STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

STOCKHOLDERS’ EQUITY

11.          STOCKHOLDERS’ EQUITY

Stock Issued In Cash Sales

The Company filed a “shelf” registration statement on Form S-3 and an accompanying prospectus with the Securities and Exchange Commission on May 26, 2020. On July 7, 2020, the Company closed an underwritten public offering issuing 1,393,900 shares, with a public offering price of $8.25 per share, generating approximately $10.5 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. On November 27, 2020, the Company closed a second underwritten public offering issuing 250,000 shares, with a public offering price of $30.00 per share, generating approximately $6.9 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the aggregate net proceeds primarily for working capital and general corporate purposes.

Other Securities

In July 2020, 3,000 stock options were exercised on a cashless basis for 2,199 registered shares of the Company’s common stock at an exercise price of $4.09.

In August 2020, a stock grant was issued for 2,700 unregistered shares of the Company’s common stock to a consultant as payment for services. The shares were valued on the grant dates’ stock price of $5.46 per share or $14,742.

During the year ended December 31, 2020, 1,456,406 warrants to purchase shares of the Company’s registered common stock and 95,800 warrants to purchase shares of the Company’s unregistered common stock were exercised generating $9,926,858, of which $9,732,408 in cash was received and $194,450 was included in other assets as a receivable (see note 3) which was collected in January 2021. 18,000 warrants were cashless exercises in 2020 and the Company issued 11,304 unregistered shares of common stock.

The unregistered securities described above were issued pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

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.

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 Company follows the provisions of ASC Topic 718, “Compensation – Stock Compensation.” ASC Topic 718 establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services. ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as options issued under the Company’s Stock Option Plans.

During the year ended December 31, 2021, the Company granted 43,300 stock options under the plans with a total valuation of $905,658 and a 10-year term. During the year ended December 31, 2020, the Company granted 105,604 stock options under the plans with a total valuation of $1,374,394 and a 10-year term.

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, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options.

We used the following assumptions for options granted in fiscal 2021 and 2020:

	2021		2020
Expected volatility		93.03% - 99.32%		74.16% - 115.78%
Expected term		5 - 7 Years		5 - 7 Years
Risk-free interest rate		1.25% - 1.38%		0.37% - 1.79%
Weighted average FV	$	19.55	$	12.38

The Company’s stock option compensation expense was $444,713 and $722,549 for the years ended December 31, 2021 and 2020, respectively, and there was $1,040,700 of total unrecognized compensation costs related to outstanding stock options at December 31, 2021 which will be recognized over 4.0 years.

Option activity for the years ended December 31, 2021 and 2020 is as follows:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding at December 31, 2019		239,704		$	9.25
Granted		105,604			15.63
Exercised		(3,000	)		4.09
Forfeited		(500	)		5.27
Outstanding at December 31, 2020		341,808			11.27
Granted		43,300			24.63
Exercised		(97,192	)		13.28
Forfeited		(24,483	)		23.84
Outstanding at December 31, 2021		263,433		$	11.56	7.24 Years
Exercisable at December 31, 2021		155,402		$	7.04	6.12 Years

Total intrinsic value of options exercised was $1,775,213 and $33,660 during the years ended December 31, 2021 and 2020, respectively. Total intrinsic value of options outstanding and options exercisable were $2,391,810 and $1,796,153, respectively, as of December 31, 2021.

Restricted Stock

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. The Company also issues restricted stock to Mr. Wheatley, 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, 2021 and 2020 is as follows:

	Nonvested Shares		Weighted- Average Grant- Date Fair Value
Nonvested at December 31, 2019	44,437		$	5.63
Granted	61,908			12.44
Vested	(59,782	)		7.51
Nonvested at December 31, 2020	46,563			12.28
Granted	20,444			31.41
Vested	(40,513	)		18.32
Forfeited	(12,825	)		14.95
Nonvested at December 31, 2021	13,669		$	20.45

On June 17, 2020, the Board approved two restricted stock grants to Mr. Wheatley under the 2011 Stock Incentive Plan. The total number of shares granted was determined based on an award of $150,000 divided by the per share quoted trading price on June 17, 2020. On the grant date, the shares had a per share fair value of $7.35 and 20,408 shares were granted. During the year ended December 31, 2020, 10,203 shares vested generating an expense of $75,000.

On October 20, 2020, upon recommendation of its Compensation Committee, the Board granted two directors annual stock grants of 12,200 each and the lead director was issued an annual grant of 17,100, which vest quarterly in four (4) equal installments. On the grant date, these shares had a per share fair value of $14.95 based on the quoted trading price, or $620,425. During the year ended December 31, 2020, 10,375 shares vested generating an expense of $155,107.

Fair values of restricted stock vested during the year ended December 31, 2021 and 2020 were $1,367,138 and $1,539,637, respectively.

As of December 31, 2021, there were unreleased shares of common stock representing $279,578 of unrecognized restricted stock grant expense which will be recognized over three years.

Warrants

A summary of activity of warrants outstanding for the years ended December 31, 2021 and 2020 is as follows:

	Number of Warrants		Weighted Average Exercise Price
Outstanding at December 31, 2019	2,535,790		$	6.41
Exercised	(1,570,206	)	$	6.47
Outstanding at December 31, 2020	965,584		$	6.33
Exercised	(445,926	)	$	6.40
Outstanding at December 31, 2021	519,658		$	6.30
Exercisable at December 31, 2021	519,658		$	6.30

Exercisable warrants as of December 31, 2021 have a weighted average remaining contractual life of 2.30 years. The intrinsic value of the exercisable shares of the warrants at December 31, 2021 was $6,391,793. During the year ended December 31, 2020, 1,552,206 warrants to purchase shares of the Company’s common stock were exercised generating $9,926,858. 18,000 warrants were cashless exercises in 2020 and the Company issued 11,304 shares.

During the year ended December 31, 2021, 433,937 warrants to purchase shares of the Company’s registered common stock and 11,989 warrants to purchase shares of the Company’s unregistered common stock were exercised generating $2,854,222. The unregistered securities were issued pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended.