STOCKHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

11. STOCKHOLDERS’ EQUITY

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. See further discussion in note 3. Business Combination.

Committed Equity Facility

On September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights 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, or a maximum of 2.0 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 securities 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 10,484 shares of its common stock and will issue an additional 10,484 shares of its common stock or a cash payment of $150,000, at the Company’s sole discretion, sometime after the first VWAP purchase occurs.

The Company incurred an aggregate cost of approximately $0.4 million in connection with the Purchase Agreement, including the fair value of the 10,484 shares of common stock issued to B. Riley upon the execution of the agreement, which was recorded to prepaid expenses and other current assets on the Balance Sheet to be offset against future proceeds from the sale of the Company’s common stock under the Purchase Agreement.

During the year ended December 31, 2022, the Company issued 1,436 shares under this agreement. The proceeds were fully offset by costs previously deferred.

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, 2022, 1.9 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 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 2022 and 2021:

	2022		2021
Expected volatility		94.94% - 97.41%		93.03% - 99.32%
Expected term		5 - 7 Years		5 - 7 Years
Risk-free interest rate		1.55% - 3.86%		1.25% - 1.38%
Weighted average FV		$13.02		$19.55

Option activity for the years ended December 31, 2022 and 2021 is as follows: 

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
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
Granted		78,400			16.72
Exercised		(1,750	)		6.67
Forfeited		(3,325	)		36.25
Outstanding at December 31, 2022		336,758		$	12.54	7.04 Years
Exercisable at December 31, 2022		225,360		$	8.89	6.30 Years

The Company’s stock option compensation expense was $0.9 million and $0.4 million for the years ended December 31, 2022 and 2021, respectively, and there was $1.1 million of total unrecognized compensation costs related to outstanding stock options at December 31, 2022 which will be recognized over 3.9 years. Total intrinsic value of options exercised was immaterial for the year ended December 31, 2022 and $1.8 million during the year ended December 31, 2021. Total intrinsic value of options outstanding and options exercisable were $2.2 million and $1.9 million, respectively, as of December 31, 2022. Number of stock options vested and unvested as of December 31, 2022 were 251,129 and 85,629, 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, with 25% vesting on February 1^st 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 is measured at the end of fiscal year 2024.

A summary of activity of the RSUs for the year ended December 31, 2022 is as follows: 

	PSU Nonvested Shares		RSU Nonvested Shares			Weighted-Average Grant-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

Stock compensation expense related to restricted stock units was $1.1 million during the year ended December 31, 2022, with $2.6 million in unrecognized stock compensation expense remaining to be recognized over 2.2 years as of December 31, 2022. Fair value of restricted stock units vested during the year ended December 31, 2022 was $0.9 million.

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. The Company also issues 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, 2022 and 2021 is as follows: 

				Weighted-
	Nonvested			Average Grant-
	Shares			Date Fair Value
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
Granted		26,136			14.68
Vested		(21,940	)		18.75
Nonvested at December 31, 2022		17,865		$	14.11

Stock compensation expense related to restricted stock awards was $0.4 million and $0.7 million during the years ended December 31, 2022 and 2021, respectively. Fair values of restricted stock vested during the years ended December 31, 2022 and 2021 were $0.4 million and $1.4 million, respectively.

As of December 31, 2022, there were unreleased shares of common stock representing $0.3 million of unrecognized restricted stock grant expense which will be recognized over two years.

Warrants

A summary of activity of warrants outstanding for the years ended December 31, 2022 and 2021 is as follows: 

	Number of Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2020		965,584		$	6.33
Exercised		(445,926	)		6.40
Outstanding at December 31, 2021		519,658			6.30
Exercised		(79,454	)		6.30
Outstanding at December 31, 2022		440,204		$	6.30
Exercisable at December 31, 2022		440,204		$	6.30

Exercisable warrants as of December 31, 2022 have a weighted average remaining contractual life of 1.30 years. The intrinsic value of the exercisable shares of the warrants at December 31, 2022 was $4.9 million.

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 $2.9 million. 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. All warrants exercised during the year ended December 31, 2022 were for the Company’s common stock.