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BUSINESS COMBINATION | 12 Months Ended
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Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
BUSINESS COMBINATION |
4. | BUSINESS COMBINATION
Amiga DOO Kraljevo On October 20, 2023, the Company acquired Amiga DOO Kraljevo (“Amiga”), pursuant to a Share Sale and Purchase Agreement dated October 6, 2023 (the “Purchase Agreement”) by and among the Company and the owners of Amiga (the “Sellers”). Pursuant to the terms of the Purchase Agreement, the Company acquired all the equity stock of Amiga from the Sellers in exchange for cash and common stock. With respect to the cash portion of the purchase price, the Company paid to the Sellers 4.6 million euros ($4.9 million) (“Tranche 1 Payment”) at closing and an additional 2.5 million euros ($2.7 million) was deferred on December 31, 2023, and paid on January 2, 2024 (“Deferred Tranche 2 Payment”). With respect to the equity portion of the purchase price, the Company issued to the Sellers 293,675 shares of our common stock (“Tranche 1 Issuance”) upon closing and an additional 158,132 shares before December 31, 2023, (“Tranche 2 Issuance”). The Sellers are eligible to earn additional shares of the Company’s common stock if Amiga meets certain revenue milestones for the years ended December 31, 2024 and 2025 (the “Earnout Consideration”). The Earnout Consideration that Sellers are eligible to receive is equal to two times the amount of revenue of Amiga (“Amiga Net Revenue”) that is greater than specific revenue targets for each of the years ended December 31, 2024 and 2025. The Earnout Consideration will be paid in the Company’s stock for each annual target period and will be calculated based on the volume weighted average price of Beam’s common stock for the thirty trading days prior to the end of the applicable measurement period. In no event and under no circumstances will the Sellers receive from the Company or will the Company issue to the Sellers an amount of the Company’s common stock that exceeds 19.99% of the total outstanding common stock of the Company immediately prior to the closing. An estimate of the fair value of the contingent consideration has been recorded in the opening balance sheet. Additionally, if within five years of the closing date of the acquisition Amiga receives a final award in specific legal proceedings in excess of EUR 3.8 million, the amount exceeding EUR 3.8 million is payable to the Sellers. This is not currently considered probable and therefore no accrual has been established. On February 16, 2024, the Company and the Sellers entered into an amendment to the Purchase Agreement (the “Amendment”) to remove the requirement that the Sellers shall be providing services to Amiga as a condition to receive the Earnout Consideration. Amiga, located in Serbia, is engaged in the manufacture and distribution of steel structures with integrated electronics, such as streetlights, cell towers, and ski lift towers. We expect the acquisition of Amiga to assist in introducing our products to Europe, increasing and diversifying our revenues, enhancing our manufacturing and engineering capabilities, accelerating the development of EV Standard™ and other products both in Europe and the US, adding new customer segments in both Europe and the US, increasing barriers to entry for future competition, and advancing Beam’s position as a leader in the green economy. The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. Goodwill represents the premium the Company paid over net fair value of tangible and intangible assets acquired. The valuation of the Earnout Consideration was performed using a discounted cash flow analysis to determine the fair value of the contingent consideration, which includes estimates and assumptions such as forecasted revenues of Amiga, discount rates, 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 will be 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, 2023 is as follows (in thousands):
Schedule of change in the fair value of earnout consideration - Amiga |  |  |  |
Balance as of December 31, 2022 |  | $ | – |
Acquisition of Amiga |  |  | 4,725 |
Balance as of December 31, 2023 |  | $ | 4,725 |
The following table summarizes the estimated fair value allocation of consideration exchanged for the estimated fair value of tangible assets acquired and liabilities assumed at the acquisition date. The estimated fair value for working capital is generally equivalent to the net book value of the acquired assets and liabilities on the acquisition date. Fair value assigned to property, plant and equipment is based on real estate appraisals, market value comparisons, or acquired net book value of recently acquired assets. The valuation of the contingent consideration is based on a discounted cash flow analysis using the Company’s forecasted results for the operations for the two years subject to revenue earn-out targets. The Company incurred $0.2 million of transaction costs during the fiscal year ended December 31, 2023, directly related to the acquisition that are reflected in operating expenses in the statement of operations. Consideration is comprised of the following (in thousands):
Schedule of consideration comprised |  |  |  |
Cash |  | $ | 4,874 |
Common Stock |  |  | 1,847 |
Deferred Cash Consideration - Tranche 2 |  |  | 2,713 |
Deferred Equity Consideration - Tranche 2 |  |  | 1,121 |
Earnout Consideration |  |  | 4,725 |
Total consideration |  | $ | 15,280 |
The following table shows the allocation of consideration to assets and liabilities at fair value (in thousands):
Schedule of consideration to assets and liabilities |  |  |  |
Assets Acquired |  |  |
Cash and cash equivalents |  | $ | 222 |
Accounts receivable |  |  | 1,454 |
Inventory |  |  | 2,181 |
Prepaid expenses |  |  | 414 |
Property, plant and equipment |  |  | 14,282 |
Goodwill |  |  | 5,445 |
Total assets acquired |  | $ | 23,998 |
Liabilities Assumed |  |  |  |
Accounts payable |  | $ | 1,948 |
Accrued expenses |  |  | 219 |
Deferred revenue |  |  | 971 |
Deferred tax liabilities |  |  | 1,631 |
Other liabilities |  |  | 3,949 |
Total liabilities assumed |  | $ | 8,718 |
Net assets acquired |  | $ | 15,280 |
All Cell Technologies, LLC On March 4, 2022, the Company acquired substantially all the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions. This acquisition has increased and diversified our Company’s revenue, intellectual property portfolio and customer base, and improved our gross profitability and manufacturing capabilities. 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 $0.9 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 was: (i) two times the amount of energy storage products revenue and contracted backlog that is greater than $7.5 million for 2022 and is (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 Company issued 446,815 shares of stock valued at $7.05 million as payment for the 2022 Earnout Consideration. No shares were earned or issued for the 2023 Earnout Consideration. 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 year ended December 31, 2023 is as follows (in thousands):
Schedule of change in the fair value of earnout consideration |  |  |
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 |
Issue earnout shares for 2022 |  |  | (7,051 | )
Change in estimated fair value |  |  | 260 |
Balance as of December 31, 2023 |  | $ | – |
The fair value of consideration transferred consisted of the following (in thousands):
Schedule of consideration for acquisitions |  |  |
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):
Schedule of assets acquired and liabilities assumed |  |  |
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 $0.1 million of transaction costs during the year ended December 31, 2022, directly related to the acquisition that is reflected in operating expenses in the statement of operations. Goodwill represents the excess of the total purchase price over the fair value of the underlying net assets, largely arising from synergies expected to be achieved by the combined company and expanded market opportunities. The goodwill is expected to be fully deductible for tax purposes. The fair values assigned to identifiable intangible assets and goodwill acquired are as follows ($ in thousands):
Schedule of acquired intangible assets |  |  |  |  |  |
|  | 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 unaudited pro forma information for the periods set forth below gives effect to the acquisitions of Amiga and All Cell had they occurred on January 1, 2022. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transactions been consummated as of that time nor does in purport to be indicative of future financial operating results. The pro forma unaudited financial information includes a conservative estimate of sell-through of the Company’s legacy products, as well as updated depreciation related to the fair value adjustments from the acquisitions. Pro forma net revenues for the years ended December 31, 2023 and 2022 are $75.3 million and $32.3 million, respectively. Proforma net loss for the years ended December 31, 2023 and 2022 are $16.8 million and $22.0 million, respectively. The consolidated statement of operations includes revenue of $11.9 and net loss of $5.8 million related to acquired operations for the year ended December 31, 2023.

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