Beam Global's warrants issued under the new CFO

Investment Analysis Clubs Saul’s Investing Discussions
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I learned yesterday that Beam Global has issued warrants and they are sold under the symbol BEEMW. On the beam investor relation page it says,

Beam Global is trading public warrants on Nasdaq: BEEMW. The strike price is $6.30 per warrant. One warrant will exchange for one share of BEEM stock. The warrants expire at 5pm EST on April 18, 2024.

BEEM Warrants
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And how have these warrants performed under the symbol BEEMW? They are down 80%+,

BEEMW
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I cannot for the life of my figure out what the company is doing with these warrants. They have a strike price of $6.30 per warrant and act as an option from my understanding. However, now these warrants are below the strike price, and losing almost all their value. They also expire on April 18.

Still there is no word from management about their earnings date, and they last reported earnings in November! I don’t understand how any prospective buyer of the warrants could purchase them without knowing if it covers earnings or not. The volume on these warrants is tiny too and raises a ton of red flags for me about this action. Why management thinks this is a good idea, and there’s zero communication about this, for a company which communicates heavily about it’s product.

The graph they have on their investor relation page has all these technical indicators laid over the stock price like MACD. Well technically this stock is doing very poorly, and yesterday the biggest volume of the day was heavy selling going into the close.

My experience with warrants is I was once worked at a series B startup company which issued warrants because they couldn’t do another round of funding. These warrants granted preferential rights to the new warrant owners and investors effectively making employee RSUs worth much less.

There is a new CFO Lisa Potak from December 2023, the old CFO Kathy McDermott left to “pursue other interests”. Why is there no promotional activity about the new CFO?

Here’s my biggest worries about the new CFO and potential bad outcomes,

  • The old CFO left a mess of financials and they cannot reconcile things
  • The new CFO is incompetent and doing things like issuing these warrants
  • The Serbian company they acquired has accounting issues and they cannot file earnings appropriately

I sincerely hope I am wrong with some of these concerns, and the company comes out and has great earnings. However, these concerns are just way too big for me and I’ve sold out of my small position.

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Responding to a few things quickly. I just finished watching today’s investor event at the LD Micro conference in NYC.

Random things:

  1. On the CFO, they did announce it in this press release from last October.

  2. The former CFO has had a consulting agreement with the company to help the new CFO. It expired March 31, but they filed yesterday to continue it through June.

  3. I’m pretty annoyed at the conference hosts. I registered as a virtual attender. On the schedule, they were correctly named as Beam Global, but they listed the ticker as BEAM–which is Beam Therapeutics–and the description for those trying to decide which of the four consecutive presentations to watch was also for Beam Therapeutics. So I don’t know if anyone in the room was actually interested in Beam Global, or if they all thought they were getting health care.

  4. Wheatley emphasized a couple of times that they came public via an IPO, not a SPAC, and he said they still had some outstanding warrants from the IPO, which expire on April 18. Most warrants, he said, had already been exercised.

  5. He showed a slide with their growth through Q3 2023. Then he said that the chart for the full year would go off the slide and said the full year revenue was north of 67 million and that they had “just released” it. I haven’t found that release. But I’m guessing that means it’s coming quite soon. (Schwab now says earnings will be April 16.) He also gave a 300% YoY growth rate for 2023–I think it was for the full year, but I’m not sure. That does not yet include any revenue from Europe.

  6. He also said they were gross margin positive last year, expected a 20% gross margin for 2024, and could be FCF positive in 2024 if they choose to be, but they might redeploy that money instead since he said, “It’s a crazy time to slow down.” That was in answer to a question and isn’t on a slide, so I’m hoping there will be a transcript. He speaks very quickly.

  7. I took screenshots of a lot of slides, which I’ll post later. I want to make sure they’re new and not ones I’ve posted before. But wanted to answer at least a couple of questions, since the presentation just ended 20 minutes ago.

  8. Largest customer is currently the US Federal government. Pre-covid it was commercial interests, and he said with offices and stores again getting people in the doors, commercial uses were returning. Within the Federal government, the largest customer is the US Army. It was, however, the US Marines that recommended their system to the UK Ministry of Defense, which is how they got that authorization and sale.

JabbokRiver

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Jabbok

I like the story, I like the concept, I like much of the growth info and I like the aesthetics of the BEAM product. These positives drive me back to info on the company every couple of weeks, but ….

I simple terms from a customer perspective, can you provide any residential or commercial application in which the economics and practicality of the BEAM approach surpasses or is even equivalent to alternatives?. Government does not have to justify economics or functionality, so what is the formula encouraging the purchase a BEAM unit.

Graydrake

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Beam went public in 2010, and not sure why SPACs would even come into the coversation as that was a 2020 phenomena.

Even if there were warrants or options from then, why do they have a new symbol BEEMW to make this publically tradable? There are metrics like Diluted EPS which account for items such as warrants and RSUs.

I’m confused why this is the headline on their investor relations page that this is something the public can buy. Sounds like on April 18 they warrants will likely become worthless anyways as they are below the strike price, so there would be no point to exercise them.

He showed a slide with their growth through Q3 2023. Then he said that the chart for the full year would go off the slide and said the full year revenue was north of 67 million and that they had “just released” it. I haven’t found that release. But I’m guessing that means it’s coming quite soon. (Schwab now says earnings will be April 16.) He also gave a 300% YoY growth rate for 2023–I think it was for the full year, but I’m not sure. That does not yet include any revenue from Europe.

I’m pretty sure that Schwab April 16 is just a placeholder date, Yahoo has April 9 - April 10 as the reporting date, and Robinhood as May 13.

If their current report is not going to include any revenue from Beam Europe yet, why is earnings delayed 2+ months now? Since they reported on November 13th last, they are pretty much due to report two reports at once.

They have said the old CFO is helping out as you mentioned, so it doesn’t seem like it should be that hard to calculate for a Q4 of 2023. They are still having trouble calculating last years results as of April 9, 2024?

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