10-Q 1 beam_i10q-033124.htm FORM 10-Q FOR MARCH 2024 Beam Global Form 10-Q
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Period ended March 31, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to ________________

 

Commission File Number 001-38868

 

Beam Global

(Exact name of Registrant as specified in its charter)

 

Nevada 26-1342810
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

 

5660 Eastgate Dr.

San Diego, California

92121
(Address of principal executive offices) (Zip Code)

 

(858) 799-4583

(Registrant’s telephone number, including area code)

 

_____________________________________________

(Former name, former address and formal fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange in which registered
Common stock, $0.001 par value BEEM Nasdaq Capital Market
     

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company under Rule 12b-2 of the Exchange Act. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated Filer Smaller reporting company
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

The number of registrant's shares of common stock, $0.001 par value outstanding as of May 16, 2024 was 14,537,451.

 

   

 

 

TABLE OF CONTENTS

 

    Page
     
PART I FINANCIAL INFORMATION 3
Item 1. Financial Statements (Unaudited) 3
  Condensed Consolidated Balance Sheets at March 31, 2024 (Unaudited) and December 31, 2023 3
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 4
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 5
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 6
  Notes To Condensed Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 25
     
PART II OTHER INFORMATION 27
Item 1. Legal Proceedings 27
Item 1A. Risk Factors 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Mine Safety Disclosures 27
Item 5. Other Information 27
Item 6. Exhibits 28
  SIGNATURES 29

 

 

 

 

 

 

 

 2 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Beam Global

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

           
   March 31,   December 31, 
   2024   2023 
   (Unaudited)     
Assets          
Current assets          
Cash  $4,962   $10,393 
Accounts receivable, net of allowance for credit losses of $112 and $447   20,139    15,943 
Prepaid expenses and other current assets   2,216    2,453 
Inventory, net   11,474    11,933 
Total current assets   38,791    40,722 
           
Property and equipment, net   15,597    16,513 
Operating lease right of use assets   2,249    1,026 
Goodwill   10,150    10,270 
Intangible assets, net   8,769    9,050 
Deposits   98    62 
Total assets  $75,654   $77,643 
           
Liabilities and Stockholders' Equity          
Current liabilities          
Accounts payable  $10,778   $9,732 
Accrued expenses   3,812    2,737 
Sales tax payable   211    209 
Deferred revenue, current   1,007    828 
Note payable, current   45    40 
Deferred consideration, current       2,713 
Contingent consideration, current   4,330     
Operating lease liabilities, current   851    615 
Total current liabilities   21,034    16,874 
           
Deferred revenue, noncurrent   470    402 
Note payable, noncurrent   178    160 
Contingent consideration, noncurrent   248    4,725 
Other liabilities, noncurrent   3,716    3,787 
Deferred tax liabilities, noncurrent   1,662    1,698 
Operating lease liabilities, noncurrent   1,444    455 
Total liabilities   28,752    28,101 
           
Stockholders' equity          
Preferred stock, $0.001 par value, 10,000,000 authorized, none outstanding as of March 31, 2024 and December 31, 2023.        
Common stock, $0.001 par value, 350,000,000 shares authorized, 14,438,270 and 14,398,243 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.   14    14 
Additional paid-in-capital   142,991    142,265 
Accumulated deficit   (96,398)   (93,361)
Accumulated Other Comprehensive Income (AOCI)   295    624 
           
Total stockholders' equity   46,902    49,542 
           
Total liabilities and stockholders' equity  $75,654   $77,643 

 

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

 

 3 

 

 

Beam Global

Condensed Consolidated Statement of Operations and Comprehensive Loss

(Unaudited, in thousands except per share data)

 

           
   Three Months Ended 
   March 31, 
   2024   2023 
         
Revenues  $14,561   $13,020 
           
Cost of revenues   13,082    13,015 
           
Gross profit   1,479    5 
           
Operating expenses   4,527    3,846 
           
Loss from operations   (3,048)   (3,841)
           
Other income (expense)          
Interest income   71    1 
Other (expense) income   (56)   10 
Interest expense   (4)    
Other income   11    11 
           
Loss before income tax expense   (3,037)   (3,830)
           
Income tax expense       1 
           
Net loss  $(3,037)  $(3,831)
           
Net foreign currency translation adjustments   (329)    
Total Comprehensive Loss  $(3,366)  $(3,831)
           
Net loss per share - basic  $(0.21)  $(0.38)
Net loss per share - diluted  $(0.21)  $(0.38)
           
Weighted average shares outstanding - basic   14,422    10,214 
Weighted average shares outstanding - diluted   14,422    10,214 

 

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

 4 

 

 

Beam Global

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited, in thousands)

 

 

                               
   Common Stock   Additional Paid-in   Accumulated   Accumulated Other Comprehensive   Total Stockholders' 
   Stock   Amount   Capital   Deficit   Income   Equity 
Balance at December 31, 2022   10,178   $10   $100,498   $(77,301)  $0   $23,207 
Stock issued for director services - vested   6        76            76 
Stock issued to (released from) escrow account - unvested   (6)                    
Stock-based compensation to consultants   6        1,704            1,704 
Employee stock-based compensation expense           438            438 
Warrants exercised for cash   16        100            100 
Sale of stock under Committed Equity Facility   38        158            158 
Net loss               (3,831)       (3,831)
Balance at March 31, 2023   10,238   $10   $102,974   $(81,132)  $0   $21,852 
                               
Balance at December 31, 2023   14,398   $14   $142,265   $(93,361)  $624   $49,542 
Stock issued for director services - vested   0        6            6 
Stock issued to (released from) escrow account - unvested   (0)                    
Stock-based compensation to consultants                        
Employee stock-based compensation expense           468            468 
Warrants exercised for cash   40        252            252 
Impact of foreign currency translation                   (329)   (329)
Net loss               (3,037)       (3,037)
Balance at March 31, 2024   14,438   $14   $142,991   $(96,398)  $295   $46,902 

 

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

 

 5 

 

 

Beam Global

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

           
   Three Months Ended 
   March 31, 
   2024   2023 
         
Operating Activities:          
Net loss  $(3,037)  $(3,831)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   930    332 
Provision on credit losses   (336)    
Common stock issued for services       76 
Change in fair value of contingent consideration liabilities   (147)   (13)
Employee stock-based compensation   554    438 
Disposal of property and equipment   27     
Abandoned patent costs   36     
Stock Compensation expense for non-employees       14 
Changes in assets and liabilities:          
(Increase) decrease in:          
Accounts receivable   (3,901)   (2,453)
Prepaid expenses and other current assets   151    390 
Operating lease right of use asset        
Inventory   425    (414)
Deposits   (36)    
Increase (decrease) in:          
Accounts payable   956    4,235 
Accrued expenses   1,082    932 
Operating lease liability        
Sales tax payable   2    (20)
Deferred revenue   258    (305)
Other long term liabilities   10     
Net cash used in operating activities   (3,026)   (619)
           
Investing Activities:          
Purchase of property and equipment   (104)   (314)
Payment of Deferred Consideration   (2,713)    
Funding of patent costs       (16)
Net cash used in investing activities   (2,817)   (330)
           
Financing Activities:          
Proceeds from sale of common stock under committed equity facility, net of offering costs       158 
Proceeds from warrant exercises   252    100 
Borrowings of note payable   25     
Net cash used in financing activities   277    258 
           
Effect of exchange rate changes   135     
           
Net decrease in cash   (5,431)   (691)
Cash at beginning of period   10,393    1,681 
Cash at end of period  $4,962   $990 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest  $4   $ 
Cash paid for taxes  $   $1 
           
Supplemental Disclosure of Non-Cash Investing and Financing Activities:          
Purchase of property and equipment by incurring current liabilities  $104   $21 
Right-of-use assets obtained in exchange for lease liabilities  $1,223   $ 
Issuance of stock for Committed Equity Line  $   $140 
Warrants issued for services to non-employee  $   $1,609 
Shares issued for services to non-employee  $   $95 

 

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

 6 

 

 

BEAM GLOBAL

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Operations

 

Beam is a clean technology innovator based in San Diego, California; Broadview, Illinois and Kraljevo, Serbia. We develop, design, engineer, manufacture and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, outdoor media and branding, and energy security and disaster preparedness as well as safe and compact, highly energy-dense battery solutions. Beam’s products enable vital and highly valuable energy production in locations where it is either too expensive or too impactful to connect to the utility grid, or where the requirements for electrical power are so important that grid failures, like blackouts, are intolerable. Beam’s energy storage products provide high energy density in a safe, compact and bespoke form-factors ideal for the rapidly increasing numbers of mobile and stationary equipment and products which require electrical energy without being connected to the electrical grid.

 

Beam’s products and proprietary technology solutions target four markets that are experiencing significant growth with annual global spending in the billions of dollars:

 

  · electric vehicle (EV) charging infrastructure;
     
  · energy storage solutions;
     
  · energy security and disaster preparedness; and
     
  · outdoor media advertising.

 

Basis of Presentation

 

The interim unaudited condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In management’s opinion, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly our results of operations and cash flows for the three months ending March 31, 2024 and 2023, and our financial position as of March 31, 2024, have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.

 

Certain information and disclosures normally included in the notes to the annual financial statements have been condensed or omitted from these interim financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2023. The December 31, 2023 balance sheet is derived from those statements.

 

 

 

 7 

 

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the allowance for credit losses (CECL), valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of contingent consideration liability, valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

 

Recent Accounting Pronouncements

 

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements” (“ASU 2023-06”), which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The ASU was issued in response to the SEC’s disclosure update and simplification initiative issued in August 2018. The effective date for the amendments for each topic will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoptions prohibited.

  

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a company’s effective tax rate reconciliation and information on income taxes paid. This standard is effective for Beam beginning with our annual financial statements for the fiscal year ending December 31, 2025. Early adoption is permitted. The Company is currently evaluating the impact that the updated standard will have on our consolidated financial statements. 

 

Concentrations

 

Credit Risk

 

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and accounts receivable.

 

The Company maintains its cash in banks and financial institutions that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through March 31, 2024. As of March 31, 2024, approximately $4.8 million of the Company’s cash deposits were greater than the federally insured limits.

 

Major Customers

 

The Company continually assesses the financial strength of its customers. We are not aware of any material credit risks associated with our customers. 84% of our first quarter revenues were derived from pre-funded federal, state and local government programs, and the remaining 16% were derived from commercial customers that we believe have good credit or, alternatively, favorable payment terms which minimizes our credit risk with respect to such customers. For the three months ended March 31, 2024, two customers accounted for 30% and 18% of total revenues, with no other single customer accounting for more than 10% of total revenues. At March 31, 2024, accounts receivable from three customers accounted for 22%, 18% and 14% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2023, accounts receivable from four customers accounted for 11%, 10%, 10% and 10% of total accounts receivable each with no other single customer accounting for more than 10% of the accounts receivable balance. For the three months ended March 31, 2024 and 2023, the Company’s sales to federal, state and local governments represented 84% and 86% of revenues, respectively.

 

 

 

 8 

 

 

Fair Value Measurement

 

The Company follows the authoritative guidance that establishes a formal framework for measuring fair values of assets and liabilities in the consolidated financial statements that are already required by generally accepted accounting principles to be measured at fair value. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability.

 

The Company utilizes market data or assumptions that market participants who are independent, knowledgeable, and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to level 3 measurements, and accordingly, Level 1 measurement should be used whenever possible.

 

The hierarchy is broken down into three levels based on the reliability of inputs as follows:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities or published net asset value for alternative investments with characteristics similar to a mutual fund.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for the asset or liability.

 

The methods used may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes its valuation methods are appropriate, the fair value of certain financial instruments could result in a difference fair value measurement at the reporting date. There were no changes in the Company’s valuation methodologies from the prior year.

 

For purpose of this disclosure, the carrying amounts for financial assets and liabilities such as cash and cash equivalents, accounts receivable – trade, other prepaid expenses and current assets, accounts payable and other current liabilities, all approximate fair value due to their short-term nature as of March 31, 2024. The Company had Level 3 liabilities as of March 31, 2024. There were no transfers between levels during the reporting period.

 

Fair value of contingent consideration  Level 1   Level 2   Level 3 
Contingent Consideration as of December 31, 2023  $   $   $4,725 
Additions            
Change in fair value           (147)
Contingent Consideration as of March 31, 2024  $   $   $4,578 

  

Significant Accounting Policies

 

During the three months ended March 31, 2024, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

 

 

 

 9 

 

 

Net Loss Per Share

 

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per share of common stock is computed using the weighted average number of common stock outstanding for the period, and, if dilutive, potential common stock outstanding during the period. Potential common stock outstanding consists of shares of common stock issuable upon the exercise of stock options, stock warrants, or other common stock equivalents. Potentially common stock outstanding are excluded from the computation if their effect is anti-dilutive.

 

Options to purchase 592,658 shares of common stock and warrants to purchase 570,718 shares of common stock were outstanding at March 31, 2024. Options to purchase 346,758 common shares and warrants to purchase 624,306 shares of common stock were outstanding at March 31, 2023. These options and warrants were not included in the computation of diluted loss per share for the three months ended March 31, 2024 and 2023 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share.

 

Segments

 

The Company assesses its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. Management reviews financial results, manages the business and allocates resources on an aggregate basis. Therefore, financial results are reported in a single operating segment.

 

  

2. LIQUIDITY

 

The Company had net losses of $3.0 million (which includes $1.1 million of non-cash expenses) and $3.8 million (which includes $0.9 million of non-cash expenses) and net cash used in operating activities of $3.0 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, the Company had a cash balance of $5.0 million and working capital of $17.8 million. Based on the Company’s current operating plan and the available working capital that can be converted to cash, particularly the accounts receivable balance of approximately $20.1 million the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from the date of this report.

 

In 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley Principal Capital II, LLC (“B. Riley”) under which the Company has the right, but not the obligation, to sell up to $30.0 million worth of shares, but in any event, no more than 2.0 million shares of its common stock over a period of 24 months in its sole discretion (see note 11 for further information). The Company has issued 199,469 shares for $2.5 million since 2022 under this agreement. There is $27.5 million worth of shares of common stock remaining under this facility available to sell through Q4 2024.

 

The Company’s outstanding warrants generated $0.3 million and $0.1 million of proceeds during each of the three months ended March 31, 2024 and 2023, respectively. Warrants to purchase 370,718 shares of common stock which were issued in our 2019 public offering expired on April 18, 2024. Excluding the warrants issued in our 2019 public offering which recently expired, the Company has a warrant outstanding to purchase up to 200,000 shares of our common stock at an exercise price equal to $17.00 per share that expires in March 2028 that could potentially generate an additional $3.4 million of proceeds, conditioned upon the market price of our common stock and the warrant holder’s ability and decision to exercise them.

 

In March 2023, the Company entered into a supply chain line of credit agreement with OCI Group for up to $100 million to further support our working capital requirements. Subject to the terms of the agreement, OCI Group will make available to the Company funding based on amounts owed to the Company by its customers.

 

The Company believes that it will become profitable in the next few years as our revenues continue to grow, we improve our gross margins and we leverage our overhead costs, but we expect to continue to incur losses for a period of time. If necessary, the Company may raise additional capital to finance its future operations through equity or debt financings. There is no guarantee that profitable operations will be achieved, or that additional capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business strategy. In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.

 

 

 

 10 

 

 

 

3. BUSINESS COMBINATION

 

Amiga DOO Kraljevo

 

On October 20, 2023, the Company acquired Amiga DOO Kraljevo (“Amiga”), pursuant to a Share Sale and Purchase Agreement dated October 6, 2023 (the “Purchase Agreement”) by and among the Company and the owners of Amiga (the “Sellers”). Pursuant to the terms of the Purchase Agreement, the Company acquired all the equity stock of Amiga from the Sellers in exchange for cash and common stock. With respect to the cash portion of the purchase price, the Company paid to the Sellers 4.6 million euros ($4.9 million) at closing and an additional 2.5 million euros ($2.7 million) was deferred on December 31, 2023, and paid on January 2, 2024. With respect to the equity portion of the purchase price, the Company issued to the Sellers 293,675 shares of our common stock upon closing and an additional 158,132 shares before December 31, 2023.

 

The Sellers are eligible to earn additional shares of the Company’s common stock if Amiga meets certain revenue milestones for the years ended December 31, 2024 and 2025 (the “Earnout Consideration”). The Earnout Consideration that Sellers are eligible to receive is equal to two times the amount of revenue of Amiga (“Amiga Net Revenue”) that is greater than specific revenue targets for each of the years ended December 31, 2024 and 2025. The Earnout Consideration will be paid in the Company’s stock for each annual target period and will be calculated based on the volume weighted average price of Beam’s common stock for the thirty trading days prior to the end of the applicable measurement period. In no event and under no circumstances will the Company issue to the Sellers an amount of the Company’s common stock that exceeds 19.99% of the total outstanding common stock of the Company immediately prior to the closing. An estimate of the fair value of the contingent consideration has been recorded in the opening balance sheet. Additionally, if within five years of the closing date of the acquisition Amiga receives a final award in specific legal proceedings in excess of EUR 3.8 million, the amount exceeding EUR 3.8 million is payable to the Sellers. This is not currently considered probable and therefore no accrual has been established. On February 16, 2024, the Company and the Sellers entered into an amendment to the Purchase Agreement to remove the requirement that the Sellers shall be providing services to Amiga as a condition to receive the Earnout Consideration. During the three months ended March 31, 2024, the Company recorded $0.1 million of income related to the fair value adjustment of the liability for Earnout Consideration.

  

Amiga, located in Serbia, is engaged in the manufacture and distribution of steel structures with integrated electronics, such as streetlights, cell towers, and ski lift towers. We expect the acquisition of Amiga to assist in introducing our products to Europe, increasing and diversifying our revenues, enhancing our manufacturing and engineering capabilities, accelerating the development of EV Standard™ and other products both in Europe and the US, adding new customer segments in both Europe and the US, increasing barriers to entry for future competition, and advancing Beam’s position as a leader in the green economy.

 

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. Goodwill represents the premium the Company paid over net fair value of tangible and intangible assets acquired.

 

On November 7, 2023, Amiga changed its name to Beam Europe LLC.

 

Pro Forma Financial Information

 

The following pro forma financial information summarizes the combined results of operations of Beam Global and Amiga as if the companies had been combined as of the beginning of the three months ended March 31, 2023 (in thousands): 

     
   March 31, 
   2023 
Revenues  $14,425 
Net Loss  $(4,298)

 

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been completed at the beginning of the three months ended March 31, 2023. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company, nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition. The unaudited pro forma financial information includes adjustments to reflect the incremental amortization expense of the identifiable intangible assets and transaction costs.

 

The statement of operations, in the table above, for the three months ended March 31, 2023 includes revenues of $1.4 million and loss from operations of $0.5 million from the acquired Amiga business.

 

 

 11 

 

 

4. INVENTORY

 

Inventory consists of the following (in thousands): 

          
   March 31,   December 31, 
   2024   2023 
Finished goods  $5,101   $1,953 
Work in process   447    2,006 
Raw materials   5,926    7,974 
Total inventory, net  $11,474   $11,933 

 

 

 

5. PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following (in thousands):

          
   March 31,   December 31, 
   2024   2023 
Office furniture and equipment  $227   $227 
Computer equipment and software   244    248 
Land, buildings and leasehold improvements   7,771    7,935 
Autos   649    616 
Machinery and equipment   9,073    9,200 
Total property and equipment   17,964    18,226 
Less accumulated depreciation   (2,367)   (1,713)
Property and Equipment, net  $15,597   $16,513 

 

Depreciation expense during the three months ended March 31, 2024 and March 31, 2023 was $0.7 million and $0.1 million, respectively.

 

 

6. INTANGIBLE ASSETS

 

The intangible assets consist of the following (in thousands): 

                    
   December 31, 2023 
   Gross Carrying Amount   Accumulated Amortization   Net Carrying Amount   Weighted-average Amortization Period (yrs) 
Developed technology  $8,074   $(1,346)  $6,728    11 
Trade name   1,756    (322)   1,434    10 
Customer relationships   444    (110)   334    13 
Backlog   185    (185)       1 
Patents   611    (57)   554    20 
Intangible assets  $11,070   $(2,020)  $9,050      

 

   March 31, 2024 
   Gross Carrying Amount   Accumulated Amortization   Net Carrying Amount   Weighted-average Amortization Period (yrs) 
Developed technology  $8,074   $(1,529)  $6,545    11 
Trade name   1,756    (366)   1,390    10 
Customer relationships   444    (122)   322    13 
Backlog   185    (185)       1 
Patents   573    (61)   512    20 
Intangible assets  $11,032   $(2,263)  $8,769      

 

Amortization expense during the three months ended March 31, 2024 and March 31, 2023 was $0.2 million and $0.3 million, respectively.

 

 

 

 12 

 

 

 

7. ACCRUED EXPENSES

 

The major components of accrued expenses are summarized as follows (in thousands): 

          
   March 31,   December 31, 
   2024   2023 
         
Accrued Expenses:          
Accrued vacation  $255   $246 
Accrued salaries and bonus   1,382    1,086 
Vendor accruals   75    50 
Accrued warranty   19    27 
Customer prepayments   950     
Other accrued expense   1,132    1,328 
Total accrued expenses  $3,813   $2,737 
           
Other Long-Term Liabilities:          
Long-term deferred tax liability  $1,662   $1,698 
Acquired long-term liability   3,716    3,787 
Total long-term liabilities  $5,378   $5,485 

 

Acquired long-term liability of $3.8 million consists of a restructuring debt settlement from the acquisition of Amiga. The debt restructuring was entered into in 2021 for a nine year term with six years and nine months remaining at March 31, 2024. Payments are due quarterly as a percent of the remaining balance due.

 

 

8. NOTE PAYABLE

 

In May 2023, the Company purchased two new trucks and financed the purchase through an auto loan. The loan has a term of 60 months, requires monthly payments of approximately $4 thousand, and bears interest at a rate of 7.55 percent per year. Payment on the loan began in July 2023, and the loan has a short-term balance of $40 thousand. In March 2024, the Company purchased a forklift and financed the purchase through an auto loan. The loan has a term of 60 months, requires monthly payments of approximately $661, and bears interest at a rate of 6.54 percent per year. Payment on the loan began in February 2024, and the loan has a short-term balance of $6 thousand.

 

 

9. COMMITMENTS AND CONTINGENCIES

 

Legal Matters:

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of March 31, 2024, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

 

 

 

 13 

 

 

Other Commitments:

 

The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments. Since inception, the Company entered into agreements to act as a reseller for certain vendors; joint development contracts with third parties; referral agreements where the Company would pay a referral fee to the referrer for business generated; sales agent agreements whereby sales agents would receive a fee equal to a percentage of revenues generated by the agent; business development agreements and strategic alliance agreements where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first refusal with respect to certain projects of the other parties; agreements with vendors where the vendor may provide marketing, investor relations, public relations, software licenses, technical consulting or subcontractor services, vendor arrangements with non-binding minimum purchasing provisions, and financial advisory agreements where the financial advisor would receive a fee and/or commission for raising capital for the Company.

 

 

10. INCOME TAXES

 

There was no Federal income tax expense for the three months ended March 31, 2024 or 2023 due to the Company’s net losses. Income tax expense represents the minimum state taxes due. As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established to offset all deferred tax assets as of March 31, 2024 and no benefit has been provided for the quarter-to-date loss. On a quarterly basis, the company evaluates the positive and negative evidence to assess whether the more likely than not criteria have been satisfied in determining whether there will be further adjustments to the valuation allowance.

 

 

11. STOCKHOLDERS’ EQUITY

 

Committed Equity Facility

 

On September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B. Riley. Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B. Riley up to $30.0 million, but in any event, a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price of the Company’s common stock, as calculated in accordance with the Purchase Agreement, over a period of 24 months subject to certain limitations and conditions contained in the Purchase Agreement. Sales and timing of any sales are solely at the election of the Company, and the Company is under no obligation to sell any common stock to B. Riley under the Purchase Agreement. As consideration for B. Riley’s commitment to purchase shares of the Company’s common stock the Company issued B. Riley 10,484 shares of its common stock in both September 2022 and April 2023.

 

The Company incurred an aggregate cost of approximately $0.5 million in connection with the Purchase Agreement, including the fair value of the shares of common stock issued to B. Riley, which were recorded as equity on the Balance Sheet and offset proceeds from the sale of the Company’s common stock under the Purchase Agreement.

 

The Company has issued 199,469 shares under the Purchase Agreement for $2.5 million in proceeds, of which $0.5 million was offset by the offering costs as of March 31, 2024.

 

 

 

 14 

 

 

Stock Options

 

Option activity for the three months ended March 31, 2024 is as follows: 

          
       Weighted 
       Average 
   Number of   Exercise 
   Options   Price 
Outstanding at December 31, 2023   481,858   $10.41 
Granted   113,000    6.10 
Forfeited   (2,200)   10.74 
Outstanding at March 31, 2024   592,658   $8.48 

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions in the table below and we assumed there would not be dividends paid during the life of the options granted during the three months ended March 31, 2024 and 2023: 

       
    Three months ended March 31,
    2024   2023
Expected volatility   90.28% - 90.37%   94.51%
Expected term   7 Years   7 Years
Risk-free interest rate   4.01% - 4.25%   3.55%
Weighted-average FV   $4.88   $14.28

 

The Company’s stock option compensation expense was $0.2 million for the three months ended March 31, 2024, and $0.1 million for the three months ended March 31, 2023. There was $1.6 million of total unrecognized compensation costs related to outstanding stock options at March 31, 2024 which will be recognized over 3.0 years. Total intrinsic value of options outstanding and options exercisable were $0.4 million and $0.2 million, respectively, as of March 31, 2024. The number of shares of common stock underlying stock options vested and unvested as of March 31, 2024 were 351,788 and 240,870, respectively.

 

Restricted Stock Units

 

In November 2022, the Company granted 142,500 restricted stock units (“RSUs”) and up to 142,500 performance stock units (“PSU”) to its Chief Executive Officer (“CEO”). For the RSUs, 50% vested upon the grant date, 25% vested on February 1, 2024 and 25% will vest on February 1, 2025. The number of shares that will be earned under the PSUs will be determined based on the achievement of specific performance metrics during the three-years ending December 31, 2024.

 

There was no activity during the three months ended March 31, 2024. 142,500 PSUs and 71,250 RSUs remain outstanding as of March 31, 2024, with weighted-average grant-date fair values of $13.05 each.

 

Stock compensation expense related to the RSUs and PSUs was $0.3 million during the three months ended March 31, 2024, with $1.1 million in unrecognized stock compensation expense remaining to be recognized over 1.0 years as of March 31, 2024.

 

 

 

 15 

 

 

Restricted Stock Awards

 

The Company issues restricted stock to the members of its board of directors as compensation for such members’ services. Such grants generally vest ratably over four quarters. The Company also previously issued restricted stock awards to its CEO, for which generally 50% of the shares granted vest ratably over four quarters and the remaining 50% vest ratably over twelve quarters. The common stock related to these awards are issued to an escrow account on the date of grant and released to the grantee upon vesting. The fair value is determined based on the closing stock price of the Company’s common stock on the date granted and the related expense is recognized ratably over the vesting period.

 

A summary of activity of the restricted stock awards for the three months ended March 31, 2024 is as follows: 

          
Nonvested at December 31, 2023   1,238   $20.17 
Vested   (310)   20.17 
Nonvested at March 31, 2024   928   $20.17 

 

Stock compensation expense related to restricted stock awards was $37 thousand and $0.1 million during each of the three months ended March 31, 2024 and 2023 respectively.

 

As of March 31, 2024, there were unvested shares of common stock representing $18 thousand of unrecognized restricted stock grant expense which will be recognized over 1 year.

 

Warrants

 

In 2023, the Company issued warrants to purchase up to 200,000 shares of the Company’s common stock at a price per share equal to $17.00 to a consultant for investor relations services to be provided over a five-year period. The warrants were immediately exercisable but are subject to repurchase by the Company until the required service is provided. The fair value of such warrants was $8.05 per share or $1.6 million on the date of grant using the Black-Scholes option-pricing model. This model incorporated certain assumptions for inputs including a risk-free market interest rate of 3.86%, expected dividend yield of the underlying common stock of 0%, expected life of 2.5 years and expected volatility in the market value of the underlying common stock based on our historical volatility of 99.6%. The fair value of the warrants was recorded to prepaid expenses and other current assets to be recognized over the service period. During the three months ended March 31, 2024, $0.3 million was recorded as expense and $1.3 million of cost has not been recognized and will be recognized over the next 4.0 years.

 

A summary of activity of warrants outstanding for the three months ended March 31, 2024 is as follows: 

          
   Number of Warrants   Weighted Average Exercise Price 
Outstanding at December 31, 2023   610,745   $9.80 
Granted        
Exercised   (40,027)   6.30 
Outstanding at March 31, 2024   570,718   $10.05 
Exercisable at March 31, 2024   570,718   $10.05 

 

 

 

 16 

 

 

Exercisable warrants as of March 31, 2024 have a weighted average remaining contractual life of 1.44 years. The intrinsic value of the exercisable shares of the warrants at March 31, 2024 was $0.2 million. . Warrants to purchase 370,718 shares of common stock at an exercise price equal to $6.30 which were issued in our 2019 public offering expired on April 18, 2024.

 

 

12. REVENUES

 

For each of the identified periods, revenues can be categorized into the following (in thousands): 

          
   Three Months Ended 
   March 31, 
   2024   2023 
Product sales  $13,570   $12,811 
Maintenance fees   27    16 
Professional services   65    36 
Shipping and handling   978    216 
Discounts and allowances   (80)   (59)
Total revenues  $14,561   $13,020 

 

During the three months ended March 31, 2024 and 2023, 27% and 60% of revenues were derived from customers located in California, respectively. In addition, 11% and 10% of revenues in the three months ended March 31, 2024 and 2023 were international sales, respectively.

 

At March 31, 2024 and December 31, 2023, deferred revenue was $1.5 million and $1.2 million, respectively. These amounts consisted mainly of customer deposits in the amount of $0.9 million and $0.7 million for March 31, 2024 and December 31, 2023, respectively and prepaid multi-year maintenance plans for previously sold products which account for $0.6 million and $0.5 million for March 31, 2024 and December 31, 2023, respectively, and pertain to services to be provided through 2031.

 

13.

SUBSEQUENT EVENTS

 

Management has evaluated events that have occurred subsequent to the date of these condensed consolidated financial statements and has determined that no such reportable subsequent events exist through March 31, 2024. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

 

 

 

 

 

 

 17 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This report contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections about us, the industry in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” and variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended.

 

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important factors that could prevent the Company from achieving its stated goals include, but are not limited to, the following:

 

  (a) volatility or decline of the Company’s stock price, or absence of stock price appreciation;
     
  (b) fluctuation in quarterly results;
     
  (c) failure of the Company to earn revenues or profits;
     
  (d) inadequate capital to continue or expand its business, and the inability to raise additional capital or financing to implement its business plans;
     
  (e) reductions in demand for the Company’s products and services, whether because of competition, general industry conditions, loss of tax incentives for solar power, technological obsolescence or other reasons;
     
  (f) litigation with or legal claims and allegations by outside parties;
     
  (g) insufficient revenues to cover operating costs, resulting in persistent losses;
     
  (h) rapid and significant changes to costs of raw materials from government tariffs or other market factors;
     
  (i) failure to realize the anticipated benefits of any acquisition or difficulties in integrating any acquisition with the Company and its operations;
     
  (j) the preceding and other factors discussed in Part I, Item 1A, “Risk Factors,” and other reports we may file with the Securities and Exchange Commission from time to time; and
     
  (k) the factors set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

 

 

 

 18 

 

 

New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Because factors referred to elsewhere in this report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 (sometimes referred to as the “2023 Form 10-K”) that we previously filed with the Securities and Exchange Commission, including without limitation the “Risk Factors” section in the 2023 Form 10-K, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as may be required by applicable law, we undertake no obligation to release publicly the results of any revisions to these forward-looking statements or to reflect events or circumstances arising after the date of this report on Form 10-Q.

 

Overview

 

Beam Global develops, manufactures, and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media.

 

The Company has five product lines that incorporate our proprietary technology for producing a unique alternative to grid-tied charging, having a built-in renewable energy source in the form of attached solar panels and/or light wind generator to produce power and battery storage to store the power. These products are rapidly deployable and attractively designed and include:

 

  - EV ARC™ Electric Vehicle Autonomous Renewable Charger – a patented, rapidly deployed, infrastructure product that uses integrated solar power and battery storage to provide a mounting asset and a source of power for factory installed electric vehicle charging stations of any brand. The electronics are elevated to the underside of the sun-tracking solar array making the unit flood-proof up to nine and a half feet and allowing adequate space to park a vehicle on the engineered ballast and traction pad which gives the product stability and a certified wind rating of 160 miles per hour.

 

  - Solar Tree® DCFC – Patented off-grid, renewably energized and rapidly deployed, single-column mounted smart generation and energy storage system with the capability to provide a 150kW DC fast charge to one or more electric vehicles or larger vehicles.

 

  - EV ARC™ DCFC – DC Fast Charging system for charging EVs comprised of four interconnected EV ARC™ systems and a 50kW DC fast charger.

 

  - EV-Standard™ – patent issued on December 31, 2019 and currently under development. A lamp standard, EV charging and emergency power product which uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging.

 

  - UAV ARC™ - patent issued on November 24, 2020 and currently under development. An off-grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets.

 

We believe that there is a clear need for a rapidly deployable and highly scalable EV charging infrastructure, and that our products fulfill that requirement. Unlike grid-tied installations which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring concrete, wiring, and ongoing utility bills, the EV ARC™ system can be deployed in minutes, not months, and is powered by renewable energy so there is no utility bill. We are agnostic as to the EV charging service equipment or provider and integrate best of breed solutions based upon our customer’s requirements. For example, our EV ARC™ and Solar Tree® products have been deployed with Chargepoint, Blink, Enel X, Electrify America and other high quality EV charging solutions. We can make recommendations to customers, or we can comply with their specifications and/or existing charger networks. Our products replace the infrastructure required to support EV chargers, not the chargers themselves. We do not sell EV charging, rather we sell products which enable it.

 

 

 

 19 

 

 

We believe our chief differentiators for our electric vehicle charging infrastructure products are:

  

  · our patented, renewable energy products dramatically reduce the cost, time and complexity of the installation and operation of EV charging infrastructure and outdoor media platforms when compared to traditional, utility grid tied alternatives;
     
  · our proprietary and patented energy storage solutions;
     
  · our first-to-market advantage with EV charging infrastructure products which are renewably energized, rapidly deployed and require no construction or electrical work on site;
     
  · our products’ capability to operate during grid outages and to provide a source of EV charging and emergency power rather than becoming inoperable during times of emergency or other grid interruptions; and
     
  · our ability to continuously create new and patentable marketable inventions by integrating our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition;
     
  · our international operations in two of the three largest automotive markets in the world today.

 

With the acquisition of All Cell Technologies, LLC (“All Cell”) in March 2022, we now offer Beam AllCell™ energy storage technology with a highly flexible lithium-ion and/or lithium iron phosphate battery platform architecture. The battery design uses a proprietary phase change material which provides a low-cost thermal management solution and a unique safety mechanism to prevent propagation of thermal runaway. Our batteries are ideally suited for applications where energy density, safety and specialized enclosures require high power in small spaces. Drones, submersibles, medical and recreational products and a host of micro mobility products benefit from this technology. Beam is already using AllCell™ energy storage products in EV ARC™ products for EV charging and plans to incorporate this battery technology in our new product designs that are under development.

 

On October 20, 2023, Beam acquired Amiga DOO Kraljevo (“Amiga”), a business located in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration, including (i) infrastructure products for public lighting; (ii) infrastructure products for mobile telephone, networks and transmission lines; (iii) infrastructure products for tram, trolleybus, and railways; (iv) infrastructure products for contact networks, masts, portals and semi-portals for road and railway signaling; (v) large steel lattice structures for specific purposes (e.g., stadiums, factories, power plants, etc.); and (vi) distribution and command electrical cabinets. Amiga has engineering, product development and manufacturing capabilities which we believe are well suited to manufacture and sell Beam’s current and future products in the European market. As a large European manufacturer of streetlights, we believe Amiga is well positioned to assist in the development of the EV-Standard for both the European and US markets.

 

Overall Business Outlook

 

Our revenues for the first three months of 2024 were $14.6 million, a 12% increase over $13.0 million for the same quarter in 2023, primarily derived from delivery of EV ARC™ systems to federal, state and local governments. We have invested in sales and marketing resources over the past three plus years which has created increased demand for our EV ARC™ renewable chargers. For the period, we reported revenues of $1.4 million as a result of our acquisition of Amiga in October 2023. The Company believes there continues to be a high level of support for funding EV charging infrastructure from both government and commercial entities, including a number of federal grants available under the Inflation Reduction Act. In addition, certain of our commercial customers may benefit from the Federal Solar Investment Tax Credit and accelerated depreciation as allowed under Section 179 of IRS code which, we believe, provide a competitive advantage for our products over traditionally installed EV charging infrastructure which is not eligible for these incentives. Given these available incentives, we have invested in a federal lobbyist, a federal business development resource and a government relations employee, who have helped to identify opportunities on the federal side and have increased awareness of our product and outreach with federal agencies. In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. In the three months ended March 31, 2024, we recorded revenues of $12.2 million for federal customers, compared to $11.2 million for the same period in 2023. We expect to see uneven orders from quarter to quarter, especially with our federal customers, but over time we expect our revenues to grow.

 

 

 

 20 

 

 

We expect the electric vehicle market to continue to experience significant growth over the next decade which will in turn cause a requirement for additional EV charging infrastructure. We believe our products are positioned to benefit significantly from this growth.

 

We believe the Company’s acquisition of the assets of All Cell, a battery technology company, will increase our new customer opportunities. As a result of the acquisition of All Cell, we believe Beam’s gross margin will continue to improve as a result of our storage technology solutions engineered by our team of engineers and scientists in Illinois. We now also have the ability to value engineer bespoke battery solutions for our products. Beam All-Cell batteries are ideally suited for applications where energy density, safety and bespoke enclosures require high power in small spaces. Drones, submersibles, recreational products and a host of micro mobility and electric vehicle products are already benefiting from our Beam All-Cell highly differentiated products. With the continued growth of untethered electrification, we believe there is opportunity for increased demand in these markets and others.

 

In October 2023, the Company acquired Amiga, an established manufacturer of specialized steel structures and equipment, producing street lights, communications and energy infrastructure whose manufacturing, engineering and sales teams service municipalities, states and commercial customers in 16 nations. The Company believes that the addition of Amiga will expand Beam’s presence into the European market and increase its production, engineering, sales and product development expertise. The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy. An increase in electric vehicles adoptions will increase the demand for charging infrastructure. We believe that our sustainably energized EV ARCTM and EV Standard™ products can play a major role in the provision of EV charging infrastructure in Europe. Amiga is already producing components for EV ARC™ systems in our factory in Kraljevo at the time of this filing.

 

Our energy security business is connected with the deployment of our EV charging infrastructure products and serves as an additional benefit and value proposition for our charging products which, along with their integrated emergency power panels, can continue to operate, charge EVs, and deliver emergency power during utility grid failures. The state-of-the-art storage batteries installed on our EV charging systems are immune to grid failures and provide another benefit for customers such as municipalities, counties, states, the federal government, hospitals, fire departments, large private enterprises with substantial facilities, and vehicle fleet operators.

 

We are in development on our newest patented products - our EV Standard™ and UAV ARC™, which we expect will expand our product offerings leveraging the same proprietary technology as our current products and allow us to expand into new markets. Amiga is one of Europe’s largest manufacturers of streetlights and has a team of qualified structural, electrical and civil engineers who are experts in the field of development and deployment of street lighting. They are working with our engineers in San Diego and Chicago to finalize the engineering and product development on our new EV Standard™ product. We believe that EV Standard™ may become our largest selling product when available for sale.

 

Our gross profit improved as a percentage of sales reporting a positive 10.2% gross margin in Q1 2024, up 10.1% from the gross profit reported in Q1 2023. Additionally, our cost of goods sold included non-cash intellectual property amortization of $0.2 million for the first three months of both 2024 and 2023, related to the acquisition of All Cell in 2022. Excluding this non-cash expense results in a gross profit of 11.4% for the three months ended March 31, 2024. We implemented engineering design changes to our EV ARCTM in Q4 2023 that resulted in cost reductions to our bill of materials. Our gross profit improvements were achieved in spite of ongoing inflation and the high costs of many of our components, including steel, that began during the Covid pandemic. We expect to see these costs continue to decrease over time. We are implementing lean manufacturing process improvements and making engineering changes to our product where we expect to benefit from cost reductions. Many of the components that we integrate into our products are manufactured by others. This is consistent with our strategy to take advantage of the investment by large and well-funded organizations in the improvement of various components and sub-assemblies which we integrate into our final product. We continue to identify components and sub-assemblies that may be more cost effective to outsource, which we believe may further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory. There is no guarantee that our growth will continue at this same pace and we expect that the receipt of orders may be inconsistent quarter over quarter. We expect that in the long-term, our revenues will continue to grow as we expect to see a significant increase in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing pressure on our products. The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will continue to see improvement in our gross margins during the year. Amiga has capabilities to perform several activities which we outsource in the US. We believe that in combination with a generally less expensive operating environment in Serbia, we will be able to produce our products in Europe less expensively than in the US, even as we continue to reduce our costs in the US.

 

 

 

 21 

 

 

Critical Accounting Policies and Estimates

 

The Company’s significant accounting policies are described in Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in these policies or their application.

 

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of intangible assets, valuation of contingent consideration liability, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

 

Changes in Accounting Principles. There were no significant changes in accounting principles that were adopted during the three months ended March 31, 2024.

 

Results of Operations

 

Comparison of Results of Operations for the Three Months Ended March 31, 2024 and 2023

 

Revenues. For the quarter ended March 31, 2024, our revenues increased 12% to $14.6 million compared to $13.0 million for the same period in 2023. Revenues to federal customers increased by $1.0 million in Q1 2024 compared to the quarter ended March 31, 2023. We also recorded revenues of $1.4 million as a result of our acquisition of Amiga in 2023. We continue to invest in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our products, which is reflected in the strong year over year sales growth in the quarter. The receipt of orders may continue to be uneven due to the timing of customer approvals or budget cycles, however we believe that as EV adoption increases in concert with increased availability of infrastructure funding, our business will be less impacted by specific variations in order timing.

 

Gross Profit. For the quarter ended March 31, 2024, our gross profit was $1.5 million, or 10.2% of sales, compared to a gross profit of .04% of sales for the same period in 2023. As a percentage of sales, the margin improved by 10.1%, primarily because of cost reductions implemented in late 2023 as a result of design changes to the EV ARCTM as well as an increase in production levels in the current quarter compared to the prior year, which resulted in favorable fixed overhead absorption. Our gross profits included $0.2 million for non-cash intangible amortization. We began to see some improvements in the reduction of material costs in late 2023, which we believe should continue to improve. In addition, as our revenues continue to increase in 2024 and beyond, we expect our fixed overhead absorption to continue to improve. Our engineering and operations teams continue to identify further cost reductions and efficiencies which we believe will improve our gross margins in future quarters.

 

Operating Expenses. Total operating expenses were $4.5 million, or 31% of revenues, for the quarter ended March 31, 2024, compared to $3.8 million, or 30% of revenues, for the same quarter in the prior year. The $0.7 million increase is mostly attributable to a $0.4 million increase in consultant costs related to the integration of our new ERP Accounting software, Sales and Marketing, Government Relations and engineering design support, $0.3 million for operating expenses pertaining to our new Amiga operations, partially offset by $0.1 million reduction for favorable change in the present value factor of our contingent consideration related to the earnout for the Amiga acquisition.

 

Liquidity and Capital Resources

 

At March 31, 2024, we had cash of $5.0 million, compared to cash of $10.4 million at December 31, 2023. We have historically met our cash needs through a combination of debt and equity financing. Our cash requirements are generally for operating activities.

 

 

 

 22 

 

 

Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the table below:

 

   March 31, 
   2024   2023 
Cash provided by (used in):          
Net cash used in operating activities  $(3,026)  $(619)
Net cash used in investing activities  $(2,817)  $(330)
Net cash provided by financing activities  $277   $258 

 

For the three months ended March 31, 2024, our cash used in operating activities was $3.0 million compared to $0.6 million for the three months ended March 31, 2023. Net loss of $3.0 million for the three months ended March 31, 2024 was adjusted by $1.1 million of non-cash expense items that included depreciation and amortization of $0.9 million, employee stock-based compensation expense of $0.6 million, offset by decreases of $0.3 million provision on credit losses and $0.1 million for a change in fair value of contingent consideration liabilities. Further, cash used in operations included a $3.9 million increase in accounts receivable due to the increase in revenues and the timing of customer payments. Cash generated from operations included a $1.0 million increase in accounts payable primarily for inventory, $1.1 million increase in accrued expenses, $0.4 million decrease in inventory, $0.3 million increase in deferred revenue and $0.2 million decrease in prepaid expenses and other current assets.

 

For the three months ended March 31, 2023, our cash used in operating activities was $0.6 million. Net loss of $4.1 million for the three months ended March 31, 2023 was increased by $0.9 million of non-cash expense items that included depreciation and amortization of $0.3 million, common stock issued for services for director compensation of $0.1 million and employee stock-based compensation expense of $0.5 million. Further, cash used in operations included a $2.4 million increase in accounts receivable due to the increase in revenues in the quarter, $0.3 million decrease in deferred revenue, and a $0.2 million increase in inventory. Cash used in operations included a $4.2 million increase in accounts payable primarily for inventory, $0.9 million increase in accrued expenses and a $0.4 million decrease in prepaid expenses and other current assets.

 

Cash used in investing activities in the three months ended March 31, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition and $0.1 million for the purchase of equipment compared to $0.3 million purchased in the same period in the prior year.

 

For the three months ended March 31, 2024, cash generated by our financing activities included $0.3 million for the exercise of warrants compared to $0.2 million in proceeds from the public offering issuance of common stock, net of offering expenses, and $0.1 million from the exercise of warrants for the same period in the prior year.

  

Current assets were $38.8 million on March 31, 2024, a decrease from $40.7 million at December 31, 2023, primarily due to decreases of $5.4 million in cash, $0.5 million in inventory, $0.2 million in prepaid expenses and other current assets offset by an increase of $4.2 million in accounts receivable. Current liabilities increased to $21.0 million at March 31, 2024 from $16.9 million at December 31, 2023, primarily due to a $1.0 million increase accounts payable and $1.1 million increase in accrued expenses. As a result, our working capital decreased to $17.8 million at March 31, 2024 compared to $23.8 million at December 31, 2023.

 

The Company has been focused on marketing and sales efforts to increase our revenues. Revenues increased annually by 45% from 2020 to 2021, 144% from 2021 to 2022, and 206% from 2022 to 2023 demonstrating that this investment has been successful. Improvements to gross profitability have been made despite the current inflationary period. As revenues increase, we expect to continue to see our fixed overhead costs spread over more units, which will reduce the cost per unit. Our engineering and operations teams have made several design changes and process improvements in our product development and manufacturing operations which has helped to increase labor efficiency and reduce material costs. In addition, the Company increased pricing in Q3 of 2023 for the first time to cover some of the inflationary cost increases, which we should benefit from as new orders are received and are shipped in future quarters.

 

 

 

 23 

 

 

On March 22, 2023, the Company entered into that certain Supply Chain Line of Credit with OCI Limited (“OCI”), whereby OCI may provide a supply chain line of credit in the amount of up to $100 million based on the amounts of approved accounts receivable of the Company (the “Credit Facility”). In order to request a drawdown on the Credit Facility, the Company is required to submit a transaction request to OCI which sets forth the terms of the applicable account receivables, including but not limited to the name of the party responsible for the applicable account receivables (the “Obligor”), the terms of repayment and the amount of such receivables. The Company has no obligation to submit a drawdown request and OCI is not obligated to accept any drawdown request from the Company. In the event OCI accepts a drawdown request of the Company and upon satisfaction of certain conditions required by OCI to issue the drawdown, OCI will disburse funds to the Company for such drawdown in an amount equal to the full value of the applicable account receivables assigned to OCI minus any transaction expenses incurred by OCI and the full amount of interest to be incurred for such receivables over the term of the drawdown. The Company will pay interest on any drawdown at the Secured Overnight Financing Rate +300 basis points. Upon the disbursement of funds to the Company for a drawdown, the Company will assign all rights to such account receivables of the Obligor to OCI. The Company will act as collection agent on any account receivables assigned to OCI and agrees to establish a designated bank account for the purpose of collecting payment on any applicable account receivables that are assigned to OCI. In the event (i) the Company is in material breach of the Credit Facility, (ii) the Company or the Obligor is insolvent or is subject to reorganization or liquidation, or (iii) any dispute related to an agreement with an Obligor or non-payment by an Obligor, OCI has the right to exercise any contractual rights it may have against Obligor, increase the interest rate to the agreed upon default interest rate, and demand immediate repayment by the Company for the outstanding amounts owed under such account receivables. The Company has also agreed to indemnify OCI for any losses incurred by OCI in connection with the Credit Facility. Either party may terminate the Credit Facility at any time by providing fifteen (15) days prior written notice to the other party. To date, Beam Global has not drawn on this line of credit.

 

The Company may be required to raise capital until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. In September 2022, the Company entered into a Common Stock Purchase Agreement with B. Riley under which the Company has the right to sell up to the lesser of either two million shares or $30 million of our common stock over a period of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financing. The rest of which could potentially generate an additional $3.4 million of proceeds over the next 4.0 years, depending on the warrant holders’ ability and decision to exercise them. The proceeds from these offerings are expected to provide working capital to fund business operations and the development of new products. Management cannot currently predict when or if it will achieve positive cash flow. There is no guarantee that profitable operations will be achieved, or that additional capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business strategy. In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors.

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Currency Risk

 

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances and results of our non-United States subsidiaries into United States dollars, currency gains and losses related to intercompany and third-party transactions denominated in currencies other than a subsidiary's functional currency, and currency gains and losses associated with global intercompany receivable and payable balances. Our principal currency exposures relate to the Serbian Dinar and the Euro. The impact of foreign exchange rate fluctuations on our net earnings in the first quarter ending March 31, 2024 was not significant.

 

 

 

 24 

 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. All internal control systems, no matter how well designed, have inherent limitations. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

During the period covered by this filing, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our internal controls over financial reporting. Amiga is a small business and represents less than 10.0% of our 2024 revenues and 10.7% of our 2024 net loss. There was no material change to its internal control over financial reporting due to the acquisition. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, identified as of March 31, 2024, we do not have sufficient internal controls over financial reporting and procedures to ensure that all the information required to be disclosed in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis.

 

The following material weakness existed as of December 31, 2023:

 

Material weakness:

 

  · The Company has a material weakness that was previously identified, that has not yet been completely remediated. The Company currently does not have sufficient controls in place to ensure that all inventory is appropriately tracked and recorded on a timely basis, given the lack of an automated tracking system and the manual nature of its current processes and controls surrounding inventory. This includes a manual process for completing an allocation of labor and overhead to our products on a timely basis. The Company implemented a NetSuite ERP system in Q4 2023 which we believe will remedy this deficiency. The NetSuite ERP system is continually undergoing additional configuration to effectively remediate the internal control weakness when fully implemented.

 

  · During Q4 2023, the Company implemented NetSuite ERP system to automate operations and accounting for the San Diego and Chicago locations. We did not implement program change management and user access controls to ensure that:

  a. IT program and data changes affecting the Company’s financial IT applications & underlying accounting records are identified, tested, authorized, and implemented appropriately, and
  b. Appropriate segregation of duties that would adequately restrict user access and ensure adequate review of transactions.

 

 

 

 25 

 

 

    Because we are a small company, many employees have multiple job responsibilities, and during the implementation in Q4, access was allowed for employees to access necessary tasks. As we move forward into 2024, we will assign access to ensure the proper segregation of duties. Additionally, we need to ensure the employees are adequately trained and able to resolve issues timely. The Company needs to establish appropriate procedures for change management to ensure changes to the system are formally approved, properly restricted to appropriate personnel, and adequately tested.
     
  · In our review, we noted that the Company did not implement adequate controls relating to documentation of the review and approval of reconciliations and other schedules prepared internally to be included or disclosed in the financial statements. Many of our reports and reconciliations are performed in Excel spreadsheets, and we did not adequately validate the segregation of duties between the preparer and the approver with a signature and time stamp. NetSuite has many robust internal control features that can be configured and utilized to ensure workflow approvals are adhered to and integrated into documentation.

 

Since these controls have a pervasive effect across the inventory transaction cycle, management has determined that these circumstances constitute a material weakness, based on the criteria established in the “Internal Integrated Framework” issued by COSO in 2013 and as a result, we did not maintain effective internal control over financial reporting as of March 31, 2024.

 

Changes in Internal Control Over Financial Reporting

 

The Company is continuing to actively work to remediate the material weaknesses described above, including the need for additional remediation steps and implementing additional measures to remediate the underlying causes that give rise to the material weaknesses. During the three months ended March 31, 2024, the Company has taken various actions to strengthen our internal control over financial reporting, including:

 

·Reviewing access in NetSuite ERP to ensure the proper segregation of duties and training courses to ensure the employees are adequately trained and able to resolve issues timely.
·Implementing stronger processes related to ordering, counting, warehousing, valuing and transacting our inventory in NetSuite ERP.
·Increasing the adequacy of staffing levels and expertise with the requisite technical knowledge and skills to support further enhancement on the controls and procedures surrounding documentation of review and formalization of reconciliations, accounting policies and controls.
·Implementing a segregation of duties between the preparer and the approver of reconciliation and supporting schedules which included hiring additional staff.

 

The material weaknesses will be considered remediated when management concludes that, through testing, the applicable remedial controls are designed, implemented and operating effectively. As management continues to evaluate and improve disclosure controls and procedures and internal control over financial reporting, the Company may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified.

 

 

 

 

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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company may from time to time become party to actions, claims, suits, investigations or proceedings arising from the ordinary course of our business, including actions with respect to intellectual property claims, breach of contract claims, labor and employment claims and other matters. Any litigation could divert management time and attention from the Company, could involve significant amounts of legal fees and other fees and expenses, or could result in an adverse outcome having a material adverse effect on our financial condition, cash flows or results of operations. Actions, claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty. We are not currently involved in any legal proceedings that we believe are, individually or in the aggregate, material to our business, results of operations or financial condition. However, regardless of the outcome, litigation can have an adverse impact on us because of associated cost and diversion of management time.

 

Item 1A. Risk Factors

 

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition, liquidity or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition, liquidity or future results.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

During the quarter ended March 31, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

 

 

 

 

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Item 6. Exhibits

 

        Incorporated by Reference    

Exhibit

Number

  Exhibit Description   Form   File No.   Exhibit  

Filing

Date

 

Filed

Herewith

3.1   Articles of Incorporation   SB-2   333-147104   3.1   11/2/2007    
                         
3.2   Amendment to Articles of Incorporation dated December 23, 2016   S-1/A   333-226040   3.1.2   4/4/2019    
                         
3.3   Certificate of Change to Articles of Incorporation dated April 11, 2019   8-K   001-38868   3.1   4/18/2019    
                         
3.4   Certificate of Amendment to Articles of Incorporation dated September 14, 2020   8-K   000-53204   3.1   9/14/2020    
                         
3.5   Certificate of Amendment to Articles of Incorporation dated July 20, 2021   8-K   001-38868   3.1   7/20/2021    
                         
3.6   Bylaws of Registrant   SB-2   333-147104   3.2   11/2/2007    
                         
3.7   Amendment to Bylaws   8-K   000-53204   10.2   7/16/2014    
                         
10.1   Amended and Restated Lease Agreement dated February 1, 2024   8-K   000-53204   10.1   3/28/2024    
                         
10.2   Amendment to Share Sale and Purchase Agreement dated February 16, 2024   8-K   000-53204   10.1   2/16/2024    
                         
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act                   X
                         
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act                   X
                         
32.1   Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act                   X
                         
32.2   Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act                   X
                         
101.INS   Inline XBRL Instance Document                   X
                         
101.SCH   Inline XBRL Schema Document                   X
                         
101.CAL   Inline XBRL Calculation Linkbase Document                   X
                         
101.DEF   Inline XBRL Definition Linkbase Document                   X
                         
101.LAB   Inline XBRL Labels Linkbase Document                   X
                         
101.PRE   Inline XBRL Presentation Linkbase Document                   X
                         
104   The cover page to this Quarterly Report on Form 10-Q has been formatted in Inline XBRL                   X

 

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated: May 20, 2024 Beam Global
   
  By: /s/ Desmond Wheatley
 

Desmond Wheatley, Chairman and Chief Executive Officer,

(Principal Executive Officer)

   
  By: /s/ Lisa A. Potok
 

Lisa A. Potok, Chief Financial Officer

(Principal Financial/Accounting Officer)

 

 

 

 

 

 

 

 

 

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