Beam (BEEM) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Beam Global's unaudited condensed financial statements for the period ended March 31, 2023, encompassing Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows, along with integral notes on accounting policies and business combinations Condensed Balance Sheets As of March 31, 2023, total assets increased to $41.0 million from $37.7 million at year-end 2022, while total liabilities rose to $19.1 million from $14.5 million, leading to a decrease in total stockholders' equity from $23.2 million to $21.9 million Condensed Balance Sheet Data (in thousands) | Account | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $23,456 | $19,935 | | Accounts Receivable | $6,882 | $4,429 | | Inventory | $12,745 | $12,246 | | Total Assets | $40,982 | $37,730 | | Total Current Liabilities | $17,931 | $13,172 | | Accounts Payable | $7,080 | $2,865 | | Contingent Consideration, current | $6,776 | $6,776 | | Total Liabilities | $19,130 | $14,523 | | Total Stockholders' Equity | $21,852 | $23,207 | Condensed Statements of Operations For the three months ended March 31, 2023, revenues surged 245% to $13.0 million, achieving a marginal gross profit of $5,000 compared to a prior-year gross loss, though the net loss widened to $3.8 million due to increased operating expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :--- | :--- | :--- | | Revenues | $13,020 | $3,770 | | Gross Profit (Loss) | $5 | $(305) | | Operating Expenses | $3,846 | $1,975 | | Loss from Operations | $(3,841) | $(2,280) | | Net Loss | $(3,831) | $(2,278) | | Net Loss Per Share (basic & diluted) | $(0.38) | $(0.24) | Condensed Statements of Changes in Stockholders' Equity Stockholders' equity decreased from $23.2 million at year-end 2022 to $21.9 million as of March 31, 2023, primarily due to a $3.8 million net loss, partially offset by equity financing activities - The primary driver for the decrease in stockholders' equity was the $3.8 million net loss for the quarter[37] - Positive contributions to equity included $1.7 million from stock-based compensation to consultants, $0.4 million from employee stock-based compensation, and proceeds from warrant exercises and stock sales[37] Condensed Statements of Cash Flows Net cash used in operating activities significantly decreased to $0.6 million in Q1 2023 from $1.9 million in Q1 2022, resulting in an overall $0.7 million decrease in cash during the quarter, ending at $1.0 million Cash Flow Summary (in thousands) | Activity | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(619) | $(1,907) | | Net cash used in investing activities | $(330) | $(954) | | Net cash provided by financing activities | $258 | $88 | | Net decrease in cash | $(691) | $(2,773) | | Cash at end of period | $990 | $19,176 | Notes To Condensed Financial Statements The notes provide detailed information supporting the financial statements, including disclosures on liquidity, the 2022 All Cell Technologies acquisition, customer concentration, intangible assets, and equity financing facility terms - The company, despite a history of net losses, believes it has sufficient funding for at least the next twelve months, supported by a $100 million credit facility and a $30 million Common Stock Purchase Agreement with B Riley[16] - In March 2022, the company acquired All Cell Technologies for 1,055,000 shares of common stock and a cash payment, with potential for additional earnout consideration based on revenue milestones[55][56] - For Q1 2023, two customers, including the U.S. Army, accounted for 80% and 10% of total revenue, respectively, with the U.S. Army also representing 76% of total accounts receivable at quarter-end[47] Revenue Breakdown (in thousands) | Category | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :--- | :--- | :--- | | Product sales | $12,811 | $3,562 | | Shipping and handling | $216 | $181 | | Total revenues | $13,020 | $3,770 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 245% revenue growth in Q1 2023, driven by federal contracts, achieving a positive gross margin due to increased production volume and efficiencies, while operating expenses rose from the All Cell acquisition and R&D investments, with liquidity supported by existing credit facilities and equity agreements - Revenues for Q1 2023 increased 245% to $13.0 million, primarily due to a $9.8 million increase in sales to federal customers following large contract awards in late 2022[147][150] - Gross profit turned positive (0.04% of revenue) compared to an 8.1% gross loss in Q1 2022, attributed to favorable fixed overhead absorption from increased production (152 EV ARC units in Q1 2023 vs 45 in Q1 2022) and improved labor efficiency[153][152] - Operating expenses rose to $3.8 million from $2.0 million year-over-year, with approximately $0.5 million of the increase from the full-quarter inclusion of the acquired All Cell operations[154] - Working capital decreased to $5.5 million from $6.8 million at year-end 2022, mainly due to a $4.2 million increase in accounts payable[149] - The company is developing new products, including the EV Standard™ and UAV ARC™, to expand into new markets[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for a smaller reporting company - The report indicates this item is not applicable[89][171] Item 4. Controls and Procedures Management concluded that as of March 31, 2023, the company's internal controls over financial reporting were not effective due to a material weakness related to insufficient inventory tracking controls, with a new ERP system implementation underway for remediation by July 2023 - Management identified a material weakness in internal controls over financial reporting as of March 31, 2023[91][162] - The material weakness stems from insufficient controls for inventory tracking, relying on manual processes without an automated system[161][172] - To address the weakness, the company began implementing a new enterprise resource planning (ERP) system, with completion expected in July 2023[173] PART II OTHER INFORMATION Item 1. Legal Proceedings As of the report date, the company is not involved in any pending or threatened lawsuits reasonably expected to have a material effect on its operations - There are no ongoing or pending legal claims or proceedings of which management is aware[94][174] Item 1A. Risk Factors This section refers investors to the risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, for a comprehensive understanding of potential risks - The report directs readers to the risk factors detailed in the previously filed Annual Report on Form 10-K for the year ended December 31, 2022[165][95] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On March 21, 2023, the company issued 6,444 shares of common stock to a consultant for marketing services, unregistered under the Securities Act pursuant to a Section 4(a)(2) exemption - The Company issued 6,444 shares of common stock to a consultant for marketing services on March 21, 2023, under a Section 4(a)(2) exemption[96] Item 3. Defaults Upon Senior Securities This section is not applicable - The report indicates this item is not applicable[166] Item 4. Mine Safety Disclosures This section is not applicable as the company has no mine safety disclosures to report - None reported[97] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and various Inline XBRL documents - The filing includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act[177][168] - A list of corporate governance documents and other agreements incorporated by reference is provided[99] Signatures Signatures The report is duly signed on May 15, 2023, by Desmond Wheatley, Chairman and Chief Executive Officer, and Katherine H McDermott, Chief Financial Officer - The report was signed and authorized by the company's Principal Executive Officer and Principal Financial/Accounting Officer[101][102]