Boxlight CorpBOXL
Boxlight Corp Income Taxes Disclosure
INCOME TAX
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. The company is adopting the new standard on a prospective basis.
In November 2024, the FASB issued ASU 2024-03, Income Statement-reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40), which improves the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). This change is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
Pretax income (loss) resulting from domestic and foreign operations is as follows (in thousands):
| 2025 | 2024 | ||||||||||
| United States | $ | (22,061) | $ | (19,382) | |||||||
| United Kingdom | (5,400) | (11,185) | |||||||||
| Other Foreign Jurisdictions | 2,731 | 323 | |||||||||
| Total Pretax Book Loss | $ | (24,730) | $ | (30,244) | |||||||
The components of income tax (benefit) expense at December 31, 2025 and December 31, 2024, are as follows (in thousands):
| 2025 | 2024 | ||||||||||
| Current: | |||||||||||
| Federal | $ | 13 | $ | (23) | |||||||
| State | 6 | 55 | |||||||||
| Foreign | 1,435 | 875 | |||||||||
| Total Current | $ | 1,454 | $ | 907 | |||||||
| Deferred: | |||||||||||
| Federal | $ | — | $ | — | |||||||
| State | — | — | |||||||||
| Foreign | (2,374) | (2,816) | |||||||||
| Total Deferred | $ | (2,374) | $ | (2,816) | |||||||
| Total | $ | (920) | $ | (1,909) | |||||||
Disaggregating Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.
Following is a reconciliation of the amount of income tax expense (benefit) from continuing operations and the amount computed by multiplying earnings before income taxes by the United States federal statutory income tax rate based on the newly adopted disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures for the year ended December 31, 2025.
The reconciliation of the provision for income taxes at the United States Federal statutory rate compared to the Company’s income tax expense as reported is as follows (in thousands):
| 2025 | ||||||||
| Amount | Percent of Pretax Loss | |||||||
| US Federal Statutory Income Tax Rate | $ | (5,193) | 21.0 | % | ||||
| Domestic Federal | ||||||||
| Non-taxable or Nondeductible Items | (4) | — | % | |||||
| Cross Border Tax Laws | 531 | (2.1) | % | |||||
| Other Reconciling Items | (150) | 0.6 | % | |||||
| Change in Tax Laws/Rates | 91 | (0.4) | % | |||||
| Change in Valuation Allowance | 5,288 | (21.4) | % | |||||
| Domestic State Income Taxes, net of Federal Effect* | (1,272) | 5.1 | % | |||||
| Foreign tax effects | ||||||||
| United Kingdom | ||||||||
| GAAP Fx Reversal | (521) | 2.1 | % | |||||
| Intercompany Dividend | (637) | 2.6 | % | |||||
| Other | (19) | 0.1 | % | |||||
| Netherlands | — | % | ||||||
| Intercompany Dividend | 657 | (2.7) | % | |||||
| Other | 51 | (0.2) | % | |||||
| Other Foreign Entities | 246 | (1.0) | % | |||||
| Prior Period True-ups | — | % | ||||||
| Change in Unrecognized Tax Benefits | 12 | — | % | |||||
| Total Income Tax (Benefit) | $ | (920) | ||||||
*State and local taxes in California, Georgia, and Wisconsin made up the majority (greater than 50 percent) of the tax effect in this category.
Following is a supplemental disclosure of cash flow information related to income taxes paid based on the newly adopted disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures for the year ended December 31, 2025 (in thousands):
| 2025 | |||||
| US Federal | $ | — | |||
| US State and Local* | $ | 35 | |||
| Foreign | |||||
| United Kingdom | 336 | ||||
| Netherlands | 877 | ||||
| Other Foreign jurisdictions | 108 | ||||
| Total Foreign Jurisdictions | $ | 1,321 | |||
| Total | $ | 1,356 | |||
*The company is not disaggregating the state income taxes due to immateriality of the overall state payments
Following is a reconciliation of the amount of income tax expense (benefit) from continuing operations and the amount computed by multiplying earnings before income taxes by the United States federal statutory income tax rate for the years ended December 31, 2024, prior to adopting disclosure requirements under ASU 2023-09, Improvements to Income Tax Disclosures (in thousands):
| 2024 | |||||
| Loss before income taxes | $ | (30,244) | |||
| Income tax benefit computed at the statutory rate | (6,351) | ||||
| State income taxes-net of federal tax benefit | 35 | ||||
| Foreign tax rate differential | (474) | ||||
| Foreign currency adjustment | 1 | ||||
| GILTI inclusion | 404 | ||||
| Meals | 43 | ||||
| Stock compensation | 146 | ||||
| Other book-tax differences | 286 | ||||
| Adjustments to prior periods – temporary differences | 693 | ||||
| Rate changes and differentials | (750) | ||||
| Change in valuation allowance | 4,058 | ||||
| Income tax (benefit) expense | $ | (1,909) | |||
Following is a supplemental disclosure of cash flow information related to income taxes paid for the year ended December 31, 2024, prior to adopting disclosure requirements under ASU 2023-09, Improvements to Income Tax
Disclosures (in thousands):
| 2024 | |||||
Cash paid during the year for Income Taxes | $ | 3,193 | |||
Tax effects of temporary differences at December 31, 2025 and December 31, 2024 are as follows (in thousands):
| Deferred tax assets: | 2025 | 2024 | |||||||||
| Fixed assets | $ | 109 | $ | 51 | |||||||
| Allowance for bad debts | 683 | 1,022 | |||||||||
| Inventory | 365 | 408 | |||||||||
| R&D amortization | 1,414 | 1,650 | |||||||||
| Accrued expenses | 61 | 48 | |||||||||
| Deferred revenue | 6,010 | 5,960 | |||||||||
| Stock compensation | 145 | 108 | |||||||||
| Right of use liability | 234 | 327 | |||||||||
| Other | 191 | 97 | |||||||||
| Interest expense limitation | 11,236 | 8,770 | |||||||||
| Net operating loss carry-forwards | 10,271 | 6,736 | |||||||||
| Deferred tax assets | $ | 30,719 | $ | 25,177 | |||||||
| Valuation allowance | (27,574) | (22,231) | |||||||||
| Deferred tax assets, net | $ | 3,145 | $ | 2,946 | |||||||
| Deferred tax liabilities: | 2025 | 2024 | |||||||||
| Intangible assets | (292) | (2,019) | |||||||||
| Accrued expenses | (1,139) | (1,277) | |||||||||
| Prepaid expenses | (39) | (47) | |||||||||
| Right of use asset | (203) | (353) | |||||||||
| Other | — | (151) | |||||||||
| Deferred tax liabilities | $ | (1,673) | $ | (3,847) | |||||||
| Deferred tax assets (liabilities), net | $ | 1,472 | $ | (901) | |||||||
Uncertain Tax Positions
In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period.
As of December 31, 2025, the Company’s gross amount of unrecognized tax benefits is $165,000, excluding interest and penalties. If the Company were to prevail on all uncertain tax positions, of the unrecognized benefits would affect the Company’s effective tax rate, exclusive of any benefits related to interest and penalties.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Unrecognized tax benefits: | 2025 | 2024 | |||||||||
| Balance as of January 1 | $ | 165 | $ | 165 | |||||||
| Additions | — | — | |||||||||
| Reductions | — | — | |||||||||
| Balance as of December 31 | $ | 165 | $ | 165 | |||||||
As of December 31, 2025 and 2024, the Company has $165 thousand and $165 thousand, respectively, accrued for interest and penalties, excluding any federal tax benefit from interest deductions where applicable. During the years ended December 31, 2025 and 2024 , the Company accrued interest and penalties through income tax expense of $12 thousand and $26 thousand, respectively.
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 cumulative U.S. Federal net operating losses carryforward on tax basis income was approximately $30.1 million and $20.4 million at December 31, 2025 and 2024, of which $6.1 million will expire between December 31, 2036 and December 31, 2037 and $24.0 million will carryforward indefinitely. The cumulative U.S. state net operating losses carryforward was approximately $46.7 million and $46.6 million at December 31, 2025 and 2024, respectively. The cumulative foreign net operating losses carryforward was $2.6 million and $2.6 million at December 31, 2025 and 2024, respectively.
The legacy Boxlight entities are in a net deferred tax asset position in the United States, the United Kingdom, and other jurisdictions are 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. 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 the net deferred tax asset of its legacy Boxlight entities at December 31, 2025 and 2024. The change in its valuation allowance during 2025 is approximately $5.3 million.
The Company completed an 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 financial statements as a result of this limitation. The company is still in process of preparing a 382 study for the period ending December 31, 2025.
The tax years from 2009 to 2026 remain open to examination in the U.S. federal jurisdiction. The tax years from 2021 to 2025 remain open to examination in the U.K. Statutes of limitations vary in other immaterial jurisdictions. The Company has not identified any material uncertain tax positions at this time.
The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation to be effective as early as January 1, 2024, with general implementation of a global minimum tax rate by January 1, 2025. We are currently evaluating the potential impact of the rules on our consolidated financial statements and related disclosures. The company does not except significant tax implications from the BEPS implications.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 17, 2023 | |
| 2021 | Apr 13, 2022 | |
| 2020 | Mar 31, 2021 | |
| 2019 | May 13, 2020 | |
| 2018 | Mar 28, 2019 | |
| 2017 | Apr 2, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.