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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

12. STOCKHOLDERS’ EQUITY

 

Stock Issued for Public Offering

 

In June 2023, the Company sold 3,062,500 shares of its common stock at an offering price of $9.00 per share in a public offering. The offering provided net proceeds of approximately $25.4 million after deducting underwriting discounts and commissions and offering expenses paid by the Company.

 

Stock Issued for Acquisition

 

The Company issued 1,055,000 shares of its common stock upon acquiring certain assets of All Cell during the year ended December 31, 2022. An additional 446,815 shares were issued in 2023 to All Cell in payment of contingent consideration for 2022 results.

 

The Company issued 451,807 shares of its common stock upon acquiring Amiga during the year ended December 31, 2023. See further discussion in note 4. Business Combination.

 

Committed Equity Facility

 

On September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B. Riley. Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B. Riley up to $30.0 million, but in any event, a maximum of 2 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 common stock to B. Riley under the Purchase Agreement. As consideration for B. Riley’s commitment to purchase shares of the Company’s common stock the Company issued B. Riley 10,484 shares of its common stock in both September 2022 and April 2023.

 

The Company incurred an aggregate cost of approximately $0.4 million in connection with the Purchase Agreement, including the fair value of the shares of common stock issued to B. Riley, which were recorded as equity on the Balance Sheet and offset proceeds from the sale of the Company’s common stock under the Purchase Agreement.

 

During the year ended December 31, 2023, the Company issued 198,033 shares under the Purchase Agreement for $2.5 million in proceeds, of which $0.5 million was offset by the offering costs.

 

Stock Issued For Services

 

In March 2023, the Company issued 6,444 shares of its common stock in exchange for marketing services to be provided over a six-month period. The number of shares were determined by dividing $0.1 million by the volume-weighted average price (VWAP) per share of the Company’s common stock for the 30 days preceding the effective date which was $15.518. The shares were then valued based on a market price on the date of grant of $14.72 resulting in a fair value of $0.1 million which was recorded to prepaid expenses and other current assets upon issuance and recognized over the service period which ended in the third quarter of 2023. 

 

Awards Under Stock Incentive Plans

 

On June 9, 2021, the Company’s stockholders approved the Beam Global 2021 Equity Incentive Plan (the “2021 Plan”) under which 2,000,000 shares of the Company’s common stock are allowed to be issued pursuant to the exercise of stock options or other awards granted under such plan in addition to the 630,000 shares previously allowed under the Beam Global 2011 Stock Incentive Plan. The number of shares reserved for issuance under the 2021 Plan will increase automatically on January 1 of each of 2022 through 2031 by the number of shares equal to 5% of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31, or a lesser number as may be determined by our board of directors or compensation committee. As of December 31, 2023, 2.7 million shares remain available to grant under the 2021 Plan.

 

Stock Options

 

Stock options are granted to new and existing employees. New employee option grants generally have a term of ten years and vest ratably over four years. Existing employee option grants generally have a term of ten years and vest immediately upon grant.

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock based on our historical volatility. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate.

 

We used the assumptions in the table below and we assumed there would not be dividends granted for the options granted in fiscal 2023 and 2022:

          
   Year ended December 31, 
   2023   2022 
Expected volatility   90.25% - 94.51%    94.94% - 97.41% 
Expected term   5 - 7 Years    5 - 7 Years 
Risk-free interest rate   3.55% - 4.47%    1.55% - 3.86% 
Weighted-average FV  $5.93    $13.02 

 

Option activity for the years ended December 31, 2023 and 2022 is as follows:

                  
       Weighted   Weighted    
       Average   Average  Intrinsic 
   Number of   Exercise   Remaining  Value 
   Options   Price   Contractual Life  (in thousands) 
Outstanding at December 31, 2021   263,433   $11.56         
Granted   78,400    16.72         
Exercised   (1,750)   6.67         
Forfeited   (3,325)   36.25         
Outstanding at December 31, 2022   336,758    12.54         
Granted   169,800    7.54         
Forfeited   (24,700)   19.70         
Outstanding at December 31, 2023   481,858   $10.41   7.25 Years  $350 
Exercisable at December 31, 2023   151,310   $5.55   7.18 Years  $233 

 

The Company’s stock option compensation expense was $0.7 million and $0.9 million for the years ended December 31, 2023 and 2022, respectively, and there was $1.3 million of total unrecognized compensation costs related to outstanding stock options at December 31, 2023 which will be recognized over 4.0 years. There were no options exercised in the year ended December 31, 2023, and the total intrinsic value of options exercised was immaterial for the year ended December 31, 2022. Number of stock options vested and unvested as of December 31, 2023 were 335,745 and 146,113, respectively.

 

Restricted Stock Units

 

In November 2022, the Company granted 285,000 restricted stock units (RSUs) to its Chief Executive Officer (CEO), half of which contains performance conditions (PSUs). 50% of the RSUs without performance condition vested upon grant, and 25% will vest on February 1st of 2024 and 2025. The number of shares issuable under the PSUs are determined based on the achievement of performance metrics specific to the Company that are measured at the end of fiscal year 2024. The fair value of both the RSUs and PSUs were based on the stock price of $13.05 per share on the date of grant. The PSUs were further reviewed to determine estimated performance over the term and then a factor was applied ranging from 0% to 150% of the grant date fair value. This estimate is reviewed quarterly.

 

A summary of activity of the RSUs for the year ended December 31, 2023, is as follows:

               
   PSU   RSU   Weighted- 
   Nonvested   Nonvested   Average Grant- 
   Shares   Shares   Date Fair Value 
Nonvested at December 31, 2021   –    –   $– 
Granted   142,500    142,500    13.05 
Vested   –    (71,250)   13.05 
Nonvested at December 31, 2022   142,500    71,250    13.05 
Granted   –    –    – 
Vested   –    –    – 
Nonvested at December 31, 2023   142,500    71,250   $13.05 

 

 

Stock compensation expense related to restricted stock units was $1.2 million during the year ended December 31, 2023, with $1.4 million in unrecognized stock compensation expense remaining to be recognized over 1.2 years as of December 31, 2023. There were no restricted stock units that vested during the year ended December 31, 2023.

 

Restricted Stock Awards

 

The Company issues restricted stock to the members of its board of directors as compensation for such members’ services. Such grants generally vest ratably over four quarters. Through 2022, the Company also issued restricted stock to its CEO, for which generally 50% of the shares granted vest ratably over four quarters and the remaining 50% vest ratably over twelve quarters. The common stock related to these awards are issued to an escrow account on the date of grant and released to the grantee upon vest. The fair value is determined based on the closing stock price of the Company’s common stock on the date granted and the related expense is recognized ratably over the vesting period.

 

A summary of activity of the restricted stock awards for the years ended December 31, 2023 and 2022 is as follows:

          
       Weighted- 
   Nonvested   Average Grant- 
   Shares   Date Fair Value 
Nonvested at December 31, 2021   13,669   $20.45 
Granted   26,136    14.68 
Vested   (21,940)   18.75 
Nonvested at December 31, 2022   17,865    14.11 
Granted   19,795    10.98 
Vested   (31,022)   12.29 
Forfeited   (5,400)   11.68 
Nonvested at December 31, 2023   1,238   $20.17 

 

Stock compensation expense related to restricted stock awards was $0.4 million for each of the years ended December 31, 2023 and 2022, respectively. Fair values of restricted stock vested during each of the years ended December 31, 2023 and 2022 were $0.4 million.

 

As of December 31, 2023, there were unreleased shares of common stock representing $20 thousand of unrecognized restricted stock grant expense which will be recognized over 1.25 years.

  

Warrants

 

During the year ended December 31, 2023, the Company issued warrants to purchase up to 200,000 shares of the Company’s common stock at a price per share equal to $17.00 to a consultant for investor relations services to be provided over a five-year period. The warrants are immediately exercisable but are subject to repurchase by the Company until the required service is provided. The fair value of such warrants was $8.05 per share or $1.6 million on the date of grant using the Black-Scholes option-pricing model. This model incorporated certain assumptions for inputs including a risk-free market interest rate of 3.86%, expected dividend yield of the underlying common stock of 0%, expected life of 2.5 years and expected volatility in the market value of the underlying common stock based on our historical volatility of 99.6%. The fair value of the warrants was recorded to prepaid expenses and other current assets to be recognized over the service period. During the year ended December 31, 2023, $0.2 million was recorded as expense and at December 31, 2023, $1.4 million of cost has not been recognized and will be recognized over the next 4.25 years.

 

A summary of activity of warrants outstanding for the years ended December 31, 2023 and 2022 is as follows:

          
   Number of Warrants   Weighted Average Exercise Price 
Outstanding at December 31, 2021   519,658   $6.30 
Exercised   (79,454)   6.30 
Outstanding at December 31, 2022   440,204    6.30 
Granted   200,000    17.00 
Exercised   (29,459)   6.30 
Outstanding at December 31, 2023   610,745   $9.80 
Exercisable at December 31, 2023   610,745   $9.80 

 

Exercisable warrants as of December 31, 2023 have a weighted average remaining contractual life of 1.60 years. Of the outstanding warrants, 410,745 will expire in April 2024. The intrinsic value of the exercisable shares of the warrants at December 31, 2023 was $0.3.

 

During the year ended December 31, 2023, 29,459 warrants to purchase shares of the Company’s registered common stock were exercised generating $0.2 million, and in the year ended December 31, 2022, 79,454 warrants to purchase shares of the Company’s registered common stock were exercised generating $0.5 million.