Boxlight Corp 8-K Summary: February 3, 2020
Business Context and Reporting Period
This Current Report (Form 8-K) covers events occurring on February 3, 2020, and February 4, 2020. Boxlight Corporation (Nasdaq: BOXL), an emerging growth company, reported the entry into a material asset purchase agreement and a new securities purchase agreement to secure financing.
Key Financial Metrics and Agreements
The filing details two primary financial transactions rather than standard periodic financial results:
- Asset Acquisition: Boxlight agreed to acquire assets from MyStemKits, Inc. for a total purchase price of $600,000. Payment terms include $250,000 in cash and a $350,000 purchase note payable in four quarterly installments.
- Debt Financing: Boxlight entered into a Securities Purchase Agreement with Lind Global Macro Fund, LP, to receive $750,000 in funding.
- Debt Structure: The financing involves an $825,000 convertible promissory note (the "2020 Note") bearing 8% interest compounded monthly. The note matures over 24 months with repayment commencing August 4, 2020.
- Equity and Fees: The transaction includes the issuance of restricted Class A common stock valued at $60,000 and a commitment fee of $26,250.
- Repayment Terms: Monthly payments of $45,833.33 plus interest are required after the initial six-month interest accrual period. Payments may be made in cash or registered/Rule 144 eligible common stock.
- Existing Debt: The agreement amended and restated two prior notes totaling $5,775,000 ($4.4M and $1.375M) issued to Lind in 2019.
Material Changes and Conditions
The filing does not provide comparative financial metrics (revenue, profit, cash flow) for the period. Material changes include:
- Strategic Expansion: Acquisition of MyStemKits assets, including rights to manufacture and distribute Robo 3D branded 3D printers and 3D printable STEM curriculums for the global education market.
- Liquidity Injection: Immediate receipt of $750,000 cash from Lind Global Macro Fund, LP.
- Debt Restructuring: Modification of existing Lind notes to prohibit stock payments that would violate Nasdaq Capital Market rules.
- Closing Conditions: The MyStemKits acquisition is subject to obtaining third-party consents under existing license agreements.
Outlook, Risks, and Management Commentary
Management commentary is limited to the terms of the agreements. Key risks and contingencies include:
- Regulatory Compliance: The company agreed to call a stockholders meeting on or before May 31, 2020, to seek approval for current and prior financing transactions with Lind.
- Security Interests: A Second Amended and Restated Security Agreement and Intercreditor Agreement were executed, reaffirming the priority of security interests between Lind (second lien) and Sallyport Commercial Finance, LLC (first lien).
- Conversion Risk: Monthly debt payments may be satisfied via stock issuance, subject to registration status or Rule 144 eligibility, which could impact share count and liquidity.
Investor Verification Checklist
- Verify the status of third-party consents required to close the MyStemKits asset purchase.
- Confirm the total outstanding debt obligation to Lind Global Macro Fund, LP, including the new $825,000 note and the restated $5,775,000 in prior notes.
- Monitor the scheduled stockholders meeting (by May 31, 2020) regarding approval of Lind financing transactions.
- Review the impact of potential stock conversions on the company's capital structure and Nasdaq listing compliance.
- Assess the strategic fit and integration timeline for the acquired Robo 3D education assets.