UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Period ended
OR
For the transition period from _________________ to ________________
Commission File Number
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
|
|
|
| (Address of principal executive offices) | (Zip Code) |
(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 |
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.
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).
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 ☐ |
| 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 ☐
The number of registrant's shares of common stock, $0.001 par value outstanding as of November 4, 2022 was .
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Beam Global
Condensed Balance Sheets
(In thousands)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventory, net | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use asset | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Deposits | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Sales tax payable | ||||||||
| Deferred revenue, current | ||||||||
| Contingent consideration, current | ||||||||
| Operating lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Deferred revenue, noncurrent | ||||||||
| Contingent consideration, noncurrent | ||||||||
| Operating lease liabilities, noncurrent | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ par value, authorized, outstanding as of September 30, 2022 and December 31, 2021. | ||||||||
| Common stock, $ par value, shares authorized, and shares issued or issuable and outstanding as of September 30, 2022 and December 31, 2021, respectively. | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed financial statements
| 3 |
Beam Global
Condensed Statements of Operations
(Unaudited, in thousands except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Total other income, net | ||||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||
The accompanying unaudited notes are an integral part of these unaudited condensed financial statements
| 4 |
Beam Global
Condensed Statements of Changes in Stockholders' Equity
(Unaudited, in thousands)
| Total | ||||||||||||||||||||
| Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
| Stock | Amount | Paid-in-Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ( | ) | ||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | ||||||||||||||||||||
| Stock option exercise (cashless) | ( | ) | ( | ) | ||||||||||||||||
| Net loss for the three months ended March 31, 2021 | – | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2021 | ( | ) | ||||||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ( | ) | ||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | ||||||||||||||||||||
| Stock option exercise (cashless) | ( | ) | ( | ) | ||||||||||||||||
| Net loss for the three months ended June 30, 2021 | – | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2021 | ( | ) | ||||||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ( | ) | ||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | ||||||||||||||||||||
| Stock option exercise (cashless) | ( | ) | ( | ) | ||||||||||||||||
| Stock option exercise (for cash) | ||||||||||||||||||||
| Net loss for the three months ended September 30, 2021 | – | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Total | ||||||||||||||||||||
| Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
| Stock | Amount | Paid-in-Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ||||||||||||||||||||
| Stock issued for acquisition | ||||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2022 | ( | ) | ||||||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ( | ) | ||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2022 | ( | ) | ||||||||||||||||||
| Stock issued for director services - vested | ||||||||||||||||||||
| Stock issued to escrow account - unvested | ( | ) | ||||||||||||||||||
| Stock option expense | – | |||||||||||||||||||
| Warrants exercised for cash | – | |||||||||||||||||||
| Stock option exercise (cashless) | ||||||||||||||||||||
| Stock issued for Committed Equity Facility | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying unaudited notes are an integral part of these unaudited condensed financial statements
| 5 |
Beam Global
Condensed Statements of Cash Flows
(Unaudited, in thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Common stock issued for services | ||||||||
| Change in fair value of contingent consideration liabilities | ||||||||
| Compensation expense related to grant of stock options | ||||||||
| Amortization of operating lease right of use asset | ||||||||
| Amortization of debt discount | ||||||||
| Changes in assets and liabilities: | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Increase in: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Sales tax payable | ( | ) | ||||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities: | ||||||||
| Working capital payment for acquisition | ( | ) | ||||||
| Purchases of equipment | ( | ) | ( | ) | ||||
| Funding of patent costs | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing Activities: | ||||||||
| Taxes paid related to net share settlement of equity awards | ( | ) | ||||||
| Proceeds from warrant exercises | ||||||||
| Payments of equity offering costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Fair value of common stock issued as consideration for business combination | $ | $ | ||||||
| Purchase of property and equipment by incurring current liabilities | $ | $ | ||||||
| Depreciation cost capitalized into inventory | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | $ | ||||||
| Issuance of stock for Committed Equity Line | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed financial statements
| 6 |
BEAM GLOBAL
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
| 1. | NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Nature of Operations
Beam Global, a Nevada corporation (hereinafter the “Company,” “us,” “we,” “our” or “Beam”), is a cleantech innovation company based in San Diego, California. We develop, design, engineer, manufacture and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, outdoor media, and energy security and disaster preparedness as well as safe and compact, highly energy-dense battery solutions. Beam’s infrastructure products enable electric vehicle charging and reliable electrical power 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.
On March 4, 2022, the Company acquired substantially all the assets of All Cell Technologies, LLC (“All Cell”), an energy storage solutions and technologies company based in Broadview, Illinois. Refer to note 3, Business Combination for additional details.
Basis of Presentation
The interim unaudited condensed 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 and nine months ended September 30, 2022 and 2021, and our financial position as of September 30, 2022, 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 financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2021. The December 31, 2021 balance sheet is derived from those statements.
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, 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.
| 7 |
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326) requiring initial recognition of credit losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred. The standard eliminates the threshold for initial recognition in current U.S. GAAP and it covers a broad range of financial instruments, including trade and other receivables at each reporting date. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective for the Company beginning January 1, 2023. The adoption of this guidance is not expected to have a material effect on our 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 institution deposits that at times may exceed federally insured limits. The Company has not experienced any
losses in such accounts from inception through September 30, 2022. As of September 30, 2022, approximately $
Major Customers
The Company continually assesses
the financial strength of its customers. For the three months ended September 30, 2022, two customers accounted for
Significant Accounting Policies
During the nine months ended September 30, 2022, there were no changes to our significant accounting policies as described in in our Annual Report on Form 10-K for the year ended December 31, 2021. See below for our policy related to business combinations, goodwill and indefinite-lived intangible assets and fair value measurements.
| 8 |
Business Combination
The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in operating expenses in the statement of operations. Contingent consideration liability related to the acquisition consists of commercial milestone payments and are valued using a Monte Carlo simulation. The fair value of commercial milestone payments reflects management’s estimates of discount rates and probability of achieving certain milestones.
Goodwill and Indefinite-lived Intangible Assets
Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives except for customer relationships, for which the amortization is recorded on an accelerated method over the estimate useful life. The carrying values of intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Goodwill represents the excess of the purchase prices of an acquired business over the fair value of the underlying net tangible and intangible assets. The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test, including macroeconomic conditions, industry and market considerations, and our overall financial performance. If, after completing the qualitative assessment, it is determined it is more likely than not that the estimated fair value is greater than the carrying value, the Company concludes no impairment exists. Alternatively, if the Company determines in the qualitative assessment, it is more likely than not that the fair value is less than its carrying value, then the Company performs a quantitative goodwill impairment test to identify both the existence of an impairment and the amount of impairment loss, by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, then a goodwill impairment charge is recognized in the amount by which the carrying amount exceeds the fair value, limited to the total amount of goodwill allocated to that reporting unit. The goodwill annual assessment test is performed in the fourth quarter of every year or when an event occurs, or circumstances change such that it is reasonably possible that an impairment may exist.
| 9 |
Fair Value Measurements
The fair value of assets and liabilities are based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
· Level 1 — Quoted prices in active markets for identical assets or liabilities.
· Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.
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 common share 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 consists of the incremental shares of common stock issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.
Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2022. Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2021. These options and warrants were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share.
Segments
The Company follows ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information.” Management assesses its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. For periods through the date of the All Cell acquisition, the Company had, and reported in, one reportable segment. Subsequent to the acquisition of All Cell, management continues to review financial results, manage the business and allocate resources on an aggregate basis. Therefore, financial results continue to be reported in a single operating segment.
| 10 |
| 2. | LIQUIDITY |
The Company has a history
of net losses. For the nine months ended September 30, 2022 and 2021, the Company had net losses of $
At September 30, 2022, the
Company had a cash balance of $
| 3. | BUSINESS COMBINATION |
On March 4, 2022, the Company completed its acquisition of substantially all the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions. We believe this strategic acquisition will increase and diversify our Company’s revenue, gross profitability, manufacturing capabilities, intellectual portfolio and customer base. The Company purchased substantially all of the assets and business of All Cell for shares of Beam Common Stock (“Closing Consideration”) plus an additional $0.8 million in cash for the net working capital held by All Cell at closing.
In addition, All Cell is eligible to earn an additional number of shares of Beam Common Stock if Beam’s new energy storage business meets certain revenue milestones (the “Earnout Consideration”). The Earnout Consideration is: (i) two times the amount of energy storage products revenue and contracted backlog that is greater than $7.5 million for 2022, and (ii) two times the amount of energy storage products 2023 revenue only which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million. Revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration. The maximum aggregate number of shares of Beam Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares. Revenue from energy storage products used in Beam Global products will not be considered as contributing to the Earnout calculation.
| 11 |
The preliminary fair value of consideration transferred consisted of the following (in thousands):
| Common Stock | $ | |||
| Working Capital Cash Payment | ||||
| Earnout Consideration | ||||
| Total consideration transferred | $ | |||
The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands):
| Inventory | $ | |||
| Prepaid expenses | ||||
| Deposits | ||||
| Property, plant and equipment | ||||
| Intangible assets, including goodwill | ||||
| Total assets acquired | ||||
| Customer deposits | ( | ) | ||
| Total liabilities assumed | ( | ) | ||
| Total assets and liabilities assumed | $ | |||
The estimated fair values
assigned to identifiable assets acquired and liabilities assumed are provisional pending the finalization of the working capital and purchase
price allocation and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired
and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired
and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the
provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to complete
the allocation of purchase price as soon as practicable, but no later than one year after the acquisition date. The Company incurred $
Goodwill represents the excess of the total purchase price over the fair value of the underlying net assets, largely arising from synergies expected to be achieved by the combined company and expanded market opportunities. The goodwill is expected to be fully deductible for tax purposes.
| 12 |
The valuation of the Earnout Consideration was performed using a two-factor Monte Carlo simulation, which includes estimates and assumptions such as forecasted revenues of All Cell, volatility, discount rates, share price and the milestone settlement value. As such valuation includes the use of unobservable inputs, it is considered to be a Level 3 measurement. The fair value of the Earnout Consideration is reassessed on a quarterly basis with the change recorded to operating expenses. Change in the fair value of the Earnout Consideration during the nine months ended September 30, 2022 is as follows (in thousands):
| Balance as of December 31, 2021 | $ | |||
| Acquisition of All Cell | ||||
| Change in estimated fair value | ||||
| Balance as of September 30, 2022 | $ |
The preliminary fair values assigned to identifiable intangible assets and goodwill acquired are as follows ($ in thousands):
| Value | Useful Life (yrs.) | |||||||
| Developed technology | $ | |||||||
| Trade name | ||||||||
| Customer relationships | ||||||||
| Backlog | ||||||||
| Goodwill | N/A | |||||||
| $ | ||||||||
The fair values of the developed technology, trade name, customer relationships and backlog were estimated using an income approach. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits in the form of cash flows to be derived from ownership of the asset. The estimated fair values were developed by discounting future net cash flows to their present value at market-based rates of return. The useful lives of the intangible assets for amortization purposes were determined by considering the period of expected cash flows used to measure the fair values of the intangible assets adjusted as appropriate for entity-specific factors including legal, competitive, and other factors that may limit the useful life. The identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives except for customer deposits which uses accelerated depreciation.
Pro Forma Financial Information
The following pro forma financial information summarizes the combined results of operations of Beam Global and All Cell as if the companies had been combined as of the beginning of the nine months ended September 30, 2021 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 13 |
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 nine months ended September 30, 2021. In addition, the 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 pro forma financial information includes adjustments to reflect the incremental amortization expense of the identifiable intangible assets and transaction costs, as well as removes the impact of the debt that was not acquired by the Company.
The statement of operations
for the three and nine months ended September 30, 2022 includes revenues of $
Broadview Lease
As part of the acquisition,
the Company assumed a facility lease located in Broadview, Illinois, and recorded $
| 4. | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Prepaid expenses and other current assets are summarized as follows (in thousands):
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Vendor prepayments | $ | $ | ||||||
| Related party receivable | ||||||||
| Deferred equity offering costs | ||||||||
| Prepaid insurance | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
Related party receivables as of September 30, 2022 and December 31, 2021 consisted primarily of payroll related taxes due for employee stock vesting.
| 5. | INVENTORY |
Inventory consists of the following (in thousands):
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Total inventory | $ | $ | ||||||
| 14 |
| 6. | PROPERTY AND EQUIPMENT |
Property and equipment consist of the following (in thousands):
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Office furniture and equipment | $ | $ | ||||||
| Computer equipment and software | ||||||||
| Leasehold improvements | ||||||||
| Autos | ||||||||
| Machinery and equipment | ||||||||
| Total property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, net | $ | $ | ||||||
| 7. | ACCRUED EXPENSES |
The major components of accrued expenses are summarized as follows (in thousands):
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accrued vacation | $ | $ | ||||||
| Accrued salaries and bonus | ||||||||
| Vendor accruals | ||||||||
| Other accrued expense | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 8. | 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 September 30, 2022, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
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 sales agent agreements whereby sales agents would receive a fee equal to a percentage of revenues generated by the agent; agreements with vendors where the vendor may provide marketing, investor relations, public relations, 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.
| 15 |
| 9. | INCOME TAXES |
There was no Federal income tax expense for the nine months ended September 30, 2022 or 2021 due to the Company’s net losses. Income tax expense represents 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 September 30, 2022 and no benefit has been provided for the year-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.
| 10. | STOCKHOLDERS’ EQUITY |
Stock Issued For Acquisition
The Company issued shares of its common stock upon acquiring certain assets of All Cell during the nine months ended September 30, 2022. See further discussion in note 3. Business Combination.
Committed Equity Facility
On September 2, 2022, the
Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement with
B. Riley Principal Capital, LLC (“B. Riley”). Pursuant to the Purchase Agreement, the Company has the right, in its sole
discretion, to sell to B. Riley up to $
Other than the issuance of the initial commitment shares of the Company’s common stock to B. Riley, the Company had not issued any shares of its common stock to raise capital under the Purchase Agreement as of September 30, 2022.
The Company incurred an aggregate cost of approximately $0.4 million in connection with the Purchase Agreement, including the fair value of the 10,484 shares of common stock issued to B. Riley upon the execution of the agreement, which was recorded to prepaid expenses and other current assets on the Balance Sheet to be offset against future proceeds from the sale of the Company’s common stock under the Purchase Agreement.
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Awards Under Stock Incentive Plans
Stock Options
Option activity for the nine months ended September 30, 2022 is as follows:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Exercise | |||||||
| Options | Price | |||||||
| Outstanding at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Outstanding at June 30, 2022 | $ | |||||||
The Company’s stock option compensation
expense was $ and $ for the three and nine months ended September 30, 2022, respectively, and $
and $ for the three and nine months ended September 30, 2021, respectively. There was $
Restricted Stock
A summary of activity of the restricted stock awards for the nine months ended September 30, 2022 is as follows:
| Weighted- | ||||||||
| Nonvested | Average Grant- | |||||||
| Shares | Date Fair Value | |||||||
| Nonvested at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Nonvested at September 30, 2022 | $ | |||||||
As of September 30, 2022,
there were unreleased shares of common stock representing $ million of unrecognized restricted stock grant expense which will be recognized
over approximately
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Warrants
A summary of the number of shares of common stock underlying warrants outstanding for the nine months ended September 30, 2022 is as follows:
Number of Common Stock | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2021 | $ | |||||||
| Exercised | ( | ) | ||||||
| Outstanding at September 30, 2022 | $ | |||||||
| 11. | REVENUES |
For each of the identified periods, revenues can be categorized into the following (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Maintenance fees | ||||||||||||||||
| Professional services | ||||||||||||||||
| Shipping and handling | ||||||||||||||||
| Discounts and allowances | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
During the three and nine
months ended September 30, 2022
At September 30, 2022 and
December 31, 2021, deferred revenue was $
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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 (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).
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, 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) | increasing spread of the COVID-19 pandemic and its impact on the Company’s business as well as worldwide financial markets; |
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, 2021 (sometimes referred to as the “2021 Form 10-K”) that we previously filed with the Securities and Exchange Commission, including without limitation the “Risk Factors” section in the 2021 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.
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Overview
Beam develops, manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media advertising.
The Company has designed five product lines for the electrification of transportation, that incorporate the same underlying proprietary technology and value for producing a unique alternative to utility 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. Our product lines include:
| - | EV ARC™ Electric Vehicle Autonomous Renewable Charger – a patented, rapidly deployed, infrastructure product that uses integrated solar power, battery storage and electronics and computing, to provide a mounting asset and a source of power for factory installed electric vehicle charging stations of any brand. The electronics and energy storage are elevated to the underside of the tracking solar array, making the unit flood-proof up to nine and a half feet and allowing adequate parking space on the engineered ballast and traction pad which gives the product stability. |
| - | Solar Tree® DCFC – Off-grid, renewably energized and rapidly deployed, patented single-column mounted smart generation and energy storage system with the capability to provide fast charging to one or more electric vehicles or larger vehicles. |
| - | EV ARC™ DCFC – DC Fast Charging system for charging EVs. |
| - | EV-Standard™ – patent issued on December 31, 2019 and still 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 still under development. An off-grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets.
All Beam Global products are capable of operating completely independent of the utility grid but can also connect to the grid where it is advantageous to do so. |
In addition, 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 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. They are ideally suited for applications where energy density, safety and specialized enclosures require high power in small spaces. Drones, submersibles, 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.
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We believe that we are living in an increasingly electrified era, where electricity is replacing other forms of fuel and energy without being connected to the utility grid through the use of batteries and other forms of energy storage. We also believe that there is a clear need for a rapidly deployable and highly scalable EV charging infrastructure, and that our products fulfill these requirements. Unlike utility grid-tied installations which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring concrete, wiring, and ongoing utility bills, the EV ARC™ systems, equipped with our proprietary battery technologies, can be deployed in minutes, not months, and are 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. Because they generate and store all their own electricity, our products replace the utility grid and civil infrastructure required to support EV chargers, but not the chargers themselves. We do not sell EV charging, rather we sell products which enable it.
We believe our chief differentiators for our electric vehicle charging infrastructure products are:
| · | our patented, renewably energized products which 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 inventions which are marketable and a complex integration of our own proprietary technology and parts, and other commonly available engineered components, creating a further barrier to entry for our competition. |
Overall Business Outlook
Our revenues increased 156% from $5.5 million in the first nine months of 2021 to $14.1 million for the first nine months of 2022, primarily due to our investment in sales and marketing resources over the past three years which has created increased demand for our EV ARC™ renewable chargers, as well as an increase of $3.5 million in sales from our battery storage business since the closing of our acquisition of All Cell in March 2022. The Company believes there continues to be a high level of support for funding EV charging infrastructure on the federal level, including a number of federal grants available in addition to the Federal Solar Investment Tax Credit and accelerated depreciation as allowed under Section 179 of IRS code which provide a strong financial incentive for many of our target customers. Given these available resources, we invested in a federal lobbyist, a federal business development resource and a government relations employee, who are helping to identify opportunities on the federal side and are increasing awareness of our product and outreach with federal agencies. In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement (BPA) which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. As a direct result, during the first nine months of 2022, revenues from the federal government increased by $2.3 million compared to the prior year. In addition, we were awarded several large federal orders in September through November 2022 that are scheduled to deliver within 12 months:
(Millions) –
| Techflow, Inc. for the US Army (IMCOM) | $ | 29.4 | ||
| Veterans Administration | 11.7 | |||
| Department of Homeland Security | 2.9 | |||
| U.S. Navy Facilities - Navfac (4 orders) | 1.4 | |||
| US Marine Corps (4 orders) | 0.7 | |||
| General Services Administration (3 orders) | 0.4 | |||
| Science Applications International Corp (SAIC) for the US Army (2 orders) | 0.4 | |||
| Total | $ | 46.9 |
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Ongoing efforts to expand revenues to state agencies have also been successful. In June, we were awarded a new three-year statewide contract with the State of California which can be used by state, local and municipal government entities throughout the U.S., not just California, and provides previously negotiated pricing to make the procurement process easier. During the first nine months of 2022, we increased revenues to state agencies by $1.6 million compared to the same period in the prior year. In addition, in early October 2022, we were awarded a $5.3 million contract from the Department of Citywide Administrative Services (DCAS) to deploy units throughout New York City.
In addition, as companies are moving back to work from working from home during the past two years due to the pandemic, we are seeing an increase in orders for workplace charging and corporate fleets for enterprise customers. Revenues to enterprise customers for the first nine months of 2022 increased by $1.1 million compared to the same period in the prior year. We expect the electric vehicle market to continue to experience significant growth over the next decade which will require additional EV charging infrastructure. We believe our products are uniquely positioned to benefit from this growth.
We believe the Company’s acquisition of the assets of All Cell, a battery storage company, will provide new customer opportunities for our products. As a result of the acquisition of All Cell, we believe Beam’s gross margin will improve by utilizing the Beam All Cell battery in its EV ARCs™ as it did for eight years in the past, but now at lower cost. Beam’s 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 All Cell’s highly differentiated products. With the continued growth of untethered electrification, we believe there is opportunity for increased demand in these markets and others.
We continue to work with The Superlative Group, an industry leading consultant engaged in the selling of corporate sponsorships and have identified several potential corporate sponsors to engage in a global naming rights agreement that would provide their corporate branding to network(s) of EV ARC™ units deployed throughout a city. Superlative is compensated when they are successful in securing a sponsor for our Driving on Sunshine network. This business model can be replicated in other cities throughout the country. Our energy security business is connected with the deployment of our EV charging infrastructure products and serves as an additional benefit to the value proposition of 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. Our proprietary and state-of-the-art storage batteries, combined with solar or wind generation, integrated into our products and powering EV chargers 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 or anyone who needs a reliable source of electricity to fuel electric vehicles.
We have begun 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.
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Gross margins improved as a percentage of sales in the nine months ended September 30, compared to the same period in 2021. The gross margin is the nine months ended 2022 includes $0.5 million of non-cash intangible amortization, which is not included in the prior year. The increase in EV ARC™ systems sold from 76 units in the first nine months of 2021 to 136 units in the first nine months of 2022 resulted in favorable fixed overhead absorption and improved labor efficiencies gained by the higher volume. This was partially offset by ongoing inflation and supply chain driven cost increases on many of our components, including steel, in addition to increased delivery charges due to fuel price increases. We believe these cost increases are largely a temporary increase brought on by supply chain issues resulting from plant closures and staffing shortages due to the COVID-19 pandemic as well as other transitory inflationary pressures. We are starting to see some pricing increases leveling off, and we expect costs to begin to come back down in the coming months and years. We also expect to see a reduction in the cost of our bill of materials. Batteries are the highest cost contributor to our bill of materials, but with the March 2022 purchase of All Cell’s assets, a battery manufacturer, we expect those costs to be significantly reduced. 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 may further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory. 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 see significant improvement in our gross margins over the next year.
Significant 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, 2021. There have been no material changes in these policies or their application.
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 doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, 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.
Changes in Accounting Principles. There were no significant changes in accounting principles that were adopted during the nine months ended September 30, 2022.
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Results of Operations
Comparison of Results of Operations for the Three Months Ended September 30, 2022 and 2021
Revenues. For the quarter ended September 30, 2022, our revenues increased 227% to $6.6 million compared to $2.0 million for the same period in 2021. Revenues to federal customers increased by $2.1 million compared to the same quarter in the prior year. In addition, we were awarded a number of contracts from federal agencies in late September and early October in line with the federal year-end. Revenues to corporate enterprises also increased during the quarter by $0.9 million compared to the prior year as employees are returning to working on-site, and as large employers are converting to electric fleets. Revenues to customers in California, consisting mostly of state agencies and municipalities, represented 24% of the total, which continues to be a strong market for EV ARC™ systems. In early October 2022, we received a contract from the Department of Citywide Administrative Services (DCAS) for $5.3 million to deploy units throughout New York City in the coming months. We also recorded energy storage revenue of $1.7 million as a result of our acquisition of All Cell which closed on March 4, 2022. Our backlog consisting of undelivered purchase orders scheduled to deliver within 12 months was $32.3 million at September 30, 2022 and has increased significantly in October with the Federal and DCAS orders. 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 Loss. For the quarter ended September 30, 2022, our gross loss was $0.3 million, or 5% of sales, compared to $0.2 million, or 10% of sales in the same quarter of the prior year. As a percentage of sales, the margin improved by 5 percentage points, primarily due to the increase in production levels in the current quarter compared to the third quarter of 2021, which resulted in favorable fixed overhead absorption. In addition, our labor efficiency improved during the quarter as a result of a steady flow of units through the factory. This was partially offset by an increase of $0.2 million for non-cash intangible amortization and an increase in material costs for steel, batteries and other components, due to the COVID-19 pandemic and other inflationary pressures. Shipping costs have increased globally as well as gas prices which have increased our delivery costs. Toward the end of the third quarter, we started to see some reduction in gas prices and cost increases from our suppliers have begun to level off. We expect our cost per unit to improve as we expect to see material costs start to decrease and as our volumes increase. We also acquired a battery manufacturer, All Cell in March 2022, which is expected to significantly reduce the cost of the batteries in our units. In addition, as we expect the Company to grow in 2022 and beyond, we expect our fixed overhead absorption to continue to improve.
Operating Expenses. Total operating expenses were $6.5 million for the quarter ended September 30, 2022, compared to $1.5 million for the same period in the prior year. The increase was primarily due to a $3.9 million change in fair value of contingent consideration related to the All Cell acquisition based on an increase in 2022 forecasted revenues and backlog than expected earlier in the year. Excluding such cost, the operating expenses for the quarter ended September 30, 2022 increased by 74% compared to the same period in the prior year, driven by expenses attributable to the newly acquired All Cell business of $1.1 million.
Comparison of Results of Operations for the Nine Months Ended September 30, 2022 and 2021
Revenues. For the nine months ended September 30, 2022, our revenues increased 156% to $14.1 million compared to $5.5 million for the same period in 2021. Revenues to federal customers increased by $2.3 million year to date, compared to the same period in the prior year. In addition, we were awarded a number of contracts from federal agencies in late September and early October totalling more than $46.0 million, which will be delivered over the next 12 months. We recorded energy storage revenues of $3.5 million as a result of our acquisition of All Cell which closed on March 4, 2022. Our revenue to state agencies increased by $1.6 million year to date compared to the prior year, and we continue to have a strong concentration of revenues to the State of California which represents 34% of total revenues. 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.
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Gross Loss. For the nine months ended September 30, 2022, our gross loss was $1.0 million, or 7% of sales, compared to $0.6 million, or 11% of sales in the same period of the prior year. As a percentage of sales, the margin improved by four percentage points, primarily due to the increase in production levels in the current quarter compared to the same period in 2021, which resulted in favorable fixed overhead absorption. In addition, our labor efficiency improved during the quarter as a result of a steady flow of units through the factory. This was partially offset by an increase of $0.5 million for non-cash intangible amortization and an increase in material costs for steel, batteries and other components, due to the COVID-19 pandemic and other inflationary pressures. Shipping costs have increased globally as well as gas prices which have increased our delivery costs. Toward the end of the third quarter, we started to see some reduction in gas prices and cost increases for some of our products’ components have begun to level off. We expect our cost per unit to improve as we expect to see material costs start to decrease and as our volumes increase. We also acquired a battery manufacturer, All Cell in March 2022, which should significantly reduce the cost of the batteries in our units. In addition, as we expect the Company to grow in 2022 and beyond, we expect our fixed overhead absorption to continue to improve.
Operating Expenses. Total operating expenses were $10.9 million for the nine months ended September 30, 2022, compared to $4.0 million for the same period in the prior year, primarily due to a $3.7 million change in fair value of contingent consideration related to the All Cell acquisition. Excluding such cost, the operating expenses for the quarter ended September 30, 2022 increased by 83% compared to the same period in the prior year, driven by $2.3 million in expenses attributable to the newly acquired All Cell business, $0.4 million increase for legal and accounting services, primarily attributable to the acquisition, and $0.3 million increase for sales and marketing costs to generate increased sales levels. As a percentage of revenue, operating expenses excluding the change in fair value of contingent consideration represented a decrease of 20 percentage points.
Liquidity and Capital Resources
At September 30, 2022, we had cash of $4.7 million, compared to cash of $21.9 million at December 31, 2021. We have historically met our cash needs through a combination of debt and equity financings. Our cash requirements are generally for operating activities.
Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the table below (in thousands):
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash provided by (used in): | ||||||||
| Net cash used in operating activities | $ | (15,724 | ) | $ | (5,161 | ) | ||
| Net cash used in investing activities | $ | (1,645 | ) | $ | (534 | ) | ||
| Net cash provided by financing activities | $ | 100 | $ | 2,070 | ||||
For the nine months ended September 30, 2022, our cash used in operating activities was $15.7 million compared to $5.2 million for the same period in 2021. Net loss of $11.9 million for the nine months ended September 30, 2022 was increased by $5.1 million of non-cash expense items that included a change in fair value of contingent consideration of $3.7 million, depreciation and amortization of $0.8 million, common stock issued for services for director compensation of $0.3 million and non-cash compensation expense related to the grant of stock options of $0.3 million. Further, cash used in operations included a $2.2 million increase in accounts receivable, $1.0 million increase in prepaid expenses and other current assets, primarily related to the prepayment of battery cells, and $8.3 million increase in inventory (i) to secure battery cells required for battery manufacturing in case of potential future supply chain challenges and (ii) due to higher work in process inventory of nearly complete EV ARC units that were waiting for parts as well as finished EV ARC units awaiting final delivery at September 30, 2022. The increases in prepayments and inventory are not expected to continue in future quarters, but rather should remain flat or reduce to lower levels over the next 12 months. Cash provided by operations included a $2.3 million increase in accounts payable primarily for inventory, $0.2 million increase in deferred revenue and $0.2 million increase in accrued expenses.
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Net loss of $4.6 million for the nine months ended September 30, 2021 was decreased by $0.9 million in non-cash expense items that included depreciation and amortization, common stock issued for services for director compensation, non-cash compensation expense related to the grant of stock options, and amortization of operating lease right of use asset. Cash used in operations for the period included a $1.0 million increase in inventory based on forecasted requirements and a $0.7 million increase in accounts receivable due to some slow payments. Cash provided by operations included a $0.1 million increase in prepaid expenses and other current assets due to insurance prepayments, a $0.1 million increase in accounts payable for inventory purchases, and a $0.1 million increase in deferred revenue due to an increase in the sale of maintenance plans.
Cash used in investing activities in the nine months ended September 30, 2022 included $0.8 million cash payment for working capital payment related to the acquisition of All Cell, $0.8 million to purchase equipment and $0.1 million in patent costs. The nine months ended September 30, 2021 included $0.5 million to fund patent related costs and to purchase equipment.
In the nine months ended September 30, 2022, cash generated by our financing activities included $0.3 million from the exercise of warrants, compared to $2.6 million for the exercise of warrants for the same period in the prior year. Current year period also includes a $0.2 million payment of equity offering costs related to the committed equity line agreement entered into with B. Riley.
Current assets were $24.5 million at September 30, 2022 and $27.6 million at December 31, 2021. Current liabilities increased to $8.7 million at September 30, 2022 from $3.0 million at December 31, 2021, primarily due to the acquisition of All Cell, including additions of $1.3 million in accounts payable and accrued liabilities, $4.8 million in contingent consideration, current, based on the terms of the acquisition, and $1.3 million in deferred revenue for customer deposits. In addition, accounts payable for the remainder of the Company increased by $1.3 million due to increased purchases of inventory to support the increased revenue activity. As a result, our working capital decreased to $12.8 million at September 30, 2022 compared to $24.6 million at December 31, 2021.
The Company has been focused on marketing and sales efforts over the past two years to support an increase in revenues. We saw a 45% increase in revenues in 2021 compared to 2020, and the first nine months of 2022 was 156% higher than the first nine months of 2021, which shows continued improvement on revenues. While the Company has still not earned a gross profit on its sale of products, as revenues increase, we expect to see our fixed overhead costs spread over more units, which will reduce the cost per unit. Management has made several design changes and process improvements in our manufacturing operations in 2021 and the first nine months of 2022 which has helped to increase labor efficiency and reduce costs. At the same time, supply chain issues related to the COVID-19 virus have caused an increase in certain of our material costs, most notably in steel purchases. However, we believe that we will continue to improve our gross profit as our revenues grow. Management believes that with anticipated increased production volumes, efficiencies will continue to improve, and the fixed overhead cost per unit will decrease. In addition, our suppliers believe that costs that have increased over the past year should start to decrease beginning in 2023. This should result in increasing gross profits on the EV ARC ™ and Solar Tree® products in the future.
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 and Registration Rights Agreement with B. Riley under which the Company has the right to sell up to $30.0 million shares of its common stock over a period of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financings. Furthermore, the Company has warrants to purchase 469,305 shares of our Common Stock outstanding at September 30, 2022, which could potentially generate an additional $3.0 million of proceeds over the next 2 years, depending on the market value of our stock and the warrant holders’ ability 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.
| 26 |
On March 4, 2022, the Company completed an acquisition of the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions. We believe this strategic acquisition will increase and diversify our revenue, gross profitability, manufacturing capabilities, intellectual portfolio and customer base. The Company purchased substantially all of the assets and business of All Cell for 1,055,000 shares of Beam Common Stock (“Closing Consideration”) (on the closing date, based on the closing price of the Beam Common Stock of $13.61, such shares had a value of approximately $14.4 million) plus an additional $0.8 million in cash for the net working capital of primarily inventory held by All Cell at closing. In addition to the cash paid for the working capital of $0.8 million, the Purchase Agreement requires a capital investment of not less than $1.5 million of equipment to be used for the business. All Cell is eligible to earn an additional number of shares of Beam Common Stock if Beam’s new energy storage business meets certain revenue milestones (the “Earnout Consideration”). The Earnout Consideration is: (i) two times the amount of energy storage products revenue and contracted backlog that is greater than $7.5 million for 2022, and (ii) two times the amount of energy storage products 2023 revenue only which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million. Revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration. The maximum aggregate number of shares of Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares.
Management believes that evolution in the operations of the Company may allow it to execute on its strategic plan and enable it to experience profitable growth in the future. This evolution is anticipated to include the following continual steps: addition of sales personnel and independent sales channels, continued management of overhead costs, increased overhead absorption resulting from volume growth, process improvements and vendor negotiations leading to cost reductions, increased public awareness of the Company and its products, and the maturation of certain long sales cycle opportunities. Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue operations. There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives.
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
Not Applicable.
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.
| 27 |
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. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2022, we do not yet 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.
We identified the following material weakness which existed as of December 31, 2021:
| · | 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. | |
| · | The Company performs manual processes during the year to track and control inventory transactions, apply labor and overheads to inventory and to perform a wall-to-wall physical inventory at the end of the year to confirm the ending inventory balance and valuation. While these processes provide good results in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact our ability to submit timely reporting. A manufacturing system will also provide better management tools to analyze and plan production. This will avoid over-purchasing or shortages of inventory. We plan to implement a manufacturing and purchasing system in early fiscal 2023. |
In addition, we identified the following material weakness at March 31, 2022:
| · | With regard to a business combination that was completed during the quarter ended March 31, 2022, we identified that the controls over the review of the business combination were not designed effectively such that a material error in the calculation of the purchase price was not detected in a timely manner. |
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 September 30, 2022.
Changes in Internal Control Over Financial Reporting
During the three months ended September 30, 2022, we continued to implement stronger processes related to ordering, counting, warehousing, valuing and transacting our inventory. We are evaluating enterprise resource planning (ERP) systems to replace our existing QuickBooks system. In addition, we evaluated the internal controls of All Cell and rolled out processes and procedures to this new acquisition which was acquired during the nine months ended September 30, 2022.
During the quarters ended June 30 and September 30, 2022, the Company implemented a review control over third-party valuation reports, which include formalized review procedures and enhanced communications with third-party experts. We believe that these controls will address the material weakness identified in the quarter ended March 31, 2022.
| 28 |
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of the date of this report, there are no ongoing or pending legal claims or proceedings of which management is aware.
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, 2021, 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 also may materially adversely affect our business, financial condition, liquidity or future results.
In addition, the risks listed below should be considered:
We may acquire other businesses, which could require significant management attention, disrupt our business, dilute stockholder value and harm our business, revenue and financial results.
As part of our business strategy, we intend to make acquisitions to add complementary companies, products or technologies, such as our recent acquisition of All Cell. Our acquisitions may not achieve our goals, and we may not realize benefits from acquisitions. Any integration process will require significant time and resources, and we may not be able to manage the process successfully. If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, the business, revenue and financial results of the combined company could be harmed. We may not successfully evaluate or utilize the acquired assets and accurately forecast the financial impact of an acquisition, including accounting charges. We may also incur unanticipated liabilities that we assume as a result of acquiring companies. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our securities. We would expect to finance any future acquisitions through a combination of additional issuances of equity, corporate indebtedness or cash from operations. The sale of equity to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Our acquisition strategy could require significant management attention, disrupt our business and harm our business, revenue and financial results.
We are dependent on a limited number of suppliers for our battery cells, and in the current market, there is a risk that these suppliers will not be able to provide cells at prices and volumes acceptable to us, which could have an adverse effect on our business.
We source battery cells from a few suppliers, but the demand for cells and for lithium has increased over the past year with the increase in electrification and the growing demand for electric vehicles. It is possible that our suppliers will not have adequate supply to cover our demand, or the price of the cells will increase due to shortages, impacting our ability to ship units and/or cause the price of our products to increase. While we believe that we will be able to establish additional supplier relationships for our battery cells, we may be unable to do so in the short term or at all at prices, quality or costs that are favorable to us.
| 29 |
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
None.
| 30 |
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 | Common Stock Purchase Agreement | 8-K | 001-38868 | 10.1 | 9/2/2022 | |||||||
| 10.2 | Registration Rights Agreement | 8-K | 001-38868 | 10.2 | 9/2/2022 | |||||||
| 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 | ||||||||||
| 31 |
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: November 10, 2022 | Beam Global |
| By: /s/ Desmond Wheatley | |
|
Desmond Wheatley, Chairman and Chief Executive Officer, (Principal Executive Officer) | |
| By: /s/ Katherine H. McDermott | |
|
Katherine H. McDermott, Chief Financial Officer, (Principal Financial/Accounting Officer) |
| 32 |
Exhibit 31.1
CERTIFICATION
I, Desmond Wheatley, certify that:
| 1. | I have reviewed this report on Form 10-Q of Beam Global; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Date: November 10, 2022
| /s/ Desmond Wheatley | |
| Desmond Wheatley, Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Katherine H. McDermott, certify that:
| 1. | I have reviewed this report on Form 10-Q of Beam Global; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Date: November 10, 2022
| /s/ Katherine H. McDermott | |
| Katherine H. McDermott | |
| Chief Financial Officer | |
| (Principal Financial/Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Beam Global (the “Company”) on Form 10-Q for the period ending September 30, 2022 (the “Report”) I, Desmond Wheatley, Chief Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Desmond Wheatley | Date: November 10, 2022 |
| Desmond Wheatley, Chief Executive Officer | |
| (Principal Executive Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Beam Global (the “Company”) on Form 10-Q for the period ending September 30, 2022 (the “Report”) I, Katherine H. McDermott, Chief Financial Officer (Principal Financial/Accounting Officer) of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Katherine H. McDermott | Date: November 10, 2022 |
| Katherine H. McDermott | |
| Chief Financial Officer | |
| (Principal Financial/Accounting Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common Stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common Stock shares authorized | 350,000,000 | 350,000,000 |
| Common Stock shares issued | 10,095,562 | 8,971,711 |
| Common Stock shares outstanding | 10,095,562 | 8,971,711 |
Condensed Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Income Statement [Abstract] | ||||
| Revenues | $ 6,611 | $ 2,021 | $ 14,099 | $ 5,514 |
| Cost of revenues | 6,950 | 2,229 | 15,069 | 6,145 |
| Gross loss | (339) | (208) | (970) | (631) |
| Operating expenses | 6,468 | 1,481 | 10,933 | 3,953 |
| Loss from operations | (6,807) | (1,689) | (11,903) | (4,584) |
| Other income (expense) | ||||
| Interest income | 18 | 1 | 35 | 4 |
| Interest expense | 0 | 0 | (1) | 0 |
| Total other income, net | 18 | 1 | 34 | 4 |
| Loss before income tax expense | (6,789) | (1,688) | (11,869) | (4,580) |
| Income tax expense | 0 | 0 | 1 | 1 |
| Net loss | $ (6,789) | $ (1,688) | $ (11,870) | $ (4,581) |
| Net loss per share - basic | $ (0.67) | $ (0.19) | $ (1.21) | $ (0.52) |
| Net loss per share - diluted | $ (0.67) | $ (0.19) | $ (1.21) | $ (0.52) |
| Weighted average shares outstanding - basic | 10,088 | 8,920 | 9,827 | 8,856 |
| Weighted average shares outstanding - diluted | 10,088 | 8,920 | 9,827 | 8,856 |
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2022 | |||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
| NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Nature of Operations
Beam Global, a Nevada corporation (hereinafter the “Company,” “us,” “we,” “our” or “Beam”), is a cleantech innovation company based in San Diego, California. We develop, design, engineer, manufacture and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, outdoor media, and energy security and disaster preparedness as well as safe and compact, highly energy-dense battery solutions. Beam’s infrastructure products enable electric vehicle charging and reliable electrical power 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.
On March 4, 2022, the Company acquired substantially all the assets of All Cell Technologies, LLC (“All Cell”), an energy storage solutions and technologies company based in Broadview, Illinois. Refer to note 3, Business Combination for additional details.
Basis of Presentation
The interim unaudited condensed 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 and nine months ended September 30, 2022 and 2021, and our financial position as of September 30, 2022, 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 financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2021. The December 31, 2021 balance sheet is derived from those statements.
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, 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 June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326) requiring initial recognition of credit losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred. The standard eliminates the threshold for initial recognition in current U.S. GAAP and it covers a broad range of financial instruments, including trade and other receivables at each reporting date. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective for the Company beginning January 1, 2023. The adoption of this guidance is not expected to have a material effect on our 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 institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through September 30, 2022. As of September 30, 2022, approximately $4.9 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. For the three months ended September 30, 2022, two customers accounted for 22% and 10% of total revenues each and for the nine months ended September 30, 2022, two customers accounted for 15% and 10% of total revenues each. For the three months ended September 30, 2021, revenues from one customer accounted for 74% of total revenues and for the nine months ended September 30, 2021, revenues from one customer accounted for 36% of total revenues, with no other single customer accounting for more than 10% of revenues. At September 30, 2022, accounts receivable from two customers accounted for 25% and 11% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2021, accounts receivable from four customers accounted for 30%, 22%, 13% and 10% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. For the nine months ended September 30, 2022 and 2021, the Company had a heavy concentration of sales to federal, state and local governments which represented 58% and 84% of revenues, respectively.
Significant Accounting Policies
During the nine months ended September 30, 2022, there were no changes to our significant accounting policies as described in in our Annual Report on Form 10-K for the year ended December 31, 2021. See below for our policy related to business combinations, goodwill and indefinite-lived intangible assets and fair value measurements.
Business Combination
The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in operating expenses in the statement of operations. Contingent consideration liability related to the acquisition consists of commercial milestone payments and are valued using a Monte Carlo simulation. The fair value of commercial milestone payments reflects management’s estimates of discount rates and probability of achieving certain milestones.
Goodwill and Indefinite-lived Intangible Assets
Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives except for customer relationships, for which the amortization is recorded on an accelerated method over the estimate useful life. The carrying values of intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Goodwill represents the excess of the purchase prices of an acquired business over the fair value of the underlying net tangible and intangible assets. The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test, including macroeconomic conditions, industry and market considerations, and our overall financial performance. If, after completing the qualitative assessment, it is determined it is more likely than not that the estimated fair value is greater than the carrying value, the Company concludes no impairment exists. Alternatively, if the Company determines in the qualitative assessment, it is more likely than not that the fair value is less than its carrying value, then the Company performs a quantitative goodwill impairment test to identify both the existence of an impairment and the amount of impairment loss, by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, then a goodwill impairment charge is recognized in the amount by which the carrying amount exceeds the fair value, limited to the total amount of goodwill allocated to that reporting unit. The goodwill annual assessment test is performed in the fourth quarter of every year or when an event occurs, or circumstances change such that it is reasonably possible that an impairment may exist.
Fair Value Measurements
The fair value of assets and liabilities are based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
· Level 1 — Quoted prices in active markets for identical assets or liabilities.
· Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.
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 common share 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 consists of the incremental shares of common stock issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.
Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2022. Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2021. These options and warrants were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share.
Segments
The Company follows ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information.” Management assesses its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. For periods through the date of the All Cell acquisition, the Company had, and reported in, one reportable segment. Subsequent to the acquisition of All Cell, management continues to review financial results, manage the business and allocate resources on an aggregate basis. Therefore, financial results continue to be reported in a single operating segment.
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LIQUIDITY |
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Sep. 30, 2022 | |||
| Liquidity | |||
| LIQUIDITY |
The Company has a history of net losses. For the nine months ended September 30, 2022 and 2021, the Company had net losses of $11.9 million (which includes $5.1 million of non-cash expenses) and $4.6 million (which included $0.9 million of non-cash expenses), respectively, and net cash used in operating activities of $15.7 million and $5.2 million, respectively. During the first nine months of 2022, the $15.7 million of operating cash usage included $9.1 million to purchase inventory and to prepay vendors for inventory to reduce the risk of potential shortages of cells required for battery manufacturing, and to increase work in process and finished inventory of EV ARC™ units based on a strong revenue forecast. The prepayment and inventory balances are not expected to continue to increase and utilize cash at the same rate as the first nine months, but rather should level off or reduce to lower levels over the next 12 months.
At September 30, 2022, the Company had a cash balance of $4.7 million and working capital of $12.8 million. Based on the Company’s current operating plan, the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from September 30, 2022. 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. Should the Company need to raise additional capital, in September 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley under which the Company has the right, but not the obligation, to sell up to $30.0 million shares or a maximum of 2.0 million of its common stock over a period of 24 months in its sole discretion (see note 10 for further information). Furthermore, we could pursue other equity or debt financings. In addition, the Company’s outstanding warrants have generated $0.3 million and $2.7 million of proceeds during the nine months ended September 30, 2022 and 2021, respectively. There is no guarantee that profitable operations will be achieved, the warrants will be exercised or that additional capital or debt financing will be available. |
BUSINESS COMBINATION |
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| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS COMBINATION |
On March 4, 2022, the Company completed its acquisition of substantially all the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions. We believe this strategic acquisition will increase and diversify our Company’s revenue, gross profitability, manufacturing capabilities, intellectual portfolio and customer base. The Company purchased substantially all of the assets and business of All Cell for shares of Beam Common Stock (“Closing Consideration”) plus an additional $0.8 million in cash for the net working capital held by All Cell at closing.
In addition, All Cell is eligible to earn an additional number of shares of Beam Common Stock if Beam’s new energy storage business meets certain revenue milestones (the “Earnout Consideration”). The Earnout Consideration is: (i) two times the amount of energy storage products revenue and contracted backlog that is greater than $7.5 million for 2022, and (ii) two times the amount of energy storage products 2023 revenue only which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million. Revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration. The maximum aggregate number of shares of Beam Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares. Revenue from energy storage products used in Beam Global products will not be considered as contributing to the Earnout calculation.
The preliminary fair value of consideration transferred consisted of the following (in thousands):
The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands):
The estimated fair values assigned to identifiable assets acquired and liabilities assumed are provisional pending the finalization of the working capital and purchase price allocation and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to complete the allocation of purchase price as soon as practicable, but no later than one year after the acquisition date. The Company incurred $0.1 million of transaction costs during the nine months ended September 30, 2022, directly related to the acquisition that is reflected in operating expenses in the statement of operations.
Goodwill represents the excess of the total purchase price over the fair value of the underlying net assets, largely arising from synergies expected to be achieved by the combined company and expanded market opportunities. The goodwill is expected to be fully deductible for tax purposes.
The valuation of the Earnout Consideration was performed using a two-factor Monte Carlo simulation, which includes estimates and assumptions such as forecasted revenues of All Cell, volatility, discount rates, share price and the milestone settlement value. As such valuation includes the use of unobservable inputs, it is considered to be a Level 3 measurement. The fair value of the Earnout Consideration is reassessed on a quarterly basis with the change recorded to operating expenses. Change in the fair value of the Earnout Consideration during the nine months ended September 30, 2022 is as follows (in thousands):
The preliminary fair values assigned to identifiable intangible assets and goodwill acquired are as follows ($ in thousands):
The fair values of the developed technology, trade name, customer relationships and backlog were estimated using an income approach. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits in the form of cash flows to be derived from ownership of the asset. The estimated fair values were developed by discounting future net cash flows to their present value at market-based rates of return. The useful lives of the intangible assets for amortization purposes were determined by considering the period of expected cash flows used to measure the fair values of the intangible assets adjusted as appropriate for entity-specific factors including legal, competitive, and other factors that may limit the useful life. The identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives except for customer deposits which uses accelerated depreciation.
Pro Forma Financial Information
The following pro forma financial information summarizes the combined results of operations of Beam Global and All Cell as if the companies had been combined as of the beginning of the nine months ended September 30, 2021 (in thousands):
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 nine months ended September 30, 2021. In addition, the 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 pro forma financial information includes adjustments to reflect the incremental amortization expense of the identifiable intangible assets and transaction costs, as well as removes the impact of the debt that was not acquired by the Company.
The statement of operations for the three and nine months ended September 30, 2022 includes revenues of $1.7 million and $3.5 million, and loss from operations of $5.0 million and $6.4 million, respectively, from the acquired All Cell assets.
Broadview Lease
As part of the acquisition, the Company assumed a facility lease located in Broadview, Illinois, and recorded $0.2 million in right-of-use asset and lease liability. The lease term ends on August 31, 2023 and contains clauses for annual rent escalation. Total minimum rental payments remaining as of September 30, 2022 was $0.1 million. |
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PREPAID EXPENSES AND OTHER CURRENT ASSETS |
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| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Prepaid expenses and other current assets are summarized as follows (in thousands):
Related party receivables as of September 30, 2022 and December 31, 2021 consisted primarily of payroll related taxes due for employee stock vesting. |
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INVENTORY |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY |
Inventory consists of the following (in thousands):
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PROPERTY AND EQUIPMENT |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT |
Property and equipment consist of the following (in thousands):
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ACCRUED EXPENSES |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES |
The major components of accrued expenses are summarized as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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| Commitments and Contingencies Disclosure [Abstract] | |||
| 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 September 30, 2022, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
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 sales agent agreements whereby sales agents would receive a fee equal to a percentage of revenues generated by the agent; agreements with vendors where the vendor may provide marketing, investor relations, public relations, 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.
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INCOME TAXES |
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| Income Tax Disclosure [Abstract] | |||
| INCOME TAXES |
There was no Federal income tax expense for the nine months ended September 30, 2022 or 2021 due to the Company’s net losses. Income tax expense represents 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 September 30, 2022 and no benefit has been provided for the year-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. |
STOCKHOLDERS’ EQUITY |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY |
Stock Issued For Acquisition
The Company issued shares of its common stock upon acquiring certain assets of All Cell during the nine months ended September 30, 2022. See further discussion in note 3. Business Combination.
Committed Equity Facility
On September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement with B. Riley Principal Capital, LLC (“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, or a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price (“VWAP”) of the Company’s common stock on the trading day, 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 securities 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 10,484 shares of its common stock and will issue an additional shares of its common stock or a cash payment of $150,000, at the Company’s sole discretion, when the first VWAP purchase occurs.
Other than the issuance of the initial commitment shares of the Company’s common stock to B. Riley, the Company had not issued any shares of its common stock to raise capital under the Purchase Agreement as of September 30, 2022.
The Company incurred an aggregate cost of approximately $0.4 million in connection with the Purchase Agreement, including the fair value of the 10,484 shares of common stock issued to B. Riley upon the execution of the agreement, which was recorded to prepaid expenses and other current assets on the Balance Sheet to be offset against future proceeds from the sale of the Company’s common stock under the Purchase Agreement.
Awards Under Stock Incentive Plans
Stock Options
Option activity for the nine months ended September 30, 2022 is as follows:
The Company’s stock option compensation expense was $ and $ for the three and nine months ended September 30, 2022, respectively, and $ and $ for the three and nine months ended September 30, 2021, respectively. There was $1.0 million of total unrecognized compensation costs related to outstanding stock options at September 30, 2022 which will be recognized over years. Number of stock options vested and unvested as of September 30, 2022 were and , respectively.
Restricted Stock
A summary of activity of the restricted stock awards for the nine months ended September 30, 2022 is as follows:
As of September 30, 2022, there were unreleased shares of common stock representing $ million of unrecognized restricted stock grant expense which will be recognized over approximately 2.3 years.
Warrants
A summary of the number of shares of common stock underlying warrants outstanding for the nine months ended September 30, 2022 is as follows:
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REVENUES |
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| REVENUES |
For each of the identified periods, revenues can be categorized into the following (in thousands):
During the three and nine months ended September 30, 2022 24% and 34% of revenues were derived from customers located in California, respectively. During the three and nine months ended September 30, 2021, 91% and 58% of revenues were derived from customers located in California, respectively. In addition, 2% of revenues in the nine months ended September 30, 2022 were international sales compared to none in the same period in the prior year.
At September 30, 2022 and December 31, 2021, deferred revenue was $1.6 million and $0.3 million, respectively. These amounts represented customer deposits in the amount of $1.3 million and $0.1 million for September 30, 2022 and December 31, 2021, respectively, and prepaid multi-year maintenance plans for previously sold products which account for $0.3 million and $0.2 million for September 30, 2022 and December 31, 2021, respectively, and pertain to services to be provided through 2028.
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NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Operations | Nature of Operations
Beam Global, a Nevada corporation (hereinafter the “Company,” “us,” “we,” “our” or “Beam”), is a cleantech innovation company based in San Diego, California. We develop, design, engineer, manufacture and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, outdoor media, and energy security and disaster preparedness as well as safe and compact, highly energy-dense battery solutions. Beam’s infrastructure products enable electric vehicle charging and reliable electrical power 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.
On March 4, 2022, the Company acquired substantially all the assets of All Cell Technologies, LLC (“All Cell”), an energy storage solutions and technologies company based in Broadview, Illinois. Refer to note 3, Business Combination for additional details.
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| Basis of Presentation | Basis of Presentation
The interim unaudited condensed 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 and nine months ended September 30, 2022 and 2021, and our financial position as of September 30, 2022, 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 financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2021. The December 31, 2021 balance sheet is derived from those statements.
|
| Use of Estimates | 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, 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 | Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326) requiring initial recognition of credit losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred. The standard eliminates the threshold for initial recognition in current U.S. GAAP and it covers a broad range of financial instruments, including trade and other receivables at each reporting date. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective for the Company beginning January 1, 2023. The adoption of this guidance is not expected to have a material effect on our financial statements.
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| Concentrations | 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 institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through September 30, 2022. As of September 30, 2022, approximately $4.9 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. For the three months ended September 30, 2022, two customers accounted for 22% and 10% of total revenues each and for the nine months ended September 30, 2022, two customers accounted for 15% and 10% of total revenues each. For the three months ended September 30, 2021, revenues from one customer accounted for 74% of total revenues and for the nine months ended September 30, 2021, revenues from one customer accounted for 36% of total revenues, with no other single customer accounting for more than 10% of revenues. At September 30, 2022, accounts receivable from two customers accounted for 25% and 11% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2021, accounts receivable from four customers accounted for 30%, 22%, 13% and 10% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. For the nine months ended September 30, 2022 and 2021, the Company had a heavy concentration of sales to federal, state and local governments which represented 58% and 84% of revenues, respectively.
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| Significant Accounting Policies | Significant Accounting Policies
During the nine months ended September 30, 2022, there were no changes to our significant accounting policies as described in in our Annual Report on Form 10-K for the year ended December 31, 2021. See below for our policy related to business combinations, goodwill and indefinite-lived intangible assets and fair value measurements.
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| Business Combination | Business Combination
The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in operating expenses in the statement of operations. Contingent consideration liability related to the acquisition consists of commercial milestone payments and are valued using a Monte Carlo simulation. The fair value of commercial milestone payments reflects management’s estimates of discount rates and probability of achieving certain milestones.
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| Goodwill and Indefinite-lived Intangible Assets | Goodwill and Indefinite-lived Intangible Assets
Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives except for customer relationships, for which the amortization is recorded on an accelerated method over the estimate useful life. The carrying values of intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Goodwill represents the excess of the purchase prices of an acquired business over the fair value of the underlying net tangible and intangible assets. The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test, including macroeconomic conditions, industry and market considerations, and our overall financial performance. If, after completing the qualitative assessment, it is determined it is more likely than not that the estimated fair value is greater than the carrying value, the Company concludes no impairment exists. Alternatively, if the Company determines in the qualitative assessment, it is more likely than not that the fair value is less than its carrying value, then the Company performs a quantitative goodwill impairment test to identify both the existence of an impairment and the amount of impairment loss, by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, then a goodwill impairment charge is recognized in the amount by which the carrying amount exceeds the fair value, limited to the total amount of goodwill allocated to that reporting unit. The goodwill annual assessment test is performed in the fourth quarter of every year or when an event occurs, or circumstances change such that it is reasonably possible that an impairment may exist.
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| Fair Value Measurements | Fair Value Measurements
The fair value of assets and liabilities are based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
· Level 1 — Quoted prices in active markets for identical assets or liabilities.
· Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.
|
| 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 common share 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 consists of the incremental shares of common stock issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.
Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2022. Options to purchase shares of common stock and warrants to purchase shares of common stock were outstanding at September 30, 2021. These options and warrants were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share.
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| Segments | Segments
The Company follows ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information.” Management assesses its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. For periods through the date of the All Cell acquisition, the Company had, and reported in, one reportable segment. Subsequent to the acquisition of All Cell, management continues to review financial results, manage the business and allocate resources on an aggregate basis. Therefore, financial results continue to be reported in a single operating segment.
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BUSINESS COMBINATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Noncash or Part Noncash Acquisitions |
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| Schedule of assets acquired and liabilities assumed |
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| Schedule of fair value earnout |
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| Schedule of acquired intangible assets |
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| Schedule of Pro Forma Information |
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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Current Assets |
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INVENTORY (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventory |
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PROPERTY AND EQUIPMENT (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
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ACCRUED EXPENSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expense |
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STOCKHOLDERS’ EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of option activity |
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| Schedule of restricted stock award activity |
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| Schedule of common stock warrant activity |
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REVENUES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of disaggregated revenues |
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LIQUIDITY (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Liquidity | ||
| Net Income (Loss) Available to Common Stockholders, Basic | $ 11,900,000 | $ 4,600,000 |
| Other Noncash Expense | 5,100,000 | 900,000 |
| Cash Equivalents, at Carrying Value | 4,700,000 | |
| Working capital | 12,800,000 | |
| Proceed from warrant outstanding | $ 300,000 | $ 2,700,000 |
BUSINESS COMBINATION (Details - Fair Value of Consideration Transferred) - USD ($) $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
Mar. 04, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Business Acquisition [Line Items] | |||
| Working Capital Cash Payment | $ 811 | $ (0) | |
| All Cell Technologies [Member] | |||
| Business Acquisition [Line Items] | |||
| Common Stock | $ 14,359 | ||
| Working Capital Cash Payment | 811 | ||
| Earnout Consideration | 1,251 | ||
| Total consideration transferred | $ 16,421 | ||
BUSINESS COMBINATION (Details - Preliminary Fair Value Assets Acquired) - All Cell Technologies [Member] $ in Thousands |
Mar. 04, 2022
USD ($)
|
|---|---|
| Business Acquisition [Line Items] | |
| Inventory | $ 2,146 |
| Prepaid expenses | 28 |
| Deposits | 10 |
| Property, plant and equipment | 397 |
| Intangible assets, including goodwill | 15,059 |
| Total assets acquired | 17,640 |
| Customer deposits | (1,219) |
| Total liabilities assumed | (1,219) |
| Total assets and liabilities assumed | $ 16,421 |
BUSINESS COMBINATION (Details - Fair value earnout) $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Business Combination and Asset Acquisition [Abstract] | |
| Fair value of earnout consideration, beginning | $ 0 |
| Acquisition of All Cell | 1,251 |
| Change in estimated fair value | 3,690 |
| Fair value of earnout consideration, ending | $ 4,941 |
BUSINESS COMBINATION (Details - Intangible assets acquired) $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets | $ 15,059 |
| Developed Technology Rights [Member] | |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Intangible assets acquired | $ 8,074 |
| Useful life | 11 years |
| Trade Names [Member] | |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Intangible assets acquired | $ 1,756 |
| Useful life | 10 years |
| Customer Relationships [Member] | |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Intangible assets acquired | $ 444 |
| Useful life | 13 years |
| Order or Production Backlog [Member] | |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Intangible assets acquired | $ 185 |
| Useful life | 1 year |
| Goodwill [Member] | |
| Acquired Finite-Lived Intangible Assets [Line Items] | |
| Intangible assets acquired | $ 4,600 |
BUSINESS COMBINATION (Details - Pro Forma Information) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Business Combination and Asset Acquisition [Abstract] | ||||
| Revenues | $ 10,329 | $ 3,869 | $ 14,345 | $ 7,016 |
| Net Loss | $ (9,445) | $ (2,767) | $ (12,589) | $ (4,472) |
BUSINESS COMBINATION (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Mar. 04, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
| Business Acquisition [Line Items] | ||||||
| Revenue | $ 6,611,000 | $ 2,021,000 | $ 14,099,000 | $ 5,514,000 | ||
| Operating Lease, Right-of-Use Asset | 1,795,000 | 1,795,000 | $ 2,030,000 | |||
| Broadview Lease [Member] | ||||||
| Business Acquisition [Line Items] | ||||||
| Lease liability | $ 200,000 | |||||
| Operating Lease, Right-of-Use Asset | $ 200,000 | |||||
| Lease term | Aug. 31, 2023 | |||||
| Minimum rental payments | 100,000 | 100,000 | ||||
| All Cell Business [Member] | ||||||
| Business Acquisition [Line Items] | ||||||
| Revenue | 1,700,000 | 5,000,000.0 | ||||
| Loss from operations | $ 3,500,000 | $ 6,400,000 | ||||
| All Cell Technologies [Member] | ||||||
| Business Acquisition [Line Items] | ||||||
| Share issued | 1,055,000 | |||||
| Transaction costs | $ 100,000 | |||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
| Vendor prepayments | $ 1,004 | $ 87 |
| Related party receivable | 40 | 27 |
| Deferred equity offering costs | 358 | 0 |
| Prepaid insurance | 184 | 66 |
| Total prepaid expenses and other current assets | $ 1,586 | $ 180 |
INVENTORY (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Finished goods | $ 1,615 | $ 0 |
| Work in process | 1,773 | 425 |
| Raw materials | 8,799 | 1,186 |
| Total inventory | $ 12,187 | $ 1,611 |
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | $ 2,294 | $ 1,133 |
| Less accumulated depreciation | (701) | (483) |
| Property, Plant and Equipment, Net | 1,593 | 650 |
| Office Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 181 | 132 |
| Computer Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 107 | 74 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 165 | 28 |
| Autos [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 337 | 337 |
| Machinery and Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | $ 1,504 | $ 562 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued vacation | $ 169 | $ 238 |
| Accrued salaries and bonus | 523 | 353 |
| Vendor accruals | 31 | 36 |
| Other accrued expense | 198 | 100 |
| Total accrued expenses | $ 921 | $ 727 |
STOCKHOLDERS' EQUITY Schedule of option activity (Details) - Equity Option [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Number of Options Outstanding, Beginning | shares | 263,433 |
| Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 11.56 |
| Number of Options Granted | shares | 21,000 |
| Weighted Average Exercise Price Granted | $ / shares | $ 16.72 |
| Number of Options Exercised | shares | (1,750) |
| Weighted Average Exercise Price Exercised | $ / shares | $ 6.67 |
| Number of Options Forfeited | shares | (3,025) |
| Weighted Average Exercise Price Forfeited | $ / shares | $ 37.68 |
| Number of Options Outstanding, Ending | shares | 279,658 |
| Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 11.69 |
STOCKHOLDERS' EQUITY Schedule of restricted stock award activity (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Equity [Abstract] | |
| Number of Nonvested Shares Outstanding, Beginning | shares | 13,669 |
| Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 20.45 |
| Number of Nonvested Shares Granted | shares | 7,436 |
| Weighted Average Exercise Price Granted | $ / shares | $ 20.17 |
| Number of Nonvested Shares Vested | shares | (15,050) |
| Weighted Average Exercise Price Vested | $ / shares | $ 21.03 |
| Number of Nonvested Shares Outstanding, Ending | shares | 6,055 |
| Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 18.67 |
STOCKHOLDERS' EQUITY Warrant activity (Details) - Warrant [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Number of Warrants Outstanding, Beginning | shares | 519,658 |
| Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 6.30 |
| Number of Warrants Exercised | shares | (50,353) |
| Weighted Average Exercise Price Exercised | $ / shares | $ 6.30 |
| Number of Warrants Outstanding, Ending | shares | 469,305 |
| Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 6.30 |
REVENUES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Revenues | $ 6,611 | $ 2,021 | $ 14,099 | $ 5,514 |
| Discounts and allowances | (22) | (3) | (35) | (15) |
| Product [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenues | 6,268 | 1,966 | 13,022 | 5,207 |
| Maintenance [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenues | 17 | 11 | 37 | 34 |
| Service, Other [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenues | 60 | 18 | 491 | 74 |
| Shipping and Handling [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenues | $ 288 | $ 29 | $ 584 | $ 214 |
REVENUES (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | |||||
| Contract with Customer, Liability | $ 1,600,000 | $ 1,600,000 | $ 300,000 | ||
| Product Deposits [Member] | |||||
| Disaggregation of Revenue [Line Items] | |||||
| Contract with Customer, Liability | 1,300,000 | 1,300,000 | 100,000 | ||
| Maintenance Fees [Member] | |||||
| Disaggregation of Revenue [Line Items] | |||||
| Contract with Customer, Liability | $ 300,000 | $ 300,000 | $ 200,000 | ||
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | International Sales [Member] | |||||
| Disaggregation of Revenue [Line Items] | |||||
| Concentration percentage | 2.00% | ||||
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | California Customers [Member] | |||||
| Disaggregation of Revenue [Line Items] | |||||
| Concentration percentage | 24.00% | 91.00% | 34.00% | 58.00% | |
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