XML 19 R9.htm IDEA: XBRL DOCUMENT v3.23.1
BUSINESS COMBINATION
 3 Months Ended
Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
BUSINESS COMBINATION

 

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 1,055,000 shares of our 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 our common stock if the acquired 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 which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million. Any revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration. The maximum aggregate number of shares of our common stock that we 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 revenue in the Earnout calculation.

 

The fair value of consideration transferred consisted of the following (in thousands): 

     
Common Stock  $14,359 
Working Capital Cash Payment   811 
Earnout Consideration   1,251 
Total consideration transferred  $16,421 

 

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands): 

     
Inventory  $2,146 
Prepaid expenses   28 
Deposits   10 
Property, plant and equipment   397 
Right-of-use asset   192 
Intangible assets, including goodwill   15,059 
Total assets acquired   17,832 
      
Customer deposits   (1,219)
Lease liability   (192)
Total liabilities assumed   (1,411)
      
Total assets and liabilities assumed  $16,421 

 

The Company incurred $0.1 million of transaction costs during the year ended December 31, 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 year ended December 31, 2022 and the quarter ended March 31, 2023 is as follows (in thousands): 

     
Balance as of December 31, 2021  $– 
Acquisition of All Cell   1,251 
Change in estimated fair value   5,540 
Balance as of December 31, 2022  $6,791 
Change in estimated fair value   (13)
Balance as of March 31, 2023  $6,778 

 

The fair values assigned to identifiable intangible assets and goodwill acquired are as follows ($ in thousands): 

          
   Value   Useful Life (yrs.) 
Developed technology  $8,074    11 
Trade name   1,756    10 
Customer relationships   444    13 
Backlog   185    1 
Goodwill   4,600    N/A 
   $15,059      

 

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 Unaudited Financial Information

 

The following pro forma unaudited 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 year ended December 31, 2021 (unaudited and in thousands): 

          
   Year Ended December 31, 
   2022   2021 
Revenues  $22,241   $14,399 
Net Loss  $(20,395)  $(10,551)

 

The pro forma unaudited 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 year ended December 31, 2021. In addition, the pro forma unaudited 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 unaudited 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 and payments to a non-employee.

 

The statement of operations for the year ended December 31, 2022 includes revenues of $5.2 million and loss from operations of $10.1 million, respectively, from the acquired All Cell business.