SEC Comment Letter for Boxlight Corp (BOXL) (CIK 0001624512) (BOXL) — Mar 10, 2015
Boxlight Corp (BOXL) (CIK 0001624512)
Date: March 10, 2015 · CIK: 0001624512 · Accession: 0000000000-15-014161
AI Filing Summary & Sentiment
Letter
March 9 , 2015 Mark Elliott Chief Executive Officer Boxlight Corporation 1045 Progress Circle Lawrenceville, Georgia 30043
Re: Boxlight Corporation (formerly known as Logical Choice Corporation ) Amendment No. 1 to Draft Registration Statement on Form S -1 Submitted February 12, 2015 CIK No. 0001624512
Dear Mr. Elliott :
We have reviewed your amended draft registration statement and have the following comments. In some of our comments, we may ask you to provide us with information so we may better under stand your disclosure.
Please respond to this letter by providing the requested information and either submitting an amended draft registration statement or publicly filing your registration statement on EDGAR. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in re sponse to these comments and your amended draft registration statement or filed registration statement, we may have additional comments.
Prospectus Summary, page 1
1. Revise the first few paragraphs of the summary to clarify the relative size of each acquisition target by disclosing their respective revenues and net gain/loss.
Acquisition of Boxlight, page 7
2. Please clarify when the closing of the sale of series C convertible preferred stock will occur. In addition, please clarify whether the convers ion of the preferred stock in to class A common stock will occur simultaneously with the closing.
3. Revise the first sentence of the second paragraph of this section for clarity.
Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 2
Acquisition of Genesis, page 7
4. Your disclosure indicates that other than one share retained by Vert Capital, all shares held by Vert Capital and the former members of Genesis will be returned to the treasury. Please revise to clarify the equity interest that will be acquired by Parent in this transaction.
Our Status as an E merging Growth Co mpany, page 9
5. We note your response to prior comment 16. Since you have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Act, you should include risk factor disclosure in which it explains that this election allows it to d elay the adoption of new or revised accoun ting standards that have different effective dates for public and private co mpanies until those standards apply to private companies. You should also disclose in the risk factor that, as a result of this election, your financial statements may not be co mparable to co mpanies that co mply with public co mpany effective dates. You should also provide a si milar state ment in your critical accounting policy disclos ures in MD&A.
We will operate in a highly competitive industry, page 12
6. While we note your response to prior comment 17, it remains unclear why you elected to identify in your prospectus the particular companies named. Please tell us the objective criteria that you used to determine the competi tors that would be identified in your filing . To the extent that other companies also satisfied your objective criteria but were not named in the filing, please explain why they were omitted . As prev iously noted, please be aware that we do not consider na me recognition a sufficient basis for identifying a competitor in your prospectus.
Our future sales of interactive displays…, page 14
7. Please revise this risk factor, and elsewhere in the prospectus as appropriate, to include the clarifying information contained in your response to prior comment 18.
Our suppliers may not be able to supply…, page 14
8. We note your response to prior comment 19. Please provide additional detail regarding the overselling of your forecast. Specifically, please tell us more precisely when it occurred, by how much you oversold, how long the ensuing shortage lasted and whether you have taken any steps to prevent future overselling.
Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 3
An affiliate is in liquidation, page 16
9. Please expand your disclosure to describe further the p otential consequences to you if creditors successfully claim that the obligations owed by Logical Choice Technologies must be performed by it, or otherwise guaranteed by you. In this regard, please address the size of the obligations relative to your finan cial position and whether there is a possibility that the entire acquisition could be unwound. Also, please tell us whether the inactive status of Vert Capital’s Delaware subsidiary will have any impact on the proposed acquisition or liquidation .
Unaudited Pro For ma Combined Financial Statements, page 28
Notes to Unaudited Pro For ma Combined Financial Statements, page 32
10. We note your response to prior comment 23. Consistent with your response, please revise your filing to explain that you have not reflected any pro for ma adjust ments to reflect the tax impact of the pro for ma adjustments since you belie ve that the tax i mpact would not be material .
(6) Purchase Price Allocation, page 34
11. We note your response to prior comment 27 and that your underwriters valu ed your company at $1.39 per share based on an $ 80 million valuation. In light of the fact t hat the actual v aluation could differ from that presented here and that could materially i mpact the purchase p rice allocation, please provide additional disclosures to explain how a change in the valuation would i mpact the pro fo rma presentation.
12. Further to the above, we note your response to prior com ment 31. We note that the assumed gross offering proceeds of $15 million from the sale of 17,250,000 shares as detailed on the cover page rep resents a price of $.87 per share, which differs significantly from the $1.39 per s hare valuation you present elsewhere. Further, ut ilizing the pro fo rma shares outstanding you refer to in response to comment 27, the i mplied offering price suggests a valuation of approxi mately $65 million. Please rec oncile these amounts and explain why you belie ve it is appropriate to present two separate values for your com mon stock in the filing .
13. We note your response to prior comment 30. For each of the Boxlight and Globisens transactions, please reconcile the i mplied value of the transaction, which is calculated using the shares issued at $1.39 per share together with any cash paid, to the a mount presented on page 39 as the consideration paid for each of the tran sactions. For exa mple, you disclo se that you will i ssue 12,438,390 shares for t he Boxlight acquisition as well as $7.3 million of cash. Utilizi ng a value of $1.39 per share, this repre sents consi deration paid of $24.6 million. However, the table on page 39 prese nts $21.0 million as t he consideration paid.
Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 4
14. We note your response to prior comment 28. However, it appears th at the analysis you provided is li mited to the factors listed in F ASB A SC 805 -10-55-12. Please expand your prior response to address the com ments below regarding your analysis of the factors listed in FASB ASC 805 -10-55-12 as well as the com ments below rel ating to your analysis of other factors listed in FASB ASC 805 :
You state t hat the share holders of Boxlight Corp oration will have the a bility to elect, appoint, or to re move a majority of the members of the Board of Directors. Please clarify if you are referring to the pre -transaction Boxlight shareholders or the post -transaction shareholders. In this regard, please also cla rify how the re maining three Bo ard members will be elected.
You state t hat the seni or manage ment of Boxlight Corporation will be the senior manage ment of the co mbined entity. With re ference to the se nior manag ement, please clarify for us if any of the existing e mployees and senior manag ement of Everest Display will beco me employees of Boxlight Coporation after the transaction. Expla in the signif icant roles these e mployees will have a nd how you considered t his in your a nalysis. In this regard, it appears that the Pre sident and Chief Operating Officer of the co mbined company will co me from Boxlight (Everest Di splay) .
You state t hat Boxlig ht Corpora tion will pay a premium over the pr e- combination fair value of all the eq uity intere sts of the other combining entities. With reference to the implied value of your stock in connection with this offering ($.87 per share), please provide us with your calculations that support this assertion as it relates to the Everest Display transaction .
Tell us how you have considered F ASB ASC 805 -10-55-13. In this regard, we note that as of and from Septe mber 18, 2014, from the date of inception through Septe mber 30, 2014, Boxlight Corporation had $0 assets and $0 revenues while as of and for the nine months ended Septe mber 30, 2014, Everest Di splay has $2 4.8 million in total assets and $18 million in t otal revenue .
Tell us how you have considered F ASB ASC 805 -10-55-15. In this regard, we note that Boxlight Corporation was just for med on Septe mber 18, 2014 and it appears it was formed for the purposes of issuing equity int erests to e ffect these business co mbinations .
(9). Weighted Outstanding Shares, page 34
15. We note your response to prior comment 24. It is not clear to us how you calculated the 57,628,940 shares of fully diluted outstanding shares on a pro fo rma basis that will be outstanding after the completion of the offering. Please provide us with your calculation of this a mount.
Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 5
Liquidit y and Capital Resources, page 45
16. Disclose the terms of the loan you entered into with Vert Capital on September 30, 2014.
Business, page 48
17. We note your revisions in response to prior comment 35. Please continue your revisions to provide an expanded discussion of your integration strategy. Your current disclosure provides limited detail regarding the timing of the i ntegration process . Also, t o the extent that different acquisitions require differe nt strategies, please provide separate disclosure to explain.
Competition, page 58
18. We note that you have provided additional disclosure about the competitive landscape for Boxlight, Globisens and Genesis. Please also discuss the competitive landscape fo r the larger, fully -integrated company.
Executive Compensation, page 63
19. Please revise to include a summary compensation table for the fiscal year ended December 31, 2014 .
Everest Di splay, Inc. Audited Financial State ments, page F -15 Note 10. Commi tment and Contingencies, page F -33
20. We note your response to prior comment 39. Please provide us with additional analysis to support the con clusion that Everest Display held an asset at Dece mber 31, 2013. In this regard, we note that prior to that date, Everest Display held the rights to use the trade mark at agreed upon rates . The transaction on October 10 , 2014 appears to provide for the transfer of the legal righ ts of the trade mark to Everest Di splay, allowing Everest Display to control others’ access to the trade mark and thereby at that date meeting the definition of an asset. However, it re mains unclear why you believe the transaction and related valuation of the trade mark on October 10, 2014 provides evi dence as to the existence and fair value of an asset prior to that date, specifically on Dece mber 31, 2013.
Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 6
Boxlight Corporation Audited Financial State ments, page F -71 State ment of Stockholders’ (Deficit), page F-74
21. Please reconcile your disclosure on page 83 that you issued 16,000,000 shares of Class A common stock to Vert Capital with the disclosure here that you have not issued any shares of common stock. In this regard, please also revise the footnotes to the financial statements to describe the ter ms of your Class A com mon stock as well as any other classes of com mon stock of Boxlight Corporation.
Exhibit
22. Please confirm that you have filed final copies of all your material agreements. In this regard, we note that several exhibits contain missing dates and missing signatures.
23. We note that you have added a new provision under Article Nine of the amended and restated Articles of Incorporation. Please revise your prospectus to disclose prominently the new requirements set forth with respect to derivative actions. Your revised disclosure should clearly explain the basis for adding the new provision and the obligation s it imposes on investors.
24. Please file all exhibits, schedules and attachments to your agreements. As one example, we note that exhibits and schedules are not filed with Exhibit 10.12.
You may contact Tara Harkins at 202 -551-3639 or Kevin Vaughn at 202-551-3643 if you have questions regarding comments on the financial statements and related matters. Please contact Daniel Morris at 202-551-3314 or me at 202-551-3412 with any other questions.
Sincerely,
/s/ A manda Ravitz
Show Raw Text
March 9 , 2015 Mark Elliott Chief Executive Officer Boxlight Corporation 1045 Progress Circle Lawrenceville, Georgia 30043 Re: Boxlight Corporation (formerly known as Logical Choice Corporation ) Amendment No. 1 to Draft Registration Statement on Form S -1 Submitted February 12, 2015 CIK No. 0001624512 Dear Mr. Elliott : We have reviewed your amended draft registration statement and have the following comments. In some of our comments, we may ask you to provide us with information so we may better under stand your disclosure. Please respond to this letter by providing the requested information and either submitting an amended draft registration statement or publicly filing your registration statement on EDGAR. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing the information you provide in re sponse to these comments and your amended draft registration statement or filed registration statement, we may have additional comments. Prospectus Summary, page 1 1. Revise the first few paragraphs of the summary to clarify the relative size of each acquisition target by disclosing their respective revenues and net gain/loss. Acquisition of Boxlight, page 7 2. Please clarify when the closing of the sale of series C convertible preferred stock will occur. In addition, please clarify whether the convers ion of the preferred stock in to class A common stock will occur simultaneously with the closing. 3. Revise the first sentence of the second paragraph of this section for clarity. Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 2 Acquisition of Genesis, page 7 4. Your disclosure indicates that other than one share retained by Vert Capital, all shares held by Vert Capital and the former members of Genesis will be returned to the treasury. Please revise to clarify the equity interest that will be acquired by Parent in this transaction. Our Status as an E merging Growth Co mpany, page 9 5. We note your response to prior comment 16. Since you have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Act, you should include risk factor disclosure in which it explains that this election allows it to d elay the adoption of new or revised accoun ting standards that have different effective dates for public and private co mpanies until those standards apply to private companies. You should also disclose in the risk factor that, as a result of this election, your financial statements may not be co mparable to co mpanies that co mply with public co mpany effective dates. You should also provide a si milar state ment in your critical accounting policy disclos ures in MD&A. We will operate in a highly competitive industry, page 12 6. While we note your response to prior comment 17, it remains unclear why you elected to identify in your prospectus the particular companies named. Please tell us the objective criteria that you used to determine the competi tors that would be identified in your filing . To the extent that other companies also satisfied your objective criteria but were not named in the filing, please explain why they were omitted . As prev iously noted, please be aware that we do not consider na me recognition a sufficient basis for identifying a competitor in your prospectus. Our future sales of interactive displays…, page 14 7. Please revise this risk factor, and elsewhere in the prospectus as appropriate, to include the clarifying information contained in your response to prior comment 18. Our suppliers may not be able to supply…, page 14 8. We note your response to prior comment 19. Please provide additional detail regarding the overselling of your forecast. Specifically, please tell us more precisely when it occurred, by how much you oversold, how long the ensuing shortage lasted and whether you have taken any steps to prevent future overselling. Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 3 An affiliate is in liquidation, page 16 9. Please expand your disclosure to describe further the p otential consequences to you if creditors successfully claim that the obligations owed by Logical Choice Technologies must be performed by it, or otherwise guaranteed by you. In this regard, please address the size of the obligations relative to your finan cial position and whether there is a possibility that the entire acquisition could be unwound. Also, please tell us whether the inactive status of Vert Capital’s Delaware subsidiary will have any impact on the proposed acquisition or liquidation . Unaudited Pro For ma Combined Financial Statements, page 28 Notes to Unaudited Pro For ma Combined Financial Statements, page 32 10. We note your response to prior comment 23. Consistent with your response, please revise your filing to explain that you have not reflected any pro for ma adjust ments to reflect the tax impact of the pro for ma adjustments since you belie ve that the tax i mpact would not be material . (6) Purchase Price Allocation, page 34 11. We note your response to prior comment 27 and that your underwriters valu ed your company at $1.39 per share based on an $ 80 million valuation. In light of the fact t hat the actual v aluation could differ from that presented here and that could materially i mpact the purchase p rice allocation, please provide additional disclosures to explain how a change in the valuation would i mpact the pro fo rma presentation. 12. Further to the above, we note your response to prior com ment 31. We note that the assumed gross offering proceeds of $15 million from the sale of 17,250,000 shares as detailed on the cover page rep resents a price of $.87 per share, which differs significantly from the $1.39 per s hare valuation you present elsewhere. Further, ut ilizing the pro fo rma shares outstanding you refer to in response to comment 27, the i mplied offering price suggests a valuation of approxi mately $65 million. Please rec oncile these amounts and explain why you belie ve it is appropriate to present two separate values for your com mon stock in the filing . 13. We note your response to prior comment 30. For each of the Boxlight and Globisens transactions, please reconcile the i mplied value of the transaction, which is calculated using the shares issued at $1.39 per share together with any cash paid, to the a mount presented on page 39 as the consideration paid for each of the tran sactions. For exa mple, you disclo se that you will i ssue 12,438,390 shares for t he Boxlight acquisition as well as $7.3 million of cash. Utilizi ng a value of $1.39 per share, this repre sents consi deration paid of $24.6 million. However, the table on page 39 prese nts $21.0 million as t he consideration paid. Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 4 14. We note your response to prior comment 28. However, it appears th at the analysis you provided is li mited to the factors listed in F ASB A SC 805 -10-55-12. Please expand your prior response to address the com ments below regarding your analysis of the factors listed in FASB ASC 805 -10-55-12 as well as the com ments below rel ating to your analysis of other factors listed in FASB ASC 805 : You state t hat the share holders of Boxlight Corp oration will have the a bility to elect, appoint, or to re move a majority of the members of the Board of Directors. Please clarify if you are referring to the pre -transaction Boxlight shareholders or the post -transaction shareholders. In this regard, please also cla rify how the re maining three Bo ard members will be elected. You state t hat the seni or manage ment of Boxlight Corporation will be the senior manage ment of the co mbined entity. With re ference to the se nior manag ement, please clarify for us if any of the existing e mployees and senior manag ement of Everest Display will beco me employees of Boxlight Coporation after the transaction. Expla in the signif icant roles these e mployees will have a nd how you considered t his in your a nalysis. In this regard, it appears that the Pre sident and Chief Operating Officer of the co mbined company will co me from Boxlight (Everest Di splay) . You state t hat Boxlig ht Corpora tion will pay a premium over the pr e- combination fair value of all the eq uity intere sts of the other combining entities. With reference to the implied value of your stock in connection with this offering ($.87 per share), please provide us with your calculations that support this assertion as it relates to the Everest Display transaction . Tell us how you have considered F ASB ASC 805 -10-55-13. In this regard, we note that as of and from Septe mber 18, 2014, from the date of inception through Septe mber 30, 2014, Boxlight Corporation had $0 assets and $0 revenues while as of and for the nine months ended Septe mber 30, 2014, Everest Di splay has $2 4.8 million in total assets and $18 million in t otal revenue . Tell us how you have considered F ASB ASC 805 -10-55-15. In this regard, we note that Boxlight Corporation was just for med on Septe mber 18, 2014 and it appears it was formed for the purposes of issuing equity int erests to e ffect these business co mbinations . (9). Weighted Outstanding Shares, page 34 15. We note your response to prior comment 24. It is not clear to us how you calculated the 57,628,940 shares of fully diluted outstanding shares on a pro fo rma basis that will be outstanding after the completion of the offering. Please provide us with your calculation of this a mount. Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 5 Liquidit y and Capital Resources, page 45 16. Disclose the terms of the loan you entered into with Vert Capital on September 30, 2014. Business, page 48 17. We note your revisions in response to prior comment 35. Please continue your revisions to provide an expanded discussion of your integration strategy. Your current disclosure provides limited detail regarding the timing of the i ntegration process . Also, t o the extent that different acquisitions require differe nt strategies, please provide separate disclosure to explain. Competition, page 58 18. We note that you have provided additional disclosure about the competitive landscape for Boxlight, Globisens and Genesis. Please also discuss the competitive landscape fo r the larger, fully -integrated company. Executive Compensation, page 63 19. Please revise to include a summary compensation table for the fiscal year ended December 31, 2014 . Everest Di splay, Inc. Audited Financial State ments, page F -15 Note 10. Commi tment and Contingencies, page F -33 20. We note your response to prior comment 39. Please provide us with additional analysis to support the con clusion that Everest Display held an asset at Dece mber 31, 2013. In this regard, we note that prior to that date, Everest Display held the rights to use the trade mark at agreed upon rates . The transaction on October 10 , 2014 appears to provide for the transfer of the legal righ ts of the trade mark to Everest Di splay, allowing Everest Display to control others’ access to the trade mark and thereby at that date meeting the definition of an asset. However, it re mains unclear why you believe the transaction and related valuation of the trade mark on October 10, 2014 provides evi dence as to the existence and fair value of an asset prior to that date, specifically on Dece mber 31, 2013. Mr. Mark Elliott Boxlight Corporation March 9 , 2015 Page 6 Boxlight Corporation Audited Financial State ments, page F -71 State ment of Stockholders’ (Deficit), page F-74 21. Please reconcile your disclosure on page 83 that you issued 16,000,000 shares of Class A common stock to Vert Capital with the disclosure here that you have not issued any shares of common stock. In this regard, please also revise the footnotes to the financial statements to describe the ter ms of your Class A com mon stock as well as any other classes of com mon stock of Boxlight Corporation. Exhibit 22. Please confirm that you have filed final copies of all your material agreements. In this regard, we note that several exhibits contain missing dates and missing signatures. 23. We note that you have added a new provision under Article Nine of the amended and restated Articles of Incorporation. Please revise your prospectus to disclose prominently the new requirements set forth with respect to derivative actions. Your revised disclosure should clearly explain the basis for adding the new provision and the obligation s it imposes on investors. 24. Please file all exhibits, schedules and attachments to your agreements. As one example, we note that exhibits and schedules are not filed with Exhibit 10.12. You may contact Tara Harkins at 202 -551-3639 or Kevin Vaughn at 202-551-3643 if you have questions regarding comments on the financial statements and related matters. Please contact Daniel Morris at 202-551-3314 or me at 202-551-3412 with any other questions. Sincerely, /s/ A manda Ravitz Amanda Ravitz Assistant Director