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BUSINESS COMBINATIONS
 12 Months Ended
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
BUSINESS COMBINATIONS

 

4. BUSINESS COMBINATIONS

 

Amiga DOO Kraljevo

 

On October 20, 2023, the Company acquired Amiga DOO Kraljevo (“Amiga”), pursuant to a Share Sale and Purchase Agreement dated October 6, 2023 (the “Purchase Agreement”) by and among the Company and the owners of Amiga (the “Sellers”). Pursuant to the terms of the Purchase Agreement, the Company acquired all the equity stock of Amiga from the Sellers in exchange for cash and common stock. With respect to the cash portion of the purchase price, the Company paid to the Sellers 4.6 million euros ($4.9 million) at closing and an additional 2.5 million euros ($2.7 million) was paid on January 2, 2024. With respect to the equity portion of the purchase price, the Company issued to the Sellers an aggregate of 451,807 shares of our common stock.

 

The Sellers are eligible to earn additional shares of the Company’s common stock if Amiga meets certain revenue milestones for the years ended December 31, 2024 and 2025 (the “Earnout Consideration”). The Earnout Consideration that Sellers are eligible to receive is equal to two times the amount of revenue of Amiga (“Amiga Net Revenue”) that is greater than specific revenue targets for each of the years ended December 31, 2024 and 2025. The Earnout Consideration will be paid in the Company’s stock for each annual target period and will be calculated based on the volume weighted average price of Beam’s common stock for the thirty trading days prior to the end of the applicable measurement period. In no event and under no circumstances will the Company issue to the Sellers an amount of the Company’s common stock that exceeds 19.99% of the total outstanding common stock of the Company immediately prior to the closing. An estimate of the fair value of the contingent consideration has been recorded in the opening balance sheet. On February 16, 2024, the Company and the Sellers entered into an amendment to the Purchase Agreement to remove the requirement that the Sellers shall be providing services to Amiga as a condition to receive the Earnout Consideration. As of December 31, 2024, the Company recorded a fair value adjustment of $4.7 million adjustment to reduce the liability for Earnout Consideration.

  

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

 

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

 

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

 

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 Amiga, 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, 2023 and the year ended December 31, 2024 is as follows (in thousands):

    
Balance as of December 31, 2022  $4,488 
Change in fair value of the Earnout Consideration   238 
Balance as of December 31, 2023  $4,725 
Change in fair value of the Earnout Consideration   (4,675)
Balance as of December 31, 2024  $50 

 

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 two-factor Monte Carlo simulation 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):

    
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):

    
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 

 

Telcom

 

On August 30, 2024, the Company acquired Telcom d.o.o Beograd (“Telcom”), pursuant to a Share Sale and Purchase Agreement dated as of August 30, 2024 (the “Agreement”) with the owners (the “Sellers”) of Telcom. Telcom is a business located in Serbia and engaged in the manufacturing of telecommunications equipment. Beam acquired all of the equity stock of Telcom from the Sellers in exchange for cash and Beam common stock. The total purchase price was subject to adjustment based on the amount of cash held by Telcom at closing. Based on Telcom’s cash balance at closing equal to approximately EUR 220,298, Beam paid to the Sellers a purchase price equal to EUR 815,298 which was paid to the Sellers as follows: (i) EUR 430,000 cash and (ii) issued 82,506 shares of Beam common stock. At closing, Telcom had a positive working capital balance of approximately EUR 500,000 which consisted of (i) a cash balance equal to EUR 220,000, accounts receivables of approximately EUR 115,000, inventory of approximately EUR 275,000 and accounts payable of approximately EUR 110,000.

 

In addition to the above payments, the Sellers are eligible to earn up to EUR 250,000 (the “Earnout Cap”) in additional shares of Beam common stock if Telcom meets certain revenue milestones for fiscal years 2024 and 2025 (the “Earnout Consideration”). The Telcom Earnout Consideration that Sellers are eligible to receive for 2024 will be equal to the amount the net revenue of Telcom (“Telcom Net Revenue”) exceeds EUR 850,000 for 2024 up to the Earnout Cap. Provided that Sellers Earnout Consideration was less than the Earnout Cap, the Sellers will be eligible for additional Telcom Earnout Consideration in 2025 if (i) 2025 Telcom Net Revenue exceeds 2024 Telcom Net Revenue, and (ii) 2025 Telcom Net Revenue exceeds EUR 850,000. The Telcom Earnout Consideration for 2025 will be calculated based on the amount the 2025 Net Revenue exceeds the 2024 Net Revenue subject to the Earnout Cap. In no event, will the Sellers Earnout Consideration for 2024 and 2025, in the aggregate, exceed the Earnout Cap. The Earnout Consideration for each period 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 calendar year. In no event and under no circumstances will the Sellers receive from Beam or will Beam issue to the Sellers in connection with the transaction Beam’s common stock in an amount that exceeds 19.99% of the outstanding common stock of Beam immediately prior to closing.

 

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 Telcom, 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 twelve months ended December 31, 2024 is as follows (in thousands):

 

Schedule of change in the fair value of earnout consideration:

    
Balance as of December 31, 2023  $– 
Acquisition of Telcom   276 
Balance as of December 31, 2024  $276 

 

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.

 

Consideration is comprised of the following (in thousands):

    
Cash  $481 
Common Stock   387 
Earnout Consideration   276 
Total consideration  $1,144 

 

The following table shows the allocation of consideration to assets and liabilities at fair value (in thousands):

    
Assets Acquired    
Cash and cash equivalents  $244 
Accounts receivable   224 
Inventory   296 
Prepaid expenses   2 
Property, plant and equipment   30 
Goodwill   692 
Total assets acquired  $1,488 
      
Liabilities Assumed     
Accounts payable  $266 
Accrued expenses   10 
Other liabilities   68 
Total liabilities assumed  $344 
      
Net assets acquired  $1,144 

 

The Company believed it to be probable the maximum amount of Earnout Consideration would be earned and therefore accrued the full amount in the opening balance sheet. The estimated fair values were assigned to identifiable assets acquired and liabilities.

 

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.

 

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 was determined to be zero during the year ended December 31, 2023 as follows (in thousands):

      
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  $– 

 

Pro Forma Unaudited Financial Information

 

The unaudited pro forma information for the periods set forth below gives effect to the acquisitions of Telcom as if it had occurred on January 1, 2024 and Amiga had it occurred on January 1, 2023. 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, 2024 and 2023 are $49.9 million and $71.5 million, respectively. Proforma net loss for the years ended December 31, 2024 and 2023 are $11.4 million and $16.5 million, respectively.

 

The consolidated statement of operations includes revenue of $13.7 million and net loss of $5.3 million related to acquired operations for the year ended December 31, 2024 and revenue of $11.9 million and net loss of $5.8 million related to the acquired operations for the year ended December 31, 2023.