Beam Global 2021 Form 10-K Summary
Business Context and Reporting Period
Beam Global develops, manufactures and sells renewable-energy infrastructure for electric-vehicle charging, energy storage, energy security and outdoor media. Its principal products use solar and battery storage to provide rapidly deployable, generally off-grid charging and emergency power.
The filing covers the fiscal year ended December 31, 2021, with comparative results for 2020. The filing was signed March 31, 2022. The company operated as one reportable segment and had 86 employees at the filing date.
Financial Performance and Position
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $9.00 million | $6.21 million | Up 45% |
| Gross loss | $0.97 million | $0.71 million | Loss increased; loss margin improved |
| Gross margin | (10.8%) | (11.4%) | Improved 60 basis points |
| Operating expenses | $5.63 million | $4.50 million | Up 25% |
| Net loss | $6.60 million | $5.21 million | Loss increased 27% |
| Net loss per diluted share | $0.74 | $0.84 | Improved, partly due to higher share count |
| Operating cash flow | $(6.41) million | $(4.14) million | Higher cash use |
| Capital expenditures and patent costs | $0.58 million | $0.36 million | Higher investment |
| Cash balance | $21.95 million | $26.70 million | Down $4.75 million |
| Working capital | $24.61 million | $28.13 million | Down $3.52 million |
Revenue included 118 EV ARC units in 2021 versus 69 units in 2020. Product sales were $8.57 million, while maintenance fees, professional services, shipping and handling, and discounts accounted for the remainder.
The company remained unprofitable at both the gross-profit and operating-profit levels. Cost improvements from higher production volumes, manufacturing efficiencies, design changes and overhead absorption were offset by higher steel, battery and shipping costs. Operating expenses increased primarily from sales and marketing, research and development, insurance, shareholder-meeting costs, accounting, repairs and legal expenses.
Cash used in operations was driven by the net loss, a $2.04 million increase in accounts receivable and a $0.49 million increase in inventory. Financing provided $2.23 million, primarily from warrant exercises. The company had no material debt outstanding at year-end; liabilities primarily consisted of accounts payable, accrued expenses, deferred revenue and operating lease liabilities totaling $2.08 million.
Material Changes Versus 2020
- Revenue increased 45%, supported by higher unit volume, California state and local government orders, and federal agency sales, including a 21-unit U.S. Marine Corps order.
- California-related customers represented approximately 55% of revenue, and government customers represented 86% of revenue versus 53% in 2020.
- Two customers represented 33% and 13% of 2021 revenue, creating significant customer concentration.
- Gross-loss percentage improved modestly, but the absolute gross loss increased because operating capacity remained underutilized and input costs rose.
- Operating expenses increased 25%, although they declined as a percentage of revenue from 72.4% to 62.5%.
- Operating cash use increased by $2.27 million, while year-end cash declined by $4.75 million.
- Backlog was $4.1 million at December 31, 2021, with $3.9 million expected to be deliverable within twelve months.
- The company adopted ASU 2020-06 retrospectively and continued classifying its warrants as equity, with no reported financial-statement effect.
Guidance, Outlook, Risks and Unusual Items
Management expects continued growth in EV charging infrastructure and believes higher production volumes, outsourcing, lean manufacturing, supplier negotiations and lower battery costs can improve gross margins. Management did not provide numerical revenue, margin or profitability guidance and stated that it cannot currently predict when, or if, positive cash flow will be achieved.
Management expects cash on hand and working capital to fund liabilities and operations for at least twelve months from the filing date, but the company expects continuing losses and may need additional equity or debt financing. Approximately 519,658 warrants remained outstanding at year-end and could potentially generate up to $3.27 million, subject to exercise conditions.
In March 2022, after the reporting period, Beam acquired substantially all of the assets and business of AllCell Technologies for 1.055 million Beam shares, approximately $0.91 million in cash for working capital, and a commitment to invest at least $1.5 million in equipment. Additional earnout shares may be issued, with total consideration shares capped at 1.8 million. The acquisition is expected to expand energy-storage revenue, manufacturing capabilities and customer relationships; purchase accounting and pro forma information were not yet finalized.
- The California contract, which generated substantial revenue, was scheduled to expire in June 2022 and was under renewal negotiations.
- COVID-19 and supply-chain disruptions increased material and shipping costs and could affect manufacturing, sales and deliveries.
- The company has sustained annual losses since inception, with an accumulated deficit of $57.6 million at December 31, 2021.
- Management identified a material weakness in internal control over financial reporting related to manual inventory tracking, valuation and purchasing processes. Disclosure controls were therefore deemed ineffective at year-end. An ERP or manufacturing system was planned for 2022.
- Approximately $22.07 million of cash deposits exceeded federally insured limits.
- Key risks include customer and government-contract concentration, dependence on EV adoption and government incentives, intense competition, tariffs and component availability, product liability, technology changes, regulatory requirements, key-person dependence and possible future dilution.
- The filing states that no material litigation was pending or threatened as of December 31, 2021 and that no material off-balance-sheet arrangements existed.
Important Facts for Investors to Verify
- Confirm the renewal status and economic terms of the California contract after its June 2022 expiration date.
- Assess whether AllCell produces the expected revenue, cost, margin and manufacturing benefits and quantify any earnout dilution.
- Track gross margin, operating cash burn and the timing of management’s target for positive cash flow.
- Review customer concentration, backlog conversion and accounts-receivable collections, particularly after the strong fourth quarter.
- Verify remediation of the inventory-control material weakness and implementation of the planned ERP or manufacturing system.
- Monitor additional financing needs, warrant exercises and potential share dilution.
- Evaluate the impact of battery, steel, semiconductor, shipping and other supply-chain costs on unit economics.