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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

 

12. STOCKHOLDERS’ EQUITY

 

Stock Issued for Acquisitions

 

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.

 

The Company issued 82,506 shares of its commons stock upon acquiring Telcom during the year ended December 31, 2024. See further discussion in note 4. Business Combination.

 

Committed Equity Facility

 

In 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley Principal Capital II, LLC under which the Company issued 281,157 shares for approximately $3.0 million. 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 facility was terminated on October 1, 2024.

 

The Company issued 281,157 shares under the Purchase Agreement for $3.0 million in proceeds, of which $0.5 million was offset by the offering costs as of December 31, 2024.

 

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, 2024, 2.9 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 Company uses the simplified method to estimate the expected term. The expected term of stock options granted to employees is equal to the contractual term of the option award. 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 2024 and 2023:

               
    Year ended December 31,  
    2024     2023  
Expected volatility     89.04% - 92.70%       90.25% - 94.51%  
Expected term     5 - 7 Years       5 - 7 Years  
Risk-free interest rate     3.63% - 4.48%       3.55% - 4.47%  
Weighted-average FV     $4.02       $5.93  

 

Option activity for the years ended December 31, 2024 and 2023 is as follows:

               
       Weighted   Weighted  Aggregate 
       Average   Average  Intrinsic 
   Number of   Exercise   Remaining  Value 
   Options   Price   Contractual Life  (in thousands) 
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 
Granted   358,700    5.13         
Forfeited   177,554    9.92         
Outstanding at December 31, 2024   663,004   $6.69   7.75 Years  $– 
Exercisable at December 31, 2024   384,755   $8.63   6.65 Years  $– 

 

The Company’s stock option compensation expense was $0.8 million and $0.7 million for the years ended December 31, 2024 and 2023, respectively, and there was $1.4 million of total unrecognized compensation costs related to outstanding stock options at December 31, 2024 which will be recognized over 3.8 years. There were no options exercised in the year ended December 31, 2024, and the total intrinsic value of options exercised was immaterial for the year ended December 31, 2023. Number of stock options vested and unvested as of December 31, 2024 were 384,755 and 278,249, respectively. During the years ended December 31, 2024 and 2023, the weighted average fair value of options granted was $4.02 and $5.93 per share, respectively. Stock-based compensation expense is generally included in selling, general and administrative expenses in the consolidated statement of operations.

 

Restricted Stock Units

 

In November 2022, the Company granted 285,000 restricted stock units (RSUs) to its Chief Executive Officer (CEO), half of which contain performance conditions (PSUs). 50% of the RSUs without performance conditions vested upon grant, and 25% vested on February 1st of 2024 and 25% vested on February 1st of 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. As of December 31, 2024, the PSUs achieved the “maximum” three-year cumulative revenue payout at 150% and the “threshold” three-year average gross margin resulting in 75% resulting in an additional 44,531 PSUs granted for a total of 187,031 shares granted.

 

A summary of activity of the RSUs for the year ended December 31, 2024 is as follows:

 

Schedule of RSU activity        
   Shares   Weighted Average Grant Date Fair Value 
Unvested at beginning of 2024  71   $13.05 
Granted  –    – 
Vested  (36)  $7.25 
Forfeited  –    – 
Unvested at end of 2024  36   $13.05 

 

A summary of activity of the PSUs for the year ended December 31, 2024 is as follows:

 

Schedule of RSU activity  Shares   Weighted Average Grant Date Fair Value 
Unvested at beginning of 2024  143   $13.05 
Granted  45   $13.05 
Vested  (187)  $7.25 
Forfeited  –    – 
Unvested at end of 2024  –    – 

 

Stock compensation expense related to restricted stock units was $1.8 million during the year ended December 31, 2024, with $0.2 million in unrecognized stock compensation expense remaining to be recognized over 2 months as of December 31, 2024. There were 35,625 restricted stock units that vested during the year ended December 31, 2024.

 

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, 2024 and 2023 is as follows:

        
       Weighted- 
   Nonvested   Average Grant- 
   Shares   Date Fair Value 
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 
Granted   80,645    6.20 
Vested   (71,803)   6.44 
Forfeited   (10,080)   6.20 
Nonvested at December 31, 2024  $–   $– 

 

Stock compensation expense related to restricted stock awards was $0.5 million for the year ended December 31, 2024 and $0.4 million for the year ended December 31, 2023, respectively. Fair values of restricted stock vested during each of the years ended December 31, 2024 and 2023 were $0.4 million.

 

As of December 31, 2024, there were no unreleased shares of common stock.

 

Warrants

 

During the year ended December 31, 2024, the Company had exercisable 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, 2024, $0.3 million was recorded as expense and at December 31, 2024, $1.0 million of cost has not been recognized and will be recognized over the next 3.25 years.

 

A summary of activity of warrants outstanding for the years ended December 31, 2024 and 2023 is as follows:

        
   Number of Warrants   Weighted Average Exercise Price 
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 
Granted   –    – 
Expired   (282,334)   6.40 
Exercised   (128,411)   6.30 
Outstanding at December 31, 2024   200,000    17.00 
Exercisable at December 31, 2024   200,000   $17.00 

 

Exercisable warrants as of December 31, 2024 have a weighted average remaining contractual life of 3.25 years and will expire in March 2028. The intrinsic value of the exercisable shares of the warrants at December 31, 2024 was $0.00.

 

During the year ended December 31, 2024, 128,411 warrants to purchase shares of the Company’s registered common stock were exercised generating $0.8 million, and in 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.