Item
1.01 Entry into a Material Definitive Agreement.
Pursuant
to a stock purchase agreement, dated June 22, 2018, on June 25, 2018, Boxlight Corporation, a Nevada corporation (“Boxlight”)
acquired 100% of the capital stock of Qwizdom, Inc., based in Washington State (“Qwizdom”) and its subsidiary Qwizdom
UK Limited, based in Northern Ireland (“Qwizdom UK” and collectively with Qwizdom, the “Qwizdom Companies”).
The Qwizdom Companies develop software and hardware solutions that are quick to implement and designed to increase participation,
provide immediate data feedback, and, most importantly, accelerate and improve comprehension and learning. The company has offices
outside Seattle WA and Belfast N. Ireland and delivers products in 44 languages to customers around the world through a network
of partners.
Boxlight
purchased the Qwizdom, Inc. shares for consideration valued at $2,476,000, which was paid in the form of $410,000 in cash, a 6%
note of $656,000, $1,000,000 in the form of 142,857 shares of Boxlight Class A common stock which the parties valued at $7.00
per share, and a maximum $410,000 earnout based on future revenues derived from the Qwizdom companies.
The
principal and accrued interest under the note is due and payable in 12 equal quarterly payments. The first quarterly payment is
due on the last business day of March 2019 and subsequent quarterly payments are to be made on the last business day of the 6
th
,
9
th
and 12
th
calendar month and quarterly thereafter until the Maturity Date. The Maturity Date is defined
as the earlier of (i) Boxlight completing a public offering of its common stock or private placement of its debt or equity securities
(each a “Financing”) that results in Boxlight receiving gross proceeds from such Financing of $10,000,000 or more,
or (ii) that date which shall be the last business day of July 2021.
The
former Qwizdom shareholders are entitled to receive an annual payment, to be made within 90 days following the end of each of
the three years ending December 31, 2018, December 31, 2019 and December 31, 2020 (each an “Anniversary Year”) in
an amount equal to 16.4% of all consolidated net sales revenues of the Qwizdom Companies in excess of $750,000 Dollars that may
be obtained by Boxlight and its consolidated subsidiaries (including the Qwizdom Companies) in any one or more of the three Anniversary
Years from the sale of software (the “Earn-Out”);
provided, that
in no event shall the aggregate amount of
the Earn-Out payments payable to the shareholders in respect of such three Anniversary Years exceed the sum of $410,000.
As
part of the transaction, Qwizdom entered into a three-year employment agreement with Darin Beamish, its Chief Executive Officer,
and Qwizdom UK entered into a three year employment agreement with Dermot Sweeney, its President. In addition, Boxlight granted
options to Mr. Sweeney and Mr. Beamish to purchase 40,000 and 20,000 shares of Boxlight Class A common stock. respectively at
an exercise price of $5.78 per share.
The
two former Qwizdom shareholders agreed not to sell their shares for one year from the closing of the acquisition.