was primarily used for the acquisition of Sahara and to ~~continue as a going concern.~~meet working capital requirements. The Company has the ability to raise additional funds through public or private sales of equity and debt securities or leveraging its asset-based lending agreement.

Recent Financing

On ~~March 22, 2019,~~February 4, 2020, we entered into a separate securities purchase agreement with Lind ~~Global Marco Fund, LP~~ (the ~~“Investor”~~“2020 SPA”) ~~that contemplates a $4,000,000 working capital financing~~pursuant to which, on February 26, 2020, we received $750,000 in exchange for ~~Boxlight Parent and its subsidiaries. The investment is in~~ the ~~form~~issuance to Lind of ~~a $4,400,000 principal amount~~(1) an $825,000 convertible promissory note, ~~secured by Boxlight Parent with a maturity date~~payable at an 8% interest rate, compounded monthly (the “2020 Note”), (2) certain shares of 24 months. The note is convertible at the option of the Investor into our Class A voting common stock at a fixed conversion price of $4.00 per share. We will have the right to force the Investor to convert up to 50% of the outstanding amount of the note if the volume weighted average closing price of ourrestricted Company Class A common stock ~~trades above $8.00 for 30 consecutive days; and 100%~~valued at $60,000, calculated based on the 20-day volume average weighted price of the ~~outstanding amount of the note if the volume weighted average closing price of our~~ Class A common stock ~~trades above $12.00~~ for ~~30 consecutive days. At closing,~~the period ended February 4, 2020, and (3) a ~~total~~commitment fee of ~~$4,000,000 was funded under the note.~~$26,250.

~~We are required~~The 2020 Note matures over 24 months, with repayment to commence August 4, 2020, after which time the Company will be obligated to make monthly ~~interest~~ payments of $45,833.33 (the “Monthly Payments”), plus interest. Interest payments owed under the 2020 Note (the “Interest Payments”) shall accrue beginning on the ~~note at~~one month anniversary of the ~~rate~~issuance of ~~8% per annum and principal payments~~the Note. Accrued interest shall become payable in ~~18 equal monthly installments of $244,444 each, commencing~~either conversion shares or in cash after the first six months ~~after closing. So long as~~of the note and monthly thereafter. As with the prior purchase agreement, we may make the Monthly Payments and any Interest Payments in shares of ~~our~~the Company’s Class A common stock so long as such shares are either registered for resale under the Securities Act of 1933, as amended, or may be sold without restriction onpursuant to Rule 144 thereunder. As such, the ~~number of shares or manner of sale, we have~~Monthly Payments may be subject to reduction in any month by any amounts converted into the right to make interest payments in the form of additional shares of Class A common stock. We have the right to prepay the convertible note at any time with no penalty (the “Buy-Back Right”). Should we exercise our Buy-Back Right, the Investor will have the option of converting 25% of the outstanding $4.4 million principal amount of the note into shares of ourCompany’s Class A common stock.

~~The~~In connection with the February 2020 transaction, we and Lind amended and restated the $4,400,000 note and the $1,375,000 note that we issued to Lind in March and December 2019, respectively, to provide that we would not make any payments under the three Lind notes in the form of Class A Common Stock if such payments could cause the Company to violate any rules of the Nasdaq Capital Market.

In addition, on February 4, 2020, we and Lind entered into a second amended and restated security agreement for purposes of amending and restating a prior security agreement, dated as of December 13, 2019. In addition, Sallyport Commercial Finance, LLC, as first lien creditor, and Lind, as second lien creditor, entered into a second amended and restated intercreditor agreement for purposes of amending and restating the intercreditor agreement between the parties, dated December 13, 2019, in order to reaffirm and confirm the relative priority of each creditor’s respective security interests in our asset.

At our 2020 annual meeting of stockholders, held on September 4, 2020, our stockholders approved all of the Lind financing transactions that had occurred up until that point.

On September 21, 2020, the Company entered into a securities purchase agreement (the “Lind GAM SPA”) with Lind Global Asset Management, LLC, a Delaware limited liability company (“Lind GAM”), pursuant to which Lind purchased from the Company a $22,000,000 secured convertible note (the “Convertible Note”) in exchange for payment of $20,000,000 (the “Funding”). Under the terms of the Lind SPA, in addition to the issuance of 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 in shares of Class A common stock of the Company (the “Common Stock”), with the per share price of the Bonus Payment shares calculated based on the 20-day VWAP of the 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 Common Stock trades at $3.50 or more per share), is ~~secured by~~repayable in 22 equal installments commencing 60 days after the Funding and, at the option of the Company, may be repaid in either cash or Common Stock. Common Stock issuable to Lind in conjunction with the Bonus Payment and the Convertible Note being issuable pursuant to the Company’s existing shelf registration statement on Form S-3.

In conjunction with the Lind Convertible Note offering, on September 21, 2020, the Company and Lind Global Macro Fund, LP, an affiliate of 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 of February 4, 2020, between the Company and GMF in order to incorporate the Lind SPA and the Convertible Note therein. In addition, on September 21, 2020, the Company, Sallyport Commercial Finance, LLC (“Sallyport”), as first lien ~~on our~~creditor, and GMF and Lind, 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 GMF, in order to (i) incorporate Lind 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, ~~and properties.~~among other matters.

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 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 ofto 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:

	1.	Revenue recognition
	2.	Intangible assets
	3.	Derivatives
	4.	Stock-basedcompensation expense
	5.	Redeemable preferred stock

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 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.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

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 fiscal quarter ended September 30. ~~2019~~2020 (“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 related to the following:

●	insufficient ~~personnel resources within the accounting function to segregate the duties between preparation and review of financial statements; and~~
●	~~insufficient~~ written policies and procedures over accounting transaction processing, capital transactions and period end financial disclosure.

The above material weaknesses resulted in ineffective oversight in the establishment and proper monitoring controls over accounting and financial reporting.

Notwithstanding the existence of the above referenced internal control deficiencies, management believes that the consolidated condensed financial statements in this quarterly report on Form 10-Q fairly present, in all material respects, the Company’s financial condition as of the Evaluation Date, and its results of ~~its~~ operations and cash flows for the Evaluation Date, in conformity with GAAP.

Inherent Limitations on Effectiveness of Controls.

Because of the inherent limitations in all control systems, no control system can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of a person, by collusion of two or more people or by management override of the control. The design of any system of controls is also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Notwithstanding these limitations, with the changes referenced above, we believe that our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

(b) Changes in internal controls over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the ~~three-month~~nine-month period ended September 30, ~~2019~~2020 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.

ITEM 1A. RISK FACTORS

~~Not Applicable.~~War, terrorism, other acts of violence or natural or man-made disasters, including a global pandemic, may affect the markets in which the Company operates, the Company’s customers, the Company’s delivery of products and customer service, and could have a material adverse impact on our business, results of operations, or financial conditions.

The Company’s business may be adversely affected by instability, disruption or destruction in a geographic region in which it operates, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or man-made disasters, including famine, food, fire, earthquake, storm or pandemic events and spread of disease (including the ongoing outbreak of the coronavirus commonly referred to as “COVID-19”). Such events may cause customers to suspend their decisions on using the Company’s products and services, make it impossible to attend or sponsor trade shows or other conferences in which our products and services are presented to customers and potential customers, cause restrictions, postponements and cancellations of events that attract large crowds and public gatherings such as trade shows at which we have historically presented our products, and give rise to sudden significant changes in regional and global economic conditions and cycles that could interfere with purchases of goods or services, commitments to develop new products. These events also pose significant risks to the Company’s personnel and to physical facilities, transportation and operations, which could materially adversely affect the Company’s financial results.

As a result of the ongoing COVID-19 global pandemic, there is a risk related to modification of the traditional classroom setting that may result in reduced demand for our classroom solutions, including reduced demand for our interactive displays due to extended or indefinite distance and digital learning.

There is also a risk of reduced borrowing related to our purchase order financing facilities, as well as risk of inability to raise additional capital.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

Item 6. Exhibits

The following exhibits are filed or furnished with this report:

Exhibit No.		Description of Exhibit

4.1		Form of Certificate of Designation for Series B Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 25, 2020).
4.2		Form of Certificate of Designation for Series C Convertible Preferred Stock (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed September 25, 2020).
4.3		Amended and Restated Certificate of Designation for Series B Convertible Preferred Stock.
4.4		Amended Certificate of Designation for Series C Convertible Preferred Stock.
10.1		Securities Purchase Agreement, dated September 21, 2020, between Boxlight Corporation and Lind Global Asset Management LLC (incorporated by reference to Exhibit 10.1 to the Current Report filed on September 22, 2020).
10.2		Form of Convertible Secured Note issued to Lind Global Asset Management, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 22, 2020).
10.3		Third Amended and Restated Security Agreement, dated September 21, 2020, between Boxlight Corporation and Lind Global Macro Fund, LP (filed as Exhibit 10.3 to the Current Report on Form 8-K filed on September 22, 2020).
10.4		Third Amended and Restated Intercreditor Agreement, dated September 21, 2020 between Boxlight Corporation, Sallyport Commercial Finance, LLC, Lind Global Macro Fund, LP and Lind Global Asset Management, LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on September 22, 2020).
10.5		Securities Purchase Agreement, dated September 24, 2020, between Boxlight Corporation and the Sellers of Sahara Holdings (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed September 25, 2020).
10.6		Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 25, 2020).
10.7		Form of Accounts Receivable Agreement, effective September 30, 2020, between Boxlight Inc., EOSEDU LLC and Sallyport Commercial Finance LLC (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed October 9, 2020).
10.8		Form of Blocked Account Agreement between Boxlight Inc., EOSEDU LLC and Sallyport Commercial Finance LLC (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed October 9, 2020)

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		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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 ~~12, 2019~~16, 2020	By:	/s/ ~~JAMES MARK ELLIOTT~~Michael Pope
		~~James Mark Elliott~~Michael Pope
		Chief Executive Officer

November ~~12, 2019~~16, 2020

By:

/s/ TAKESHA BROWN

Takesha Brown

Chief Financial Officer

(Principal Financial and Accounting Officer)

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

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

		Page No.

	PART I. Financial Information

Item 1.	Unaudited Consolidated Condensed Financial Statements	F-1

	Unaudited Consolidated Condensed Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019	F-1

	Unaudited Consolidated Condensed Statements of Operations and Comprehensive Loss for the ~~Three~~three and ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	F-2

	Unaudited Consolidated Condensed Statements of Changes in ~~Stockholders~~Stockholders’ Equity (Deficit) for the ~~Three~~three and ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	F-3

	Unaudited Consolidated Condensed Statements of Cash Flows for the ~~Nine Months Ended~~nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	F-4

	Notes to Unaudited Consolidated Condensed Financial Statements ~~(Unaudited)~~	F-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	9

Item 4.	Controls and Procedures	9

	PART II. Other Information

Item 1.	Legal Proceedings	10

Item 1A.	Risk Factors	10

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	10

Item 3.	Defaults Upon Senior Securities	10

Item 4.	Mine Safety Disclosures	10

Item 5.	Other Information	10

Item 6.	Exhibits	11

	Signatures	12

	September 30, 2019			December 31, 2018
ASSETS
Current asset:
Cash and cash equivalents	$	806,245		$	901,459
Accounts receivable – trade, net of allowances		8,415,106			3,634,726
Inventories, net of reserve		3,418,460			4,214,316
Prepaid expenses and other current assets		1,581,636			1,214,157
Total current assets		14,221,447			9,964,658

Property and equipment, net of accumulated depreciation		209,520			226,409
Intangible assets, net of accumulated amortization		5,776,915			6,352,273
Goodwill		4,723,549			4,723,549
Other assets		302			298
Total assets	$	24,931,733		$	21,267,187

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	4,683,050		$	1,883,626
Accounts payable and accrued expenses – related parties		5,110,061			6,009,112
Warranty reserve		779,583			580,236
Short-term debt		6,883,522			2,306,227
Short-term debt – related party		357,668			377,333
Current portion of earn-out payable – related party		288,652			136,667
Deferred revenues – short-term		311,184			938,050
Derivative liabilities		896,095			326,452
Other short-term liabilities		77,896			5,128
Total current liabilities		19,387,711			12,562,831

Deferred revenues – long-term		97,481			134,964
Earn-out payable – related party		98,778			273,333
Long-term debt – related party		162,895			328,000
Long-term debt		1,416,688			-
Total liabilities		21,163,553			13,299,128

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 167,972 and 250,000 shares issued and outstanding		17			25
Common stock, $0.0001 par value, 200,000,000 shares authorized; 10,849,966 and 10,176,433 Class A shares issued and outstanding, respectively		1,085			1,018
Additional paid-in capital		29,250,838			27,279,931
Subscriptions receivable		(200	)		(225	)
Accumulated deficit		(25,350,392	)		(19,206,271	)
Other comprehensive loss		(133,168	)		(106,419	)
Total stockholders’ equity		3,768,180			7,968,059

Total liabilities and stockholders’ equity	$	24,931,733		$	21,267,187

	September 30, 2020			December 31, 2019
ASSETS
Current asset:
Cash and cash equivalents	$	9,609,667		$	1,172,994
Accounts receivable – trade, net of allowances		21,095,910			3,665,057
Inventories, net of reserves		21,571,932			3,318,857
Prepaid expenses and other current assets		4,051,356			1,765,741
Total current assets		56,328,865			9,922,649

Property and equipment, net of accumulated depreciation		383,415			207,397
Intangible assets, net of accumulated amortization		54,012,656			5,559,097
Goodwill		13,429,385			4,723,549
Other assets		70,634			56,193
Total assets	$	124,224,955		$	20,468,885

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses	$	11,282,365		$	4,721,417
Accounts payable and accrued expenses – related parties		2,050,848			5,031,367
Warranty reserve		17,223			12,775
Current portion of debt – third parties		11,373,472			4,536,227
Current portions of debt – related parties		-			368,383
Earn-out payable – related party		119,132			387,118
Deferred revenues – short-term		4,917,088			1,972,565
Derivative liabilities		385,944			146,604
Other short-term liabilities		1,126,813			31,417
Total current liabilities		31,272,885			17,207,873

Deferred revenues – long-term		8,801,969			2,582,602
Long-term debt – third parties		10,950,403			1,201,139
Long-term debt – related parties		-			108,228
Other long-term liabilities		5,623			16,696
Total liabilities		51,030,880			21,116,538

Commitments and contingencies (Note 14)

Mezzanine equity:
Series B preferred stock, $0.0001 par value, 1,586,620 shares designated, 1,586,620 and -0- shares issued and outstanding, respectively		18,181,178			-

Series C preferred stock, $0.0001 par value, 1,320,850 shares designated, 1,320,850 and -0- shares issued and outstanding, respectively		10,690,267			-
Total mezzanine equity		28,871,445			-

Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value, 50,000,000 shares authorized:

Series A preferred stock, $0.0001 par value, 250,000 shares designated, 167,972 and 167,972 shares issued and outstanding, respectively		17			17

Common stock, $0.0001 par value, 200,000,000 shares authorized; 50,871,711 and 11,698,697 Class A shares issued and outstanding, respectively		5,087			1,170

Additional paid-in capital		82,860,910			30,735,815
Subscriptions receivable		(200	)		(200	)
Accumulated deficit		(38,932,954	)		(31,346,431	)
Accumulated other comprehensive income (loss)		389,770			(38,024	)
Total stockholders’ equity (deficit)		44,322,630			(647,653	)

Total liabilities, mezzanine and stockholders’ equity (deficit)	$	124,224,955		$	20,468,885

													Three Months Ended						Nine Months Ended
	Three Months Ended						Nine Months Ended						September 30,						September 30,
	September 30,						September 30,						2020			2019			2020			2019
	2019			2018			2019			2018						(Note 1)						(Note 1)

Revenues, net	$	11,602,722		$	10,195,968		$	27,711,452		$	25,856,310		$	9,476,956		$	11,304,731		$	23,027,723		$	27,099,654
Cost of revenues		8,163,811			7,763,617			19,439,775			20,217,670			7,452,453			8,070,930			16,721,610			19,204,342
Gross profit		3,438,911			2,432,351			8,271,677			5,638,640			2,024,503			3,233,801			6,306,113			7,895,312

Operating expense:
General and administrative expenses		4,258,166			4,262,707			11,912,432			11,183,305			3,306,845			4,230,372			10,444,060			11,892,814
Research and development		351,104			98,952			911,682			368,555			471,129			351,104			1,073,095			911,682
Total operating expense		4,609,270			4,361,659			12,824,114			11,551,860			3,777,974			4,581,476			11,517,155			12,804,496

Loss from operations		(1,170,359	)		(1,929,308	)		(4,552,437	)		(5,913,220	)		(1,753,471	)		(1,347,675	)		(5,211,042	)		(4,909,184	)

Other income (expense):
Interest expense, net		(517,391	)		(188,457	)		(1,277,016	)		(542,656	)		(530,830	)		(517,391	)		(1,618,366	)		(1,277,016	)
Other income, net		21,077			38,796			65,956			42,067
Other (expense) income, net														(14,673	)		21,077			60,932			65,956
Changes in fair value of derivative liabilities		1,372,177			821,528			(527,058	)		(334,990	)		(193,640	)		1,372,177			(239,340	)		(527,058	)
Gain from settlements of liabilities		-			36,080			146,434			165,378
Gain (loss) from settlements of liabilities														(1,718,290	)		-			(578,707	)		146,434
Total other income (expense)		875,863			707,947			(1,591,684	)		(670,201	)		(2,457,433	)		875,863			(2,375,481	)		(1,591,684	)

Net loss	$	(294,496	)	$	(1,221,361	)	$	(6,144,121	)	$	(6,583,421	)	$	(4,210,904	)	$	(471,812	)	$	(7,586,523	)	$	(6,500,868	)

Comprehensive loss:
Net loss		(294,496	)		(1,221,361	)	$	(6,144,121	)	$	(6,583,421	)	$	(4,210,904	)	$	(471,812	)	$	(7,586,523	)	$	(6,500,868	)
Other comprehensive loss:
Foreign currency translation loss		(11,563	)		(18,875	)		(26,749	)		(44,561	)
Foreign currency translation gain (loss)														536,118			(11,563	)		427,794			(26,749	)
Total comprehensive loss	$	(306,059	)	$	(1,240,236	)	$	(6,170,870	)	$	(6,627,982	)	$	(3,674,786	)	$	(483,375	)	$	(7,158,729	)	$	(6,527,617	)

Net loss per common share – basic and diluted	$	(0.03	)	$	(0.12	)	$	(0.58	)	$	(0.66	)	$	(0.10	)	$	(0.04	)	$	(0.31	)	$	(0.62	)
Weighted average number of common shares outstanding – basic and diluted		10,746,186			10,095,889			10,533,090			9,946,737			44,214,758			10,746,186			24,852,937			10,533,090

	Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs		Carrying Value as of September 30,		Markets for Identical Assets		Other Observable Inputs		Significant Unobservable Inputs		Carrying Value as of September 30,
Description	(Level 1)		(Level 2)		(Level 3)		2019		(Level 1)		(Level 2)		(Level 3)		2020
Derivative liabilities - warrant instruments	$	-	$	-	$	896,095	$	896,095	$	-	$	-	$	385,944	$	385,944
Earn-out payable – related party		-		-		387,430		387,430		-		-		119,132		119,132
Note payable – STEM Education Holdings										-		-		350,000		350,000

					$	1,283,525	$	1,283,525					$	855,076	$	855,076

	Amount			Amount
Balance, December 31, 2018	$	410,000
Balance, December 31, 2019				$	387,118
Amount paid		(22,570	)		(268,298	)
Change in fair value of earn-out payable		-			312

Balance, September 30, 2019	$	387,430
Balance, September 30, 2020				$	119,132

	Amount
Balance, December 31, 2017	$	-
Earn-out payable – related party		410,000
Amount paid		-
Change in fair value of earn-out payable		-

Balance, September 30, 2018	$	410,000

	●	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, and

	●	the costs are expected to be recovered.

	Balances under						Balances under
	Topic 606			Adjustments			Prior GAAP
STATEMENT OF OPERATIONS
Revenues	$	11,304,731		$	(297,991	)	$	11,602,722
Cost of revenues		8,070,930			(92,881	)		8,163,811
Gross profit		3,233,801			(205,110	)		3,438,911
General and administrative expenses		4,230,372			(27,794	)		4,258,166
Total operating expense		4,581,476			(27,794	)		4,609,270
Loss from operations		(1,347,675	)		(177,316	)		(1,170,359	)
Net loss	$	(471,812	)	$	(177,316	)	$	(294,496	)

Net loss per common share – basic and diluted	$	(0.04	)	$	(0.02	)	$	(0.03	)

Assets acquired:
Cash	$	6,049,483
Accounts receivable		16,065,269
Inventories		17,256,608
Prepaid expenses and other current assets		2,276,562
Property and equipment		183,182
Total assets acquired		41,831,104
Accounts payable and accrued expenses		(8,622,760	)
Deferred revenue		(9,435,449	)
Other liabilities		(292,898	)
Total liabilities assumed		(18,351,107	)

Net tangible assets acquired		23,479,997

Identifiable intangible assets:
Customer relationships		39,624,196
Trademarks		5,320,403
Technology		3,366,483
Total intangible assets subject to amortization		48,311,082

Goodwill		8,407,205

Total net assets acquired	$	80,198,284

Consideration paid:
Cash	$	50,903,200
Preferred shares issued		29,295,084

Total consideration paid	$	80,198,284

	Estimated Weighted Average Life (years)
Customer relationships		10
Trademarks		10
Technology		3

Assets acquired:
Cash	$	10,261
Accounts receivable		66,300
Inventories		386,485
Prepaid expenses		24,413
Intangible assets		93,185
Total assets acquired		580,644
Total liabilities assumed		(10,644	)

Net assets acquired	$	570,000

Consideration paid:
Issuance of 200,000 shares of Class A common stock	$	500,000
Note payable		70,000

Total	$	570,000

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019

Product Revenues:
Hardware	$	8,248,763	$	9,410,977	$	19,694,758	$	23,424,710
Software		410,813		1,066,846		855,352		1,683,659
Service Revenues:
Professional Services		329,491		382,380		1,025,603		877,502
Maintenance and Subscription Services		487,889		444,528		1,452,010		1,113,783
	$	9,476,956	$	11,304,731	$	23,027,723	$	27,099,654

	2019			2018

Accounts receivable - trade	$	9,275,782		$	4,658,352
Allowance for doubtful accounts		(197,721	)		(276,507	)
Allowance for sales returns and volume rebates		(662,955	)		(747,119	)

Accounts receivable - trade, net of allowances	$	8,415,106		$	3,634,726

	2019			2018

Finished goods	$	3,165,703		$	4,135,424
Spare parts		377,445			285,575
Reserve for inventory obsolescence		(124,688	)		(206,683	)

Inventories, net	$	3,418,460		$	4,214,316

	Useful lives	2019			2018			2020			2019

Building	50 years	$	199,708		$	199,708		$	199,708		$	199,708
Building improvements	15 years		9,086			9,086			9,086			9,086
Leasehold improvements	9-10 years		3,355			3,355			3,355			3,355
Office equipment	2-7 years		40,061			36,450			191,548			40,062
Other equipment	5 years		42,485			42,485			77,964			42,485

Property and equipment, at cost			294,695			291,084			481,661			294,696
Accumulated depreciation			(85,175	)		(64,675	)		(98,246	)		(87,299	)

Property and equipment, net of accumulated depreciation		$	209,520		$	226,409		$	383,415		$	207,397

	September 30, 2019			September 30, 2018

Balance, beginning of period	$	1,073,014		$	1,212,292
Additions		1,667,812			15,830,015
Amortization		(2,332,161	)		(11,129,344	)
Balance, ending of period		408,665			5,912,963

Deferred revenue – short-term		311,184			5,749,610
Deferred revenue – long-term	$	97,481		$	163,353

	September 30, 2019			September 30, 2020
Common stock issuable upon exercise of warrants		1,189,949			295,000
Market value of common stock on measurement date	$	1.84		$	1.61
Exercise price	$	1.20-2.23		$	0.43
Risk free interest rate (1)		1.63-1.88	%		0.12	%
Expected life in years		0.25-2.25 years			1.25 years
Expected volatility (2)		73.69-87.03	%		143.56	%
Expected dividend yields ~~(3)~~(4)		0	%		0	%

	(1)	The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date.
	(2)	The expected volatility was determined by calculating the volatility of the Company’s ~~peers’~~ common stock.
	(3)	The expected volatility was determined by calculating the volatility of the Company’s peer common stock.
	(4)	The Company does not expect to pay a dividend in the foreseeable future.

	Amount
Balance, December 31, 2017	$	1,857,252
Initial valuation of derivative liabilities upon issuance of warrants		149,321
Cancellation of warrants		(1,253,140	)
Change in fair value of derivative liabilities		334,990

Balance, September 30, 2018	$	1,088,423

	Number of Units		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2018		1,718,024	$	4.18		4.64
Granted		543,250	$	1.83
Cancelled		(88,641)	$	5.33
Outstanding, September 30, 2019		2,172,643	$	3.55		4.32
Exercisable, September 30, 2019		1,493,809	$	3.38		3.91

	Number of Units			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2019		2,384,688		$	3.35		4.15
Granted		2,936,000			0.76
Cancelled		(463,802	)		3.60
Outstanding, September 30, 2020		4,856,886			1.76		4.03
Exercisable, September 30, 2020		2,177,455			2.62		6.09

	Number of Units			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2019		-		$	-
Granted		3,055,063			1.56
Vested		(126,036	)		0.52
Outstanding, September 30, 2020		2,929,027			1.60

	Number of Units		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding, December 31, 2018		1,184,121	$	1.9		1.63
Granted		60,827	$	2.2
Outstanding, September 30, 2019		1,244,948	$	1.5		0.85
Exercisable, September 30, 2019		1,191,824	$	1.26		0.75

Year ending December 31,	Amount
2019	$	85,077
2020		335,032
2021		315,840
2022		79,440

Net Minimum Lease Payments	$	815,389

Customer	Total revenues from the customer to total revenues for the nine months ended September 30, 2019			Accounts receivable from the customer as of September 30, 2019 (rounded to 000’s)		Total revenues from the customer to total revenues for the nine months ended September 30, 2020			Accounts receivable from the customer as of September 30, 2020 (rounded to 000’s)
1		13	%	$	643		16	%	$	3,378
2		13	%		2,624		12	%		244
3		13	%		638		12	%	$	114

Vendor	Total purchases from the vendor to total purchases for the nine months ended September 30, 2019			Accounts payable (prepayment) to the vendor as of September 30, 2019 (rounded to 000’s)			Total purchases from the vendor to total purchases for the nine months ended September 30, 2020			Accounts payable (prepayment) to the vendor as of September 30, 2020 (rounded to 000’s)
1		34	%	$	(1,789	)		21	%	$	(406	)
2								18	%		(70	)

	●	Integrating products of ~~the~~ acquired companies and cross training our sales ~~reps~~representatives and channel partners to increase their product offerings. The combination of additional products and cross training has already resulted in ~~increased sales. The synergy we have found between the products of Boxlight and Mimio are adding opportunities to resellers for both companies to~~a substantial increase ~~their~~in sales.

	●	Hiring new sales representatives with significant education technology sales experience in their respective ~~territories and our current pipeline has reached a record high level.~~territories.

	●	~~Seeking~~Continuing to ~~increase demand in~~develop innovative technology solutions for the ~~US market for technology sales and have the products and infrastructure in place to handle our expected growth.~~markets we target.

	●	~~Staff reductions – consolidating resources, such as accounting, marketing and human resources.~~
	3
	●	~~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.~~

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company