Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 07, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-37564 | |
Entity Registrant Name | BOXLIGHT CORPORATION | |
Entity Central Index Key | 0001624512 | |
Entity Tax Identification Number | 46-4116523 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 2750 Premiere Parkway, Suite 900 | |
Entity Address, City or Town | Duluth | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30097 | |
City Area Code | (678) | |
Local Phone Number | 367-0809 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | BOXL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 74,124,212 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||
Revenues, net | $ 68,736,000 | $ 61,008,000 | $ 178,967,000 | $ 141,186,000 |
Cost of revenues | 47,716,000 | 45,210,000 | 128,497,000 | 104,002,000 |
Gross profit | 21,020,000 | 15,798,000 | 50,470,000 | 37,184,000 |
Operating expense: | ||||
General and administrative expenses | 13,952,000 | 11,933,000 | 44,714,000 | 32,844,000 |
Research and development | 604,000 | 355,000 | 1,865,000 | 1,310,000 |
Total operating expense | 14,556,000 | 12,288,000 | 46,579,000 | 34,154,000 |
Income from operations | 6,464,000 | 3,510,000 | 3,891,000 | 3,030,000 |
Other income (expense): | ||||
Interest expense, net | (2,598,000) | (870,000) | (7,330,000) | (2,652,000) |
Other income (expense), net | (128,000) | 34,000 | (204,000) | 54,000 |
Gain (loss) on settlement of liabilities, net | (614,000) | 856,000 | (2,992,000) | |
Changes in fair value of derivative liabilities | (113,000) | 60,000 | 1,537,000 | (164,000) |
Total other expense | (2,839,000) | (1,390,000) | (5,141,000) | (5,754,000) |
Income (loss) before income taxes | 3,625,000 | 2,120,000 | (1,250,000) | (2,724,000) |
Income tax expense | (520,000) | (1,391,000) | (475,000) | (3,936,000) |
Net income (loss) | 3,105,000 | 729,000 | (1,725,000) | (6,660,000) |
Fixed dividends - Series B Preferred | (317,000) | (317,000) | (952,000) | (952,000) |
Deemed contribution -Series B Preferred | 367,000 | |||
Net income (loss) attributable to common stockholders | 2,788,000 | 412,000 | (2,677,000) | (7,245,000) |
Comprehensive loss: | ||||
Net income (loss) | 3,105,000 | 729,000 | (1,725,000) | (6,660,000) |
Foreign currency translation adjustment | (5,040,000) | (2,008,000) | (11,449,000) | (1,738,000) |
Total comprehensive loss | $ (1,935,000) | $ (1,279,000) | $ (13,174,000) | $ (8,398,000) |
Net income (loss) per common share - basic | $ 0.04 | $ 0.01 | $ (0.04) | $ (0.12) |
Net income (loss) per common share - diluted | $ 0.03 | $ 0.01 | $ (0.04) | $ (0.12) |
Weighted average number of common shares outstanding - basic | 71,547 | 60,094 | 67,458 | 57,723 |
Weighted average number of common shares outstanding - diluted | 89,574 | 64,710 | 67,458 | 57,723 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 21,952 | $ 17,938 |
Accounts receivable - trade, net of allowances | 51,254 | 29,573 |
Inventories, net of reserves | 49,435 | 51,591 |
Prepaid expenses and other current assets | 9,013 | 9,444 |
Total current assets | 131,654 | 108,546 |
Property and equipment, net of accumulated depreciation | 1,675 | 1,073 |
Operating lease right of use asset | 4,370 | |
Intangible assets, net of accumulated amortization | 51,913 | 65,532 |
Goodwill | 24,524 | 26,037 |
Other assets | 363 | 248 |
Total assets | 214,499 | 201,436 |
Current liabilities: | ||
Accounts payable and accrued expenses | 48,410 | 33,638 |
Short-term debt | 9,224 | 9,804 |
Operating lease liabilities, current | 1,767 | |
Deferred revenues, current | 8,194 | 7,575 |
Derivative liabilities | 1,527 | 3,064 |
Other short-term liabilities | 258 | 667 |
Total current liabilities | 69,380 | 54,748 |
Deferred revenues, non-current | 15,016 | 13,952 |
Long-term debt | 44,056 | 42,137 |
Deferred tax liabilities, net | 8,036 | 8,449 |
Operating lease liabilities, non-current | 2,594 | |
Other long-term liabilities | 148 | 340 |
Total liabilities | 139,230 | 119,626 |
Commitments and contingencies (Note 15) | ||
Mezzanine equity: | ||
Total mezzanine equity | 28,509 | 28,509 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 167,972 and 167,972 shares issued and outstanding, respectively | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 74,123,492 and 63,821,901 Class A shares issued and outstanding, respectively | 7 | 6 |
Additional paid-in capital | 117,499 | 110,867 |
Accumulated deficit | (63,025) | (61,300) |
Accumulated other comprehensive (loss) income | (7,721) | 3,728 |
Total stockholders' equity | 46,760 | 53,301 |
Total liabilities and stockholders' equity | 214,499 | 201,436 |
Series B Preferred Stock | ||
Mezzanine equity: | ||
Total mezzanine equity | 16,146 | 16,146 |
Series C Preferred Stock | ||
Mezzanine equity: | ||
Total mezzanine equity | $ 12,363 | $ 12,363 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 167,972 | 167,972 |
Preferred stock, shares outstanding | 167,972 | 167,972 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Class A common stock | ||
Common stock, shares authorized | 150,000,000 | |
Common stock, shares issued | 74,123,492 | 63,821,901 |
Common stock, shares outstanding | 74,123,492 | 63,821,901 |
Series B Preferred Stock | ||
Mezzanine equity, shares issued | 1,586,620 | 1,586,620 |
Mezzanine equity, shares outstanding | 1,586,620 | 1,586,620 |
Series C Preferred Stock | ||
Mezzanine equity, shares issued | 1,320,850 | 1,320,850 |
Mezzanine equity, shares outstanding | 1,320,850 | 1,320,850 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Series A Preferred Stock. Series A Preferred Stock | Series A Preferred Stock. | Class A Common Stock | Additional Paid-in Capital. | Accumulated Other Comprehensive Loss | Accumulated Deficit. | Series A Preferred Stock | Total |
Beginning balance, value at Dec. 31, 2020 | $ 6 | $ 86,768 | $ 5,192 | $ (47,498) | $ 44,468 | |||
Beginning balance, shares at Dec. 31, 2020 | 53,343,518 | 167,972 | ||||||
Shares issued for acquisition | 404 | 404 | ||||||
Shares issued for acquisition (in shares) | 142,882 | |||||||
Stock options exercised | 405 | $ 405 | ||||||
Stock options exercised (in shares) | 481,834 | 481,834 | ||||||
Warrants exercised | 203 | $ 203 | ||||||
Warrants exercised (in shares) | 95,749 | |||||||
Stock compensation | 3,020 | 3,020 | ||||||
Foreign currency translation | (1,739) | (1,739) | ||||||
Fixed dividends Preferred Series B | (951) | (951) | ||||||
Net income (loss) | (6,659) | (6,659) | ||||||
Conversion of accounts payable liabilities | 1,626 | 1,626 | ||||||
Conversion of accounts payable liabilities (in shares) | 793,375 | |||||||
Conversion of debt obligations | 13,783 | $ 13,783 | ||||||
Conversion of debt obligations (in shares) | 5,693,481 | |||||||
Conversion of restricted shares (in shares) | 760,060 | 760,060 | ||||||
Deemed contribution from Series B preferred | 367 | $ 367 | ||||||
Ending balance, value at Sep. 30, 2021 | $ 6 | 105,625 | 3,453 | (54,157) | 54,927 | |||
Ending balance, shares at Sep. 30, 2021 | 61,310,899 | 167,972 | ||||||
Beginning balance, value at Jun. 30, 2021 | $ 6 | 100,559 | 5,461 | (54,886) | 51,140 | |||
Beginning balance, shares at Jun. 30, 2021 | 59,102,072 | 167,972 | ||||||
Stock options exercised | 159 | $ 159 | ||||||
Stock options exercised (in shares) | 162,400 | 162,000 | ||||||
Warrants exercised | 152 | $ 152 | ||||||
Warrants exercised (in shares) | 75,000 | |||||||
Stock compensation | 1,161 | 1,161 | ||||||
Foreign currency translation | (2,008) | (2,008) | ||||||
Fixed dividends Preferred Series B | (317) | (317) | ||||||
Net income (loss) | 729 | 729 | ||||||
Conversion of debt obligations | 3,911 | $ 3,911 | ||||||
Conversion of debt obligations (in shares) | 1,755,009 | |||||||
Conversion of restricted shares (in shares) | 216,418 | 217,000 | ||||||
Ending balance, value at Sep. 30, 2021 | $ 6 | 105,625 | 3,453 | (54,157) | $ 54,927 | |||
Ending balance, shares at Sep. 30, 2021 | 61,310,899 | 167,972 | ||||||
Beginning balance, value at Dec. 31, 2021 | $ 6 | 110,867 | 3,728 | (61,300) | 53,301 | |||
Beginning balance, shares at Dec. 31, 2021 | 167,972 | 63,821,901 | ||||||
Shares issued for acquisition | 150 | 150 | ||||||
Shares issued for acquisition (in shares) | 230,770 | |||||||
Stock options exercised | 69 | $ 69 | ||||||
Stock options exercised (in shares) | 193,841 | 193,841 | ||||||
Issuance of warrants and prefunded warrants | 2,348 | $ 2,348 | ||||||
Vesting of restricted share units (in shares) | 1,995,871 | |||||||
Warrants exercised (in shares) | 352,940 | |||||||
Issuance of stock | $ 1 | 2,352 | 2,353 | |||||
Issuance of stock (in shares) | 7,000,000 | |||||||
Stock compensation | 2,665 | 2,665 | ||||||
Foreign currency translation | (11,449) | (11,449) | ||||||
Fixed dividends Preferred Series B | (952) | (952) | ||||||
Net income (loss) | (1,725) | $ (1,725) | ||||||
Conversion of debt obligations (in shares) | 528,169 | |||||||
Conversion of restricted shares (in shares) | 1,995,871 | |||||||
Ending balance, value at Sep. 30, 2022 | $ 7 | 117,499 | (7,721) | (63,025) | $ 46,760 | |||
Ending balance, shares at Sep. 30, 2022 | 167,972 | 167,972 | 74,123,492 | |||||
Beginning balance, value at Jun. 30, 2022 | $ 7 | 112,352 | (2,681) | (66,130) | 43,548 | |||
Beginning balance, shares at Jun. 30, 2022 | 167,972 | 66,207,717 | ||||||
Shares issued for acquisition | 150 | $ 150 | ||||||
Shares issued for acquisition (in shares) | 230,770 | |||||||
Stock options exercised (in shares) | 0 | |||||||
Issuance of warrants and prefunded warrants | 2,348 | $ 2,348 | ||||||
Vesting of restricted share units | 11 | 11 | ||||||
Vesting of restricted share units (in shares) | 332,065 | |||||||
Warrants exercised (in shares) | 352,940 | |||||||
Issuance of stock | 2,352 | 2,352 | ||||||
Issuance of stock (in shares) | 7,000,000 | |||||||
Stock compensation | 603 | 603 | ||||||
Foreign currency translation | (5,040) | (5,040) | ||||||
Fixed dividends Preferred Series B | (317) | (317) | ||||||
Net income (loss) | 3,105 | $ 3,105 | ||||||
Conversion of restricted shares (in shares) | 332,065 | |||||||
Ending balance, value at Sep. 30, 2022 | $ 7 | $ 117,499 | $ (7,721) | $ (63,025) | $ 46,760 | |||
Ending balance, shares at Sep. 30, 2022 | 167,972 | 167,972 | 74,123,492 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (1,725) | $ (6,660) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of debt discount and issuance cost | 1,645 | 1,473 |
Bad debt expense (recovery) | 9 | (114) |
(Gain) loss on settlement of liabilities | (856) | 2,992 |
Changes in deferred tax assets and liabilities | (654) | 912 |
Change in allowance for sales returns and volume rebate | 431 | 542 |
Change in inventory reserve | 634 | 56 |
Change in fair value of derivative liability | (1,537) | 164 |
Shares issued for interest payment on notes payable | 512 | |
Stock compensation expense | 2,665 | 3,020 |
Depreciation and amortization | 6,818 | 5,264 |
Non-cash lease expense | (20) | |
Changes in operating assets and liabilities: | ||
Accounts receivable - trade | (26,240) | (26,658) |
Inventories | (4,722) | (10,084) |
Prepaid expenses and other assets | (41) | (8,375) |
Other assets | (332) | |
Accounts payable and accrued expenses | 21,592 | 17,865 |
Other liabilities | (1,737) | 2,134 |
Deferred revenues | 4,570 | 3,875 |
Net cash provided by (used in) operating activities | 500 | (13,082) |
Cash flows from investing activities: | ||
Business acquisitions (net of cash acquired) | (804) | |
Asset acquisition | (100) | |
Purchases of property and equipment, net | (960) | (139) |
Net cash used in investing activities | (1,060) | (943) |
Cash flows from financing activities: | ||
Net proceeds from issuance of common stock and warrants, net of issuance costs | 4,700 | 405 |
Proceeds from issuances of short-term debt | 2,500 | 43,269 |
Proceeds from exercise of options and warrants | 70 | |
Principal payments on debt | (1,878) | (35,487) |
Debt issuance costs | (70) | |
Payments of fixed dividends to Series B Preferred stockholders | (952) | (952) |
Net cash provided by financing activities | 4,440 | 7,165 |
Effect of foreign currency exchange rates | 134 | (377) |
Net increase (decrease) in cash and cash equivalents | 4,014 | (7,237) |
Cash and cash equivalents, beginning of the period | 17,938 | 13,460 |
Cash and cash equivalents, end of the period | 21,952 | 6,223 |
Supplemental cash flow disclosures: | ||
Cash paid for income taxes | 1,615 | 1,458 |
Cash paid for interest | 7,346 | 2,130 |
Non-cash investing and financing transactions: | ||
Shares issued to settle accounts payable | 1,626 | |
Exercise of warrants | 203 | |
Deemed contribution - Series B Preferred | 367 | |
Deferred consideration for acquisition | 537 | |
Shares issued to convert notes payable and accrued interest | 13,786 | |
Shares issued for asset acquisition | $ 150 | $ 403 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Boxlight Corporation, a Nevada Corporation, (“Boxlight”) designs, produces and distributes interactive technology solutions to the education, corporate and government markets under its Clevertouch and Mimio brands. The Company’s solutions include interactive displays, collaboration software, supporting accessories and professional services. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its wholly owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated 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 condensed consolidated financial information and interim financial reporting guidelines and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete condensed consolidated financial statements. The unaudited condensed consolidated 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2021 and notes thereto contained in the Company’s Annual Report on Form 10-K. Certain information and note disclosures normally included in consolidated financial statements have been condensed. The December 31, 2021 balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete financial statements. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for 2021 contained in the Annual Report on Form 10-K, filed with the SEC on April 13, 2022, describes the significant accounting policies that the Company used in preparing its dated condensed financial statements. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to revenue/reserves and allowances. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable and debt. Due to the short-term nature of cash, accounts receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value. Debt approximates fair value due to either the short-term nature, variable rate, or recent execution of the debt agreement. The amount of consideration received is deemed to approximate the fair value of long-term debt net of any debt discount and issuance cost. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted 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, 2022 and December 31, 2021 (in thousands): Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs September 30, Description (Level 1) (Level 2) (Level 3) 2022 Derivative liabilities - warrant instruments $ — $ — $ 1,527 $ 1,527 Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs December 31, Description (Level 1) (Level 2) (Level 3) 2021 Derivative liabilities - warrant instruments $ — $ — $ 3,064 $ 3,064 The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy: (in thousands) Balance, June 30, 2022 $ 1,414 Change in fair value of derivative liabilities 113 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, December 31, 2021 $ 3,064 Change in fair value of derivative liabilities 1,537 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, June 30, 2021 $ 536 Exercise of warrants (171) Change in fair value of derivative liabilities (9) Balance, September 30, 2021 $ 356 (in thousands) Balance, December 31, 2020 $ 363 Exercise of warrants (171) Change in fair value of derivative liabilities 164 Balance, September 30, 2021 $ 356 INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. The dilutive effect of options to purchase common stock, restricted stock units subject to vesting and other share-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted calculation for the entire period being presented. For the three months ended September 30, 2022 and September 30, 2021, where the Company had income, approximately 17.7 million and 1.89 million of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect. For the nine months ended September 30, 2022 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.2 million shares from options to purchase common shares and unvested restricted shares as well as 10.8 million shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. For the nine months ended September 30, 2021 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 6.7 million shares from options to purchase common shares and unvested restricted shares as well as 265,000 shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. REVENUE RECOGNITION The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and the title, and the significant risks and rewards of ownership of products or services are transferred to its customers. Product revenue is derived from the sale of projectors, interactive panels and related software and accessories to distributors, resellers, and end users. Service revenue is derived from hardware maintenance services, product installation, training, software maintenance, and subscription services. Nature of Products and Services and Related Contractual Provisions The Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software, and the provision of related software maintenance. In most cases, interactive devices are sold with hardware maintenance services with terms of approximately 60 months. Software maintenance includes technical support, product updates on a when and if available basis, and error correction services. At times, non-interactive projectors are also sold with hardware maintenance services with terms of approximately 60 months. The Company also licenses software independently of its interactive devices, in which case it is bundled with software maintenance, and in some cases, subscription services that include access to on-line content, and cloud-based applications. The Company’s software subscription services provide access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications. The Company’s product sales, including those with software and related services, generally include a single payment up front for the products and services, and revenue is recorded net of estimated sales returns and rebates based on the Company’s expectations and historical experience. For most of the Company’s product sales, control transfers, and therefore, revenue is recognized when products are shipped at the point of origin. When the Company transfers control of its products to the customer prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. For many of the Company’s software product sales, control is transferred when shipped at the point of origin since the software is installed on the interactive hardware device in advance of shipping. For software product sales, control is transferred when the customer receives the related interactive hardware since the customer’s connection to the interactive hardware activates the software license at which time the software is made available to the customer. For the Company’s software maintenance, hardware maintenance, and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer. Customer Financing Arrangements Through a third-party leasing partner, we provide financing programs that are designed to offer customers a variety of options to purchase interactive technology solutions whereby customers enter into purchase agreements with the Company along with a separate financing or leasing contract with a third-party lender, who advances the proceeds from the sale to us upon contract execution and shipment of goods. In such situations, the sales to the customer are final and the Company bears no risk of loss regarding subsequent payments. Significant Judgments For contracts with multiple performance obligations, each of which represent promises within a contract that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). The Company’s products and services included in its contracts with multiple performance obligations generally are not sold separately and there are no observable prices available to determine the SSP for those products and services. Since observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins. Because observable prices are generally not available for the Company’s performance obligations that are sold in bundled arrangements, the Company does not apply the residual approach to determining SSP. However, the Company does have performance obligations for which pricing is highly variable or uncertain, and contracts with those performance obligations generally contain multiple performance obligations with highly variable or uncertain pricing. For these contracts the Company allocates the transaction price to those performance obligations using an alternative method of allocation that is consistent with the allocation objective and the guidance on determining SSPs considering, when applicable, the estimated cost to provide the performance obligation, market pricing for competing product or service offerings, residual values based on the estimated SSP for certain goods, product-specific business objectives, incremental values for bundled transactions that include a service relative to similar transactions that exclude the service, and competitor pricing and margins. A separate price has not been established by the Company for performance obligations generally included in its contracts. In addition, the Company’s contracts generally include performance obligations that are never sold separately, 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. The Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that are executed in the same manner, contain the same performance obligations, and are priced in a consistent manner. The Company believes that the application of the portfolio approach produces the same result as if they were applied at the contract level. Contract Balances The timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for the Company’s product and most service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally due within 30-60 days of contract execution. Fees for installation, training, and professional development services are fixed and generally become due as the services are performed. The Company has an established history of collecting under the terms of its contracts without providing refunds or concessions to its customers. The Company’s contractual payment terms do not vary when products are bundled with services that are provided over multiple years. In these contracts where services are expected to be transferred on an ongoing basis for several years after the related payment, the Company has determined that the contracts generally do not include a significant financing component. The upfront invoicing terms are designed 1) to provide customers with a predictable way to purchase products and services where the payment is due in the same timeframe as when the products, which constitute the predominant portion of the contractual value, are transferred, and 2) to ensure that the customer continues to use the related services; so that the customer will receive the optimal benefit from the products during the course of such product’s lifetime. Additionally, the Company has elected the practical expedient to exclude any financing component from consideration for contracts where, at contract inception, the period between the transfer of services and the timing of the related payment is not expected to exceed one year. The Company has an unconditional right to consideration for all products and services transferred to the customer. That unconditional right to consideration is reflected in accounts receivable in the accompanying condensed consolidated balance sheets in accordance with Topic 606. Contract liabilities are reflected in deferred revenue in the accompanying consolidated balance sheets and reflect amounts allocated to performance obligations that have not yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription services. The Company has no material contract assets as of September 30, 2022, or December 31, 2021. During the three months ended September 30, 2022, and September 30, 2021, the Company recognized $2.2 million and $2.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021, and December 31, 2020, respectively. During the nine months ended September 30, 2022, and September 30, 2021, the Company recognized $5.8 million and $4.4 million of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively. Variable Consideration The Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, price protection provisions, or in connection with certain other rebate provisions. The Company generally does not allow product returns other than under assurance warranties or hardware maintenance contracts. However, the Company, on a case-by-case basis, will grant exceptions, mostly for “buyer’s remorse” where the distributor or reseller’s end customer either did not understand what they were ordering or otherwise determined that the product did not meet their needs. An allowance for sales returns is estimated based on an analysis of historical trends. In very limited situations, a customer may return previous purchases held in inventory for a specified period of time in exchange for credits toward additional purchases. The Company includes variable consideration in its transaction price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not be a significant reversal. These estimates are generally made using the expected value method based on historical experience and are measured at each reporting date. There was no material revenue recognized in the three and nine months ended September 30, 2022 related to changes in estimated variable consideration that existed at June 30, 2022 or December 31, 2021. Remaining Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting within the contract. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract. Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer. As of September 30, 2022 and December 31, 2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $23.2 million and $21.5 million, respectively. The Company expects to recognize revenue on 33% of the remaining performance obligations during the next twelve months, 26% in the following twelve months, 22% in the twelve months ended September 30, 2025, 14% in the twelve months ended September 30, 2026, with the remaining 5% recognized thereafter In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contracts). In addition, the Company has elected not to disclose the value of remaining performance obligations for contracts with performance obligations that are expected, at contract inception, to be satisfied over a period that does not exceed one year. Disaggregated Revenue The Company disaggregates revenue based upon the nature of its products and services and the timing and in the manner which it is transferred to the customer. Although all products are transferred to the customer at a point in time, hardware and some software is pre-installed on the interactive device are transferred at the point of shipment, while some software is transferred to the customer at the time the hardware is received by the customer or when software product keys are delivered electronically to the customer. All service revenue is transferred over time to the customer; however, professional services are generally transferred to the customer within a year from the contract date as measured based upon hours or time incurred while software maintenance, hardware maintenance, and subscription services are generally transferred over five years from the contract execution date as measured based upon the passage of time. Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) (in thousands) (in thousands) (in thousands) Product revenues: Hardware $ 64,601 $ 57,400 $ 167,967 $ 131,865 Software 906 1,395 3,959 3,445 Service revenues: Professional services 1,359 534 2,192 1,103 Maintenance and subscription services 1,870 1,679 4,849 4,773 $ 68,736 $ 61,008 $ 178,967 $ 141,186 Contract Costs The Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs. The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were not obtained (e.g., a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all the following criteria: ● The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. ● The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. ● The costs are expected to be recovered. Certain sales commissions incurred by the Company are determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the estimated economic benefit period. For these sales commissions that are incremental costs to obtain where the period of amortization would be recognized over a period that is one year or less, the Company has elected the practical expedient to expense those costs as incurred. Commission costs that are deferred are classified as current or non-current assets based on the timing of when the Company expects to recognize the expense and are included in prepaid and other assets and other assets, respectively, in the accompanying condensed consolidated balance sheets. Total deferred commissions, net of accumulated amortization, was $274 thousand at September 30, 2022. Bill and Hold Arrangements From time to time the Company enters custodial bill and hold arrangements with customers. Each arrangement is reviewed, and revenue is recognized only when the following criteria have been met: (1) the reason for the bill-and-hold arrangement is substantive (2) the product is identified as the customer’s asset (3) the product is ready for delivery to the customer (4) there must be a fixed schedule for delivery (5) the seller cannot use the product or direct the product to another customer. At September 30, 2022, RECENTLY ADOPTED ACCOUNTING STANDARDS Leases Accounting Standards Update ("ASU") No. 2016-02 "Leases” (Topic 842), as amended, requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The Company elected the modified retrospective approach which we applied on January 1, 2022, and therefore have not restated comparative periods. The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less). The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component. Finally, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The Company’s operating leases relate primarily to office space. As a result of the adoption of ASU 2016-02, the Company recognized an operating lease right-of-use ("ROU") asset of $3.8 million and a current operating lease liability of approximately $1.6 million and a long-term operating lease liability of approximately $2.3 million as of January 1, 2022, with no impact on the Company’s Condensed Consolidated Statement of Operations and Comprehensive Loss or Condensed Consolidated Statement of Cash Flows. The ROU asset and operating lease liabilities are recorded as separate line items in the Condensed Consolidated Balance Sheet. ACCOUNTING STANDARDS PENDING ADOPTION In June 2016, the FASB issued ASU 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 financial assets measured at amortized cost, including trade accounts receivable. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. This new guidance changes the impairment model for most financial assets and certain other instruments. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact that this standard will have, if any, on its financial statements. There were various other accounting standards and interpretations issued recently, some of which although applicable, are not expected to a have a material impact on the Company’s financial position, operations, or cash flows. SUBSEQUENT EVENTS We reviewed all material events through the date on which these condensed consolidated financial statements were issued for subsequent event disclosure consideration as described in Note 17. |
RECENT BUSINESS ACQUISITIONS
RECENT BUSINESS ACQUISITIONS | 9 Months Ended |
Sep. 30, 2022 | |
RECENT BUSINESS ACQUISITIONS | |
RECENT BUSINESS ACQUISITIONS | NOTE 2 – RECENT BUSINESS ACQUISITIONS FrontRow Calypso LLC On December 31, 2021, the Company, and its wholly owned subsidiary, Boxlight, Inc., consummated the acquisition of 100% of the membership interests of FrontRow Calypso LLC, a Delaware limited liability company (“FrontRow”). FrontRow was acquired in exchange for payment of $34.7 million to Phonic Ear Inc. and Calypso Systems LLC, the equity holders of FrontRow. Based in Petaluma, California, FrontRow makes technology that improves communication in learning environments, including developing network-based solutions for intercom, paging, bells, mass notification, classroom sound, lesson sharing, AV control and management. FrontRow also has offices in Toronto, Copenhagen, Brisbane, Hamilton (UK) and Shenzhen. In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a term loan credit facility with Whitehawk Finance LLC described in more detail in Note 9. The assets acquired and liabilities assumed were recorded at their estimated fair values at the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and selection of comparable companies. The Company engaged the assistance of an independent third-party valuation specialist to determine certain fair value measurements related to acquired assets. The excess consideration over the net fair values of the assets acquired and liabilities assumed was recognized as goodwill. The fair value or net realizable value of inventories at the date of acquisition was determined using a “top-down” approach based upon the estimated sales value, less a reasonable profit margin and less the estimated costs to dispose of the inventory, including selling costs and other disposal costs such as freight. Accordingly, the carrying amount of inventories at the acquisition date was increased to its estimated fair value based on these assumptions which will result in an increase in cost of revenues subsequent to the acquisition date in 2022. The fair value of accounts receivable acquired in connection with the acquisition approximated the contractual amount due from customers at that date. The Company has early adopted ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” and therefore, the acquired contract liabilities of FrontRow have been recognized and measured in accordance with Topic 606 as follows. (in thousands) Assets acquired: Cash $ 2,752 Accounts receivable 3,381 Inventories 10,240 Prepaid expenses 883 Property and equipment 348 Total assets acquired 17,604 Accounts payable and accrued expenses (1,501) Deferred revenue (1,225) Other liabilities (12) Total liabilities assumed (2,738) Net tangible assets acquired $ 14,866 Identifiable intangible assets: Customer relationships 8,195 Trademarks 3,244 Technology 5,036 Non-compete 391 Total intangible assets subject to amortization 16,866 Goodwill 2,920 Total net assets acquired $ 34,652 Consideration paid: Cash $ 34,652 The following table presents the useful lives over which the acquired intangible assets will be amortized on a straight-line basis, which approximates the pattern by which the related economic benefits of the assets are consumed: Estimated Weighted Average Life (years) Customer relationships 8 Trademarks 10 Technology 8 Non-compete agreements 3 Interactive Concepts On March 23, 2021, the Company acquired 100% of the outstanding shares of Interactive Concepts BV, a company incorporated and registered in Belgium and a distributor of interactive technologies (“Interactive”), for total consideration of approximately $3.3 million in cash, common stock and deferred consideration. Interactive has been Boxlight’s key distributor in Belgium and Luxembourg. The following table summarizes the estimated acquisition date fair values of the net assets acquired and liabilities assumed, and the estimate of the fair value of consideration paid: (in thousands) Assets acquired: Cash $ 1,647 Accounts receivable 1,045 Inventories 191 Property and equipment 37 Total assets acquired 2,920 Accounts payable and accrued expenses (821) Deferred tax liability (230) Total liabilities assumed (1,051) Net tangible assets acquired 1,869 Identifiable intangible assets: Tradename 220 Customer relationships 745 Total intangible assets subject to amortization 965 Goodwill 439 Total net assets acquired $ 3,273 Consideration paid: Cash $ 1,795 Deferred cash consideration 1,075 Common shares issued 403 Total consideration paid $ 3,273 |
ACCOUNTS RECEIVABLE - TRADE
ACCOUNTS RECEIVABLE - TRADE | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS RECEIVABLE - TRADE. | |
ACCOUNTS RECEIVABLE - TRADE | NOTE 3 – ACCOUNTS RECEIVABLE - TRADE Accounts receivable consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Accounts receivable – trade $ 53,174 $ 31,053 Allowance for doubtful accounts (555) (405) Allowance for sales returns and volume rebates (1,365) (1,075) Accounts receivable - trade, net of allowances $ 51,254 $ 29,573 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORIES. | |
INVENTORIES | NOTE 4 – INVENTORIES Inventories are stated at the lower of cost or net realizable value and include spare parts and finished goods. Inventories are primarily determined using specific identification and the first-in, first-out (“FIFO”) cost methods. Cost includes direct cost from the Current Manufacturer (“CM”) or Original Equipment Manufacturer (“OEM”), plus material overhead related to the purchase, inbound freight and import duty costs. Inventories consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Finished goods $ 49,577 $ 51,346 Spare parts 998 260 Reserve for inventory obsolescence (1,232) (599) Advanced shipping costs 92 584 Inventories, net $ 49,435 $ 51,591 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS. | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Prepayments to vendors $ 7,085 $ 7,739 Prepaid licenses and other 1,928 1,705 Prepaid expenses and other current assets $ 9,013 $ 9,444 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS. | |
INTANGIBLE ASSETS | NOTE 6 – INTANGIBLE ASSETS Intangible assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): Useful lives 2022 2021 Patents 4-10 years $ 182 $ 182 Customer relationships 8-15 years 47,650 55,158 Technology 3-5 years 8,521 8,901 Domain 7 years 14 14 Non-compete 8-15 years 391 391 Tradenames 2-10 years 12,065 13,085 Intangible assets, at cost 68,823 77,731 Accumulated amortization (16,910) (12,199) Intangible assets, net of accumulated amortization $ 51,913 $ 65,532 For the three months ended September 30, 2022 and 2021, the Company recorded amortization expense of $2.1 million and $1.8 million, respectively. For the nine months ended September 30, 2022 and 2021, the Company recorded amortization expense of $6.5 million and $5.2 million, respectively. Changes to gross carrying amount of recognized intangible assets due to translation adjustments include approximately $6.3 million reduction as of September 30, 2022 and $3.0 million increase as of December 31, 2021. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
LEASES | NOTE 7 – LEASES The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through February 2027. Generally, these leases have initial lease terms of five years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at its sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of the Company’s lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of the Company’s lease agreements provide for periodic adjustments to rental payments for inflation. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. In connection with the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At September 30, 2022, the Company had no leases classified as finance leases. The Company is not a lessor in any lease arrangement. Operating lease expense was $439 thousand for the three months ended September 30, 2022 and $1.5 million for the nine months ended September 30, 2022. Variable lease costs and short-term lease cost were not material for the three and nine months ended September 30, 2022. Cash paid for amounts included in the measurement of lease liabilities was $267 thousand for the three months ended September 30, 2022 and $1.4 million for the nine months ended September 30, 2022. During the three months ended September 30, 2022, the Company obtained new operating lease right-of-use assets totaling $143 thousand and for the nine months ended September 30, 2022, the Company obtained $2.0 million in operating right-of-use assets. Future maturities of the Company's operating lease liabilities are summarized as follows (in thousands): Fiscal year ended, 2022 $ 647 2023 2,000 2024 1,271 2025 1,068 2026 731 5,717 Less imputed interest (1,356) Total $ 4,361 Supplemental lease information Weighted-average remaining lease term (years) 3.5 Weighted-average discount rate 15.5 % |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expense consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Accounts payable $ 38,955 $ 25,714 Accrued expense 8,648 6,440 Other 807 1,484 Accounts payable and other liabilities $ 48,410 $ 33,638 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
DEBT | NOTE 9 – DEBT The following is a summary of the Company’s debt as of September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Debt – Third Parties Paycheck Protection Program $ 140 $ 1,009 Note payable - Whitehawk 59,063 58,500 Total debt 59,203 59,509 Less: Discount and issuance costs 5,923 7,568 Current portion of debt 9,224 9,804 Long-term debt $ 44,056 $ 42,137 Total debt (net of discount and issuance costs) $ 53,280 $ 51,941 Debt - Third Parties: Whitehawk Finance LLC In order to finance the acquisition of FrontRow, the Company and substantially all of its direct and indirect subsidiaries, including Boxlight and FrontRow as guarantors, entered into a maximum $68.5 million term loan credit facility, dated December 31, 2021 (the “Credit Agreement”), with Whitehawk Finance LLC, as lender (the “Lender”), and White Hawk Capital Partners, LP, as collateral agent. The Company received an initial term loan of $58.5 million on December 31, 2021 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $10 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw”). The Initial Loan and Delayed Draw are collectively referred to as the “Term Loans.” The proceeds of the Initial Loan were used to finance the Company’s acquisition of FrontRow, pay off all indebtedness owed to the Company’s then existing lenders, Sallyport Commercial Finance, LLC and Lind Global Asset Management, LLC, pay related fees and transaction costs, and provide working capital. Of the Initial Loan, $8.5 million was subject to repayment on February 28, 2022, with quarterly principal payments of $625,000 and interest payments commencing March 31, 2022 and the $40.0 million remaining balance plus any Delayed Draw loans becoming due and payable in full on December 31, 2025. The Term Loans bear interest at the LIBOR rate plus 10.75%; provided that after March 31, 2022, if the Company’s Senior Leverage Ratio (as defined in the Credit Agreement) is less than 2.25, the interest rate would be reduced to LIBOR plus 10.25%. Such terms are subject to the Company maintaining a borrowing base in terms compliant with the Credit Agreement. In conjunction with its receipt of the Initial Loan, the Company issued to the Lender (i) 528,169 shares of Class A common stock (the “Shares”), which Shares were registered pursuant to its existing shelf registration statement and were delivered to the Lender in January 2022, (ii) a warrant to purchase 2,043,291 shares of Class A common stock (subject to increase to the extent of 3% of any Series B and Series C convertible preferred stock converted into Class A common stock), exercisable at $2.00 per share (the “Warrant”), which Warrant was subject to repricing on March 31, 2022 based on the arithmetic volume weighted average prices for the 30 trading days prior to September 30, 2022, in the event the Company’s stock is then trading below $2.00 per share, (iii) a 3% fee of $1,800,000, and (iv) a $500,000 original issue discount. In addition, the Company agreed to register for resale the shares issuable upon exercise of the Warrant. The Company also incurred agency fees, legal fees, and other costs in connection with the execution of the Credit Agreement totaling approximately $1.7 million. Under the terms of the warrant issued to Whitehawk on December 31, 2021, the exercise price of the warrants would reprice if the stock price on March 31, 2022 was less than the original exercise price, at which time the number of warrants would also be increased proportionately, so that after such adjustment the aggregate exercise price payable for the increased number of warrant shares would be the same as the aggregate exercise price previously in effect. The warrants repriced on March 31, 2022 to $1.19 per share and the shares increased to 3,434,103. On July 22, 2022, the Company entered into a Securities Purchase Agreement with an accredited institutional investor. According to the terms of the Whitehawk agreement, this purchase agreement triggered a reduction of the exercise price of the warrants and a revaluation of the derivative liability. The warrants were repriced to $1.10 and shares increased to 3,715,075. On March 29, 2022, the Company received a notice from the collateral agent, alleging, among other things, defaults as a result of (i) failure to repay $8.5 million of the facility by February 28, 2022, (ii) non-compliance with the borrowing base resulting in the Company being in an over advance position under the Credit Agreement, and (iii) failure to timely provide certain reports and documents. As a result, all accrued and unpaid interest owed under the Term Loan, became subject to a post-default interest rate equal to the highest interest rate allowed for under the Credit Agreement plus 2.50% until such time as the events of default were either waived or cured. In February 2022, WhiteHawk and the Company agreed in principle to an extension of the February 2022 Payment. Pursuant to amendment to the Credit Agreement, dated April 4, 2022, the Collateral Agent and Lender agreed to extend the terms of repayment of the $8.5 million originally due on February 28, 2022 until February 28, 2023 and waive and/or otherwise extend compliance with certain other terms of the Credit Agreement in order to allow the Loan Parties adequate time to comply with such terms. In July 2022, the Company and Whitehawk agreed that the notice had inadvertently included the default with respect to the failure to repay On June 21, 2022, the Company and substantially all of its direct and indirect subsidiaries (together with the Company, the “Loan Parties”), entered into a second amendment (the “Second Amendment”) to the four year term loan credit facility, originally entered into December 31, 2021 and as amended on April 4, 2022 (the “Credit Agreement”), with the Collateral Agent and Lender. The Second Amendment to the Credit Agreement was entered into for purposes of the Lender funding a $2.5 million delayed draw term loan and adjusting certain terms to the Credit Agreement, including adjusting the Applicable Margin (as defined in the Second Amendment) to 13.25% for LIBOR Rate Loans and 12.25% for Reference Rate Loans, increasing the definition of change of control from 33% voting power to 40% voting power, requiring the Company to engage a financial advisor, and allowing additional time, until July 15, 2022, for the Company to come into compliance with certain borrowing base requirements set forth in the Second Amendment to the Credit Agreement, among other adjustments. During the three-month period ending September 30, 2022, the Company repaid principal of $656 thousand and interest of $2.0 million to Whitehawk. During the nine-month period ending September 30, 2022, the Company repaid principal of $1.9 million and interest of $5.6 million to Whitehawk. Lind Global Marco Fund and Lind Global Asset Management During the nine months ended September 30, 2021, the Company repaid principal of $9.9 million and interest of $511 thousand, to Lind Global by issuing a total of 5.7 million shares of Class A common stock with an aggregate value of $13.8 million to Lind Global and recognized a loss extinguishment of debt of approximately $3.4 million. Paycheck Protection Program Loan On May 22, 2020, the Company received loan proceeds of $1.1 million under the Paycheck Protection Program. During 2021, the Company applied for forgiveness in the amount of $836 thousand. On March 2, 2022, we received a decision letter from the lender that the forgiveness application had been approved, leaving a remaining balance of $173 thousand to be paid. The Company received a payment schedule from our lender on May 5, 2022, extending the payoff date until May 2025. The amount remaining on the loan at September 30, 2022 was $140 thousand. Everest Display, Inc. On January 26, 2021, the Company entered into an agreement with EDI and EDI’s subsidiary, AMAGIC, settling $1,983,436 in accounts payable owed by the Company to EDI for 793,375 shares of Class A common stock. During the nine months ended September 30, 2021, the Company recognized a $357 thousand gain. Accounts Receivable Financing – Sallyport Commercial Finance On September 30, 2020, Boxlight Inc. and EOS EDU LLC entered into an asset-based lending agreement with Sallyport Commercial Finance, LLC (“Sallyport”). Sallyport agreed to purchase 90% of the eligible accounts receivable of the Company during the Term with a right of recourse back to the Company if the receivables are not collectible. 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. On July 20, 2021, Boxlight and Sallyport amended the Accounts Receivable Agreement (the “ARC Amendment”) for purposes of increasing the Maximum Facility Limit Amount to $13,000,000, as well as increasing the minimum monthly sales from $1,250,000 to $3,000,000. In exchange for entry into the ARC Amendment, Boxlight agreed to a fee of $50,000, representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remain unchanged. On August 6, 2021, Boxlight and Sallyport entered into an additional amendment of the Accounts Receivable Agreement (the “Second ARC Amendment”), which further increased the Maximum Facility Limit Amount to $15,000,000. In exchange for entry into the Second ARC Amendment, Boxlight agreed to a fee of $20,000, representing one percent of the increased Maximum Facility Limit Amount. Other terms of the Accounts Receivable Agreement remain unchanged. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVE LIABILITIES. | |
DERIVATIVE LIABILITIES | NOTE 10 – DERIVATIVE LIABILITIES The Company determined that certain warrants to purchase common stock do not satisfy the criteria for classification as equity instruments due to the existence of certain net cash and non-fixed settlement provisions that are not within the sole control of the Company. Conversion and exercise prices may be lowered if the Company issues securities at lower prices in the future. Such warrants are measured at fair value at each reporting date, and the changes in fair value are included in determining net income (loss) for the period. The Company used a Monte Carlo Simulation model to determine the fair value of the derivative liabilities at September 30, 2022 and December 31, 2021. September 30, 2022 Common stock issuable upon exercise of warrants 3,715,075 Market value of common stock on measurement date $ 0.62 Exercise price $ 1.10 Risk free interest rate (1) 4.07 % Expected life in years 4.25 years Expected volatility (2) 92 % Expected dividend yields (3) — % December 31, 2021 Common stock issuable upon exercise of warrants 2,043,291 Market value of common stock on measurement date $ 1.38 Exercise price $ 2.00 Risk free interest rate (1) 1.25 % Expected life in years 5 years Expected volatility (2) 79 % Expected dividend yields (3) — % (1) The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date. (2) The Company does not expect to pay a dividend in the foreseeable future. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 – INCOME TAXES Pretax (loss) income resulting from domestic and foreign operations is as follows (in thousands): Three Months Three Months Ended Ended September 30 September 30, 2022 2021 United States $ 3,320 $ (3,114) Foreign 305 5,234 Total pretax book income $ 3,625 $ 2,120 Nine Months Ended Nine Months Ended September 30 September 30, 2022 2021 United States $ (589) $ (8,541) Foreign (661) 5,817 Total pretax book loss $ (1,250) $ (2,724) The Company recorded income tax expense of $520 thousand and $1.4 million for the three months ended September 30, 2022 and September 30, 2021, respectively and income tax expense of $475 thousand of $3.9 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. The year-to-date effective tax rate is 38% due to there being no material tax expense/benefit for the legacy Boxlight entities, due to their valuation allowance position, while the Sahara entities are fully taxable. The decrease in tax expense year-over-year is largely due to foreign pretax book loss for the nine months ended September 30, 2022 as compared to foreign pretax income for the nine months ended September 30, 2021, as well as the impact of a significant tax rate change in the UK on the Company’s deferred tax liability that was recorded in the three months ended September 30, 2021. The Company operates in the United States, United Kingdom, and other jurisdictions. Income taxes have been provided based upon the tax laws and rates of the countries in which operations are conducted and income is earned. The legacy Boxlight entities are in a net deferred tax asset position in the United States, the United Kingdom, and other jurisdictions, primarily driven by the aforementioned net operating losses. The recoverability of these deferred tax assets depends on the Company’s ability to generate taxable income in the jurisdiction to which the carryforward applies. It also depends on specific tax provisions in each jurisdiction that could impact utilization. For example, in the United States, a change in ownership, as defined by federal income tax regulations, could significantly limit the Company’s ability to utilize its U.S. net operating loss carryforwards. Additionally, because U.S. tax laws limit the time during which the net operating losses generated prior to 2018 may be applied against future taxes, if the Company fails to generate U.S. taxable income prior to the expiration dates, the Company may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes. The Company has evaluated both positive and negative evidence as to the ability of its legacy entities in each jurisdiction to generate future taxable income. Based on its long history of cumulative losses in those jurisdictions, it believes it is appropriate to maintain a full valuation allowance on its net deferred tax asset at September 30, 2022 and December 31, 2021. The Sahara entities have recorded a net deferred tax liability, which is primarily driven by the net deferred tax liability on the intangibles for which it does not have tax basis. This includes the deferred tax liability recorded during 2021 for the acquisition of Interactive Concepts. The Company does not qualify for any consolidated filing positions in any of these countries, so there is no ability to net the deferred tax liabilities of the Sahara companies against the deferred tax assets of the legacy Boxlight companies. The tax years from 2009 to 2022 remain open to examination in the U.S. federal jurisdiction. The tax years from 2020 to 2022 remain open to examination in the U.K. Statutes of limitations vary in other immaterial jurisdictions. During the second quarter of 2021, the Company became aware of a potential state tax exposure for failure to file minimum tax returns in a state for several years. The Company has recorded an exposure item of $82 thousand for its best estimate of the amount for which it will settle the exposure. This amount includes $24 thousand of income tax and $58 thousand of penalties and interest. The Company has not identified any other material uncertain tax positions at this time. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2022 | |
EQUITY | |
EQUITY | NOTE 12 – EQUITY Preferred Shares The Company’s articles of incorporation provide that the Company is authorized to issue 50,000,000 shares of preferred stock consisting of: 1) 250,000 shares of non-voting Series A preferred stock, with a par value of $0.0001 per share; 2) 1,200,000 shares of voting Series B preferred stock, with a par value of $0.0001 per share; 3) 270,000 shares of voting Series C preferred stock, with a par value of $0.0001 per share; and 4) 48,280,000 shares of “blank check” preferred stock to be designated by the Company’s board of directors. Issuance of preferred shares Series A Preferred Stock At the time of the Company’s initial public offering, the Company issued 250,000 shares of the Company’s non-voting convertible Series A preferred stock to Vert Capital for the acquisition of Genesis. All of the Series A preferred stock was convertible into 398,406 shares of Class A common stock, at the discretion of the Series A stockholder. On August 5, 2019, a total of 82,028 shares of Series A preferred stock were converted into a total of 130,721 shares of Class A common stock. As of September 30, 2022, a total of 167,972 shares of Series A preferred stock remained outstanding. Series B Preferred Stock and Series C Preferred Stock 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 per share which was the closing price of the Company’s Class A common stock on the Nasdaq Stock Market on September 25, 2020 (the “Conversion Price”). Such conversion may occur either (i) at the option of the holder at any time after January 1, 2024, or (ii) automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading days (based on a volume weighted average price). The Series C Preferred Stock has a stated and liquidation value of $10.00 per share and is convertible into the Company’s Class A common stock at the Conversion Price either (i) at the option of the holder at any time after January 1, 2026, or (ii) automatically upon the Company’s Class A common stock trading at 200% of the Conversion Price for 20 consecutive trading days (based on a volume weighted average price). To the extent not previously converted into the Company’s Class A common stock, the outstanding shares of Series B Preferred Stock shall be redeemable at the option of the holders at any time or from time to time commencing on January 1, 2024 upon, 30 days prior written notice to the holders, for a redemption price, payable in cash, equal to the sum of (a) ($10.00) multiplied by the number of shares of Series B Preferred Stock being redeemed (the “Redeemed Shares”), plus (b) all accrued and unpaid dividends, if any, on such Redeemed Shares. The Series C Preferred Stock is also subject to redemption on the same terms commencing January 1, 2026. The aggregate estimated fair value of the Series B and C Preferred Stock of $28.5 million was included as part of the total $94.9 million consideration paid for the purchase of Sahara. As the redemption features in the Series B Preferred Stock and Series C Preferred Stock are not solely within the control of the Company, the Company has classified the Series B Preferred Stock and Series C Preferred Stock as mezzanine or temporary equity in the Company’s condensed consolidated balance sheet. On March 24, 2021, the Company entered into a share redemption and conversion agreement with certain holders of Series B and Series C preferred stock (the “Redemption Agreement”) which allows the Company to redeem and repurchase each such stockholder’s shares of Series B preferred stock on or before June 30, 2021 for the stated or liquidation value of approximately £11.5 million (or approximately $15.9 million) plus accrued dividends from January 1, 2021 to the date of purchase. Such stockholders hold 96% of the Series C preferred stock. Upon redemption, the Series C shares held by such stockholders would convert into approximately 7.6 million shares of Class A Common Stock at the stated conversion price of $1.66 per share. On June 14, 2021, the Company entered into an amendment to the Redemption Agreement (the “Amended Redemption Agreement”) for purposes of extending the completion date to on or before December 31, 2021. In addition, the Amended Redemption Agreement changed the definition of “Redemption Payments” such that the redemption payment schedule would begin on or before May 31, 2021, for the quarter then ended and continue quarterly until the date of completion. Regarding these amendments, the Company applied the accounting guidance from ASC 470-50 pertaining to determining whether an amendment to an equity-classified preferred share is an extinguishment or modification, and concluded that the Amended Redemption Agreement on June 14, 2021, as it effected the Series B Preferred Stock, resulted in an extinguishment of the original equity instruments subject to redemption agreement. Accordingly, the Series B Preferred Stock subject to the Amended Redemption Agreement was recorded at its fair value as of June 14, 2021, and a $367 thousand deemed contribution was credited to additional-paid-in-capital. With the Redemption Agreement, the Series B Preferred Stock includes a beneficial conversion feature. The Company early adopted (as of January 1, 2021) ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which includes a key provision eliminating the beneficial conversion feature guidance in ASC Subtopic 470-20, “Debt with Conversion and Other Options. Common Stock The Company’s common stock consists of 1) 150,000,000 shares of Class A voting common stock and 2) 50,000,000 shares of Class B non-voting common stock. Class A and Class B common stock have the same rights except that Class A common stock is entitled to one 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 would automatically convert into shares of Class A common stock. As of September 30, 2022 and December 31, 2021, the Company had 74,123,492 and 63,821,901 shares of Class A common stock issued outstanding Issuance of common stock Securities Purchase Agreement On July 22, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited institutional investor (the “Investor”) pursuant to which the Company agreed to issue and sell, in a registered direct offering directly to the Investor, 7.0 million shares (the “Shares”) of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase 352,940 shares of Common Stock at an exercise price of $0.0001 per share, which Pre-Funded Warrants were issued in lieu of shares of Common Stock to ensure that the Investor did not exceed certain beneficial ownership limitations, and warrants to purchase an aggregate of 7,352,940 shares of Common Stock at an exercise price of $0.68 per share (the “Warrants”, and collectively with the Pre-Funded Warrants and the Shares, the “Securities”). The Securities were sold at a price of $0.68 per share for total gross proceeds to the Company of $5.0 million (the “Offering”), before deducting estimated offering expenses, and excluding the exercise of any Warrants or Pre-Funded Warrants. The Pre-Funded Warrants were exercisable immediately and the Warrants will be exercisable six months after the date of issuance and will expire five and a half years The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties. Pursuant to the terms of the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) during the 60-day The Company evaluated whether the Warrants, Pre-Funded Warrants and/or Shares were in the scope of ASC 480 which discusses the accounting for instruments with characteristics of both liabilities and equity. The guidance in ASC 480, and the resulting liability classification, is applicable to such instruments when certain criteria are met. Based on its analysis, the Company concluded that the Warrants, Pre-Funded Warrants and Shares did not meet any of the criteria to be subject to liability classification under ASC 480 and are therefore classified as equity. Credit Facility In conjunction with its receipt of the Whitehawk loan, the Company issued to Whitehawk 528,169 shares of Class A common stock, which were registered pursuant to the Company’s existing shelf registration statement and were delivered to the Whitehawk in January 2022. Debt Conversion During the three months ended September 30, 2021, the Company repaid principal of $3.1 million and interest of $138 thousand by issuing 1.8 million shares Class A common stock to Lind and recognized a $0.7 million loss. During the nine months ended September 30, 2021, the Company repaid principal of $9.9 million and interest of $511 thousand by issuing 5.7 million shares Class A common stock with an aggregate value of $13.8 million to Lind and recognized a $3.4 million loss. Accounts Payable and Other Liabilities Conversion During the nine months ended September 30, 2021, the Company converted $2.0 million of EDI accounts payable in exchange for 793 thousand shares of Class A common stock with an aggregate value of $1.6 million and recognized a $357 thousand gain. Conversion of restricted stock units During the three and nine months ended September 30, 2022, respectively, 332,065 and 1,995,871 restricted stock units vested and were converted into Class A common stock. During the three and nine months ended September 30, 2021, 217,000 and 760,060 restricted stock units vested and were converted into Class A common stock. Exercise of stock options During the three months ended September 30, 2022, no options to purchase stock were exercised and during the nine months ended September 30, 2022, options to purchase a total of 193,841 shares of Class A common stock were exercised. During the three months ended September 30, 2021, 162,000 options were exercised and during the nine months ended September 30, 2021, options to purchase a total of 481,834 shares of Class A common stock were exercised. Warrants The following is a summary of the equity warrant activities during the nine months ended September 30, 2022. Weighted Average Weighted Remaining Number of Average Contractual Units Exercise Price Term (in years) Outstanding, December 31, 2021 70,000 $ 5.70 0.94 Granted 7,705,880 $ 0.65 Exercised (352,940) $ - Expired (50,000) 7.70 Outstanding, September 30, 2022 7,372,940 $ 0.68 5.25 Exercisable, September 30, 2022 12,500 $ 0.70 2.56 The Company used the following inputs to value warrants issued during the nine months ending September 30, 2022 using the Black Scholes option valuation method: market value on measurement date, $0.59; exercise price $0.68; risk free interest rate, 2.86%; expected term, 6 years; expected volatility, 132% and expected dividend yield of 0%. Exercise of warrants |
STOCK COMPENSATION
STOCK COMPENSATION | 9 Months Ended |
Sep. 30, 2022 | |
STOCK COMPENSATION | |
STOCK COMPENSATION | NOTE 13 – STOCK COMPENSATION Grants made under the Equity Incentive Plans must be approved by the Company’s board of directors. As of September 30, 2022, the total number of underlying shares of the Company’s Class A common stock available for grant to directors, officers, key employees and consultants of the Company or a subsidiary of the Company under the Company’s 2021 Equity Incentive Plan were 2,725,400 shares. Stock Options Under the Company’s stock option program, pursuant to the Equity Incentive Plans, an employee receives an award that provides the opportunity in the future to purchase the Company’s shares at the market price of the stock on the date the award is granted (the strike price). The options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from the grant date, unless stated differently in the option agreements, if they are not exercised. Stock options have no financial statement effect on the date they are granted but rather are reflected over time through compensation expense. We record compensation expense based on the estimated fair value of the awards which is amortized as compensation expense on a straight-line basis over the vesting period. Accordingly, total expense related to the award is reduced by the fair value of options that are forfeited by employees that leave the Company prior to vesting. The following is a summary of the option activities during the nine months ended September 30, 2022: Weighted Average Weighted Remaining Number of Average Contractual Units Exercise Price Term (in years) Outstanding, December 31, 2021 4,054,116 $ 1.92 2.29 Granted 1,221,744 $ 1.12 Exercised (193,841) $ 0.24 Cancelled (724,408) $ 1.75 Outstanding, September 30, 2022 4,357,611 $ 1.80 2.28 Exercisable, September 30, 2022 3,042,376 $ 2.20 1.80 The Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model. The Company used the following inputs to value warrants issued during the nine months ending September 30, 2022 using the Black Scholes option valuation method: market value on measurement date, $0.59 to $0.93; exercise price of $5.01 to $0.68; risk free interest rate, 1.69% to 2.87%; expected term, 3 to 4 years; expected volatility, ranged from 141 to 148 and expected dividend yield of 0%. As of September 30, 2022 and December 31, 2021, the stock options had an intrinsic value of approximately $150 thousand and $1.9 million, respectively. On May 3, 2022, the Boxlight board of directors adopted a resolution, in exchange for a three-year non-compete agreement, to grant Mark Elliott, a member of the board and former CEO of the Company, an extension for one year, of previously granted stock options to purchase a total of 577,675 shares of Class A common stock, par value $0.001 per share, which had expired on January 12, 2022. The stock price on the remeasurement date was $1.04 and the incremental compensation recognized was $314,000. On June 13, 2022, the Boxlight board of directors granted Greg Wiggins, our Chief Financial Officer, stock options for 150,000 shares of the Company’s Class A common stock will vest in equal quarterly installments over a four-year term commencing on July 5, 2022. Restricted Stock Units Under the Company’s Equity Incentive Plans the Company may grant restricted stock units (“RSUs”) to certain employees and non-employee directors. Upon granting the RSUs, the Company recognizes a fixed compensation expense equal to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period for the RSUs. Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting. The RSUs vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement. The following is a summary of the RSU activities during the nine months ended September 30, 2022. Weighted Average Grant Date Fair Number of Units Value Outstanding, December 31, 2021 1,973,947 $ 1.81 Granted 2,411,662 $ 1.20 Vested (1,179,754) $ 1.73 Forfeited (370,151) $ 1.38 Outstanding, September 30, 2022 2,835,704 $ 1.37 On March 21, 2022, the Company granted an aggregate of 348,840 RSUs to its board members. These RSUs vest ratably over one year and had an aggregated fair value of approximately $450 thousand on the grant date. On February 14, 2022, with an effective date of January 1, 2022, the Company entered into a letter agreement with Michael Pope, the Chairman and Chief Executive Officer, extending Mr. Pope’s term of employment with the Company. Under the terms of the agreement, Mr. Pope received a grant of 163,637 RSU’s, valued at approximately $180,000, and vesting over three years and 494,069 options to purchase Class A Common Stock, which are valued using the Black-Scholes Model with the Company’s customary inputs. On February 24, 2022, following approval by the Company’s board of directors, the Company’s senior management issued a total of 1,771,950 RSUs under the terms of Amendment No. 2 to the Boxlight Corporation 2014 Stock Incentive Plan, vesting over four years, as long-term incentive awards to its employees in the U.S. and Europe. The aggregate fair value of the shares was $2.1 million. During the first quarter ended March 31, 2022, Jens Holstebro, a former FrontRow employee, received 39,683 in restricted shares of Class A common stock, valued at $50,000, as a bonus, which restricted stock vested immediately. Stock Compensation Expense For the three and nine months ended September 30, 2022 and 2021, the Company recorded the following stock compensation in general and administrative expense (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Stock options $ 128 $ 153 $ 683 $ 544 Restricted stock units 474 1,005 1,980 2,472 Warrants 1 3 2 4 Total stock compensation expense $ 603 $ 1,161 $ 2,665 $ 3,020 As of September 30, 2022, there was approximately $4.7 million of unrecognized compensation expense related to unvested options, restricted stock units, and warrants, which expense will be amortized over the remaining vesting period of such awards. Of that total, approximately $608 thousand is estimated to be recorded as compensation expense in the remaining three months of 2022. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 14 – RELATED PARTY TRANSACTIONS Management Agreement On January 31, 2018, the Company entered into a management agreement (the “Management Agreement”) with an entity owned and controlled by the Chief Executive Officer and Chairman, Michael Pope. The Management Agreement is separate and apart from Mr. Pope’s employment agreement with the Company. The Management Agreement will become effective as of the first day of the same month that Mr. Pope’s employment with the Company shall terminate. Thereafter, and for a term of 13 months, Mr. Pope shall provide consulting services to the Company including sourcing and analyzing strategic acquisitions, assisting with financing activities, and other services. As consideration for the services provided, the Company 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/or receive payment in the form of shares of Class A common stock of the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 – COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company leases seven office building facilities located in Lawrenceville, Georgia and Duluth, Georgia; Poulsbo; Scottsdale, Arizona; Miami, Florida and Utica, New York in the U.S., and two office building facilities in Dartford and Kent in the U.K. for sales, marketing, technical support, and service staff. During the second quarter of 2022, FrontRow entered into a building lease in Australia and assumed a lease from FrontRow’s former owner in Denmark. All such leased facilities are under non-cancelable lease agreements with terms ending from 2023 to 2027. Purchase Commitments The Company is legally obligated to fulfill certain purchase commitments made to vendors that supply materials used in the Company’s products. As of September 30, 2022, the total amount of such open inventory purchase orders was $33.8 million. |
CUSTOMER AND SUPPLIER CONCENTRA
CUSTOMER AND SUPPLIER CONCENTRATION | 9 Months Ended |
Sep. 30, 2022 | |
CUSTOMER AND SUPPLIER CONCENTRATION | |
CUSTOMER AND SUPPLIER CONCENTRATION | NOTE 16 – CUSTOMER AND SUPPLIER CONCENTRATION There was one customer that accounts for greater than 10% of the Company’s consolidated revenues for the nine months ended September 30, 2022. There were two customers that accounted for greater than 10% of the Company’s consolidated revenues for the nine months ended September 30, 2021. Details are as follows: Total revenues Total revenues Accounts from the customer Accounts from the customer receivable from as a percentage of receivable from as a percentage of the customer as total revenues this customer as of total revenues of for the nine months ended September 30, for the nine months ended September 30, September 30, 2022 September 30, 2021 Customer 2022 (in thousands) 2021 (in thousands) 1 14.1 % $ 8,532 12.8 % $ 9,815 2 — — 10.1 % $ 5,142 For the nine months ended September 30, 2022 and 2021, the Company’s purchases were concentrated primarily with two vendors. Details are as follows: Total purchases Total purchases from the vendor from the vendor Accounts payable as a percentage of Accounts payable as a percentage (prepayment) to total cost of (prepayment) to of total cost of the revenues for the vendor as of revenues for vendor as of the nine months ended September 30, the nine months ended September 30, September 30, 2022 September 30, 2021 Vendor 2022 (in thousands) 2021 (in thousands) 1 44.0 % $ 8,275 47.0 % $ 4,188 2 20.0 % $ (10,482) 18.4 % $ (2,070) The Company believes there are other suppliers that could be substituted should the above cited supplier become unavailable or non-competitive. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS |
ORGANIZATION AND SIGNIFICANT _2
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Boxlight Corporation, a Nevada Corporation, (“Boxlight”) designs, produces and distributes interactive technology solutions to the education, corporate and government markets under its Clevertouch and Mimio brands. The Company’s solutions include interactive displays, collaboration software, supporting accessories and professional services. |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying unaudited condensed consolidated financial statements include the accounts of Boxlight and its wholly owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated 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 condensed consolidated financial information and interim financial reporting guidelines and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete condensed consolidated financial statements. The unaudited condensed consolidated 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2021 and notes thereto contained in the Company’s Annual Report on Form 10-K. Certain information and note disclosures normally included in consolidated financial statements have been condensed. The December 31, 2021 balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures, including notes, required by GAAP for complete financial statements. |
ESTIMATES AND ASSUMPTIONS | ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for 2021 contained in the Annual Report on Form 10-K, filed with the SEC on April 13, 2022, describes the significant accounting policies that the Company used in preparing its dated condensed financial statements. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to revenue/reserves and allowances. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments primarily include cash, accounts receivable, derivative liabilities, accounts payable and debt. Due to the short-term nature of cash, accounts receivables and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value. Debt approximates fair value due to either the short-term nature, variable rate, or recent execution of the debt agreement. The amount of consideration received is deemed to approximate the fair value of long-term debt net of any debt discount and issuance cost. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted 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, 2022 and December 31, 2021 (in thousands): Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs September 30, Description (Level 1) (Level 2) (Level 3) 2022 Derivative liabilities - warrant instruments $ — $ — $ 1,527 $ 1,527 Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs December 31, Description (Level 1) (Level 2) (Level 3) 2021 Derivative liabilities - warrant instruments $ — $ — $ 3,064 $ 3,064 The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy: (in thousands) Balance, June 30, 2022 $ 1,414 Change in fair value of derivative liabilities 113 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, December 31, 2021 $ 3,064 Change in fair value of derivative liabilities 1,537 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, June 30, 2021 $ 536 Exercise of warrants (171) Change in fair value of derivative liabilities (9) Balance, September 30, 2021 $ 356 (in thousands) Balance, December 31, 2020 $ 363 Exercise of warrants (171) Change in fair value of derivative liabilities 164 Balance, September 30, 2021 $ 356 |
INCOME (LOSS) PER COMMON SHARE | INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. The dilutive effect of options to purchase common stock, restricted stock units subject to vesting and other share-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted calculation for the entire period being presented. For the three months ended September 30, 2022 and September 30, 2021, where the Company had income, approximately 17.7 million and 1.89 million of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect. For the nine months ended September 30, 2022 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 7.2 million shares from options to purchase common shares and unvested restricted shares as well as 10.8 million shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. For the nine months ended September 30, 2021 potentially dilutive securities that were not included in the diluted per share calculation because they would be anti-dilutive comprise 6.7 million shares from options to purchase common shares and unvested restricted shares as well as 265,000 shares issuable upon exercise of warrants. Additionally, potentially dilutive securities of 17.8 million from the assumed conversion of preferred stock are excluded from the denominator because they would be anti-dilutive. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and the title, and the significant risks and rewards of ownership of products or services are transferred to its customers. Product revenue is derived from the sale of projectors, interactive panels and related software and accessories to distributors, resellers, and end users. Service revenue is derived from hardware maintenance services, product installation, training, software maintenance, and subscription services. Nature of Products and Services and Related Contractual Provisions The Company’s sales of interactive devices, including panels, projectors, and other interactive devices generally include hardware maintenance services, a license to software, and the provision of related software maintenance. In most cases, interactive devices are sold with hardware maintenance services with terms of approximately 60 months. Software maintenance includes technical support, product updates on a when and if available basis, and error correction services. At times, non-interactive projectors are also sold with hardware maintenance services with terms of approximately 60 months. The Company also licenses software independently of its interactive devices, in which case it is bundled with software maintenance, and in some cases, subscription services that include access to on-line content, and cloud-based applications. The Company’s software subscription services provide access to content and software applications on an as needed basis over the Internet, but do not provide the right to take delivery of the software applications. The Company’s product sales, including those with software and related services, generally include a single payment up front for the products and services, and revenue is recorded net of estimated sales returns and rebates based on the Company’s expectations and historical experience. For most of the Company’s product sales, control transfers, and therefore, revenue is recognized when products are shipped at the point of origin. When the Company transfers control of its products to the customer prior to the related shipping and handling activities, the Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. For many of the Company’s software product sales, control is transferred when shipped at the point of origin since the software is installed on the interactive hardware device in advance of shipping. For software product sales, control is transferred when the customer receives the related interactive hardware since the customer’s connection to the interactive hardware activates the software license at which time the software is made available to the customer. For the Company’s software maintenance, hardware maintenance, and subscription services, revenue is recognized ratably over time as the services are provided since time is the best output measure of how those services are transferred to the customer. Customer Financing Arrangements Through a third-party leasing partner, we provide financing programs that are designed to offer customers a variety of options to purchase interactive technology solutions whereby customers enter into purchase agreements with the Company along with a separate financing or leasing contract with a third-party lender, who advances the proceeds from the sale to us upon contract execution and shipment of goods. In such situations, the sales to the customer are final and the Company bears no risk of loss regarding subsequent payments. Significant Judgments For contracts with multiple performance obligations, each of which represent promises within a contract that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). The Company’s products and services included in its contracts with multiple performance obligations generally are not sold separately and there are no observable prices available to determine the SSP for those products and services. Since observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, when applicable, the estimated cost to provide the performance obligation, market trends in the pricing for similar offerings, product-specific business objectives, and competitor or other relevant market pricing and margins. Because observable prices are generally not available for the Company’s performance obligations that are sold in bundled arrangements, the Company does not apply the residual approach to determining SSP. However, the Company does have performance obligations for which pricing is highly variable or uncertain, and contracts with those performance obligations generally contain multiple performance obligations with highly variable or uncertain pricing. For these contracts the Company allocates the transaction price to those performance obligations using an alternative method of allocation that is consistent with the allocation objective and the guidance on determining SSPs considering, when applicable, the estimated cost to provide the performance obligation, market pricing for competing product or service offerings, residual values based on the estimated SSP for certain goods, product-specific business objectives, incremental values for bundled transactions that include a service relative to similar transactions that exclude the service, and competitor pricing and margins. A separate price has not been established by the Company for performance obligations generally included in its contracts. In addition, the Company’s contracts generally include performance obligations that are never sold separately, 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. The Company has applied the portfolio approach to its allocation of the transaction price for certain portfolios of contracts that are executed in the same manner, contain the same performance obligations, and are priced in a consistent manner. The Company believes that the application of the portfolio approach produces the same result as if they were applied at the contract level. Contract Balances The timing of invoicing to customers often differs from the timing of revenue recognition and these timing differences can result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for the Company’s product and most service contracts are fixed, except as adjusted for rebate programs when applicable, and are generally due within 30-60 days of contract execution. Fees for installation, training, and professional development services are fixed and generally become due as the services are performed. The Company has an established history of collecting under the terms of its contracts without providing refunds or concessions to its customers. The Company’s contractual payment terms do not vary when products are bundled with services that are provided over multiple years. In these contracts where services are expected to be transferred on an ongoing basis for several years after the related payment, the Company has determined that the contracts generally do not include a significant financing component. The upfront invoicing terms are designed 1) to provide customers with a predictable way to purchase products and services where the payment is due in the same timeframe as when the products, which constitute the predominant portion of the contractual value, are transferred, and 2) to ensure that the customer continues to use the related services; so that the customer will receive the optimal benefit from the products during the course of such product’s lifetime. Additionally, the Company has elected the practical expedient to exclude any financing component from consideration for contracts where, at contract inception, the period between the transfer of services and the timing of the related payment is not expected to exceed one year. The Company has an unconditional right to consideration for all products and services transferred to the customer. That unconditional right to consideration is reflected in accounts receivable in the accompanying condensed consolidated balance sheets in accordance with Topic 606. Contract liabilities are reflected in deferred revenue in the accompanying consolidated balance sheets and reflect amounts allocated to performance obligations that have not yet been transferred to the customer related to software maintenance, hardware maintenance, and subscription services. The Company has no material contract assets as of September 30, 2022, or December 31, 2021. During the three months ended September 30, 2022, and September 30, 2021, the Company recognized $2.2 million and $2.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021, and December 31, 2020, respectively. During the nine months ended September 30, 2022, and September 30, 2021, the Company recognized $5.8 million and $4.4 million of revenue that was included in the deferred revenue balance as of December 31, 2021 and December 31, 2020, respectively. Variable Consideration The Company’s otherwise fixed consideration in its customer contracts may vary when refunds or credits are provided for sales returns, stock rotation rights, price protection provisions, or in connection with certain other rebate provisions. The Company generally does not allow product returns other than under assurance warranties or hardware maintenance contracts. However, the Company, on a case-by-case basis, will grant exceptions, mostly for “buyer’s remorse” where the distributor or reseller’s end customer either did not understand what they were ordering or otherwise determined that the product did not meet their needs. An allowance for sales returns is estimated based on an analysis of historical trends. In very limited situations, a customer may return previous purchases held in inventory for a specified period of time in exchange for credits toward additional purchases. The Company includes variable consideration in its transaction price when there is a basis to reasonably estimate the amount of the fee and it is probable there will not be a significant reversal. These estimates are generally made using the expected value method based on historical experience and are measured at each reporting date. There was no material revenue recognized in the three and nine months ended September 30, 2022 related to changes in estimated variable consideration that existed at June 30, 2022 or December 31, 2021. Remaining Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting within the contract. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies performance obligations at contract inception so that it can monitor and account for the obligations over the life of the contract. Remaining performance obligations represent the portion of the transaction price in a contract allocated to products and services not yet transferred to the customer. As of September 30, 2022 and December 31, 2021, the aggregate amount of the contractual transaction prices allocated to remaining performance obligations was $23.2 million and $21.5 million, respectively. The Company expects to recognize revenue on 33% of the remaining performance obligations during the next twelve months, 26% in the following twelve months, 22% in the twelve months ended September 30, 2025, 14% in the twelve months ended September 30, 2026, with the remaining 5% recognized thereafter In accordance with Topic 606, the Company has elected not to disclose the value of remaining performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (for example, a time-and-materials professional services contracts). In addition, the Company has elected not to disclose the value of remaining performance obligations for contracts with performance obligations that are expected, at contract inception, to be satisfied over a period that does not exceed one year. Disaggregated Revenue The Company disaggregates revenue based upon the nature of its products and services and the timing and in the manner which it is transferred to the customer. Although all products are transferred to the customer at a point in time, hardware and some software is pre-installed on the interactive device are transferred at the point of shipment, while some software is transferred to the customer at the time the hardware is received by the customer or when software product keys are delivered electronically to the customer. All service revenue is transferred over time to the customer; however, professional services are generally transferred to the customer within a year from the contract date as measured based upon hours or time incurred while software maintenance, hardware maintenance, and subscription services are generally transferred over five years from the contract execution date as measured based upon the passage of time. Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) (in thousands) (in thousands) (in thousands) Product revenues: Hardware $ 64,601 $ 57,400 $ 167,967 $ 131,865 Software 906 1,395 3,959 3,445 Service revenues: Professional services 1,359 534 2,192 1,103 Maintenance and subscription services 1,870 1,679 4,849 4,773 $ 68,736 $ 61,008 $ 178,967 $ 141,186 Contract Costs The Company capitalizes incremental costs to obtain a contract with a customer if the Company expects to recover those costs. The incremental costs to obtain a contract are those that the Company incurs to obtain a contract with a customer that it would not have otherwise incurred if the contract were not obtained (e.g., a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all the following criteria: ● The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. ● The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. ● The costs are expected to be recovered. Certain sales commissions incurred by the Company are determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the estimated economic benefit period. For these sales commissions that are incremental costs to obtain where the period of amortization would be recognized over a period that is one year or less, the Company has elected the practical expedient to expense those costs as incurred. Commission costs that are deferred are classified as current or non-current assets based on the timing of when the Company expects to recognize the expense and are included in prepaid and other assets and other assets, respectively, in the accompanying condensed consolidated balance sheets. Total deferred commissions, net of accumulated amortization, was $274 thousand at September 30, 2022. Bill and Hold Arrangements From time to time the Company enters custodial bill and hold arrangements with customers. Each arrangement is reviewed, and revenue is recognized only when the following criteria have been met: (1) the reason for the bill-and-hold arrangement is substantive (2) the product is identified as the customer’s asset (3) the product is ready for delivery to the customer (4) there must be a fixed schedule for delivery (5) the seller cannot use the product or direct the product to another customer. At September 30, 2022, |
RECENTLY ADOPTED ACCOUNTING STANDARDS & ACCOUNTING STANDARDS PENDING ADOPTION | RECENTLY ADOPTED ACCOUNTING STANDARDS Leases Accounting Standards Update ("ASU") No. 2016-02 "Leases” (Topic 842), as amended, requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The Company elected the modified retrospective approach which we applied on January 1, 2022, and therefore have not restated comparative periods. The Company elected certain relief options offered in ASU 2016-02 including the package of practical expedients, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less). The Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single component. Finally, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The Company’s operating leases relate primarily to office space. As a result of the adoption of ASU 2016-02, the Company recognized an operating lease right-of-use ("ROU") asset of $3.8 million and a current operating lease liability of approximately $1.6 million and a long-term operating lease liability of approximately $2.3 million as of January 1, 2022, with no impact on the Company’s Condensed Consolidated Statement of Operations and Comprehensive Loss or Condensed Consolidated Statement of Cash Flows. The ROU asset and operating lease liabilities are recorded as separate line items in the Condensed Consolidated Balance Sheet. ACCOUNTING STANDARDS PENDING ADOPTION In June 2016, the FASB issued ASU 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 financial assets measured at amortized cost, including trade accounts receivable. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. This new guidance changes the impairment model for most financial assets and certain other instruments. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact that this standard will have, if any, on its financial statements. There were various other accounting standards and interpretations issued recently, some of which although applicable, are not expected to a have a material impact on the Company’s financial position, operations, or cash flows. |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS We reviewed all material events through the date on which these condensed consolidated financial statements were issued for subsequent event disclosure consideration as described in Note 17. |
ORGANIZATION AND SIGNIFICANT _3
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |
SCHEDULE OF FINANCIAL LIABILITIES MEASURED ON A RECURRING BASIS | 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, 2022 and December 31, 2021 (in thousands): Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs September 30, Description (Level 1) (Level 2) (Level 3) 2022 Derivative liabilities - warrant instruments $ — $ — $ 1,527 $ 1,527 Markets for Other Significant Carrying Identical Observable Unobservable Value as of Assets Inputs Inputs December 31, Description (Level 1) (Level 2) (Level 3) 2021 Derivative liabilities - warrant instruments $ — $ — $ 3,064 $ 3,064 |
SUMMARY OF WARRANT INSTRUMENTS ROLLFORWARD | The following tables reconcile the beginning and ending balances of the warrant instruments within Level 3 of the fair value hierarchy: (in thousands) Balance, June 30, 2022 $ 1,414 Change in fair value of derivative liabilities 113 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, December 31, 2021 $ 3,064 Change in fair value of derivative liabilities 1,537 Balance, September 30, 2022 $ 1,527 (in thousands) Balance, June 30, 2021 $ 536 Exercise of warrants (171) Change in fair value of derivative liabilities (9) Balance, September 30, 2021 $ 356 (in thousands) Balance, December 31, 2020 $ 363 Exercise of warrants (171) Change in fair value of derivative liabilities 164 Balance, September 30, 2021 $ 356 |
SCHEDULE OF DISAGGREGATES REVENUE | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) (in thousands) (in thousands) (in thousands) Product revenues: Hardware $ 64,601 $ 57,400 $ 167,967 $ 131,865 Software 906 1,395 3,959 3,445 Service revenues: Professional services 1,359 534 2,192 1,103 Maintenance and subscription services 1,870 1,679 4,849 4,773 $ 68,736 $ 61,008 $ 178,967 $ 141,186 |
RECENT BUSINESS ACQUISITIONS (T
RECENT BUSINESS ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Interactive Concepts BV | |
Business Acquisition [Line Items] | |
SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED | (in thousands) Assets acquired: Cash $ 1,647 Accounts receivable 1,045 Inventories 191 Property and equipment 37 Total assets acquired 2,920 Accounts payable and accrued expenses (821) Deferred tax liability (230) Total liabilities assumed (1,051) Net tangible assets acquired 1,869 Identifiable intangible assets: Tradename 220 Customer relationships 745 Total intangible assets subject to amortization 965 Goodwill 439 Total net assets acquired $ 3,273 Consideration paid: Cash $ 1,795 Deferred cash consideration 1,075 Common shares issued 403 Total consideration paid $ 3,273 |
FrontRow Calypso, LLC | |
Business Acquisition [Line Items] | |
SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED | (in thousands) Assets acquired: Cash $ 2,752 Accounts receivable 3,381 Inventories 10,240 Prepaid expenses 883 Property and equipment 348 Total assets acquired 17,604 Accounts payable and accrued expenses (1,501) Deferred revenue (1,225) Other liabilities (12) Total liabilities assumed (2,738) Net tangible assets acquired $ 14,866 Identifiable intangible assets: Customer relationships 8,195 Trademarks 3,244 Technology 5,036 Non-compete 391 Total intangible assets subject to amortization 16,866 Goodwill 2,920 Total net assets acquired $ 34,652 Consideration paid: Cash $ 34,652 |
SCHEDULE OF ESTIMATED USEFUL LIVES OF ACQUIRED INTANGIBLE ASSETS | Estimated Weighted Average Life (years) Customer relationships 8 Trademarks 10 Technology 8 Non-compete agreements 3 |
ACCOUNTS RECEIVABLE - TRADE (Ta
ACCOUNTS RECEIVABLE - TRADE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS RECEIVABLE - TRADE. | |
SCHEDULE OF ACCOUNTS RECEIVABLE - TRADE | Accounts receivable consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Accounts receivable – trade $ 53,174 $ 31,053 Allowance for doubtful accounts (555) (405) Allowance for sales returns and volume rebates (1,365) (1,075) Accounts receivable - trade, net of allowances $ 51,254 $ 29,573 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORIES. | |
SCHEDULE OF INVENTORIES | Inventories consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Finished goods $ 49,577 $ 51,346 Spare parts 998 260 Reserve for inventory obsolescence (1,232) (599) Advanced shipping costs 92 584 Inventories, net $ 49,435 $ 51,591 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS. | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Prepayments to vendors $ 7,085 $ 7,739 Prepaid licenses and other 1,928 1,705 Prepaid expenses and other current assets $ 9,013 $ 9,444 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS. | |
SCHEDULE OF INTANGIBLE ASSETS | Intangible assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): Useful lives 2022 2021 Patents 4-10 years $ 182 $ 182 Customer relationships 8-15 years 47,650 55,158 Technology 3-5 years 8,521 8,901 Domain 7 years 14 14 Non-compete 8-15 years 391 391 Tradenames 2-10 years 12,065 13,085 Intangible assets, at cost 68,823 77,731 Accumulated amortization (16,910) (12,199) Intangible assets, net of accumulated amortization $ 51,913 $ 65,532 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
SCHEDULE OF FUTURE OPERATING LEASE LIABILITIES | Future maturities of the Company's operating lease liabilities are summarized as follows (in thousands): Fiscal year ended, 2022 $ 647 2023 2,000 2024 1,271 2025 1,068 2026 731 5,717 Less imputed interest (1,356) Total $ 4,361 |
SCHEDULE OF SUPPLEMENTAL LEASE INFORMATION | Weighted-average remaining lease term (years) 3.5 Weighted-average discount rate 15.5 % |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expense consisted of the following at September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Accounts payable $ 38,955 $ 25,714 Accrued expense 8,648 6,440 Other 807 1,484 Accounts payable and other liabilities $ 48,410 $ 33,638 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
SCHEDULE OF DEBT | The following is a summary of the Company’s debt as of September 30, 2022 and December 31, 2021 (in thousands): 2022 2021 Debt – Third Parties Paycheck Protection Program $ 140 $ 1,009 Note payable - Whitehawk 59,063 58,500 Total debt 59,203 59,509 Less: Discount and issuance costs 5,923 7,568 Current portion of debt 9,224 9,804 Long-term debt $ 44,056 $ 42,137 Total debt (net of discount and issuance costs) $ 53,280 $ 51,941 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVE LIABILITIES. | |
SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITIES | September 30, 2022 Common stock issuable upon exercise of warrants 3,715,075 Market value of common stock on measurement date $ 0.62 Exercise price $ 1.10 Risk free interest rate (1) 4.07 % Expected life in years 4.25 years Expected volatility (2) 92 % Expected dividend yields (3) — % December 31, 2021 Common stock issuable upon exercise of warrants 2,043,291 Market value of common stock on measurement date $ 1.38 Exercise price $ 2.00 Risk free interest rate (1) 1.25 % Expected life in years 5 years Expected volatility (2) 79 % Expected dividend yields (3) — % (1) The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date. (2) The Company does not expect to pay a dividend in the foreseeable future. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INCOME TAXES | |
SCHEDULE OF PRETAX INCOME (LOSS) | Pretax (loss) income resulting from domestic and foreign operations is as follows (in thousands): Three Months Three Months Ended Ended September 30 September 30, 2022 2021 United States $ 3,320 $ (3,114) Foreign 305 5,234 Total pretax book income $ 3,625 $ 2,120 Nine Months Ended Nine Months Ended September 30 September 30, 2022 2021 United States $ (589) $ (8,541) Foreign (661) 5,817 Total pretax book loss $ (1,250) $ (2,724) |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
EQUITY | |
SUMMARY OF THE WARRANTS ACTIVITIES | Weighted Average Weighted Remaining Number of Average Contractual Units Exercise Price Term (in years) Outstanding, December 31, 2021 70,000 $ 5.70 0.94 Granted 7,705,880 $ 0.65 Exercised (352,940) $ - Expired (50,000) 7.70 Outstanding, September 30, 2022 7,372,940 $ 0.68 5.25 Exercisable, September 30, 2022 12,500 $ 0.70 2.56 |
STOCK COMPENSATION (Tables)
STOCK COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
STOCK COMPENSATION | |
SUMMARY OF THE OPTION ACTIVITIES | Weighted Average Weighted Remaining Number of Average Contractual Units Exercise Price Term (in years) Outstanding, December 31, 2021 4,054,116 $ 1.92 2.29 Granted 1,221,744 $ 1.12 Exercised (193,841) $ 0.24 Cancelled (724,408) $ 1.75 Outstanding, September 30, 2022 4,357,611 $ 1.80 2.28 Exercisable, September 30, 2022 3,042,376 $ 2.20 1.80 |
SUMMARY OF THE RESTRICTED STOCK ACTIVITIES | Weighted Average Grant Date Fair Number of Units Value Outstanding, December 31, 2021 1,973,947 $ 1.81 Granted 2,411,662 $ 1.20 Vested (1,179,754) $ 1.73 Forfeited (370,151) $ 1.38 Outstanding, September 30, 2022 2,835,704 $ 1.37 |
SCHEDULE OF STOCK COMPENSATION EXPENSE | For the three and nine months ended September 30, 2022 and 2021, the Company recorded the following stock compensation in general and administrative expense (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Stock options $ 128 $ 153 $ 683 $ 544 Restricted stock units 474 1,005 1,980 2,472 Warrants 1 3 2 4 Total stock compensation expense $ 603 $ 1,161 $ 2,665 $ 3,020 |
CUSTOMER AND SUPPLIER CONCENT_2
CUSTOMER AND SUPPLIER CONCENTRATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
CUSTOMER AND SUPPLIER CONCENTRATION | |
SCHEDULE OF CONCENTRATION RISK | Total revenues Total revenues Accounts from the customer Accounts from the customer receivable from as a percentage of receivable from as a percentage of the customer as total revenues this customer as of total revenues of for the nine months ended September 30, for the nine months ended September 30, September 30, 2022 September 30, 2021 Customer 2022 (in thousands) 2021 (in thousands) 1 14.1 % $ 8,532 12.8 % $ 9,815 2 — — 10.1 % $ 5,142 Total purchases Total purchases from the vendor from the vendor Accounts payable as a percentage of Accounts payable as a percentage (prepayment) to total cost of (prepayment) to of total cost of the revenues for the vendor as of revenues for vendor as of the nine months ended September 30, the nine months ended September 30, September 30, 2022 September 30, 2021 Vendor 2022 (in thousands) 2021 (in thousands) 1 44.0 % $ 8,275 47.0 % $ 4,188 2 20.0 % $ (10,482) 18.4 % $ (2,070) |
ORGANIZATION AND SIGNIFICANT _4
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF FINANCIAL LIABILITIES MEASURED ON A RECURRING BASIS (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||||
Derivative liabilities | $ 1,527 | $ 1,414 | $ 3,064 | $ 356 | $ 536 | $ 363 |
Warrant | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||||
Derivative liabilities | 1,527 | 3,064 | ||||
Level 3 | Warrant | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||||
Derivative liabilities | $ 1,527 | $ 3,064 |
ORGANIZATION AND SIGNIFICANT _5
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CHANGES IN THE COMPANY WARRANT INSTRUMENTS (Details) - Fair Value, Recurring - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Beginning balance | $ 1,414 | $ 536 | $ 3,064 | $ 363 |
Exercise of warrants | (171) | (171) | ||
Change in fair value of derivative liabilities | 113 | (9) | 1,537 | 164 |
Ending balance | $ 1,527 | $ 356 | $ 1,527 | $ 356 |
ORGANIZATION AND SIGNIFICANT _6
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - EPS, REVENUE RECOGNITION, CONTRACT BALANCES AND COSTS AND WARRANTY RESERVE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Line Items] | ||||
Potentially dilutive shares excluded from computation of diluted earnings per share due | 17,700,000 | 1,890,000 | ||
Revenue recognized which was previously deferred | $ 2,200 | $ 2,500 | $ 5,800 | $ 4,400 |
Deferred commissions related amortization | $ 274 | |||
Stock options | ||||
Property, Plant and Equipment [Line Items] | ||||
Potentially dilutive shares excluded from computation of diluted earnings per share due | 7,200,000 | 6,700,000 | ||
Warrant | ||||
Property, Plant and Equipment [Line Items] | ||||
Potentially dilutive shares excluded from computation of diluted earnings per share due | 10,800,000 | 265,000 | ||
Converted preferred stock | ||||
Property, Plant and Equipment [Line Items] | ||||
Potentially dilutive shares excluded from computation of diluted earnings per share due | 17,800,000 | 17,800,000 | ||
Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Period fees are due for adjustable rebate contracts | 30 days | |||
Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Period fees are due for adjustable rebate contracts | 60 days | |||
Non-interactive projectors | ||||
Property, Plant and Equipment [Line Items] | ||||
Hardware maintenance services terms (in months) | 60 months |
ORGANIZATION AND SIGNIFICANT _7
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - REMAINING PERFORMANCE OBLIGATIONS (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Remaining Performance Obligations | ||
Remaining performance obligations | $ 23.2 | $ 21.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation period | 12 months | |
Remaining performance obligations (as a percent) | 33% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation period | 12 months | |
Remaining performance obligations (as a percent) | 26% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation period | 12 months | |
Remaining performance obligations (as a percent) | 22% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation period | 12 months | |
Remaining performance obligations (as a percent) | 14% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-10-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligation period | 12 months | |
Remaining performance obligations (as a percent) | 5% |
ORGANIZATION AND SIGNIFICANT _8
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - DISAGGREGATED REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2018 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | |||||
Revenue | $ 250,000 | $ 68,736,000 | $ 61,008,000 | $ 178,967,000 | $ 141,186,000 |
Product revenues | Hardware | |||||
Disaggregation of Revenue | |||||
Revenue | 64,601,000 | 57,400,000 | 167,967,000 | 131,865,000 | |
Product revenues | Software | |||||
Disaggregation of Revenue | |||||
Revenue | 906,000 | 1,395,000 | 3,959,000 | 3,445,000 | |
Service revenues | Professional services | |||||
Disaggregation of Revenue | |||||
Revenue | 1,359,000 | 534,000 | 2,192,000 | 1,103,000 | |
Service revenues | Maintenance and subscription services | |||||
Disaggregation of Revenue | |||||
Revenue | $ 1,870,000 | $ 1,679,000 | 4,849,000 | $ 4,773,000 | |
Bill and hold arrangements | |||||
Disaggregation of Revenue | |||||
Revenue | $ 5,300,000 |
ORGANIZATION AND SIGNIFICANT _9
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jan. 01, 2022 |
Operating lease right of use asset | $ 4,370 | |
Operating lease liabilities, current | 1,767 | |
Operating lease liabilities, non-current | $ 2,594 | |
ASU 2016-02 | ||
Operating lease right of use asset | $ 3,800 | |
Operating lease liabilities, current | 1,600 | |
Operating lease liabilities, non-current | $ 2,300 |
RECENT BUSINESS ACQUISITIONS (D
RECENT BUSINESS ACQUISITIONS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Mar. 23, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Interactive Concepts BV | |||
Business Acquisitions | |||
Voting interests acquired (as a percent) | 100% | ||
Consideration amount | $ 3,300 | $ 3,273 | |
Payments to Acquire Businesses, Gross | 1,795 | ||
FrontRow Calypso, LLC | |||
Business Acquisitions | |||
Voting interests acquired (as a percent) | 100% | ||
Consideration amount | $ 34,700 | ||
Payments to Acquire Businesses, Gross | $ 34,652 |
RECENT BUSINESS ACQUISITIONS -
RECENT BUSINESS ACQUISITIONS - SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Mar. 23, 2021 | Sep. 25, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisitions | ||||
Goodwill | $ 24,524 | $ 26,037 | ||
Interactive Concepts BV | ||||
Business Acquisitions | ||||
Cash | 1,647 | |||
Accounts receivable | 1,045 | |||
Inventories | 191 | |||
Property and equipment | 37 | |||
Total assets acquired | 2,920 | |||
Accounts payable and accrued expenses | (821) | |||
Deferred tax liability | (230) | |||
Total liabilities assumed | (1,051) | |||
Net tangible assets acquired | 1,869 | |||
Total intangible assets subject to amortization | 965 | |||
Goodwill | 439 | |||
Total net assets acquired | 3,273 | |||
Cash | 1,795 | |||
Deferred cash consideration | 1,075 | |||
Common shares issued | 403 | |||
Total consideration paid | $ 3,300 | 3,273 | ||
Interactive Concepts BV | Customer relationships. | ||||
Business Acquisitions | ||||
Identifiable intangible assets | 745 | |||
Interactive Concepts BV | Trademarks. | ||||
Business Acquisitions | ||||
Identifiable intangible assets | 220 | |||
Sahara Presentation Systems PLC | ||||
Business Acquisitions | ||||
Total consideration paid | $ 94,900 | |||
FrontRow Calypso, LLC | ||||
Business Acquisitions | ||||
Cash | 2,752 | |||
Accounts receivable | 3,381 | |||
Inventories | 10,240 | |||
Prepaid expenses | 883 | |||
Property and equipment | 348 | |||
Total assets acquired | 17,604 | |||
Accounts payable and accrued expenses | (1,501) | |||
Deferred revenue | (1,225) | |||
Other liabilities | (12) | |||
Total liabilities assumed | (2,738) | |||
Net tangible assets acquired | 14,866 | |||
Total intangible assets subject to amortization | 16,866 | |||
Goodwill | 2,920 | |||
Total net assets acquired | 34,652 | |||
Cash | 34,652 | |||
Total consideration paid | $ 34,700 | |||
FrontRow Calypso, LLC | Customer relationships. | ||||
Business Acquisitions | ||||
Identifiable intangible assets | 8,195 | |||
FrontRow Calypso, LLC | Trademarks. | ||||
Business Acquisitions | ||||
Identifiable intangible assets | 3,244 | |||
FrontRow Calypso, LLC | Technology | ||||
Business Acquisitions | ||||
Identifiable intangible assets | 5,036 | |||
FrontRow Calypso, LLC | Non-compete agreements | ||||
Business Acquisitions | ||||
Identifiable intangible assets | $ 391 |
RECENT BUSINESS ACQUISITIONS _2
RECENT BUSINESS ACQUISITIONS - SCHEDULE OF ESTIMATED USEFUL LIVES (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Customer relationships. | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives of acquired intangible assets | 8 years |
Trademarks. | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives of acquired intangible assets | 10 years |
Technology | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives of acquired intangible assets | 8 years |
Non-compete agreements | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives of acquired intangible assets | 3 years |
ACCOUNTS RECEIVABLE - TRADE (De
ACCOUNTS RECEIVABLE - TRADE (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
ACCOUNTS RECEIVABLE - TRADE. | ||
Accounts receivable - trade | $ 53,174 | $ 31,053 |
Allowance for doubtful accounts | (555) | (405) |
Allowance for sales returns and volume rebates | (1,365) | (1,075) |
Accounts receivable - trade, net of allowances | $ 51,254 | $ 29,573 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
INVENTORIES. | ||
Finished goods | $ 49,577 | $ 51,346 |
Spare parts | 998 | 260 |
Reserve for inventory obsolescence | (1,232) | (599) |
Advanced shipping costs | 92 | 584 |
Inventories, net | $ 49,435 | $ 51,591 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Prepaid expenses and other current assets | $ 9,013 | $ 9,444 |
Prepayments to vendors | ||
Prepaid expenses and other current assets | 7,085 | 7,739 |
Prepaid licenses and other | ||
Prepaid expenses and other current assets | $ 1,928 | $ 1,705 |
INTANGIBLE ASSETS - ASSETS BY T
INTANGIBLE ASSETS - ASSETS BY TYPE (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 68,823 | $ 77,731 |
Accumulated amortization | (16,910) | (12,199) |
Intangible assets, net of accumulated amortization | 51,913 | 65,532 |
Patents | ||
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 182 | 182 |
Patents | Minimum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 4 years | |
Patents | Maximum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 10 years | |
Customer relationships | ||
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 47,650 | 55,158 |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 8 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 15 years | |
Technology | ||
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 8,521 | 8,901 |
Technology | Minimum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 3 years | |
Technology | Maximum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 5 years | |
Domain | ||
Finite-Lived Intangible Assets | ||
Useful lives | 7 years | |
Intangible assets, at cost | $ 14 | 14 |
Non-compete | ||
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 391 | 391 |
Non-compete | Minimum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 8 years | |
Non-compete | Maximum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 15 years | |
Tradenames | ||
Finite-Lived Intangible Assets | ||
Intangible assets, at cost | $ 12,065 | $ 13,085 |
Tradenames | Minimum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 2 years | |
Tradenames | Maximum | ||
Finite-Lived Intangible Assets | ||
Useful lives | 10 years |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
INTANGIBLE ASSETS. | |||||
Amortization of intangible assets | $ 2.1 | $ 1.8 | $ 6.5 | $ 5.2 | |
Changes to gross carrying amount of recognized intangible assets | $ (6.3) | $ 3 |
LEASES (Details)
LEASES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
LEASES | ||
Initial lease term (in years) | 5 years | 5 years |
Renewal options | false | |
Operating lease cost | $ 439 | $ 1,500 |
Lease liabilities | 267 | 1,400 |
New operating lease right-of-use assets | $ 143 | $ 2,000 |
LEASES - SCHEDULE OF FUTURE MIN
LEASES - SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
LEASES | |
2022 | $ 647 |
2023 | 2,000 |
2024 | 1,271 |
2025 | 1,068 |
2026 | 731 |
Minimum Lease Payments | 5,717 |
Less imputed interest | (1,356) |
Total | $ 4,361 |
LEASES - SUPPLEMENTAL LEASE INF
LEASES - SUPPLEMENTAL LEASE INFORMATION (Details) | Sep. 30, 2022 |
LEASES | |
Weighted-average remaining lease term (years) | 3 years 6 months |
Weighted-average discount rate | 15.50% |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 38,955 | $ 25,714 |
Accrued expense | 8,648 | 6,440 |
Other | 807 | 1,484 |
Accounts payable and other liabilities | $ 48,410 | $ 33,638 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
DEBT | ||
Total debt | $ 59,203 | $ 59,509 |
Less: Discount and issuance cost | 5,923 | 7,568 |
Current portion of debt | 9,224 | 9,804 |
Long-term debt | 44,056 | 42,137 |
Total debt (net of discount and issuance costs) | 53,280 | 51,941 |
Paycheck Protection Program | ||
DEBT | ||
Total debt | 140 | 1,009 |
Total debt (net of discount and issuance costs) | 140 | 173 |
Note payable | Whitehawk Inc | ||
DEBT | ||
Total debt | $ 59,063 | $ 58,500 |
DEBT - WHITEHAWK FINANCE LLC (D
DEBT - WHITEHAWK FINANCE LLC (Details) | 9 Months Ended | 12 Months Ended | ||||||||
Jun. 21, 2022 USD ($) | Apr. 04, 2022 USD ($) | Mar. 31, 2022 USD ($) $ / shares shares | Mar. 29, 2022 USD ($) | Dec. 31, 2021 USD ($) D $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jul. 31, 2022 USD ($) | Jul. 22, 2022 $ / shares shares | Jun. 20, 2022 | |
DEBT | ||||||||||
Long-term debt | $ 51,941,000 | $ 53,280,000 | $ 51,941,000 | |||||||
Number of shares for warrants | shares | 2,043,291 | 3,715,075 | 2,043,291 | |||||||
Exercise price (in dollars per share) | $ / shares | $ 0.68 | |||||||||
Agency fees, legal fees, and other costs | $ 7,568,000 | $ 5,923,000 | $ 7,568,000 | |||||||
Maximum | ||||||||||
DEBT | ||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.68 | |||||||||
Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Percentage of fees payable | 3% | 3% | ||||||||
Fees payable threshold amount | $ 1,800,000 | $ 1,800,000 | ||||||||
Shares issued discount | $ 500,000 | |||||||||
Whitehawk Inc | London Interbank Offered Rate (LIBOR) | ||||||||||
DEBT | ||||||||||
Basis spread on interest rate | 10.75% | |||||||||
Class A common stock | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
New issues (in shares) | shares | 528,169 | 528,169 | ||||||||
Number of shares for warrants | shares | 2,043,291 | 2,043,291 | ||||||||
Percentage of increase in issue of warrants | 3% | 3% | ||||||||
Exercise price (in dollars per share) | $ / shares | $ 2 | $ 2 | ||||||||
Trading days for warrant repricing | D | 30 | |||||||||
Share price | $ / shares | $ 2 | $ 2 | ||||||||
Agency fees, legal fees, and other costs | $ 1,700,000 | $ 1,700,000 | ||||||||
March 2022 warrant repricing | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Exercise price (in dollars per share) | $ / shares | $ 1.19 | |||||||||
Number of warrants after repricing | shares | 3,434,103 | |||||||||
July 2022 warrant repricing | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Share price | $ / shares | $ 1.10 | |||||||||
Number of warrants after repricing | shares | 3,715,075 | |||||||||
Credit agreement | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Change of control, voting percentage | 40% | 33% | ||||||||
Credit agreement | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Basis spread on interest rate | 9.75% | |||||||||
Forbearance on advances granted the Loan Parties | $ 3,500,000 | |||||||||
Interest rate reduction on debt instrument | 0.50% | |||||||||
EBITDA coverage ratio required to be maintained | 1.75% | |||||||||
Credit agreement | Whitehawk Inc | London Interbank Offered Rate (LIBOR) | ||||||||||
DEBT | ||||||||||
Basis spread on interest rate | 13.25% | 10.25% | ||||||||
Credit agreement | Whitehawk Inc | Reference Rate | ||||||||||
DEBT | ||||||||||
Basis spread on interest rate | 12.25% | |||||||||
Credit agreement | After March 31, 2022 Senior leverage ratio is less than 2.25 | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Leverage ratio | 2.25% | |||||||||
Credit agreement | Prepayment premiums the first year following the current fiscal year (as a percent) | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Prepayment premiums (as a percent) | 5% | |||||||||
Credit agreement | Prepayment premiums the second year following the current fiscal year (as a percent) | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Prepayment premiums (as a percent) | 4% | |||||||||
Credit agreement | Prepayment premiums the third year following the current fiscal year (as a percent) | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Prepayment premiums (as a percent) | 2% | |||||||||
Initial Term Loan | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Maximum borrowing capacity | 68,500,000 | $ 68,500,000 | ||||||||
Proceeds from debt | 58,500,000 | |||||||||
Debt, face amount | $ 8,500,000 | $ 8,500,000 | $ 8,500,000 | |||||||
Loan payment | $ 625,000 | |||||||||
Long-term debt | 40,000,000 | 40,000,000 | ||||||||
Basis spread on interest rate | 2.50% | |||||||||
Repayment of debt not eligible for prepayment premiums | $ 5,000,000 | |||||||||
Initial Loan Subject to Repayment on February 28, 2022 | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Debt, face amount | 8,500,000 | 8,500,000 | ||||||||
Delayed draw term loan | Whitehawk Inc | ||||||||||
DEBT | ||||||||||
Debt, face amount | $ 2,500,000 | |||||||||
Delayed draw term loan | Whitehawk Inc | Maximum | ||||||||||
DEBT | ||||||||||
Debt, face amount | $ 10,000,000 | $ 10,000,000 |
DEBT - LIND GLOBAL MACRO FUND A
DEBT - LIND GLOBAL MACRO FUND AND LIND GLOBAL ASSET MANAGEMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
DEBT | ||||
Repayment of interest | $ 7,346 | $ 2,130 | ||
Shares issued value | $ 2,352 | 2,353 | ||
Lind Global Macro Fund L.P. | Class A common stock | ||||
DEBT | ||||
Shares issued value | 13,800 | |||
Lind Global Macro Fund L.P. | Securities purchase agreement | ||||
DEBT | ||||
Loss on extinguishment of debt | 3,400 | |||
Lind Global Macro Fund L.P. | Third securities purchase agreement | Class A common stock | ||||
DEBT | ||||
Debt, face amount | 9,900 | |||
Interest Payable | $ 511 | |||
Lind Global Asset Management, LLC | Class A common stock | ||||
DEBT | ||||
Public offering (in shares) | 5,700,000 | |||
Whitehawk, Inc | ||||
DEBT | ||||
Repayment of debt | 656 | 1,900 | ||
Repayment of interest | $ 2,000 | $ 5,600 | ||
Whitehawk, Inc | Class A common stock | ||||
DEBT | ||||
Public offering (in shares) | 528,169 | 528,169 |
DEBT - PAYCHECK PROTECTION PROG
DEBT - PAYCHECK PROTECTION PROGRAM LOAN (Details) - USD ($) $ in Thousands | May 22, 2020 | Sep. 30, 2022 | Dec. 31, 2021 |
DEBT | |||
Long-term debt | $ 53,280 | $ 51,941 | |
Paycheck Protection Program | |||
DEBT | |||
Proceeds from loan | $ 1,100 | ||
Loan applied for forgiveness | 836 | ||
Long-term debt | $ 140 | $ 173 |
DEBT - EVEREST DISPLAY INC. (De
DEBT - EVEREST DISPLAY INC. (Details) - USD ($) | Jan. 26, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
DEBT | |||
Accounts payable | $ 38,955,000 | $ 25,714,000 | |
Everest Display, Inc. | Accounts Payable and Other Liabilities Conversion | |||
DEBT | |||
Accounts payable | $ 1,983,436 | ||
Everest Display, Inc. | Class A common stock | Accounts Payable and Other Liabilities Conversion | |||
DEBT | |||
Conversion of accounts payable liabilities (in shares) | 793,375 |
DEBT - ACCOUNTS RECEIVABLE FINA
DEBT - ACCOUNTS RECEIVABLE FINANCING - SALLYPORT COMMERCIAL FINANCE (Details) - USD ($) | Aug. 06, 2021 | Jul. 20, 2021 | Sep. 30, 2020 |
Account Receivable Agreement [Member] | |||
DEBT | |||
Maximum borrowing capacity | $ 15,000,000 | ||
Professional fees | $ 20,000 | ||
Percentage increased maximum facility limit amount | 1% | ||
Sallyport Commercial Finance, LLC | Asset-based lending agreement | |||
DEBT | |||
Account receivable agreed to be purchased, percentage | 90% | ||
Interest rate | 3.50% | ||
Interest rate floor | 3.25% | ||
Audit fees payable | $ 950 | ||
Maximum borrowing capacity | $ 13,000,000 | ||
Professional fees | $ 50,000 | ||
Percentage increased maximum facility limit amount | 1% | ||
Sallyport Commercial Finance, LLC | Asset-based lending agreement | Maximum | |||
DEBT | |||
Increase in monthly sales volume | $ 3,000,000 | ||
Sallyport Commercial Finance, LLC | Asset-based lending agreement | Minimum | |||
DEBT | |||
Increase in monthly sales volume | $ 1,250,000 |
DERIVATIVE LIABILITIES - FAIR V
DERIVATIVE LIABILITIES - FAIR VALUE OF DERIVATIVE LIABILITIES (Details) | Sep. 30, 2022 $ / shares Y shares | Dec. 31, 2021 $ / shares Y shares |
Fair Value Measurement Inputs and Valuation Techniques | ||
Common stock issuable upon exercise of warrants | shares | 3,715,075 | 2,043,291 |
Market value of common stock on measurement date | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | 0.62 | 1.38 |
Exercise price | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | 1.10 | 2 |
Risk free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | 0.0407 | 0.0125 |
Expected life in years | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | Y | 4.25 | 5 |
Expected volatility | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | 0.92 | 0.79 |
Expected dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Measurement input | 0 | 0 |
INCOME TAXES - SCHEDULE OF PRET
INCOME TAXES - SCHEDULE OF PRETAX INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Total pretax book income (loss) | $ 3,625 | $ 2,120 | $ (1,250) | $ (2,724) |
US | ||||
Total pretax book income (loss) | 3,320 | (3,114) | (589) | (8,541) |
Other Foreign Jurisdictions | ||||
Total pretax book income (loss) | $ 305 | $ 5,234 | $ (661) | $ 5,817 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income tax expense | $ (520) | $ (1,391) | $ (475) | $ (3,936) | |
Effective tax rate | 38% | ||||
Other Foreign Jurisdictions | |||||
Income tax expense | $ (520) | $ (1,400) | $ 475 | $ 3,900 | |
State and Local Jurisdiction | |||||
Income tax expense | $ (24) | ||||
Estimate of possible loss | 82 | ||||
Penalties and interest accrued | $ 58 |
EQUITY - PREFERRED SHARES (Deta
EQUITY - PREFERRED SHARES (Details) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
EQUITY | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series A Preferred Stock | ||
EQUITY | ||
Preferred stock, shares authorized | 250,000 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Series B Preferred Stock | ||
EQUITY | ||
Temporary equity, shares authorized | 1,200,000 | |
Temporary equity, par value (in dollars per share) | $ 0.0001 | |
Series C Preferred Stock | ||
EQUITY | ||
Temporary equity, shares authorized | 270,000 | |
Temporary equity, par value (in dollars per share) | $ 0.0001 | |
Blank Check Preferred Stock | ||
EQUITY | ||
Preferred stock, shares authorized | 48,280,000 |
EQUITY - SERIES A PREFERRED STO
EQUITY - SERIES A PREFERRED STOCK (Details) - shares | 9 Months Ended | ||
Aug. 05, 2019 | Sep. 30, 2022 | Dec. 31, 2021 | |
EQUITY | |||
Preferred stock, shares outstanding | 167,972 | 167,972 | |
Series A Preferred Stock | |||
EQUITY | |||
Shares issuable on conversion of preferred stock | 398,406 | ||
Shares converted on conversion | 82,028 | ||
Preferred stock, shares outstanding | 167,972 | ||
Series A Preferred Stock | Genesis Collaboration, LLC | |||
EQUITY | |||
Acquisition (in shares) | 250,000 | ||
Class A common stock | |||
EQUITY | |||
Shares issued on conversion | 130,721 |
EQUITY - SERIES B PREFERRED STO
EQUITY - SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK (Details) $ / shares in Units, $ in Thousands, £ in Millions | 9 Months Ended | |||||
Jun. 14, 2021 USD ($) | Mar. 24, 2021 USD ($) $ / shares shares | Sep. 25, 2020 USD ($) D $ / shares shares | Sep. 30, 2022 | Sep. 30, 2021 USD ($) | Mar. 24, 2021 GBP (£) shares | |
Temporary Equity | ||||||
Deemed contribution from Series B preferred | $ | $ 367 | $ 367 | ||||
Sahara Presentation Systems PLC | ||||||
Temporary Equity | ||||||
Consideration amount | $ | $ 94,900 | |||||
Series B Preferred Stock | ||||||
Temporary Equity | ||||||
Liquidation value per share | $ 10 | |||||
Dividend rate | 8% | |||||
Conversion price per share | $ 1.66 | |||||
Stock price trigger (as a percent) | 200% | |||||
Threshold trading days | D | 20 | |||||
Notice period for redemption | 30 days | |||||
Redemption price per share | $ 10 | |||||
Liquidation value | $ 15,900 | £ 11.5 | ||||
Series B Preferred Stock | Sahara Presentation Systems PLC | ||||||
Temporary Equity | ||||||
Shares issued on acquisition | shares | 1,586,620 | |||||
Series C Preferred Stock | ||||||
Temporary Equity | ||||||
Liquidation value per share | $ 10 | |||||
Conversion price per share | $ 1.66 | |||||
Stock price trigger (as a percent) | 200% | |||||
Threshold trading days | D | 20 | |||||
Shares held by shareholders (as a percent) | 96% | |||||
Shares issuable on conversion of preferred stock | shares | 7,600,000 | 7,600,000 | ||||
Series C Preferred Stock | Sahara Presentation Systems PLC | ||||||
Temporary Equity | ||||||
Shares issued on acquisition | shares | 1,320,850 | |||||
Series B and Series C Preferred Stock | Sahara Presentation Systems PLC | ||||||
Temporary Equity | ||||||
Fair value | $ | $ 28,500 |
EQUITY - COMMON STOCK (Details)
EQUITY - COMMON STOCK (Details) | 9 Months Ended | |
Sep. 30, 2022 Vote shares | Dec. 31, 2021 shares | |
EQUITY | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Class A common stock | ||
EQUITY | ||
Common stock, shares authorized | 150,000,000 | |
Number of votes per share | Vote | 1 | |
Common stock, shares issued | 74,123,492 | 63,821,901 |
Common stock, shares outstanding | 74,123,492 | 63,821,901 |
Class B common stock | ||
EQUITY | ||
Common stock, shares authorized | 50,000,000 | |
Number of votes per share | Vote | 0 | |
Common stock, shares outstanding | 0 | 0 |
EQUITY - ISSUANCE OF COMMON STO
EQUITY - ISSUANCE OF COMMON STOCK (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Jul. 22, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jan. 26, 2021 USD ($) | Sep. 30, 2022 USD ($) Y $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) Y $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | |
Class of Stock [Line Items] | |||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Number of shares for warrants | shares | 2,043,291 | 3,715,075 | 3,715,075 | ||||
Warrants and rights outstanding, term | 11 months 8 days | ||||||
Net Income (Loss) Attributable to Parent | $ 3,105 | $ 729 | $ (1,725) | $ (6,659) | |||
Accounts payable | $ 25,714 | $ 38,955 | $ 38,955 | ||||
Market value on measurement date | $ / shares | $ 0.59 | $ 0.59 | |||||
Conversion of restricted shares (in shares) | shares | 332,065 | 217,000 | 1,995,871 | 760,060 | |||
Stock options exercised (in shares) | shares | 0 | 162,000 | 193,841 | 481,834 | |||
Exercise price (in dollars per share) | $ / shares | $ 0.68 | $ 0.68 | |||||
Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Number of stock and warrants for common stock issued. | shares | 7,352,940 | ||||||
Price per share | $ / shares | $ 0.68 | ||||||
Gross proceeds from issuance of stock | $ 5,000 | ||||||
Shares offering, restriction to issue shares after closing of offering, period | 60 days | ||||||
Pre Funded Warrants | |||||||
Class of Stock [Line Items] | |||||||
Warrants exercised (in shares) | shares | 352,940 | 75,000 | 352,940 | 95,749 | |||
Exercise price (in dollars per share) | $ / shares | $ 0.001 | $ 0.42 | $ 0.001 | $ 0.42 | |||
Pre Funded Warrants | Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Number of shares for warrants | shares | 352,940 | ||||||
Issuance proceeds allocated based on relative fair value of instruments | $ 118 | ||||||
Exercisable term of warrants | 6 months | ||||||
Warrants and rights outstanding, term | 5 years 6 months | ||||||
Net proceeds from issuance of warrants | $ 4,600 | ||||||
Warrant | Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Issuance proceeds allocated based on relative fair value of instruments | 2,200 | ||||||
Risk free interest rate | |||||||
Class of Stock [Line Items] | |||||||
Measurement input | 0.0286 | 0.0286 | |||||
Expected life in years | |||||||
Class of Stock [Line Items] | |||||||
Measurement input | Y | 6 | 6 | |||||
Expected volatility | |||||||
Class of Stock [Line Items] | |||||||
Measurement input | 1.32 | 1.32 | |||||
Expected dividend yield | |||||||
Class of Stock [Line Items] | |||||||
Measurement input | 0 | 0 | |||||
Common stock | Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Issuance proceeds allocated based on relative fair value of instruments | $ 2,400 | ||||||
Class A common stock | Whitehawk Inc | |||||||
Class of Stock [Line Items] | |||||||
Public offering (in shares) | shares | 528,169 | 528,169 | |||||
Number of shares for warrants | shares | 2,043,291 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 2 | ||||||
Class A common stock | Everest Display, Inc. | Accounts payable. | |||||||
Class of Stock [Line Items] | |||||||
Accounts payable | $ 2,000 | $ 2,000 | |||||
Debt converted into shares | shares | 793,000 | ||||||
Debt converted into shares, value | $ 1,600 | ||||||
Gain from settlements of liabilities | $ 357 | $ 357 | |||||
Class A common stock | Lind Global | |||||||
Class of Stock [Line Items] | |||||||
Gross proceeds from issuance of stock | $ 13,800 | ||||||
Repaid principal | 3,100 | 9,900 | |||||
Repaid interest | $ 138 | $ 511 | |||||
Number of common stock issued | shares | 1,800,000 | 5,700,000 | |||||
Net Income (Loss) Attributable to Parent | $ 700 | $ 3,400 | |||||
Class A common stock | Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Public offering (in shares) | shares | 7,000,000 | ||||||
Common stock, par value | $ / shares | $ 0.0001 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.0001 |
EQUITY - WARRANTS ACTIVITY (Det
EQUITY - WARRANTS ACTIVITY (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Weighted Average Exercise Price | |||||
Weighted Average Remaining Contractual Term, Outstanding (in years) | 11 months 8 days | ||||
Equity warrant | |||||
Number of Units | |||||
Outstanding, at beginning (in shares) | 70,000 | ||||
Granted (in shares) | 7,705,880 | ||||
Warrants exercised (in shares) | (352,940) | ||||
Warrants expired (in shares) | (50,000) | ||||
Outstanding, at ending (in shares) | 7,372,940 | 7,372,940 | |||
Exercisable (in shares) | 12,500 | ||||
Weighted Average Exercise Price | |||||
Outstanding, at beginning (in dollars per share) | $ 5.70 | ||||
Granted (in dollars per share) | 0.65 | ||||
Expired (in dollars per share) | 7.70 | ||||
Outstanding, at ending (in dollars per share) | $ 0.68 | 0.68 | |||
Exercisable (in dollars per share) | $ 0.70 | $ 0.70 | |||
Weighted Average Remaining Contractual Term, Outstanding (in years) | 5 years 3 months | 5 years 3 months | |||
Weighted Average Remaining Contractual Term, Exercisable (in years) | 2 years 6 months 21 days | ||||
Pre Funded Warrants | |||||
Number of Units | |||||
Warrants exercised (in shares) | (352,940) | (75,000) | (352,940) | (95,749) |
STOCK COMPENSATION (Details)
STOCK COMPENSATION (Details) | 9 Months Ended |
Sep. 30, 2022 Y $ / shares shares | |
STOCK COMPENSATION | |
Market value on measurement date | $ 0.59 |
Exercise price (in dollars per share) | $ 0.68 |
Directors Officers Key Employees Consultants [Member] | 2021 Equity Incentive Plan [Member] | |
STOCK COMPENSATION | |
Shares available for issuance | shares | 2,725,400 |
Stock options | |
STOCK COMPENSATION | |
Vesting period (in years) | 4 years |
Expiration term (in years) | 5 years |
Risk free interest rate | |
STOCK COMPENSATION | |
Measurement input | 0.0286 |
Expected life in years | |
STOCK COMPENSATION | |
Measurement input | Y | 6 |
Expected volatility | |
STOCK COMPENSATION | |
Measurement input | 1.32 |
Expected dividend yield | |
STOCK COMPENSATION | |
Measurement input | 0 |
Minimum | |
STOCK COMPENSATION | |
Market value on measurement date | $ 0.59 |
Exercise price (in dollars per share) | $ 5.01 |
Minimum | Risk free interest rate | |
STOCK COMPENSATION | |
Measurement input | 1.69 |
Minimum | Expected life in years | |
STOCK COMPENSATION | |
Measurement input | Y | 3 |
Minimum | Expected volatility | |
STOCK COMPENSATION | |
Measurement input | 1.41 |
Maximum | |
STOCK COMPENSATION | |
Market value on measurement date | $ 0.93 |
Exercise price (in dollars per share) | $ 0.68 |
Maximum | Risk free interest rate | |
STOCK COMPENSATION | |
Measurement input | 2.87 |
Maximum | Expected life in years | |
STOCK COMPENSATION | |
Measurement input | Y | 4 |
Maximum | Expected volatility | |
STOCK COMPENSATION | |
Measurement input | 1.48 |
STOCK COMPENSATION - STOCK OPTI
STOCK COMPENSATION - STOCK OPTIONS ACTIVITY (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 13, 2022 | May 03, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Number of Units | |||||||
Outstanding at beginning (in shares) | 4,054,116 | ||||||
Granted (in shares) | 1,221,744 | ||||||
Exercised (in shares) | 0 | (162,000) | (193,841) | (481,834) | |||
Cancelled (in shares) | (724,408) | ||||||
Outstanding at ending (in shares) | 4,357,611 | 4,357,611 | 4,054,116 | ||||
Exercisable (in shares) | 3,042,376 | 3,042,376 | |||||
Weighted Average Exercise Price | |||||||
Outstanding at beginning (in dollars per share) | $ 1.92 | ||||||
Granted (in dollars per share) | 1.12 | ||||||
Exercised (in dollars per share) | 0.24 | ||||||
Cancelled (in dollars per share) | 1.75 | ||||||
Outstanding at ending (in dollars per share) | $ 1.80 | 1.80 | $ 1.92 | ||||
Exercisable (in dollars per share) | $ 2.20 | $ 2.20 | |||||
Weighted Average Remaining Contractual Terms, Outstanding (in years) | 2 years 3 months 10 days | 2 years 3 months 14 days | |||||
Weighted Average Remaining Contractual Terms, Exercisable (in years) | 1 year 9 months 18 days | ||||||
Options intrinsic value | $ 150,000 | $ 150,000 | $ 1,900,000 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Board of Directors | |||||||
Weighted Average Exercise Price | |||||||
Term of non compete agreement | 3 years | ||||||
Class A common stock | Board of Directors | |||||||
Weighted Average Exercise Price | |||||||
Stock options to purchase | 577,675 | ||||||
Common stock, par value | $ 0.001 | ||||||
Market value of common stock on measurement date | $ 1.04 | ||||||
Fair value of the stock | $ 314,000 | ||||||
Class A common stock | Chief Financial Officer | |||||||
Weighted Average Exercise Price | |||||||
Stock options to purchase | 150,000 | ||||||
Vesting period | 4 years |
STOCK COMPENSATION - RESTRICTED
STOCK COMPENSATION - RESTRICTED STOCK UNITS ACTIVITY (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Mar. 21, 2022 | Feb. 24, 2022 | Feb. 14, 2022 | Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | |
Weighted Average Grant Date Fair Value | ||||||
Value of shares issued | $ 11,000 | |||||
Former Front Row Employee | Class A common stock | ||||||
Weighted Average Grant Date Fair Value | ||||||
Restricted stock issued | 39,683 | |||||
Value of shares issued | $ 50,000 | |||||
Restricted Stock Units | ||||||
Number of Units | ||||||
Outstanding at beginning (in shares) | 1,973,947 | 1,973,947 | ||||
Granted (in shares) | 2,411,662 | |||||
Vested (in shares) | (1,179,754) | |||||
Forfeited (in shares) | (370,151) | |||||
Outstanding at ending (in shares) | 2,835,704 | 2,835,704 | ||||
Weighted Average Grant Date Fair Value | ||||||
Outstanding at beginning (in dollars per share) | $ 1.81 | $ 1.81 | ||||
Granted (in dollars per share) | 1.20 | |||||
Vested (in dollars per share) | 1.73 | |||||
Forfeited (in dollars per share) | 1.38 | |||||
Outstanding at ending (in dollars per share) | $ 1.37 | $ 1.37 | ||||
Vesting period (in years) | 4 years | |||||
Restricted Stock Units | Employees | 2014 Stock Incentive Plan | ||||||
Number of Units | ||||||
Granted (in shares) | 1,771,950 | |||||
Weighted Average Grant Date Fair Value | ||||||
Vesting period (in years) | 4 years | |||||
Grant date fair value | $ 2,100,000 | |||||
Restricted Stock Units | Chief Executive Officer | ||||||
Number of Units | ||||||
Granted (in shares) | 163,637 | |||||
Weighted Average Grant Date Fair Value | ||||||
Vesting period (in years) | 3 years | |||||
Aggregate intrinsic value outstanding | $ 180,000 | |||||
Options to purchase shares | $ 494,069 | |||||
Restricted Stock Units | Board Members [Member] | ||||||
Number of Units | ||||||
Granted (in shares) | 348,840 | |||||
Weighted Average Grant Date Fair Value | ||||||
Vesting period (in years) | 1 year | |||||
Grant date fair value | $ 450,000 |
STOCK COMPENSATION - STOCK COMP
STOCK COMPENSATION - STOCK COMPENSATION EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
STOCK COMPENSATION | ||||
Stock compensation expense | $ 608 | |||
Unrecognized compensation expense | $ 4,700 | 4,700 | ||
General and administrative expense. | ||||
STOCK COMPENSATION | ||||
Stock compensation expense | 603 | $ 1,161 | 2,665 | $ 3,020 |
General and administrative expense. | Stock options | ||||
STOCK COMPENSATION | ||||
Stock compensation expense | 128 | 153 | 683 | 544 |
General and administrative expense. | Restricted Stock Units | ||||
STOCK COMPENSATION | ||||
Stock compensation expense | 474 | 1,005 | 1,980 | 2,472 |
General and administrative expense. | Warrants | ||||
STOCK COMPENSATION | ||||
Stock compensation expense | $ 1 | $ 3 | $ 2 | $ 4 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2018 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |||||
Term over which Management Agreement pays after employment termination (in months) | 13 months | ||||
Percentage of annual management fee payable in cash | 0.375% | ||||
Revenues, net | $ 250,000 | $ 68,736,000 | $ 61,008,000 | $ 178,967,000 | $ 141,186,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 9 Months Ended |
Sep. 30, 2022 lease | |
US | |
Lessee, Lease, Description [Line Items] | |
Number of operating leases | 7 |
GB | |
Lessee, Lease, Description [Line Items] | |
Number of operating leases | 2 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - PURCHASE COMMITMENTS (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Purchase Commitments | |
Purchase Commitments | |
Open inventory purchase orders | $ 33.8 |
CUSTOMER AND SUPPLIER CONCENT_3
CUSTOMER AND SUPPLIER CONCENTRATION - CUSTOMER CONCENTRATION RISK (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 USD ($) customer | Dec. 31, 2021 USD ($) | |
Concentration Risk | |||
Number of customers | customer | 1 | 2 | |
Accounts receivable - trade, net of allowances | $ 51,254 | $ 29,573 | |
Revenue | Customer concentration risk | Customer one | |||
Concentration Risk | |||
Concentration risk (as a percent) | 14.10% | 12.80% | |
Accounts receivable - trade, net of allowances | $ 8,532 | $ 9,815 | |
Revenue | Customer concentration risk | Customer two | |||
Concentration Risk | |||
Concentration risk (as a percent) | 10.10% | ||
Accounts receivable - trade, net of allowances | $ 5,142 |
CUSTOMER AND SUPPLIER CONCENT_4
CUSTOMER AND SUPPLIER CONCENTRATION - SUPPLIER CONCENTRATION RISK (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) | |
Concentration Risk | ||
Number of suppliers | item | 2 | |
Cost of goods sold | Supplier concentration risk | Supplier one | ||
Concentration Risk | ||
Concentration risk (as a percent) | 44% | 47% |
Accounts payable (prepayment) | $ 8,275 | $ 4,188 |
Cost of goods sold | Supplier concentration risk | Supplier two | ||
Concentration Risk | ||
Concentration risk (as a percent) | 20% | 18.40% |
Accounts payable (prepayment) | $ (10,482) | $ (2,070) |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Nov. 04, 2022 | Jul. 22, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock issuable upon exercise of warrants | 2,043,291 | 3,715,075 | 3,715,075 | |||
Exercise price (in dollars per share) | $ 0.68 | $ 0.68 | ||||
Warrants and rights outstanding, term | 11 months 8 days | |||||
Private Placement | ||||||
Number of stock and warrants for common stock issued. | 7,352,940 | |||||
Price per share | $ 0.68 | |||||
Gross proceeds from issuance of stock | $ 5,000 | |||||
Shares offering, restriction to issue shares after closing of offering, period | 60 days | |||||
Minimum | ||||||
Exercise price (in dollars per share) | 5.01 | 5.01 | ||||
Maximum | ||||||
Exercise price (in dollars per share) | $ 0.68 | $ 0.68 | ||||
Whitehawk, Inc | ||||||
Repayment of notes payable | $ 656 | $ 1,900 | ||||
Whitehawk, Inc | Repayment on February 28, 2023 | ||||||
Debt, face amount | $ 8,500 | $ 8,500 | ||||
Pre Funded Warrants | ||||||
Exercise price (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.42 | |||
Pre Funded Warrants | Private Placement | ||||||
Common stock issuable upon exercise of warrants | 352,940 | |||||
Exercisable term of warrants | 6 months | |||||
Warrants and rights outstanding, term | 5 years 6 months | |||||
Class A common stock | Private Placement | ||||||
Public offering (in shares) | 7,000,000 | |||||
Common stock, par value | $ 0.0001 | |||||
Exercise price (in dollars per share) | $ 0.0001 | |||||
Class A common stock | Whitehawk, Inc | ||||||
Public offering (in shares) | 528,169 | 528,169 | ||||
Common stock issuable upon exercise of warrants | 2,043,291 | |||||
Exercise price (in dollars per share) | $ 2 | |||||
Subsequent event | Whitehawk, Inc | Credit agreement | ||||||
Repayment of notes payable | $ 4,250 |