What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-12 compared with 2021-05-24 · 312 added, 557 removed, 349 unchanged (71% of the section changed)

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Stockholders' equity

Preferred stock, $0.001 par value, 10,000,000 authorized, none outstanding as of March 31, 2021 and December 31, 2020, respectively.

Common stock, $0.001 par value, 9,800,000 shares authorized, 8,858,383 and 8,482,387 shares issued or issuable and outstanding as of March 31, 2021 and December 31, 2020, respectively.

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of June 30, 2021 and December 31, 2020, respectively.

Common stock, $ 0.001 par value, 9,800,000 shares authorized, 8,897,955 and 8,482,387 shares issued or issuable and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Additional paid-in-capital

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For the Three Months Ended

For the Six Months Ended

Cost of revenues

Gross income (loss)

Operating expenses

Loss from operations

( 1,642,887 )

( 2,894,682 )

( 1,774,760 )

Other income (expense)

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Total other income (expense), net

Loss before income tax expense

( 1,640,963 )

( 2,891,772 )

( 1,775,678 )

Income tax expense

$ ( 1,641,788 )

$ ( 833,957 )

$ ( 2,892,597 )

$ ( 1,776,478 )

Net loss per share - basic and diluted

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Condensed Statements of Changes in Stockholders'

Equity (Deficit)

Stockholders'

Paid-in-Capital

Additional Paid-in-

Total Stockholders'

Balance at December 31, 2019

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$ ( 46,752,102 )

Stock issued for director services

Stock issued to escrow account - unvested

Stock option expense

Warrants exercised

Net loss for the three months ended June 30, 2020

Balance at June 30, 2020

$ ( 47,586,059 )

Additional Paid-in-

Stockholders'

Paid-in-Capital

Equity (Deficit)

Balance at December 31, 2020

$ ( 51,022,606 )

Stock issued for director services - vested

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Net loss for the three months ended March 31, 2021

( 1,250,809 )

Balance at March 31, 2021

$ ( 52,273,415 )

Stock issued for director services - vested

Stock issued to escrow account - unvested

Stock option expense

Warrants exercised for cash

Stock option exercise (cashless)

Net loss for the three months ended June 30, 2021

( 1,641,788 )

Balance at June 30, 2021

$ ( 53,915,203 )

The accompanying unaudited notes are an integral

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Condensed Statements of Cash Flows

For the Three Months Ended

For the Six Months Ended

Operating Activities:

$ ( 2,892,597 )

$ ( 1,776,478 )

Adjustments to reconcile net loss to net cash used in operating activities:

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Accounts receivable

( 1,021,591 )

Prepaid expenses and other current assets

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Net cash used in operating activities

( 3,750,649 )

( 2,356,727 )

Investing Activities:

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Repayments of auto loan

Borrowings on note payable - Paycheck Protection Program

Withhold shares to cover taxes for cashless stock option exercise

Proceeds from warrant exercises

Payments of equity offering costs

Net cash provided by financing activities

Net increase (decrease) in cash

Net decrease in cash

( 1,394,198 )

( 1,897,062 )

Cash at beginning of period

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Cash paid for interest

Cash paid for taxes

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2021

JUNE 30, 2021

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Beam Global, a Nevada corporation (hereinafter the “Company,”

“us,”

“we,”

“our”

or “Beam”) is a cleantech innovation company based in San Diego, California.

Beam develops, designs, engineers, manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle

charging, outdoor media and energy security and disaster preparedness.

Beam’s products enable vital and highly valuable energy production

in locations where it is either too expensive or too impactful to connect to the utility grid, or where the requirements for electrical

power are so important that grid failures, like blackouts, are intolerable.

When competing with utilities or typical solar companies,

we rely on our products’

ease of deployment, reliability, accessibility, and total cost of ownership, rather than producing the

cheapest kilowatt hour with the help of subsidies.

Beam Global, a Nevada corporation

(hereinafter the “Company,” “us,” “we,” “our” or “Beam”) is a cleantech innovation

company based in San Diego, California.

Beam develops, designs, engineers, manufactures and sells high-quality, renewably energized infrastructure

products for electric vehicle charging, outdoor media and energy security and disaster preparedness.

Beam’s products enable vital

and highly valuable energy production in locations where it is either too expensive or too impactful to connect to the utility grid, or

where the requirements for electrical power are so important that grid failures, like blackouts, are intolerable.

When competing with

utilities or typical solar companies, we rely on our products’ ease of deployment, reliability, accessibility, and total cost of

ownership, rather than producing the cheapest kilowatt hour with the help of subsidies.

Basis of Presentation

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financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States

(“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission in instructions

to Form 10-Q and Rule 10-01 of Regulation S-X.

In management’s opinion, all adjustments (consisting of normal recurring adjustments

and reclassifications) necessary to present fairly our results of operations and cash flows for the three months ended March 31, 2021

and 2020, and our financial position as of March 31, 2021, have been made.

The results of operations for such interim periods are not

necessarily indicative of the operating results to be expected for the full year.

In management’s opinion, all adjustments (consisting of normal recurring adjustments

and reclassifications) necessary to present fairly our results of operations and cash flows for the six months ended June 30, 2021 and

2020, and our financial position as of June 30, 2021, have been made.

The results of operations for such interim periods are not necessarily

indicative of the operating results to be expected for the full year.

Certain information and disclosures

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Risks and Uncertainties

On March 11, 2020, the World Health Organization

declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.

The outbreak of COVID-19 has resulted in travel restrictions, quarantines,

“stay-at-home”

and “shelter-in-place”

orders as well as the shutdown of many businesses around the world.

while we have seen some delays and cancellations of opportunities in our pipeline as a result of funding issues, priority issues or temporary

business closures, the pandemic has not had a material adverse effect on the Company’s financial position or results of operations

for the quarter ended March 31, 2021.

However, it is difficult to predict if these governmental actions and the widespread economic disruption

arising from the pandemic will impact our business in the future.

The Company will continue to monitor its progress and communicate changes

in estimates and assumptions with shareholders, as necessary.

On March 11, 2020, the World Health Organization declared the outbreak

of a novel coronavirus (COVID-19) as a pandemic.

The outbreak of COVID-19 resulted in travel restrictions, quarantines, “stay-at-home”

and “shelter-in-place” orders as well as the shutdown of many businesses around the world.

To date, while we have seen some

delays and cancellations of opportunities in our pipeline as a result of funding issues, priority issues or temporary business closures,

the pandemic has not had a material adverse effect on the Company’s financial position or results of operations for the quarter

ended June 30, 2021.

With the rollout of a COVID-19 vaccine, businesses and governments are beginning to return to pre-pandemic status.

However, it is difficult to predict what impact variants of the virus may have in the future or what impact these governmental actions

and the widespread economic disruption arising from the pandemic will have on our business in the future.

Use of Estimates

The preparation of financial statements in conformity with GAAP

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

The preparation of financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates in the accompanying financial statements include the

allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment,

valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right

of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Significant estimates in the accompanying

financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable

lives of property and equipment, valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease

liabilities and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards

Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20)

and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and

Contracts in an Entity’s Own Equity to address the complexity in accounting for certain financial instruments with characteristics

of liabilities and equity.

This ASU includes amendments that significantly change the guidance on convertible instruments and the derivative

scope exception for contracts in an entity's own equity and simplifies the accounting for convertible instruments which include beneficial

conversion features or cash conversion features by removing certain separation models in Subtopic 470-20.

The prior conditions were difficult

to apply and resulted in circumstances where warrants may have been required to be accounted for as a liability rather than as equity

if issued under a registration statement.

The Company, in consultation with legal counsel, determined that its outstanding public warrants

issued under a Registration Statement on Form S-1 met, and continues to meet, the criteria for equity based on the terms of the warrant.

Had the warrants been determined that liability treatment was required, the liability would have been approximately $64 million for the

953,595 public warrants at December 31, 2020 with a non-cash charge to the statement of operations of $61 million for the year ended December

In August 2020, the Financial

Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options

(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible

Instruments and Contracts in an Entity’s Own Equity to address the complexity in accounting for certain financial instruments

with characteristics of liabilities and equity.

This ASU includes amendments that significantly change the guidance on convertible instruments

and the derivative scope exception for contracts in an entity's own equity and simplifies the accounting for convertible instruments which

include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20.

conditions were difficult to apply and resulted in circumstances where warrants may have been required to be accounted for as a liability

rather than as equity if issued under a registration statement.

The Company, in consultation with legal counsel, determined that its outstanding

public warrants issued under a Registration Statement on Form S-1 met, and continues to meet, the criteria for equity based on the terms

of the warrant.

Had the warrants been determined that liability treatment was required, the liability would have been approximately $64

million for the 953,595 public warrants at December 31, 2020 with a non-cash charge to the statement of operations of $61 million for

the year ended December 31, 2020.

The ASU is effective for smaller

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adoption is permitted, as early as fiscal years beginning after December 15, 2020.

As such, the Company has adopted ASU 2020-06 effective

As such, the Company adopted ASU 2020-06 effective

January 1, 2021, on a full retrospective basis, which will allow the Company to continue to classify the warrants as equity, and as a

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for any periods presented.

In June 2016, the FASB issued

ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326) requiring initial recognition of credit

losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred.

The standard eliminates the

threshold for initial recognition in current U.S.

GAAP and it covers a broad range of financial instruments, including trade and other

receivables at each reporting date.

The measurement of expected credit losses is based on historical experience, current conditions, and

reasonable and supportable forecasts that affect the collectability of the financial assets.

The standard is effective for the Company

beginning January 1, 2023.

The adoption of this guidance is not expected to have a material effect on our consolidated financial statements.

Concentrations

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potentially subject us to concentrations of credit risk consist of cash and accounts receivable.

The Company maintains its

cash in banks and financial institution deposits that at times may exceed federally insured limits.

The Company has not experienced any

losses in such accounts from inception through March 31, 2021.

As of March 31, 2021, $28,219,329 of the Company’s cash deposits

were greater than the federally insured limits.

The Company maintains its cash in banks and financial institution deposits that at times may exceed federally insured limits.

The Company has not experienced any losses in such accounts from inception through June 30, 2021.

As of June 30, 2021, $ 25,173,457 of the Company’s cash deposits were greater than the federally insured limits.

Major Customers

For the three months ended

March 31, 2021, revenues from three customers accounted for 32%, 12% and 10% of total revenues, with no other single customer accounting

for more than 10% of revenues.

At March 31, 2021, accounts receivable from four customers accounted for 28%, 19%, 11% and 10% of total

accounts receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

For the three months ended

March 31, 2020, revenues from three customers accounted for 26%, 17% and 14% of total revenues, with no other single customer accounting

for more than 10% of revenues.

At March 31, 2020, accounts receivable from two customers accounted for 37% and 21% of total accounts receivable,

with no other single customer accounting for more than 10% of the accounts receivable balance.

June 30, 2021, revenues from four customers accounted for 22 %, 18 %, 16 % and 10 % of total revenues, and for the six months ended June 30,

2021, revenues from three customers accounted for 13 %, 13 % and 11 % of total revenues, with no other single customer accounting for more

than 10% of revenues.

At June 30, 2021, accounts receivable from four customers accounted for 18 %, 14 %, 14 % and 11 % of total accounts

receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

For the three months ended

March 31, 2021 and 2020, we had a heavy concentration of sales to federal, state and local governments which represented 70% and 82% of

revenues, respectively.

June 30, 2020, revenues from four customers accounted for 39 %, 18 %, 12 % and 11 % of total revenues, and for the six months ended June 30,

2020, revenues from two customers accounted for 20 % and 12 % of total revenues, with no other single customer accounting for more than

10% of revenues.

At June 30, 2020, accounts receivable from six customers accounted for 28 %, 11 %, 10 %, 10 %, 10 % and 10 % of total accounts

receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

For the six months ended June

30, 2021 and 2020, we had a heavy concentration of sales to federal, state and local governments which represented 78 % and 75 % of revenues,

respectively.

Cash and Cash Equivalents

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purchased to be cash equivalents.

There were no cash equivalents at March 31, 2021 and December 31, 2020, respectively.

There were no cash equivalents at June 30, 2021 and December 31, 2020, respectively.

Fair Value of Financial Instruments

The Company’s financial

instruments, including accounts receivable, accounts payable, accrued expenses, and short-term loans, are carried at historical cost basis.

At March 31, 2021, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these

At June 30, 2021, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

Accounts Receivable

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become uncollectible.

Management’s evaluation includes several factors including the aging of the accounts receivable balances,

a review of significant past due accounts, dialogue with the customer, the financial profile of a customer, our historical write-off experience,

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is established if this review process determines the net realizable value of such inventory may be below the carrying value.

The Company believes it will

achieve future economic value benefits for its various patents and patent ideas.

All administrative costs for obtaining patents are accumulated

on the balance sheet as a patent asset until such time as a patent is issued.

The costs of these intangible assets are classified as a

long-term asset and amortized on a straight-line basis over the legal life of such asset, which is typically 20 years.

In the event a

patent is denied or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned.

Patent amortization expense was $7,670 and $1,091 in the three months ended March 31, 2021 and 2020, respectively.

The Company believes it will achieve future economic value benefits for its patents.

All administrative costs for obtaining patents are accumulated on the balance sheet as a patent asset until such time as a patent is issued.

The costs of these intangible assets are classified as a long-term asset and amortized on a straight-line basis over the legal life of such asset, which is typically 20 years.

In the event a patent is denied or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned.

Patent amortization expense was $ 9,977 and $ 2,182 in the six months ended June 30, 2021 and 2020, respectively.

In February 2016, the Financial

Accounting Standards Board issued Accounting Standards Update No.

“Leases (Topic 842)”

whereby lessees need to recognize

“Leases (Topic 842)” whereby lessees need to recognize

almost all leases on the balance sheet as a right of use asset and a corresponding lease liability.

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the Company assesses whether the contract is, or contains, a lease.

The Company’s assessment is based on:

(1) whether the contract

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of Financial Accounting Standards Board Update No.

“Revenue from Contracts with Customers (Topic 606).”

“Revenue from Contracts with Customers (Topic 606).” The core

principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount

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or the option to choose who will perform the services, the Company is acting as an agent and would report the revenues on a net basis.

Revenues from

professional services are recognized when services are performed.

Revenue values are based upon fixed fee arrangements or hourly

fee-based arrangements with agreed to hourly rates of service categories in line with expertise requirements.

These services are

billed to a customer as such services are provided and the customer will be obligated to make payments for such services typically

within a 30-45 day period.

Revenues from professional

services are recognized when services are performed.

Revenue values are based upon fixed fee arrangements or hourly fee-based arrangements

with agreed to hourly rates of service categories in line with expertise requirements.

These services are billed to a customer as such

services are provided and the customer will be obligated to make payments for such services typically within a 30-45 day period.

Revenues on a bill-and-hold

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The Company includes shipping

and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

and handling fees billed to customers as revenues.

Any deposits received from

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the Company accrues for product warranties when the loss is probable and can be reasonably estimated.

At March 31, 2021, the Company

has no product warranty accrual given the Company’s historical financial warranty expense.

At June 30, 2021, the Company

has no product warranty accrual given the Company’s historical financial warranty expense.

Cost of Revenues

The Company records direct

material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision, manufacturing

equipment depreciation, rent, and utility costs, all of which are included in inventory prior to a sale, as costs of revenues.

further includes shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

The Company records direct material and component costs, direct labor

and associated benefits, and manufacturing overhead costs such as supervision, manufacturing equipment depreciation, rent, and utility

costs, all of which are included in inventory prior to a sale, as costs of revenues.

The Company further includes shipping and handling

costs as cost of revenues.

Stock-Based Compensation

The Company follows ASC 718,

“Compensation –

Stock Compensation.”

ASC 718 requires companies to estimate and recognize the fair value of stock-based

“Compensation – Stock Compensation.” ASC 718 requires companies to estimate and recognize the fair value of stock-based

awards to employees and directors.

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Net Loss Per Share

Basic net loss per share is

computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented.

net loss per common share is computed using the weighted average number of common shares outstanding for the period, and, if dilutive,

potential common shares outstanding during the period.

Potential common shares consist of the incremental common shares issuable upon

the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

Potentially dilutive securities

are excluded from the computation if their effect is anti-dilutive.

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented.

Diluted net loss per common share is computed using the weighted average number of common stock outstanding for the period, and, if dilutive, potential common stock outstanding during the period.

Potential common stock consist of the incremental shares of common stock issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.

Options to purchase 333,980

common shares and warrants to purchase 576,946 common shares were outstanding at March 31, 2021.

These shares were not included in the

computation of diluted loss per share for the three months ended March 31, 2021 because the effects would have been anti-dilutive.

options and warrants may dilute future earnings per share.

shares of common stock and warrants to purchase 549,335 shares of common stock were outstanding at June 30, 2021.

These shares were not included in the computation of diluted loss per share for the three or six months ended June 30, 2021 because the effects would have been anti-dilutive.

These options and warrants may dilute future earnings per share.

Reclassifications

Where necessary, the prior year’s information has been reclassified to conform to the current period’s

statement presentation.

On the Condensed Statements of Cash Flows, the amortization of operating lease right of use asset of $12,289

at March 31, 2020 was reclassified from accrued expenses to conform to the March 31, 2021 presentation.

Where necessary, the prior

year’s information has been reclassified to conform to the current period’s statement presentation.

On the Condensed Statements

of Cash Flows, the amortization of operating lease right of use asset of $24,578 at June 30, 2020 was reclassified from accrued expenses

to conform to the June 30, 2021 presentation.

The Company follows ASC 280-10

"Disclosures about Segments of an Enterprise and Related Information."

During the three months ended March 31, 2021 and 2020,

the Company only operated in one segment;

"Disclosures about Segments of an Enterprise and Related Information." During the six months ended June 30, 2021 and 2020, the

Company only operated in one segment;

therefore, segment information has not been presented.

As reflected in the accompanying

unaudited condensed financial statements for the three months ended March 31, 2021, the Company had a net loss and net cash used in operating

unaudited condensed financial statements for the six months ended June 30, 2021, the Company had a net loss and net cash used in operating

activities of $ 2,892,597 (which includes $ 495,368 of non-cash compensation expense) and $ 3,750,649 , respectively.

Additionally, at March

Additionally, at June

30, 2021, the Company had an accumulated deficit of $ 53,915,203 .

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and such losses are expected to continue.

In April 2019, the Company

issued shares of its common stock in a public offering that generated gross proceeds of $13,201,000, which was used to pay off the Company’s

debt and to fund business operations.

The Company issued shares in two additional public offerings generating gross proceeds of $11,499,675

in July 2020 and $7,500,000 in November 2020.

In addition, the company issued warrants as part of the April 2019 public offering which

has generated an additional $10,879,389 during fiscal 2020 through March 31, 2021.

At March 31, 2021, there are 576,946 warrants outstanding,

which if fully exercised would generate an additional $3,639,359.

At March 31, 2021, our cash balance

was $28,214,029 and our working capital was $29,507,478.

Management believes it has sufficient cash to fund its liabilities and operations

for at least the next twelve months from the issue date of this report.

In April 2019, the Company issued shares of its common stock in a public offering that generated gross proceeds of $13,201,000, which was used to pay off the Company’s debt and to fund business operations.

The Company issued shares in two additional public offerings generating gross proceeds of $ 11,499,675 in July 2020 and $ 7,500,000 in November 2020.

In addition, the company issued warrants as part of the April 2019 public offering which has generated an additional $ 11,053,338 during fiscal 2020 through June 30, 2021.

At June 30, 2021, there are warrants outstanding to

purchase up to 549,335 shares of common stock, which if fully exercised would generate an additional $ 3,465,410 .

At June 30, 2021, our cash

balance was $ 25,308,606 and our working capital was $ 28,177,437 .

Management believes it has sufficient cash to fund its liabilities and

operations for at least the next twelve months from the issue date of this report.

Inventory consists of the following:

Finished goods

Work in process

Schedule of Inventory

Raw materials

Inventory allowance

Total net inventory

net inventory

ACCRUED EXPENSES

The major components of accrued expenses are summarized

Accrued salaries

Accrued expense schedule

Accrued vacation

Other accrued expense

Total accrued expenses

Accrued salaries

accrued expense

accrued expenses

CONVERTIBLE NOTE PAYABLE - RELATED PARTY AND NOTE PAYABLE

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Desmond Wheatley, the Chief Executive Officer,

President, and Chairman of the Company (the “Agreement”).

Pursuant to the Agreement, Mr.

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Wheatley bearing simple interest at the rate of 10%

per annum, accruing until paid, convertible into shares of the Company’s common stock at $7.50 per share at any time in whole or

in part at Mr.

Wheatley’s discretion.

As the conversion price was equivalent to the fair value of the common stock at various salary

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Subsequent to June 30,

2018 through December 31, 2018 and based on the average daily closing price of our common stock, the Company recorded $8,672 of debt discount

for the beneficial conversion feature value which is being amortized to interest expense over the term of the note.

For the three months

ended March 31, 2019 and based on the average daily closing price of our common stock, the Company recorded $3,967 of debt discount for

the beneficial conversion feature value which is also being amortized to interest expense over the term of the note.

There was no beneficial

conversion value and therefore, no debt discount was recorded for any other periods subsequent to March 31, 2019.

Additionally, on March

29, 2017 the Board of Directors granted Mr.

2018 through December 31, 2018, and based on the average daily closing price of our common stock, the Company recorded $ 8,672 of debt

discount for the beneficial conversion feature value which is being amortized to interest expense over the term of the note.

For the three

months ended March 31, 2019 and based on the average daily closing price of our common stock, the Company recorded $ 3,967 of debt discount

for the beneficial conversion feature value which is also being amortized to interest expense over the term of the note.

beneficial conversion value and therefore, no debt discount was recorded for any other periods subsequent to March 31, 2019.

Additionally,

on March 29, 2017, the Board of Directors granted Mr.

Wheatley a $35,000 bonus for which Mr.

Wheatley agreed to defer such bonus under the same

terms of his salary deferral.

Wheatley agreed to defer such bonus under

the same terms of his salary deferral.

On September 17, 2019, the

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be involved in litigation relating to claims arising out of our operations in the normal course of business.

As of March 31, 2021, there

As of June 30, 2021, there

were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

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would receive a fee equal to a percentage of revenues generated by the agent;

business development agreements and strategic alliance

agreements where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for

a right of first refusal with respect to certain projects of the other parties;

agreements with vendors where the vendor may provide

marketing, investor relations, public relations, technical consulting or subcontractor services, vendor arrangements with non-binding

minimum purchasing provisions, and financial advisory agreements where the financial advisor would receive a fee and/or commission for

raising capital for the Company.

All expenses and liabilities relating to such contracts were recorded in accordance with GAAP during

business development agreements and strategic alliance agreements

where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first

refusal with respect to certain projects of the other parties;

agreements with vendors where the vendor may provide marketing, investor

relations, public relations, technical consulting or subcontractor services, vendor arrangements with non-binding minimum purchasing provisions,

and financial advisory agreements where the financial advisor would receive a fee and/or commission for raising capital for the Company.

All expenses and liabilities relating to such contracts were recorded in accordance with GAAP during the periods.

The Company evaluates new

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this time, it is not reasonably certain that we will extend the term of the lease and therefore the renewal periods have been excluded

from the right-of-use (“ROU”) asset.

We calculated the present value of the lease payment stream using our effective borrowing rate of 10%

and recorded a ROU asset and operating lease liability each of $2,605,032 at September 1, 2020.

The ROU asset and the corresponding lease

liability are being equally amortized on a straight-line basis over the term of the lease which expires on August 31, 2025.

from the right-of-use (“ROU”) asset.

We calculated the present value of the lease payment stream using our effective borrowing

rate of 10 % and recorded a ROU asset and operating lease liability each of $ 2,605,032 at September 1, 2020.

The ROU asset and the corresponding

lease liability are being equally amortized on a straight-line basis over the term of the lease which expires on August 31, 2025.

The tables below show the

operating ROU assets and liabilities as of December 31, 2020 and the balances as of March 31, 2021, including the changes during the periods.

operating ROU assets and liabilities as of December 31, 2020 and the balance as of June 30, 2021, including the changes during the periods.

Schedule of Operating right-of use asset

Operating lease ROU asset as of December 31, 2020

Less amortization of operating lease ROU asset

Operating lease ROU asset as of March 31, 2021

As of March 31, 2021 and December

Less amortization of operating lease ROU assets

Operating lease ROU asset as of June 30, 2021

As of June 30, 2021 and December

31, 2020, the current and non-current portions of the lease liability were recorded to the Balance Sheet as follows:

Operating lease liabilities, current

Operating lease liabilities, noncurrent

Total lease liability

Schedule of lease liability

Operating lease

liabilities, current

lease liabilities, noncurrent

lease liability

The future minimum rental

commitments for our operating leases reconciled to the lease liability as of March 31, 2021 is as follows:

commitments for our operating leases reconciled to the lease liability as of June 30, 2021 is as follows:

Schedule of future minimum rental commitments

June 30, 2021

Total undiscounted future minimum payments

1 unchanged sentence

Total lease liability

There was no Federal income

tax expense for the six months ended June 30, 2021 or 2020 due to the Company’s net losses.

Income tax expense represents minimum

state taxes due.

As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established

to offset all deferred tax assets as of June 30, 2021 and no benefit has been provided for the year to date loss.

On a quarterly basis,

the company evaluates the positive and negative evidence to assess whether the more likely than not criteria has been satisfied in determining

whether there will be further adjustments to the valuation allowance.

Director Annual Restricted Stock Grants

On October 20, 2020, the Company

granted each of our two non-employee directors annual restricted stock grants of 12,200 shares of our common stock and our lead independent

director was issued an annual restricted stock grant of 17,100 shares of common stock, 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 closing trading price of our common stock, or $620,425.

During the three months ended March 31, 2021, upon the death of one of our directors, 12,825 unvested shares of restricted stock were

forfeited and returned to the Company, and 6,100 shares of restricted stock relating to the other two directors vested, generating an

expense of $91,196.

At March 31, 2021, there were 12,200 unvested shares of restricted stock representing $182,388 of unrecognized restricted

stock grant expense which will be recognized through the quarter ending September 30, 2021.

On June 17, 2020, the Board

On April 1, 2021, the Board

approved two restricted stock grants to Mr.

1 unchanged sentence

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.

based on an award of $ 112,500 , divided by the per share closing trading price on April 1, 2021.

On the grant date, the shares had a per

share fair value of $7.35 and 20,408 shares were granted, half of which vest quarterly over four equal installments and half vest quarterly

over 12 equal installments.

During the three months ended March 31, 2021, 3,401 of shares from this grant vested and 1,047 shares from

an October 1, 2019 grant vested generating a total expense of $31,250.

At March 31, 2021, 10,990 of these shares are unvested representing

$75,000 of unrecognized restricted stock grant expense which will be recognized through the quarter ending March 31, 2023.

share fair value of $ 40.10 and 2,806 shares were granted, half of which will vest quarterly over three equal installments and half of

which will vest quarterly over 11 equal installments.

During the quarter ended June 30, 2021, 596 of these shares vested generating

an expense of $ 23,864 .

At June 30, 2021, 2,210 shares are unvested representing $ 88,636 of unrecognized restricted stock grant expense

which will be recognized through the quarter ending December 31, 2023.

On April 16, 2021, the Board

appointed Nancy Floyd to the Company’s board of directors.

Concurrent with her appointment, the Company, upon recommendation of

the Compensation Committee, granted Ms.

Floyd 5,592 shares of restricted stock which had a per share fair value of $ 33.34 on the date

of grant and will vest quarterly through September 30, 2021.

During the quarter ended June 30, 2021, 2,542 of these shares vested generating

an expense of $ 84,739 .

At June 30, 2021, 3,050 shares are unvested representing $ 101,687 of unrecognized restricted stock grant expense

which will be recognized in the quarter ending September 30, 2021.

On April 16, 2021, the Board appointed Mr.

Posawatz as the Lead Independent Director.

With this appointment, the Company, upon recommendation of the Compensation Committee, granted Mr.

Posawatz 2,246 shares of restricted stock for this role which had a per share fair value of $ 33.34 on the date of grant and will vest quarterly through September 30, 2021.

During the quarter ended June 30, 2021, 1,021 of these shares vested generating an expense of $34,035.

At June 30, 2021, 1,225 shares are unvested representing $ 40,841 of unrecognized restricted stock grant expense which will be recognized in the quarter ending September 30, 2021.

On October 20, 2020, the Company granted each of our two non-employee directors annual restricted stock grants of 12,200 shares of our common stock and our then lead independent director an annual restricted stock grant of 17,100 shares of common stock, 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 closing trading price of our common stock, or $620,425.

During the three months ended March 31, 2021, upon the death of our lead independent director, 12,825 unvested shares of restricted stock were forfeited and returned to the Company, and 6,100 shares of restricted stock relating to the other two directors vested, generating an expense of $91,196.

During the three months ended June 30, 2021, 6,100 of these shares vested generating an expense of $91,196.

At June 30, 2021, there were 6,100 unvested shares of restricted stock representing $ 91,192 of unrecognized restricted stock grant expense which will be recognized through the quarter ending September 30, 2021.

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, half of which vest quarterly over four equal installments and half vest quarterly over 12 equal installments.

the six months ended June 30, 2021, 4,251 of

shares from this grant vested and 2,094 shares

from an October 1, 2019 grant vested generating a total expense of $ 43,750 .

At June 30, 2021, 9,093 shares for these 2 grants are unvested representing $ 62,500 of

unrecognized restricted stock grant expense which will be recognized through the quarter ending March 31, 2023.

STOCK OPTIONS AND WARRANTS

Stock Options

During the three months ended

March 31, 2021, there were no stock options granted.

During the three months ended

March 31, 2021 and 2020, the Company recorded non-cash stock option based compensation expense of $68,944 and $27,068, respectively.

of March 31, 2021, there was $703,866 of unrecognized stock option-based compensation expense that will be recognized over the next 3.5

During the three months ended

March 31, 2021, 2,300 stock options were exercised on a cashless basis for 1,063 shares of common stock at a weighted average exercise

price of $13.97.

The Company withheld shares to cover income and payroll taxes totaling $46,963, which was charged to additional paid

There were stock options

outstanding to purchase 337,633 shares of common stock at a weighted average exercise price of $11.13 at March 31, 2021.

three months ended March 31, 2021, 1,875 stock options terminated.

During the three months ended

March 31, 2021, 388,638 warrants to purchase shares of the Company’s common stock were exercised generating $2,469,543.

At March 31, 2021, there were warrants outstanding to purchase up to 576,946 shares of the Company’s common stock at a weighted

average exercise price of $6.31.

During the six months ended

June 30, 2021, there were no stock options granted.

During the six months ended

June 30, 2021 and 2020, the Company recorded non-cash stock option based compensation expense of $ 126,588 and $ 54,136 , respectively.

of June 30, 2021, there was $ 646,242 of unrecognized stock option-based compensation expense that will be recognized over the next 3.25

During the six months ended June 30, 2021, 5,953 stock options were exercised on a cashless basis for 2,380 shares of common stock at a weighted average exercise price of $ 14.38 .

The Company withheld shares to cover income and payroll taxes totaling $81,039, which was charged to additional paid in capital.

There were stock options outstanding

to purchase 333,980 shares of common stock at a weighted average exercise price of $ 11.09 at June 30, 2021.

During the six months ended

June 30, 2021, 1,875 stock options terminated.

During the six months ended

June 30, 2021, warrants to purchase 416,249

shares of the Company’s common stock were exercised generating $ 2,643,493 .

At June 30, 2021, there were warrants outstanding to purchase up to 549,335

shares of the Company’s common stock at a weighted average exercise price of $ 6.31 .

For each of the identified

periods, revenues can be categorized into the following:

For the Three Months Ended

Schedule of revenues

Product sales

2 unchanged sentences

Shipping and handling

Discounts and allowances

Total revenues

At March 31, 2021 and December 31, 2020, deferred

revenue was $97,541 and $107,489, respectively.

The March 31, 2021 balance consists of deferred maintenance fees pertaining to services

to be provided through the fourth quarter of 2026.

Revenues during the quarters ended March 31, 2021

and 2020 had a heavy concentration of sales to federal, state and local governments which represented 70% and 82% of revenues, respectively.

and allowances

At June 30, 2021 and December

31, 2020, deferred revenue was $ 155,747 and $ 107,489 , respectively.

The June 30, 2021 balance consists of deferred maintenance fees of

$ 152,447 pertaining to services to be provided through the second quarter of 2027 and a $ 3,300 prepayment from a customer.

SUBSEQUENT EVENTS

Subsequent to March 31, 2021,

Subsequent to June 30, 2021,

warrants to purchase 504 shares of common stock were exercised generating proceeds of $3,175.

On April 1, 2021, 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 $112,500, divided by the per share closing trading price on April 1, 2021.

On the grant date, the shares had a per

share fair value of $40.10 and 2,806 shares were granted, half of which will vest quarterly over three equal installments and half of

which will vest quarterly over 11 equal installments.

On April 16, 2021, the Board

appointed Nancy Floyd to the Company’s board of directors.

Concurrent with her appointment, the Company, upon recommendation of

the Compensation Committee, granted Ms.

Floyd 5,592 shares of restricted stock which had a per share fair value of $33.34 on the date

of grant and will vest quarterly through September 30, 2021.

On April 16, 2021, the Board

appointed Mr.

Posawatz the Lead Independent Director.

With this appointment, the Company, upon recommendation of the Compensation Committee,

Posawatz 2,246 shares of restricted stock for this role which had a per share fair value of $33.34 on the date of grant and

will vest quarterly through September 30, 2021.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

This report contains forward-looking

statements that are based on current expectations, estimates, forecasts and projections about Beam Global (hereinafter, “Beam,”

“Company,”

“us,”

“we”

or “our”), the industry in which we operate and other matters, as

well as management's beliefs and assumptions and other statements regarding matters that are not historical facts.

These statements include,

in particular, statements about our plans, strategies and prospects.

For example, when we use words such as "projects,"

"expects,"

"anticipates,"

"intends,"

"plans,"

"believes,"

"seeks,"

"estimates,"

"should,"

"would,"

"could,"

"will,"

“opportunity,"

"potential"

or "may,"

and variations

of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements.

These forward-looking statements

are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different

from any future results expressed or implied by the Company in those statements.

The most important factors that could prevent the Company

from achieving its stated goals include, but are not limited to, the following:

volatility or decline of the Company’s stock price or absence of stock price appreciation;

fluctuation in quarterly results;

failure of the Company to earn revenues or profits;

inadequate capital to continue or expand its business, and inability to raise additional capital or financing to implement its business plans;

unavailability of capital or financing to prospective customers of the Company to enable them to purchase products and services from the Company;

failure to commercialize the Company’s technology or to make sales;

reductions in demand for the Company’s products and services, whether because of competition, general industry conditions, loss of tax incentives for solar power, technological obsolescence, or other reasons;

rapid and significant changes in markets;

litigation with or legal claims and allegations by outside parties;

insufficient revenues to cover operating costs, resulting in persistent losses;

potential dilution of the ownership of existing shareholders in the Company due to the issuance of new securities by the Company in the future;

rapid and significant changes to costs of raw materials.

New factors emerge from time

to time, and it is not possible for us to predict which factors will arise.

In addition, we cannot assess the impact of each factor on

our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained

in any forward-looking statements.

Because factors referred to elsewhere in this report on Form 10-Q and in our Annual Report on Form

10-K for the year ended December 31, 2020 (sometimes referred to as the “2020 Form 10-K”) that we previously filed with the

Securities and Exchange Commission, including without limitation the “Risk Factors”

section in the 2020 Form 10-K, could cause

actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place

undue reliance on any forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which it is made,

and except as may be required by applicable law, we undertake no obligation to release publicly the results of any revisions to these

forward-looking statements or to reflect events or circumstances arising after the date of this report on Form 10-Q.

Beam develops, manufactures

and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, outdoor media advertising

and energy security and disaster preparedness.

Company has designed five product lines that incorporate the same underlying proprietary technology and value for producing a unique

alternative to grid-tied charging of electric vehicles, having a built-in renewable energy source in the form of attached solar panels

and/or light wind generator to produce power and battery storage to store the power.

These products are rapidly deployable and attractively

Our product lines include:

EV ARC™

Electric Vehicle Autonomous Renewable Charger –

a patented, rapidly deployed, infrastructure product that uses integrated

solar power and battery storage to provide a mounting asset and a source of power for factory installed electric vehicle charging stations

of any brand.

In 2019, we began deploying our upgraded version, the EV ARC™

2020, which provides all of the features of the original

EV ARC™

in addition to elevating the electronics to the underside of the solar array making the unit flood-proof up to nine feet

and making more space available on the engineered ballast and traction pad which gives the product stability.

Solar Tree®

Off-grid, renewably energized and rapidly deployed, patented single-column mounted smart generation and

energy storage system with the capability to provide a 50kW DC fast charge to one or more electric vehicles or larger vehicles.

EV ARC™

DC Fast Charging system for charging EVs.

- EV-Standard ™

patent issued on December 31, 2019 and still under development.

A lamp standard, EV charging and emergency power product which

uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide

curbside charging.

- UAV ARC™

- patent issued on November 24, 2020 and still under development.

An off-grid, renewably

energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets.

We believe that there is a

clear need for a rapidly deployable and highly scalable EV charging infrastructure, and that our products fulfill that requirement.

grid-tied installations which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring

concrete, wiring, and ongoing utility bills, the EV ARC™

system can be deployed in minutes, not months, and is powered by renewable

energy so there is no utility bill.

We are agnostic as to the EV charging service equipment or provider and integrate best of breed solutions

based upon our customer’s requirements.

For example, our EV ARC™

and Solar Tree®

products have been deployed with Chargepoint,

Blink, Enel X, Electrify America and other high quality EV charging solutions.

We can make recommendations to customers or we can comply

with their specifications and/or existing charger networks.

Our products replace the infrastructure required to support EV chargers, not

the chargers themselves.

We do not sell EV charging, rather we sell products which enable it.

We believe our chief differentiators

for our electric vehicle charging infrastructure products are:

Our patented, renewably energized products which dramatically reduce the cost, time and complexity of the installation and operation of EV charging infrastructure and outdoor media platforms when compared to traditional, utility grid tied alternatives;

Our first-to-market advantage with EV charging infrastructure products which are renewably energized, rapidly deployed and require no construction or electrical work on site.

our products’

capability to operate during grid outages and to provide a source of EV charging and emergency power rather than becoming inoperable during times of emergency or other grid interruptions;

our ability to continuously create new and patentable inventions which are marketable and a complex integration of our own proprietary technology and parts, and other commonly available engineered components, creating a further barrier to entry for our competition.

Overall Business Outlook

Our revenues increased from

$1,317,052 in the first quarter of 2020, to $1,372,392 for the same period in 2021.

Our revenues continue to diversify to a broad array

of customers and markets.

We have strengthened our sales force over the past year and increased marketing efforts, including engaging

a public relations firm and a rebranding, to help communicate and promote awareness to potential customers.

On January 27, 2021, President

Biden issued an executive order that called for “clean and zero-emission federal, state, local, and tribal government fleets.”

Biden also proposed $174 billion investment in the EV market and an additional 500,000 publicly available EV charging stations on U.S.

Beam Global views federal investment in EV infrastructure as an important potential source of future revenues particularly now

that the Company has been awarded a Federal General Services Administration (GSA) Multiple Award Schedule (MAS) contract that will make

the procurement process by federal agencies much easier and faster.

We are also expanding geographically across the U.S.

to add to our

significant presence in California.

We believe that our opportunities in corporate markets will increase as demand for workplace charging

We believe our products are uniquely positioned to benefit from this growth, as well as increased market share as a result

of the features our products add.

We continue to make progress

in our outdoor media advertising business in 2021, with the addition of a contracted industry expert to help identify a corporate sponsor

who will receive global naming rights to the network of EV ARC TM systems planned for the City of San Diego.

We have 2 new patents that

were issued by the United States Patent and Trademark Office at the end of 2019 and in 2020 for our EV Standard TM and UAV ARC™

which we expect will expand our product offerings with the same proprietary technology as our current products and allow us to expand

into new markets.

We had a gross loss of $149,120

in the quarter ended March 31, 2021, compared to a loss of $39,641 for the same period in the prior year.

We currently have a fixed overhead

structure and facility that will support our expected growth over the next several years.

Until our production increases, we have underutilized

capacity that adds a fixed cost burden to our margins.

Once we are able to increase our production volumes, we will improve our fixed

cost per unit, as well as benefit from improved labor efficiencies and utilization and cost improvements by negotiating volume purchase

We are also implementing lean manufacturing process improvements and making engineering changes to our product where we can

benefit from cost reductions.

Many of the components that we integrate into our products are manufactured by others.

This is consistent

with our strategy to take advantage of the investment by large and well-funded organizations in the improvement of various components

and sub-assemblies which we integrate into our final product.

Components such as battery cells and solar panels are expected to continue

to decrease in cost in the coming months and years.

We expect to see a significant increase in the demand for electric vehicle charging

infrastructure and as such we do not anticipate significant pricing pressure on our products.

The combination of this increase in demand

for electric vehicle charging infrastructure and therefore our revenues, and the cost cutting measures described above lead us to believe

that we will see significant improvement in our gross margins in the future.

Significant Accounting Policies and Estimates

Company’s significant accounting policies are described in Note 1 in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2020.

There have been no material changes in these policies or their application.

Use of Estimates.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates

in the accompanying financial statements include the valuation of inventory and standard cost allocations, depreciable lives of property

and equipment, valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease liabilities and the

related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Changes in Accounting Principles .

There were no significant changes in accounting principles that were adopted during the three months ended March 31, 2021.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended March 31, 2021 and 2020

For the three

months ended March 31, 2021, revenues were $1,372,392, a 4% increase over $1,317,052 for the three months ended March 31, 2020.

the first quarter of 2021, we shipped units to municipalities, federal agencies, a university, a utility company, and to enterprise companies.

This included the sale of a unit to Jeep, a Stellantis brand, and one to their partner Electrify America, both for use in the Moab, UT

launch of their Jeep 4xe Charging Network to provide EV charging at Jeep Badge of Honor off-road trailheads throughout the U.S.

By comparison,

revenues in the first quarter of 2020 were heavily concentrated on state and local municipalities in several cities across the U.S.

2020, we experienced some delays in orders as a result of the COVID-19 virus, which are starting to move forward.

backlog on March 31, 2021 was $1.2 million.

three months ended March 31, 2021, we had a gross loss of $149,120 compared to a gross loss of $39,641 for the three months ended March

Despite the increase in revenues during the first quarter of 2021 compared to 2020, our gross loss increased primarily due to

an increase in costs for the new EV ARC™

2020 unit that was launched at the end of 2019 and rolled out in 2020, compared to the

original EV ARC™.

Our experience with the original EV ARC™

demonstrated that while the initial costs of the unit start out

high, the operations and engineering teams improve the production process and reduce material costs which will reduce the costs over time.

We anticipate that this process will be repeated with the EV ARC™

We are also being negatively impacted by increases in steel

prices and shipping costs due to high demand.

We expect our margins to improve as we increase our production levels, which will reduce

our overhead costs per unit and improve our labor efficiency.

Operating Expenses.

operating expenses were $1,102,675 for the three months ended March 31, 2021, compared to $902,000 for the same period in 2020, a 22%

The increase was primarily due to $85,875 for non-cash compensation expense for stock option expense and vesting of director

restricted shares, $51,605 for increased sales headcount to support revenue growth, $29,241 for R&D increased headcount to support

development projects, $14,610 for legal expenses and $19,344 of other net increases.

Other Income and Expense.

Interest income was $986 in the quarter ended March 31, 2021, compared to $8,892 in the quarter ended March 31, 2020, due to a significantly

lower average gross yield on our investments, despite higher cash balances.

Interest expense was $9,772 in the quarter ended March 31,

2020, and there was no interest expense in the quarter ended March 31, 2021.

was $1,250,809 for the three months ended March 31, 2021, a $308,288 increase from a net loss of $942,521 for the same period in 2020,

primarily due to the increase in gross loss and increased operating expenses.

Liquidity and Capital Resources

At March 31, 2021, we had

cash of $28,214,029, compared to cash of $26,702,804 at December 31, 2020.

We have historically met our cash needs through a combination

of equity and debt financings.

Our cash requirements are generally for operating activities.

Our cash flows from operating,

investing and financing activities, as reflected in the condensed statements of cash flows, are summarized in the table below:

Cash provided by (used in):

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Operating Activities

Net loss of $1,250,809 for

the three months ended March 31, 2021 decreased by $221,363 for non-cash expense items that included depreciation and amortization, common

stock issued for services for director compensation, non-cash compensation expense related to grant of stock options, and amortization

of operating lease right of use asset.

Cash used in operations for the period included a $454,634 increase in inventory purchases, a $51,647

reduction of sales tax payable and a $9,948 decrease in deferred revenue.

Cash provided by operations included a $202,759 decrease in

accounts receivable due to lower revenues in the first quarter of 2021, compared to the fourth quarter of 2020, a $180,256 decrease in

prepaid expenses and other current assets as the December 31, 2020 balance included a receivable for payment due for warrant exercises,

a $167,147 increase in accounts payable primarily due to increased inventory purchases, and a $139,730 increase in accrued expenses for

accrued payroll for Q1 2021 that was paid in Q2 2021.

Net loss of $942,521 for the

three months ended March 31, 2020 decreased by $108,152 for non-cash expense items that included depreciation and amortization, common

stock issued for services for director compensation, non-cash compensation expense related to stock options, amortization of debt discount

to interest expense associated with the related party note and amortization of operating lease right of use asset.

Cash used in operations

for the period included increases in inventory by $605,396 for product needed for fiscal Q2 deliveries, prepaid expenses and other current

assets of $308,685 for vendor prepayments, funding our annual business insurance and prepaid annual Nasdaq fees, increase in accounts

receivable of $214,077 due to higher sales in Q1 2020 compared to Q1 2019 and a slow paying customer from Q4 2019, payment of a convertible

note originally issued in lieu of salary for a related party of $220,417 and a $223 increase in deposits.

Cash provided by operations

included an increase of $522,770 for accounts payable, primarily for inventory purchases, $79,456 for accrued expenses, primarily for

payroll, $22,218 for an increase for sales tax payable and $5,447 for an increase in deferred revenue.

Cash used in investing activities

included $33,445 to purchase manufacturing equipment and $22,129 for patent related costs during the three months ended March 31, 2021.

In the three months ended March 31, 2020, $125,142 was used to purchase manufacturing equipment and $18,371 was used to fund patent related

During the three months ended

March 31, 2021, cash generated by our financing activities included $2,469,544 in proceeds received from the exercise of warrants and

we used cash of $46,962 to cover payroll taxes related to cashless stock option exercises.

During the three months ended March 31, 2020,

cash generated by our financing activities included $282,350 in proceeds received from the exercise of warrants and we used cash of $2,718

to make the final repayment of an auto loan.

Working capital has increased

from $28,063,320 at December 31, 2020 to $29,507,478 at March 31, 2021, primarily due to cash proceeds from warrant exercises, partially

offset by operating expenses.

While the Company continues

to grow market awareness and focusing on the generation of sales, the Company has not generally earned a net profit on its sales of products

during recent years.

However, we believe that our net profit will improve as our revenues grow.

Management believes that with increased

production volumes that we believe are forthcoming, efficiencies will continue to improve, and total per unit production costs will decrease,

thus allowing for increasing gross profits on the EV ARC ™

and Solar Tree®

products in the future.

The Company may be

required to raise capital from the issuance of its securities or debt instruments until it achieves positive cash flow from its business,

which is predicated on increasing sales volumes and the continuation of production cost reduction measures.

Management cannot currently

predict when or if it will achieve positive cash flow.

On July 7, 2020, the Company

issued 1,393,900 shares of common stock in an underwritten public offering at $8.25 per share, generating approximately $10,500,000 after

deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

On November 27, 2020, the Company

issued 250,000 shares of common stock in an underwritten public offering at $30.00 per share, generating approximately $6,900,000 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.

Management believes that evolution

in the operations of the Company may allow it to execute on its strategic plan and enable it to experience profitable growth in the future.

This evolution is anticipated to include the following continual steps:

addition of sales personnel and independent sales channels, continued

management of overhead costs, increased overhead absorption resulting from revenue growth, process improvements and vendor negotiations

leading to cost reductions, increased public awareness of the Company and its products, and the maturation of certain long sales cycle

opportunities.

Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue

There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives.

Off-Balance Sheet Arrangements

We do not have any off-balance

sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors.

Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

In August 2021, stock options

to purchase 89,800 shares of common stock were exercised on a cashless basis at a weighted average exercise price of $13.27 resulting

in the issuance of 33,142 shares of common stock, after reducing the shares to cover the cost of the shares and taxes.

The Company withheld

shares to cover income and payroll taxes totaling $543,937, which was charged to additional paid in capital.

On July 19, 2021, we filed

a Certificate of Amendment to the Articles of Incorporation to increase our number of authorized common stock from 9,800,000 to 350,000,000.

The stockholders of the Company approved the amendment at the Company’s annual stockholders meeting on July 14, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements