INCOME TAXES

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Pretax (loss) income resulting from domestic and foreign operations is as follows (in thousands):

	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2025		2024		2025		2024
United States	$	(5,863)	$	(958)	$	(8,095)	$	(7,067)
Foreign	1,418		(611)		257		(721)
Total pretax book loss	$	(4,445)	$	(1,569)	$	(7,838)	$	(7,788)

The Company recorded income tax expense of $274 thousand and income tax benefit of $91 thousand for the three months ended June 30, 2025 and 2024, respectively, and income tax expense of $124 thousand and $779 thousand for the six months ended June 30, 2025 and 2024, respectively. The effective tax rate was (1.6)% and (10.0)% for the six months ended June 30, 2025 and 2024 due to various permanent differences for Boxlight and a change in valuation allowance for certain deferred assets. The Sahara entities are fully taxable.

The increase in tax expense year-over-year is largely due to an increase in foreign-sourced book income.

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 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 June 30, 2025 and December 31, 2024.

The Company completed its IRC Sec. 382 analysis during the second quarter of 2024 and determined that it underwent an ownership change. This caused a limit on the net operating losses generated before 2020. Due to the full valuation allowance on net operating loss carryovers, there is no impact to the interim financial statements as a result of this limitation.

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 2011 to 2024 remain open to examination in the U.S. federal jurisdiction.  The tax years from 2023 to 2024 remain open to examination in the U.K.  Statutes of limitations vary in other immaterial jurisdictions.

On July 4, 2025, the president signed H.R. 1 (commonly known as the One Big Beautiful Bill Act) into law. The law introduces many significant federal income tax changes with various effective dates. ASU 740 requires that the effects of a change in tax laws or rates should be recorded in the interim period that includes the enactment date. The Company

will continue to assess the impact of the new tax law on their tax assets and liabilities for future periods that include the enactment date.