What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-31 compared with 2021-03-30 · 895 added, 1228 removed, 391 unchanged (84% of the section changed)

3 unchanged sentences

for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed

in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported

within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such

in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported

within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such

information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,

to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures”

in Rule 15d-15(e) under the Exchange Act.

3 unchanged sentences

controls and procedures.

At the end of the period covered

by this Annual Report on Form 10-K, we conducted an evaluation, under the supervision and with the participation of our management, including

our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and

Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2020,

the disclosure controls and procedures of our Company were not effective to ensure that the information required to be disclosed in our

Exchange Act reports was recorded, processed, summarized and reported on a timely basis due to material weaknesses in internal controls

as identified below under “Management’s Report on Internal Control Over Financial Reporting”.

Since the type of material

weaknesses identified below have a pervasive effect across the organization, management has determined that these circumstances constitute

material weaknesses that therefore affects disclosure controls and procedures.

Management’s Report on Internal Control

At the end of the period covered by this Annual

Report on Form 10-K, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief

Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, the disclosure

controls and procedures of our Company were not effective to ensure that the information required to be disclosed in our Exchange Act

reports was recorded, processed, summarized and reported on a timely basis due to material weakness in internal controls as identified

below under “Management’s Report on Internal Control Over Financial Reporting”.

Since the type of material weakness

identified below have a pervasive effect across the inventory transaction cycle, management has determined that these circumstances constitute

material weakness that therefore affects disclosure controls and procedures.

Management’s Report on Internal Control

Over Financial Reporting

17 unchanged sentences

in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis.

The Company is aware of the

shortfalls in internal controls over financial reporting and intends to continue to improve its internal control over financial reporting

and procedures.

We identified the following material weaknesses which exist as of December 31, 2020:

The Company currently does not have automated

manufacturing or purchasing systems in place to track inventory purchases, transactions, bills of material, part numbers, product costing,

labor or a perpetual inventory system.

The Company performs manual processes during the year to track and control inventory transactions,

apply labor and overheads to inventory and to perform a wall to wall physical inventory at the end of the year to confirm the ending

inventory balance and valuation.

While these processes provide good results in determining inventory and cost of sales transactions,

as we grow, it has become a very time-consuming process and could impact our ability to submit timely reporting.

A manufacturing system

will also provide better management tools to analyze and plan production.

We identified the following material weakness which existed as of December 31, 2021:

The Company currently does not have sufficient controls in place to

ensure that all inventory is appropriately tracked and recorded on a timely basis, given the lack of an automated tracking system

and the manual nature of its current processes and controls surrounding inventory.

The Company performs manual processes during the

year to track and control inventory transactions, apply labor and overheads to inventory and to perform a wall-to-wall physical

inventory at the end of the year to confirm the ending inventory balance and valuation.

While these processes provide good results

in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact

our ability to submit timely reporting.

A manufacturing system will also provide better management tools to analyze and plan

This will avoid over-purchasing or shortages of inventory.

We plan to implement a manufacturing and purchasing system during fiscal 2021.

Since these controls have a pervasive effect across

the organization, management has determined that these circumstances constitute material weaknesses, based on the criteria established

in the “Internal Integrated Framework”

issued by COSO in 2013 and as a result, we did not maintain effective internal control

We plan to implement a manufacturing and purchasing system

during fiscal 2022.

Since these controls have a pervasive effect across the inventory

transaction cycle, management has determined that these circumstances constitute a material weakness, based on the criteria established

in the “Internal Integrated Framework” issued by COSO in 2013 and as a result, we did not maintain effective internal control

over financial reporting as of December 31, 2021.

4 unchanged sentences

Changes in Internal Controls Over Financial Reporting

Since September 30, 2020,

we implemented stronger manual processes through the use of spreadsheets to assist in our annual physical inventory, which improved our

manual controls during the year-end physical inventory process.

In addition, a Director of Operations and Director of Engineering were

hired who were able to assist with the inventory at year-end which strengthened controls.

With these two positions filled, we have begun

to hold several demonstrations to review various Enterprise Resource Planning (ERP) systems which would include manufacturing and purchasing

modules that are not available in our current ERP.

We hope to make a decision in the first half of 2021 and begin the implementation shortly

In addition, Robert C.

the Company’s director and Audit Committee Chairman passed away in February 2021.

This is a great loss to the Company.

is an important position with regard to maintaining strong entity level controls and supporting governance requirements for the Company.

We are currently in the process of searching for qualified candidates and anticipate that this role will be filled in April 2021.

During the quarter ended December 31,

2021, we continued to implement stronger manual processes.

Our annual year-end wall-to-wall inventory process was improved over prior

We still utilized spreadsheets to track our inventory counts and valuation, but our processes were improved to reduce the time

required and the accuracy of the count.

In October, we hired a Director of Operations who implemented improved warehouse organization,

inventory procedures, order processing and more to add stronger processes and strengthen our controls.

In late December, we also hired

an experienced electro-mechanical assembly supervisor who will add oversight and process improvements to our inventory and manufacturing

processes going forward.

In addition, we hired a seasoned financial controller with accounting expertise to the Company to help insure

we meet our closing timeline and assist in testing our manual controls.

With these resources in place, we intend to implement a new Enterprise

Resource Planning (ERP) system.

OTHER INFORMATION.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by

17 unchanged sentences

or will be included in an amendment to this Form 10-K.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

AND FINANCIAL STATEMENT SCHEDULES.

Financial Statements

8 unchanged sentences

Underwriting Agreement, dated November 23, 2020

Asset Purchase Agreement By and Between Beam Global and AllCell Technologies, LLC dated February 16, 2022

Articles of Incorporation

24 unchanged sentences

Security Agreement -Purchase Order Financing, dated September 18, 2017

Security Agreement –

Convertible Secured Promissory Note, dated September 18, 2017

Security Agreement – Convertible Secured Promissory Note, dated September 18, 2017

Promissory Note for bridge loan, dated August 27, 2018

6 unchanged sentences

Change in Control Severance Benefit Plan

Lease Agreement –

5660 Eastgate Dr.

Consent of Salberg & Company, P.A.

Lease Agreement – 5660 Eastgate Dr.

2021 Beam Global Equity Incentive Plan

Consent of Independent Registered Public Accounting Firm (RSM US

Consent of Independent Registered Public Accounting Firm (Salberg & Company, P.A.

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

4 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

* Indicates a management contract or compensatory

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Index to Financial Statements

Report of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting

Firms (PCAOB ID 49 (2021)) (PCAOB ID 106

Balance Sheets at December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Changes in Stockholders’

Equity for the Years Ended December 31, 2020 and 2019

Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Notes to Financial Statements

Report of Independent Registered Public Accounting

To the Stockholders and the Board of Directors of Beam Global

Opinion on the Financial Statements

We have audited the accompanying balance sheet

of Beam Global (the Company) as of December 31, 2021, the related statements of operations, changes in stockholders’ equity and

cash flows, for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations

and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required

to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective or complex judgments.

We determined that there are no critical audit matters.

/s/ RSM US LLP

We have served as the Company's auditor since 2021.

Los Angeles, California

March 31, 2022

Report of Independent Registered Public

Accounting Firm

To the Board of Directors and Stockholders

Opinion on the Financial Statements

We have audited the accompanying balance

sheets of Beam Global (the “Company”) as of December 31, 2020 and 2019, the related statements of operations, changes

in stockholders’

equity, and cash flows, for each of the two years in the period ended December 31, 2020, and the related

notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally

To the Board of Directors and Stockholders of:

Opinion on the Financial Statement

We have audited the accompanying balance sheet

of Beam Global (the “Company”) as of December 31, 2020, the related statement of operations, changes in stockholders’

equity, and cash flow, for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2020, and the results of its operations and its cash flows for year then ended, in conformity with accounting principles generally

accepted in the United States of America.

1 unchanged sentence

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

1 unchanged sentence

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of internal control over financial reporting.

As part of our audits we are required to

obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness

of the Company’s internal control over financial reporting.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of internal control over financial reporting.

As part of our audit we are required to obtain an understanding of

internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated

below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any

way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Analysis of Liquidity and Going Concern

As summarized in Footnote 2 “Liquidity”

to the financial statements, the Company has a history of net losses and net cash used in operating activities and believes such

conditions will continue for a period of time into the future.

These are considered adverse conditions or events that led management

to consider whether there is substantial doubt about the ability of the entity to continue as a going concern for a reasonable

period of time.

The critical audit matters communicated below

are matters arising from the 2020 audit of the financial statements that were communicated or required to be communicated to the audit

committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Analysis of Liquidity and Going

As summarized in Footnote 2 “Liquidity”

to the financial statements, the Company has a history of net losses and net cash used in operating activities and believes such conditions

will continue for a period of time into the future.

These are considered adverse conditions or events that led management to consider

whether there is substantial doubt about the ability of the entity to continue as a going concern for a reasonable period of time.

However, management believes that cash

raises through public offerings both in 2019 and 2020 which created a cash balance and positive working capital alleviates the

substantial doubt related to going concern and the need for a going concern risk disclosure.

We identified the going concern risk analysis

as a critical audit matter.

Auditing management’s going concern analysis including their process to develop the analysis

and the projections of future cash flows, operating trends, and assessments of internal and external matters that may affect the

Company’s future operations and cash flows involved a high degree of subjectivity.

Additionally, auditing management’s

plans to address the going concern risk involved highly subjective auditor judgment.

The primary procedures we performed to

address this critical audit matter included (a) Assessed the reasonableness of management’s process for developing their

assessment of whether a going concern risk exists, (b) Assessed the reasonableness of assumptions management used in their future

cash flow projections including comparison to prior year results, consideration of positive and negative evidence impacting management’s

forecasts, and consideration of the Company’s financing arrangements in place as of the report date, (c) Developed our own

independent calculation of expected source and use of funds and needs of the Company over the one year period from the date of

issuance of the financial statements, (d) confirmed cash balances as of December 31, 2020 with the banks and tested management’s

bank reconciliations, (e) Identified management’s plans for dealing with the adverse conditions and events discussed above

and assessed the reasonableness of the assumptions of such plans, (f) Assessed whether it is probable that management’s plans,

when implemented, will mitigate the adverse effects of the conditions and events discussed above, (g) Concluded whether substantial

doubt exists as to whether the Company can continue as a going concern for a period of one year after the financial statements

are issued and (h) considered the effect of such conclusion on the financial statement disclosures and our report of independent

registered public accounting firm.

We agreed with management’s assessment that the going concern risk is alleviated and a

liquidity footnote would be sufficient.

raises through public offerings both in 2019 and 2020 which created a cash balance and positive working capital alleviates the substantial

doubt related to going concern and the need for a going concern risk disclosure.

We identified the going concern risk

analysis as a critical audit matter.

Auditing management’s going concern analysis including their process to develop the analysis

and the projections of future cash flows, operating trends, and assessments of internal and external matters that may affect the Company’s

future operations and cash flows involved a high degree of subjectivity.

Additionally, auditing management’s plans to address the

going concern risk involved highly subjective auditor judgment.

The primary procedures we performed

to address this critical audit matter included (a) Assessed the reasonableness of management’s process for developing their assessment

of whether a going concern risk exists, (b) Assessed the reasonableness of assumptions management used in their future cash flow projections

including comparison to prior year results, consideration of positive and negative evidence impacting management’s forecasts, and

consideration of the Company’s financing arrangements in place as of the report date, (c) Developed our own independent calculation

of expected source and use of funds and needs of the Company over the one year period from the date of issuance of the financial statements,

(d) confirmed cash balances as of December 31, 2020 with the banks and tested management’s bank reconciliations, (e) Identified

management’s plans for dealing with the adverse conditions and events discussed above and assessed the reasonableness of the assumptions

of such plans, (f) Assessed whether it is probable that management’s plans, when implemented, will mitigate the adverse effects

of the conditions and events discussed above, (g) Concluded whether substantial doubt exists as to whether the Company can continue as

a going concern for a period of one year after the financial statements are issued and (h) considered the effect of such conclusion on

the financial statement disclosures and our report of independent registered public accounting firm.

We agreed with management’s

assessment that the going concern risk is alleviated and a liquidity footnote would be sufficient.

/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

We have served as the Company’s auditor

We had served as the Company’s

auditor from 2008 through March 31, 2021.

Boca Raton, Florida

March 30, 2021

NW Corporate Blvd., Suite 240 •

Boca Raton, FL 33431-7328

(561) 995-8270 •

(866) CPA-8500 •

(561) 995-1920

www.salbergco.com

info@salbergco.com

National Association of Certified Valuation Analysts •

Registered with the PCAOB

CPAConnect with Affiliated Offices Worldwide •

Member AICPA Center for Audit Quality

Balance Sheets

Current assets

Accounts receivable, net of $0 and $2,429 reserve for bad debt at December 31, 2020 and December 31, 2019, respectively

Prepaid and other current assets

Inventory, net

Accounts receivable

Prepaid expenses and other current assets

Total current assets

7 unchanged sentences

Deferred revenue

Convertible note payable - related party, net of debt discount of $5,990 at December 31, 2019

Operating lease liabilities, current

Total current liabilities

Deferred revenue, noncurrent

Operating lease liabilities, noncurrent

2 unchanged sentences

Stockholders' equity

Preferred stock, $0.001 par value, 10,000,000 authorized, 0 outstanding as of December 31, 2020 and 2019, respectively.

Common stock, $0.001 par value, 9,800,000 shares authorized, 8,482,387 and 5,208,170 shares issued or issuable and outstanding at December 31, 2020 and December 31, 2019, respectively.

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

Common stock, $ 0.001 par value, 350,000,000 shares authorized, 8,971,711 and 8,482,387 shares issued or issuable and outstanding as of December 31, 2021 and 2020, respectively.

Additional paid-in-capital

4 unchanged sentences

Total liabilities and stockholders' equity

The accompanying notes are an integral part

of these Financial Statements

The accompanying notes are an integral part of

these Financial Statements

Statements of Operations

3 unchanged sentences

Loss from operations

( 6,599,318 )

( 5,207,634 )

Other income (expense)

3 unchanged sentences

Loss before income tax expense

( 6,595,214 )

( 5,208,081 )

Income tax expense

3 unchanged sentences

Weighted average shares outstanding - basic and diluted

The accompanying notes are an integral part

of these Financial Statements

Statements of Changes in Stockholders'

For the Years Ended December 31, 2020

Additional Paid-in-

Stockholders' Equity

The accompanying notes are an integral part of

these Financial Statements

Statements of Changes in Stockholders' Equity

For the Years Ended December 31, 2021 and 2020

Stockholders'

Paid-in-Capital

Balance at December 31, 2019

$ ( 45,809,581 )

$ (2,480,679 )

Stock issued for director services - vested

1 unchanged sentence

Stock option expense

Shares issued for cash

Warrants issued for cash

Cash fees related to stock offering

Fractional share cash payment

Fractional shares issued from reverse split

Value of warrants and beneficial conversion features related to debt instruments

Net loss for 2019

Proceeds from issuance of common stock, pursuant to public offering

Warrants exercised for cash

Warrants exercised (cashless)

Stock option exercise (cashless)

Stock issued for services

Cash fees related to stock offerings

( 1,566,852 )

( 5,213,025 )

Balance at December 31, 2020

3 unchanged sentences

Stock option expense

Proceeds from issuance of common stock, pursuant to public offering

Warrants exercised for cash

Warrants exercised (cashless)

Stock option exercise (cashless)

Stock issued for services

Cash fees related to stock offerings

Net loss for 2020

Stock option exercise (for cash)

( 6,596,039 )

Balance at December 31, 2021

$ ( 57,618,645 )

The accompanying notes are an integral part

of these Financial Statements

The accompanying notes are an integral part of

these Financial Statements

Statements of Cash Flows

7 unchanged sentences

Compensation expense related to grant of stock options

Amortization of debt discount

Amortization of operating lease right of use asset

Provision for doubtful accounts

Amortization of debt discount

Changes in assets and liabilities:

1 unchanged sentence

Accounts receivable

( 2,040,783 )

( 1,021,937 )

Prepaid expenses and other current assets

2 unchanged sentences

Accrued expenses

Convertible note payable issued (repaid) in lieu of salary - related party

Convertible note payable repaid in lieu of salary - related party

Sales tax payable

1 unchanged sentence

Net cash used in operating activities

( 6,406,707 )

( 4,138,138 )

Investing Activities:

3 unchanged sentences

Financing Activities:

Repayments on convertible line of credit, net

Repayments of convertible notes payable, net

Repayments on notes payable

Repayments of auto loan

1 unchanged sentence

Repayment on note payable - Paycheck Protection Program

Withhold shares to cover taxes for cashless stock option exercise

Proceeds from stock option exercises

Proceeds from warrant exercises

Payments of equity offering costs

Fractional share payments

( 1,566,852 )

Proceeds from issuance of common stock and warrants, pursuant to public offering

Net cash provided by financing activities

Net increase in cash

Net (decrease) increase in cash

( 4,754,292 )

Cash at beginning of year

4 unchanged sentences

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Recording of debt discount

Transfer of prepaid asset to inventory

Recording of right of use asset and corresponding liability

Purchase of property and equipment by incurring current liabilities

Depreciation cost capitalized into inventory

Reclassification of deferred equity offering costs to additional paid in capital

Recording of right of use asset and corresponding liability

Reclassification of deferred equity offering costs into APIC

Transfer of prepaid asset to inventory

Transfer of fixed asset to inventory

The accompanying notes are an integral part

of these Financial Statements

The accompanying notes are an integral part of

these Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2 unchanged sentences

CORPORATE ORGANIZATION

Beam Global (formerly

Envision Solar International, Inc.) was incorporated in June 2006 as a limited liability company (“LLC”).

series of transactions and mergers, including a series of 2010 transactions where the then existing entity was acquired by an inactive

publicly-held company in a transaction treated as a recapitalization of the company, the resulting entity became Envision Solar

International, Inc., a Nevada Corporation.

Additionally, the Company had formed various wholly owned subsidiaries to account for

its planned future operations, but these entities were dissolved over the subsequent years.

On September 15, 2020, Envision Solar

International, Inc.

announced its rebranding and changed its corporate name to Beam Global (hereinafter the “Company”,

"us", "we", "our"

or "Beam") and trading on Nasdaq:

Beam Global (formerly Envision

Solar International, Inc.) was incorporated in June 2006 as a limited liability company (“LLC”).

Through a series of transactions

and mergers, including a series of 2010 transactions where the then existing entity was acquired by an inactive publicly held company

in a transaction treated as a recapitalization of the company, the resulting entity became Envision Solar International, Inc., a Nevada

On September 15, 2020, Envision Solar International, Inc.

announced its rebranding and changed its corporate name to Beam

Global (hereinafter the “Company”, "us", "we", "our" or "Beam") and trading on Nasdaq:

BEEM and BEEMW.

NATURE OF OPERATIONS

Beam is a cleantech

innovation company based in San Diego, California.

We develop, design, engineer, manufacture and sell renewably energized high-quality

products for electric vehicle (“EV”) charging, outdoor media and branding, and energy security.

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’s products

and proprietary technology solutions target three markets that are experiencing significant growth with annual global spending

in the billions of dollars:

Beam is a cleantech innovation

company based in San Diego, California.

We develop, design, engineer, manufacture and sell high-quality, renewably energized infrastructure

products for electric vehicle (“EV”) charging, outdoor media and branding, 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

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’s products and

proprietary technology solutions target three markets that are experiencing significant growth with annual global spending in the billions

electric vehicle (EV) charging infrastructure;

out of home advertising platforms;

energy security and disaster preparedness;

REVERSE STOCK SPLIT

The Company completed

a 1 for 50 reverse split of our common stock in April 2019, and all share and per share data in the accompanying financial statements

and footnotes for all periods presented have been retroactively adjusted for this reverse stock split.

outdoor media advertising.

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.

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 year ended December 31, 2020.

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 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.

To date, while we saw seen some delays and cancellations of opportunities in our pipeline in 2020 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 years ended December 31, 2020 and December 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.

Company will continue to monitor its progress and communicate changes in estimates and assumptions with shareholders, as necessary.

USE OF ESTIMATES

The preparation of

financial statements in conformity with accounting principles generally accepted in the United States of America 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

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.

The preparation of financial

statements in conformity with accounting principles generally accepted in the United States of America 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.

CONCENTRATIONS

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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 December 31, 2020.

As of December 31, 2020, approximately $26,889,000 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 December 31, 2021.

As of December 31, 2021, approximately $ 22,070,000 of the Company’s

cash deposits were greater than the federally insured limits.

Major Customers

The Company has a small,

but growing customer base, which can result in a concentration of revenues and accounts receivable.

The Company continually assesses

the financial strength of its customers.

For the year ended December 31, 2020, revenues from one customer accounted for 29% of

total revenues, and for the year ended December 31, 2019, revenues from two customers accounted for 44% and 22% of total revenues,

with no other single customer accounting for more than 10% of revenues.

At December 31, 2020, accounts receivable from two customers

accounted for 61% and 13% of total accounts receivable, and at December 31, 2019, accounts receivable from six customers accounted

for 35%, 21%, 12%, 11%, 11% and 10% of total accounts receivable, with no other single customer accounting for more than 10% of

the accounts receivable balance.

Major Suppliers

The Company sources

its materials and components from a wide variety of vendors.

The Company has several components that are currently sourced from

only one supplier.

They are standard off-the-shelf components, but these components differ between manufacturers in terms of their

specifications and performance.

If one of these components became unavailable, we would be able to secure supply from another source

and incorporate in our design with some modifications.

For these components, we maintain adequate supply to mitigate any supply

For the year ended December 31, 2021, two customers accounted for 33 %

of total revenues each.

For the year ended December 31, 2020, revenues from one customer accounted for 30 %

of total revenues.

At December 31, 2021, accounts receivable from four customers accounted for 30 %, 22 %, 13 %

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

December 31, 2020, accounts receivable from two customers accounted for 61 %

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

the years ended December 31, 2021 and 2020, the Company had a heavy concentration of sales to federal, state and local governments

which represented 86 %

of revenues, respectively.

CASH AND CASH EQUIVALENTS

For the purposes of

the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or

less when purchased to be cash equivalents.

For the purposes of the statements

of cash flows, the Company considers all liquid investments with an original maturity of three months or less when purchased to be cash

There were no cash equivalents at December 31, 2021 or December 31, 2020.

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 December 31, 2020, the carrying amounts of these instruments approximated their fair values because of

the short-term nature of these instruments.

ACCOUNTS RECEIVABLE

The Company’s financial

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

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

ACCOUNTS RECEIVABLE

are customer obligations due under normal trade terms.

Management reviews accounts receivable on a periodic basis to determine

if any receivables may 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, net of recoveries, and economic conditions.

The Company includes any accounts receivable

balances that are determined to be uncollectible in its overall allowance for doubtful accounts.

After all attempts to collect

a receivable have failed, the receivable is written off against the allowance.

Inventory is stated

at the lower of cost and net realizable value.

Accounts receivable are customer

obligations due under normal trade terms.

Management reviews accounts receivable on a periodic basis to determine if any receivables may

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,

net of recoveries, and economic conditions.

The Company includes any accounts receivable balances that are determined to be uncollectible

in its overall allowance for doubtful accounts.

After all attempts to collect a receivable have failed, the receivable is written off

against the allowance.

There were no allowances for doubtful accounts as of the years ended December 31, 2021 and 2020.

Inventory is stated at

the lower of cost and net realizable value.

Cost is determined using the first-in, first-out method of accounting.

costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for

products being manufactured, and finished goods.

Included in these costs are direct labor and certain manufacturing overhead costs

associated with the manufacturing process.

The Company regularly reviews inventory components and quantities on hand and performs

annual physical inventory counts.

A reserve is established if this review process determines the net realizable value of such inventory

may be below the carrying value.

Inventory costs

primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products

being manufactured, and finished goods.

Included in these costs are direct labor and certain manufacturing overhead costs associated

with normal capacity in the manufacturing process.

The Company regularly reviews inventory components and quantities on hand and

performs annual physical inventory counts.

PROPERTY, EQUIPMENT AND DEPRECIATION

Property and equipment

is recorded at cost.

Depreciation is computed using the straight-line method based on the estimated useful lives of the related

assets of 3 to 7 years.

Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are

expensed as incurred.

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

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 $4,502 and $3,217 in the years ended December 31, 2020

and 2019, respectively.

In February 2016, the

Financial Accounting Standards Board issued Accounting Standards Update No.

“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.

adopted this standard as of January 1, 2019 using the effective date method and applying the package of practical expedients to

leases that commenced before the effective date whereby the Company elected not to reassess the following:

(i) whether any expired

or existing contracts contain leases, and (ii) initial direct costs for any existing leases.

For contracts entered into after the

effective date, at the inception of a contract the Company assesses whether the contract is, or contains, a lease.

The Company’s

assessment is based on:

(1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right

to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to

direct the use of the asset.

The Company allocates the consideration in the contract to each lease component based on its relative

stand-alone price to determine the lease payments.

The Company has elected to not recognize right of use assets and lease liabilities

for short term leases that have a term of 12 months or less.

Property and equipment is

recorded at cost.

Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of

3 to 7 years .

Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are expensed as incurred.

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.

amortization related to patents was $ 30,175 and $ 11,574 as of December 31, 2021 and 2020, respectively.

Patent amortization expense was

$ 18,600 and $ 4,502 in the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the estimated patent amortization

expense for each of the five succeeding years is $ 13,307 .

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

The Company’s assessment is based

(1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the

economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset.

Company allocates the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease

The Company has elected to not recognize right of use assets and lease liabilities for short term leases that have a term of

12 months or less.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts

for long-lived assets in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.”

This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held

and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated

by the asset.

The Company accounts for long-lived

assets in accordance with the provisions of Accounting Standards Codification (“ASC”) 360-10-35-15 “Impairment or Disposal

of Long-Lived Assets.” This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets

to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be

generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which

the carrying amount of the assets exceeds the fair value of the assets.

Assets to be disposed of are reported at the lower of the

carrying amount or fair value less costs to sell.

ACCOUNTING FOR DERIVATIVES

The Company evaluates

its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those

contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.”

result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded

as a liability.

In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement

of operations as other income (expense).

Upon conversion of a note where the embedded conversion option has been bifurcated and

accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives,

and debt discounts, and recognizes a net gain or loss on extinguishment.

Equity instruments that are initially classified

as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the

instrument on the reclassification date.

Assets to be disposed of are reported at the lower of the carrying

amount or fair value less costs to sell.

REVENUE RECOGNITION

Beam follows the revenue

standards of Financial Accounting Standards Board Update No.

“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 that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognized in accordance with that core principle by applying the following five steps:

1) identify the contracts with

2) identify the performance obligations in the contract;

Beam follows the revenue standards

of Financial Accounting Standards Board Update No.

“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

that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognized

in accordance with that core principle by applying the following five steps:

1) identify the contracts with a customer;

2) identify the

performance obligations in the contract;

3) determine the transaction price;

4) allocate the transaction

price to the performance obligations;

4) allocate the transaction price to the performance obligations;

and 5) recognize revenue when (or as) we satisfy a performance obligation.

Revenues are primarily

derived from the direct sales of manufactured products.

Revenues may also consist of maintenance fees for the maintenance of previously

sold products and revenues from sales of professional services.

Revenues are primarily derived

from the direct sales of manufactured products.

Revenues may also consist of maintenance fees for the maintenance of previously sold products

and revenues from sales of professional services.

Revenues from inventoried

product are recognized upon the final delivery of such product to the customer or when legal transfer of ownership takes place.

Revenue values are fixed price arrangements determined at the time an order is placed or a contract is entered into.

is typically obligated to make payment for such products within a 30-45 day period after delivery.

Revenues from maintenance fees for services

provided by the Company are recognized equally over the period of the maintenance term.

Revenue values are fixed price arrangements

determined at the time an order is placed or a contract is entered into.

The customer is typically obligated to make payment for

the service in advance of the maintenance period.

Extended maintenance

or warranty services, where the customer has the option to purchase this extension as a separate purchase option, are considered

a separate performance obligation.

If the Company does not control the extended services, in terms of having the responsibility

for fulfillment of the obligation 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.

values are fixed price arrangements determined at the time an order is placed or a contract is entered into.

The customer is typically

obligated to make payment for such products within a 30-45 day period after delivery.

Revenues from maintenance fees for services provided

by the Company are recognized equally over the period of the maintenance term.

Revenue values are fixed price arrangements determined

at the time an order is placed or a contract is entered into.

The customer is typically obligated to make payment for the service in advance

of the maintenance period.

Extended maintenance or warranty

services, where the customer has the option to purchase this extension as a separate purchase option, are considered a separate performance

If the Company does not control the extended services, in terms of having the responsibility for fulfillment of the obligation

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 as services are performed.

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

Revenues on a bill-and-hold

arrangement are recognized when control of the product is transferred to the customer, but physical possession of the product transfers

at a point in time in the future.

To determine this, the reason for the arrangement must be substantive, the product must be separately

identified and ready for physical transfer, the customer has the ability to direct the use of the product and the product cannot

be directed to another customer.

The Company has a policy

of recording sales incentives as a contra revenue.

The Company includes

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

Any deposits received

from a customer prior to delivery of the purchased product or monies paid prior to the period for which a service is provided are

accounted for as deferred revenue on the balance sheet.

Sales tax is recorded

on a net basis and excluded from revenue.

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.

The Company has a policy of

recording sales incentives as a contra revenue.

The Company includes shipping

and handling fees billed to customers as revenues.

Any deposits received from

a customer prior to delivery of the purchased product or monies paid prior to the period for which a service is provided are accounted

for as deferred revenue on the balance sheet.

Sales tax is recorded on a

net basis and excluded from revenue.

The Company generally

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negotiated, and it will pass on the warranties from its vendors, if any, which generally covers this one-year period.

In accordance

with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated.

December 31, 2020, the Company has no product warranty accrual given the Company’s historical financial warranty expense.

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

At December 31, 2021, the Company has no

product warranty accrual based on 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

The Company 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.

further includes shipping and handling costs as cost of revenues.

RESEARCH AND DEVELOPMENT

In accordance with

ASC 730-10, “Research and Development,”

expenditures for research and development of the Company’s products

are expensed when incurred and are included in operating expenses.

The Company recognized research and development costs of $261,611

and $412,590 for the years ending December 31, 2020 and 2019, respectively.

These costs were related to the development of

new products including the solar tree, the EV ARC™

2020 and the DC Fast Charging unit.

These costs include employee labor for our

engineers and outside contracted engineers and materials.

The Company conducts

advertising for the promotion of its products and services.

In accordance with ASC 720-35, “Advertising Costs,”

costs are charged to operations and included in operating expenses when incurred.

Such amounts aggregated $122,840 in 2020 and

$126,120 in 2019.

In accordance with ASC 730-10,

“Research and Development,” expenditures for research and development of the Company’s products are expensed when incurred

and are included in operating expenses.

The Company recognized research and development costs of $ 360,586 and $ 261,611 for the years ending

December 31, 2021 and 2020, respectively.

The Company conducts advertising

for the promotion of its products and services.

In accordance with ASC 720-35, “Advertising Costs,” advertising costs are

charged to operations and included in operating expenses when incurred.

Such amounts aggregated $ 138,072 in 2021 and $ 122,840 in 2020.

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 awards to employees and directors.

The fair value of the portion of an award that is ultimately expected to vest

is recognized as an expense over the shorter of the service periods or vesting periods using the straight-line attribution method.

The Company adopted

ASU 2018-07 and accounts for non-employee share-based awards in accordance with the measurement criteria of ASC 718 and recognizes

the fair value of such awards over the service period.

The Company used the modified prospective method of adoption.

no cumulative effect of adoption on January 1, 2019.

The Company estimates

the fair value of each stock option at the grant date by using the Black-Scholes option pricing model.

The Company accounts

for income taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,”

which requires, among other things, an

asset and liability approach to calculating deferred income taxes.

The asset and liability approach requires the recognition of

deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts

and the tax bases of assets and liabilities.

A valuation allowance is provided to offset any net deferred tax assets for which

management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows

the provisions of ASC 740-10-25-5, “

Basic Recognition Threshold .”

When tax returns are filed, it is highly

certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty

about the merits of the position taken or the amount of the position that would be ultimately sustained.

In accordance with the

guidance of ASC 740-10-25-6, the benefit of a tax position is recognized in the financial statements in the period during which,

based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,

including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit

that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

The portion of

the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability

for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be

payable to the taxing authorities upon examination.

The Company believes its tax positions are all highly certain of being upheld

upon examination.

As such, the Company has not recorded a liability for unrecognized tax benefits.

As of December 31, 2020, tax

years 2017 through 2020 remain open for IRS audit.

The Company has received no notice of audit from the IRS for any of the open

The Company recognizes the benefit of a

tax position when it is effectively settled.

ASC 740-10-25-10, “Basic Recognition Threshold”

provides guidance on how

an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized

The Company follows ASC 718,

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

awards to employees and directors.

The fair value of the portion of an award that is ultimately expected to vest is recognized as an expense

over the shorter of the service periods or vesting periods using the straight-line attribution method.

The Company estimates the

fair value of each stock option at the grant date by using the Black-Scholes option pricing model.

Forfeitures are accounted for as incurred,

as a reversal of share-based compensation expense related to awards that will not vest.

The Company accounts for income

taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,” which requires, among other things, an asset and liability

approach to calculating deferred income taxes.

The asset and liability approach requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.

A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that

the net deferred asset will not be realized.

The Company follows the provisions

of ASC 740-10-25-5, “ Basic Recognition Threshold .” When tax returns are filed, it is highly certain that some

positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits

of the position taken or the amount of the position that would be ultimately sustained.

In accordance with the guidance of ASC 740-10-25-6,

the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management

believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation

processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not

recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon

settlement with the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount

measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along

with any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company believes its

tax positions are all highly certain of being upheld upon examination.

As such, the Company has not recorded a liability for unrecognized

tax benefits.

ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by

a taxing authority.

As of December 31, 2021, tax years 2018 through 2021 remain open for IRS audit.

The Company has received no notice of audit

from the IRS for any of the open tax years.

The Company recognizes the

benefit of a tax position when it is effectively settled.

ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance

on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized

tax benefits.

ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing

For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit.

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

Diluted 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.

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 consists 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 263,433

341,808 common shares and warrants to purchase 965,584 common shares were outstanding at December 31, 2020.

Convertible debt convertible

into 35,907 common shares, options to purchase 239,704 common shares and warrants to purchase 2,535,790 common shares were outstanding

at December 31, 2019.

These shares were not included in the computation of diluted loss per share for the years ended December

31, 2020 and 2019 because the effects would have been anti-dilutive.

These options and warrants may dilute future earnings per

common shares and warrants to purchase 519,658 shares of common stock were outstanding at December 31, 2021.

Options to purchase 341,808

common shares and warrants to purchase 965,584 shares of common stock were outstanding at December 31, 2020.

These shares were not included

in the computation of diluted loss per share for the years ended December 31, 2021 and 2020 because the effects would have been anti-dilutive.

These options and warrants may dilute future earnings per share.

CONTINGENCIES

Certain conditions

may exist as of the date the financial statements are issued which may result in a loss to the Company, but which will only be

resolved when one or more future events occur or fail to occur.

Company management and its legal counsel assess such contingent

liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal

proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal

counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount

of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a liability

has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in

the Company's financial statements.

If the assessment indicates that a potentially material loss contingency is not probable but

is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together

with an estimate of the range of possible loss if determinable would be disclosed.

The Company does not include legal costs in

its estimates of amounts to accrue.

The Company follows

ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information."

During 2020 and 2019, the Company

only operated in one segment;

Certain conditions may exist

as of the date the financial statements are issued which may result in a loss to the Company, but which will only be resolved when one

or more future events occur or fail to occur.

Company management and its legal counsel assess such contingent liabilities, and such assessment

inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the

Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal

proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably

estimated, then the estimated liability would be accrued in the Company's financial statements.

If the assessment indicates that a potentially

material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature

of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.

The Company does

not include legal costs in its estimates of amounts to accrue.

The Company follows ASC 280-10

for “Disclosures about Segments of an Enterprise and Related Information.” During 2021 and 2020, the Company only operated

in one segment;

therefore, segment information has not been presented.

RECLASSIFICATIONS

Where necessary, the prior year’s

information has been reclassified to conform to the current year 2020 statement presentation.

On the Balance Sheets, the operating

lease right of use asset of $316,389 was reclassified from the property and equipment, net line item and the operating lease liabilities,

current of $349,160 was reclassified from accrued expenses to conform to the December 31, 2020 presentation.

Where necessary, the prior

year’s information has been reclassified to conform to the current year 2021 statement presentation.

On the Balance Sheets, $69,711

of deferred revenue was reclassified to deferred revenue, noncurrent.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There have not been

any recent changes in accounting pronouncements or Accounting Standards Updates issued by the FASB that are of significance to

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

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 31, 2020.

The ASU is effective for smaller

reporting companies in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, although early

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

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

result, had no effect on its financial statements and related disclosures.

If the Company had recorded the warrants as a liability in

prior periods, with the full retrospective adoption on January 1, 2021, the liability would have been recast as equity and retained earnings

adjusted to reverse the effect of the liability entries and as a result, there would be no impact on the financial statements 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 financial statements.

The Company has a history

of net losses, including the accompanying financial statements for the years ended December 31, 2020 and 2019 where the Company

had net losses of $5,213,025 (which includes $1,181,473 of non-cash stock-based compensation expense) and $3,933,922 (which includes

$404,846 of non-cash stock-based compensation expense), and net cash used in operating activities of $4,138,138 and $4,826,340,

respectively.

In April and May of 2019, the Company closed 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.

In May 2020, the Company filed a shelf registration

statement on Form S-3 and subsequently closed two additional 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 and May 2019 offering which has generated

an additional $9,926,858 of proceeds during 2020.

The Company has 965,584 warrants remaining at December 31, 2020, which could

potentially generate an additional $6,108,903 of proceeds over the next 4.5 years, depending on the market value of our stock and

the warrant holders’

ability to exercise them.

The proceeds from these offerings are expected to provide working capital

to fund business operations and the development of new products.

The Company expects

to continue to incur losses for a period of time into the future.

In addition, there is no guarantee that the warrants will

be exercised or that additional capital or debt financing will be available when and to the extent required, or that if available,

it will be on terms acceptable to the Company.

The Company continues to invest in sales and marketing resources and seek out sales

contracts that should provide additional revenues and, in time, generate operating profits.

The cash balance at

December 31, 2020 was $26,702,804 and our working capital was $28,063,320 at December 31, 2020.

With these financings, 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.

ACCOUNTS RECEIVABLE AND DEFERRED REVENUE

Accounts Receivable

The Company records

accounts receivable as it bills its customers for products and services.

The allowance for doubtful accounts is based upon the

Company’s policy (See Note 1).

The bad debt expense was $0 and $2,429 for the years ended December 31, 2020 and 2019, respectively.

Deferred Revenue

Deferred revenues are

deposits from customers for product sales which have not yet been delivered and multi period maintenance contracts (See Note 1

Deferred revenue was $107,489 and $93,609 at December 31, 2020 and December 31, 2019, respectively.

of net losses, including the accompanying financial statements for the years ended December 31, 2021 and 2020 where the Company had net

losses of $ 6,596,039 (which includes $ 1,186,998 of non-cash stock-based compensation expense) and $ 5,213,025 (which includes $ 1,181,473

of non-cash stock-based compensation expense), respectively, and net cash used in operating activities of $ 6,406,707 and $ 4,138,138 , respectively.

In May 2020, the Company filed a shelf registration statement on Form S-3 and subsequently closed two additional 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

and May 2019 offering, which has generated an additional $ 2,854,223 and $ 9,926,858 of proceeds during 2021 and 2020, respectively.

The Company expects to continue

to incur losses for a period of time into the future.

In addition, there is no guarantee that the warrants will be exercised or that

additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable

to the Company.

The Company continues to invest in sales and marketing resources and seek out sales contracts that should provide additional

revenues and, in time, generate operating profits.

The cash balance at December

31, 2021 was $ 21,948,512 and our working capital was $ 24,611,810 at December 31, 2021.

With these financings, 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.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and

other current assets are summarized as follows:

Cash due for warrant exercises

Vendor prepayments

Prepaid expenses and other

current assets are summarized as follows:

Prepaid expenses and other current assets

Prepaid insurance

Vendor prepayments

Related party receivable

Cash due for warrant exercises

Total prepaid expenses and other current assets

See Note 15 for subsequent

collection of the cash due for warrant exercises.

Inventories are stated

at the lower of cost and net realizable value.

Related party receivables

as of December 31, 2021 and 2020 consisted primarily of payroll related taxes due for an employee option exercise.

Inventories are stated at

the lower of cost and net realizable value.

Costs are determined using the first in-first out (FIFO) method.

1 unchanged sentence

and 2020, inventory consists of the following:

Schedule of inventory

Finished goods

1 unchanged sentence

Raw materials

Inventory allowance

Total inventory

PROPERTY AND EQUIPMENT

Property and equipment

consists of the following:

Computer equipment and software

Property and equipment consist

of the following:

Schedule of property and equipment

Furniture and fixtures

Machinery and equipment

Computer equipment and software

Leasehold improvements

Machinery and equipment

Total property and equipment

1 unchanged sentence

Property and Equipment, net

Depreciation expense

for 2020 and 2019 was $36,450 and $37,283, respectively.

In 2020 and 2019, respectively, $20,363 and $25,761 of depreciation was

capitalized into inventory as manufacturing overhead costs.

Depreciation expense for 2021

and 2020 was $ 71,152 and $ 36,450 , respectively.

In 2021 and 2020, respectively, $ 32,136 and $ 20,363 of depreciation was capitalized into

inventory as manufacturing overhead costs.

In addition, net property and equipment of $ 3,023 and $ 0 were disposed of in 2021 and 2020,

respectively.

ACCRUED EXPENSES

The major components of accrued

expenses are summarized as follows:

The major components of accrued expenses

are summarized as follows:

Accrued expense schedule

Accrued vacation

Accrued salaries

Accrued interest

Other accrued expense

Accrued salaries and bonus

Vendor accruals

Other accrued expenses

Total accrued expenses

CONVERTIBLE LINE OF CREDIT

In April 2019, the

Company used proceeds from its public offering to pay off the entire balance of a Convertible Line of Credit, along with all accrued

and unpaid interest.

As of December 31, 2019, the following summarizes the convertible line of credit:

On September 18, 2017,

in addition to a convertible “Lender”

note, the Company entered into a revolving secured convertible promissory note

(the “Revolver”) with an unaffiliated lender (the “Lender”).

Pursuant to the Revolver, the Company has

the right to make borrowings from the Lender in amounts of up to 70% of the value of any specific purchase order (each a “PO”)

received by the Company from a credit worthy customer (each a “Draw Down”), up to a maximum of $3,000,000, commencing

on the date of the Revolver and terminating December 31, 2019.

The Revolver bears simple interest at the floating rate per annum

equal to the 12-month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 600 basis

points (the “Interest Rate”).

The Interest Rate will be adjusted on the first day of each calendar month during the

term of this Note to reflect any changes in the 12 month LIBOR rate as quoted on that day, or if that day is not a business day,

on the next business day thereafter.

The principal and accrued unpaid interest with respect to each Draw Down is due and payable

within five (5) business days of receipt from the Customer by the Company of a payment due under the applicable PO (with respect

to each Draw Down, the “Maturity Date”).

Each Draw Down is secured by a perfected recorded second priority security

interest in all of the Company’s assets.

The Lender will have the right at any time until the Maturity Date of a Draw Down,

provided the Lender gives the Company written notice of the Lender’s election to convert prior to any prepayment of such

Draw Down by the Company with respect to converting that portion of such Draw Down covered by the prepayment, to convert all or

any portion of the outstanding principal and accrued unpaid interest (the “Conversion Amount”), into such number of

the Company’s common stock as is determined by dividing the Conversion Amount by the greater of (i) seven dollars and fifty

cents ($7.50) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities

trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately

prior to the date of the Lender’s written notice of the Lender’s election to convert.

As additional consideration

for any Draw Downs made by the Company, the Company agreed to issue to the Lender common stock purchase warrants exercisable for

a period of three years from the date of issuance with an exercise price equal to the greater of (i) $7.50 per share or (ii) 75%

of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if

more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to

the date of the applicable Draw Down.

The number of warrants issuable to the Lender will equal 25% of the increase over the highest

dollar amount previously drawn down by the Company on the Revolver divided by the greater of (i) seven dollars and fifty cents

($7.50) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities

trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately

prior to the date of the applicable Draw Down which causes the increase over the previous highest amount borrowed.

As of December 31,

2018, the convertible line of credit had a principal balance outstanding amounting to $960,000 with accrued interest amounting

to $12,909 which is included in accrued expenses.

During the three months

ended March 31, 2019 the Company received other funds on Draw Downs totaling $158,442.

No warrants were issued on these Draw Downs.

At March 31, 2019, the convertible line of credit had a balance amounting to $1,118,442 with accrued interest amounting to $34,705

which was included in accrued expenses.

In April 2019, the

Company paid back the full Draw Down balance of $1,118,442, and unpaid interest of $44,599, of which $9,893 was expensed in that

CONVERTIBLE NOTE PAYABLE –

RELATED PARTY

On October 18, 2016,

the Company entered into a five-year employment agreement, effective as of January 1, 2016, with Mr.

Desmond Wheatley, the Chief

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

CONVERTIBLE NOTE PAYABLE – RELATED PARTY AND NOTE PAYABLE

On October 18, 2016, the Company

entered into a five-year employment agreement, effective as of January 1, 2016, with Mr.

Desmond Wheatley, the Chief Executive Officer,

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

Pursuant to the Agreement, Mr.

received an annual deferred salary of $50,000 which Mr.

Wheatley received an annual deferred

salary of $50,000 which Mr.

Wheatley deferred until such time as Mr.

Wheatley and the Board of Directors

agreed that payment of the deferred salary and/or cessation of the deferral was appropriate.

In August 2018, the Agreement was

amended to provide that his salary shall defer until the earliest to occur of the following:

(i) a permissible event specified

in Section 409A of the Code, (ii) December 31, 2020, (iii) a change of control as defined in the Agreement, or (iv) a sale of all

or substantially all of the assets of the Company.

All deferred amounts

were evidenced by an unsecured convertible promissory note payable by the Company to Mr.

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 deferral dates prior to June 30, 2018, there was no beneficial conversion feature to this note through

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 was 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 was 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.

a $35,000 bonus for which Mr.

Wheatley agreed to defer such bonus under the same terms of his salary deferral.

On September 17, 2019,

the Board of Directors adopted a resolution to pay off the convertible promissory note issued to Mr.

Wheatley for his deferred

compensation in the near future (subject to a recommendation on timing from Mr.

Wheatley), and no additional salary was deferred

after September 15, 2019.

As a result, this note was presented as a short-term liability as of December 31, 2019 with a balance

of $214,427, net of debt discount of $5,990, with accrued and unpaid interest of $48,884 which was included in accrued expenses

(See Note 7).

In February 2020, the remaining debt discount of $5,990 was recorded as interest expense, additional interest of

$3,442 was accrued, and the total note of $220,417 and interest of $52,326 was paid to Mr.

NOTES PAYABLE

In April 2019, the

Company used proceeds from its public offering to pay off the entire balances of all outstanding convertible notes payable, except

Wheatley’s convertible note which was paid off in February 2020 as discussed in Note 9.

As of December 31, 2019,

the following summarizes those convertible notes payable:

On December 19, 2009,

the Company entered into a convertible promissory note for $100,000 to a new landlord in lieu of paying rent for one year for new

office space.

The interest was 10% per annum with the note principal and interest originally due December 18, 2010.

If the Company

receives greater than $1,000,000 of proceeds from debt or equity financing, 25% of the amount in excess of $1,000,000 would be

used to pay down the note.

This note was subordinate to all existing senior indebtedness of the Company.

This note was convertible

at $16.50 per share and had no beneficial conversion feature at the note date.

Through a series of

amendments, the term of the note was extended until December 31, 2016, and the lender waived, through December 31, 2015, the requirement

to pay down the note with financing proceeds received by the Company.

Effective June 13,

2018, the Company entered into a further amendment to extend the maturity date of this note to December 31, 2019, and the lender

waived the past requirements to pay the note with financing proceeds received by the Company.

There were no additional fees or

discounts associated with this amendment.

This modification was treated as an extinguishment as the change in fair value of the

embedded conversion option just before and just after the modification was more than 10% of the carrying amount of the note.

market price of the Company’s stock was below the conversion price at the time of the modification, therefore no beneficial

conversion feature needed to be recorded.

In April 2019, the

Company repaid the $100,000 note, and unpaid interest of $93,096, of which $493 was expensed in that quarter.

Prior to fiscal 2011,

the Company was advanced monies by John Evey, our former director, and executed a 10% convertible promissory note with compounding

interest which was convertible into shares of common stock at $16.50 per share.

There was no beneficial conversion feature at the

note date and this note was subordinate to the then existing notes.

Through a series of amendments from the original due date,

the conversion price of the convertible note was reduced to $10.00 and the maturity date was extended to December 31, 2017.

Effective June 27,

2018, the Company entered into a further extension agreement to extend the maturity date of this note to July 1, 2019.

no additional fees or discounts associated with this extension.

This modification was treated as an extinguishment as the change

in fair value of the embedded conversion option just before and just after the modification was more than 10% of the carrying amount

The Company recorded debt discount amounting to $30,960 for the value of the beneficial conversion feature and is

amortizing this to interest expense over the remaining term of the loan.

In April 2019, the

Company repaid the note balance of $50,616 and unpaid interest of $77,066, of which $627 was expensed in that quarter.

the Company paid $80,000 to Mr.

Evey in April 2019 for consulting services.

“Lender”

On September 18, 2017,

in addition to entering into a revolving convertible line of credit (See Note 8), the Company also entered into a $1,500,000 secured

convertible promissory note with the same unaffiliated lender (the “Lender”).

The Note bears simple interest at the

floating rate per annum equal to the 12-month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg

Service plus 400 basis points (the “Interest Rate”).

The Interest Rate will be adjusted on the first day of each calendar

month during the term of the Note to reflect any changes in the 12 month LIBOR rate as quoted at on that day, or if that day is

not a business day, on the next business day thereafter.

Interest will only accrue on outstanding principal.

Accrued unpaid interest

was payable monthly on the first calendar day of each month for interest accrued during the previous month, with all outstanding

principal and accrued unpaid interest originally payable in full on or before September 17, 2018 to the extent not converted into

shares of the Company’s common stock.

This note was initially amended to be payable in full by December 1, 2018 but the Company

did not make the December 1, 2018 principal payment.

In March 2019, and effective as of December 1, 2018, the Company entered into

second amendment to extend the term of the note to be payable in full by (i) June 30, 2019 or (ii) the closing of the public offering

by the Company.

This modification was treated as a debt extinguishment as the change in fair value of the embedded conversion option

just before and just after the modification was more than 10% of the carrying amount of the note.

The Company recorded debt discount

amounting to $472,718 for the value of the beneficial conversion feature and is amortizing this to interest expense over the remaining

term of the note.

Additionally, the Company paid $30,000 of lender fees which were also recorded as debt discount and are also

being amortized to interest expense over the term of the note.

The Note is secured by a perfected recorded first priority security

interest in all of the Company’s assets, as set forth in a certain Security Agreement by and between the Company and the

Lender, dated September 18, 2017.

At any time until the maturity date, and provided Lender gives the Company written notice of

Lender’s election to convert prior to any prepayment of this Note by the Company with respect to converting that portion

of this Note covered by the prepayment, the Lender has the right to convert all or any portion of the outstanding principal and

accrued interest (the “Conversion Amount”), into such number of shares of the Company’s common stock as is determined

by dividing the Conversion Amount by the greater of (i) seven dollars and fifty cents ($7.50) or (ii) 75% of the Volume Weighted

Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one

with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the Lender’s

written notice of its election to convert.

As additional consideration

for the loan evidenced by the Note, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a

period of three years from the date of issuance with an exercise price equal to $7.50 per share.

The number of warrants issuable

to the Lender is equal to 25% of the loan Amount divided by seven dollars and fifty cents ($7.50).

As of September 18, 2017, the

Company issued warrants to purchase up to 50,000 shares of common stock under this provision with a $7.50 exercise price having

a fair value of $187,142 using the Black-Scholes valuation methodology.

As a result of this transaction, the Company recorded $232,768

of debt discount consisting of the relative fair value of the warrants of $166,384 and a beneficial conversion feature of $66,384,

which was amortized to interest expense over the original term of the note.

During any time when

the Note is outstanding, or when the Lender holds any Company stock, or any warrants to acquire Company stock where the combination

of both could result in the Lender owning stock with a current value of one million dollars or greater, in the Company, the Lender

will have certain review and consulting rights as described in the Note.

In April 2019, the

Company repaid the note balance of $1,500,000, unpaid interest of $22,029, of which $5,255 of interest was expensed in that quarter.

NOTES PAYABLE

In April 2019, the

Company used proceeds from its public offering to pay off the entire balance of this Note Payable, along with all accrued and unpaid

As of December 31, 2019, the following summarizes this note payable:

On August 27, 2018,

the Company entered into an unsecured promissory note (the “Note”) in the amount of $750,000 (the “Principal

Amount”) with Gemini Special Opportunities Fund, LP (“Gemini”).

The Note bears simple interest at an annual rate

of 10% and is subject to a Securities Purchase Agreement, dated August 27, 2018.

This Note was due and payable on February 28,

2019 (the “Maturity Date”).

Effective February 28, 2019, a forbearance agreement was granted by Gemini lender for any

defaults, confirmed in writing, until Gemini and the Company complete an amendment extending the maturity date of the note, or

the note is repaid by the Company.

If the Company repays the Note after November 28, 2018, the Company shall pay 115% of the Principal

Amount plus accrued interest.

During the year ending December 31, 2018, the Company recorded an increase in the Note Payable balance

of $112,500 with offsetting debt discount related to this repayment premium which is being amortized to interest expense over the

term of the note.

Additionally, the Company paid $5,000 of lender fees which were also recorded as debt discount and are also being

amortized to interest expense over the term of the note.

As additional consideration

for the loan evidenced by the Note, the Company issued to Gemini warrants to purchase up to 18,000 shares of common stock for a

period of five years from the date of issuance with an exercise price equal to $12.50 per share.

These warrants had a fair value

of $115,521 using the Black-Sholes valuation methodology.

As a result of this transaction, the Company recorded $100,102 of debt

discount consisting of the relative fair value of the warrants which is being amortized to interest expense over the term of the

In April 2019, the

Company repaid the note balance of $862,500, and unpaid interest of $47,466, of which $2,877 was expensed in that quarter.

the Company paid $75,000 for an extension fee, which was recorded as interest expense in that quarter.

On May 1, 2020, the

Company received a U.S.

Small Business Administration Paycheck Protection Program loan of $339,262 which was offered through the

Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

This loan was recorded as a note payable, is subject to a 1% annual

interest rate and has a two year term.

This low interest loan was intended to support short term cash flow in the event we were

more heavily impacted by the COVID-19 virus.

Wheatley and the Board of Directors agreed that payment of the deferred

salary and/or cessation of the deferral was appropriate.

In August 2018, the Agreement was amended to provide that his salary shall defer

until the earliest to occur of the following:

(i) a permissible event specified in Section 409A of the Code, (ii) December 31, 2020, (iii)

a change of control as defined in the Agreement, or (iv) a sale of all or substantially all of the assets of the Company.

All deferred amounts were

evidenced by an unsecured convertible promissory note payable by the Company to Mr.

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

deferral dates prior to June 30, 2018, there was no beneficial conversion feature to this note through such date.

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 was 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 was 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.

Wheatley a $35,000 bonus for which Mr.

Wheatley agreed to defer such bonus under the same

terms of his salary deferral.

On September 17, 2019, the

Board of Directors adopted a resolution to pay off the convertible promissory note issued to Mr.

Wheatley for his deferred compensation

in the near future (subject to a recommendation on timing from Mr.

Wheatley), and no additional salary was deferred after September 15,

In February 2020, the remaining debt discount of $ 5,990 was recorded as interest expense, additional interest of $ 3,442 was accrued,

and the total note of $ 220,417 and interest of $ 52,326 was paid to Mr.

On May 1, 2020, the Company

received a U.S.

Small Business Administration Paycheck Protection Program loan of $ 339,262 which was offered through the Coronavirus Aid,

Relief, and Economic Security Act (CARES Act).

This loan was recorded as a note payable, is subject to a 1 % annual interest rate and has

a two year term.

This low interest loan was intended to support short term cash flow in the event we were more heavily impacted by the

COVID-19 virus.

In July 2020, we were able to raise capital and no longer required the loan.

amount of the loan was repaid on November 13, 2020 in addition to $1,847 of interest.

In October 2015, the

Company purchased a new vehicle and financed the purchase through a dealer auto loan.

The loan has a term of 60 months, requires

minimum monthly payments of approximately $950, and bears interest at a rate of 5.99 percent.

As of December 31, 2019, the loan

had a short term balance of $9,294.

The loan was paid off in October 2020.

The full amount of the loan was repaid on

November 13, 2020 in addition to $ 1,847 of interest.

In October 2015, the Company

purchased a new vehicle and financed the purchase through a dealer auto loan.

The loan has a term of 60 months, requires minimum monthly

payments of approximately $950, and bears interest at a rate of 5.99 percent.

The final payment was made on this loan on October 31, 2020.

COMMITMENTS AND CONTINGENCIES

Legal Matters:

From time to time,

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

From time to time, we may

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

As of December 31, 2021,

31, 2020, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results

of our operations.

In August 2016, the

Company entered into a sublease for its current corporate headquarters and manufacturing facility.

The sublease expired in August

2020 which was the same term of the master lease for which the Company was the subtenant.

In September 2020, the Company initiated

a new five year master lease agreement, with two optional one year renewals.

Monthly lease payments will range from $52,000 to

$58,526 per month over the term of the lease (See note 14).

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

In August 2016, the Company

entered into a sublease for its current corporate headquarters and manufacturing facility.

The sublease expired in August 2020 which was

the same term of the master lease for which the Company was the subtenant.

In September 2020, the Company initiated a new five year master

lease agreement, with two optional one year renewals.

Monthly lease payments will range from $52,000 to $58,526 per month over the term

of the lease (see note 10).

Other Commitments:

The Company enters

into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments.

Since inception, the Company entered into agreements to act as a reseller for certain vendors;

joint development contracts with

third parties;

referral agreements where the Company would pay a referral fee to the referrer for business generated;

agreements whereby sales agents 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 generally accepted accounting principles during the periods.

Although such agreements increase

the risk of legal actions against the Company for potential non-compliance, there were no financial exposures that were not accounted

for in our financial statements.

The Company adopted

Leases (Topic 842) as of January 1, 2019 using the effective date method.

We were subleasing our manufacturing facility under an

operating lease which had monthly payments during 2019 and 2020 ranging from $48,672 to $50,619 through the end of the sublease

on August 31, 2020.

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

We initially recorded a right to use asset and corresponding lease liability of $872,897 on January 1, 2019.

The right-of-use

asset and the corresponding lease liability were equally amortized on a straight-line basis over the remaining term of the lease.

The right-of-use asset was further reduced by our deferred rent of $32,771 as of December 31, 2019.

As of December 31, 2019, we

reported a right-of-use asset of $316,389, and corresponding liability of $349,160 related to this sublease.

The right-of-use asset

and the corresponding lease liability continued to amortize until fully amortized upon expiration of the sublease on August 31,

On September 1, 2020,

the Company entered into a new five year operating lease with payments ranging from $52,000 to $58,526 using the same methodology.

The Company enters into various

contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments.

Since inception,

the Company entered into agreements to act as a reseller for certain vendors;

joint development contracts with third parties;

agreements where the Company would pay a referral fee to the referrer for business generated;

sales agent agreements whereby sales agents

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.

The Company evaluates new

leases at inception based on the criteria defined in Leases (Topic 842).

On September 1, 2020, the Company entered into a five-year operating

lease with payments ranging from $52,000 to $58,526.

The lease has two one-year options to extend the term of the lease.

At 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 asset.

We calculated the present

value of the remaining lease payment stream using our effective borrowing rate of 10% and recorded a right-of-use asset and operating

lease liability each of $2,605,032 at September 1, 2020:

At this time,

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

from the right-of-use (“ROU”) asset.

The present value of the lease payment stream was calculated using an effective borrowing

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

The ROU asset and the corresponding

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

The tables below show the

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

Schedule of operating right-of use asset

Operating right-of

9 unchanged sentences

Straight-line lease expense in excess of cash payments

Operating lease ROU asset December 31, 2020

As of December 31,

2020 and 2019, the current and non-current portions of the lease liability were recorded to the Balance Sheets as follows:

Operating lease ROU asset as of December 31, 2020

Less amortization of operating lease

Operating lease ROU asset as of December 31, 2021

During the twelve months ended December 31, 2021,

cash paid for amounts included in the measurement of operating lease liabilities was $ 405,476 .

As of December 31, 2021 and

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

Schedule of lease liability

Operating lease liabilities, current

1 unchanged sentence

Total lease liability

The future minimum

rental commitments for our operating leases reconciled to the lease liability as of December 31, 2020 is as follows:

December 31, 2020

The future minimum rental

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

Schedule of operating leases reconciled lease liability

Total undiscounted future minimum payments

Present value discount

Less imputed interest

Total lease liability

Issuances of the Company’s

common stock during the years ended December 31, 2020 and 2019, respectively, are as follows:

STOCKHOLDERS’

Stock Issued In Cash Sales

The Company filed a

“shelf”

registration statement on Form S-3 and an accompanying prospectus with the Securities and Exchange Commission

on May 26, 2020.

On July 7, 2020, the Company closed an underwritten public offering issuing 1,393,900 shares, with a public offering

The Company filed a “shelf”

registration statement on Form S-3 and an accompanying prospectus with the Securities and Exchange Commission on May 26, 2020.

7, 2020, the Company closed an underwritten public offering issuing 1,393,900 shares, with a public offering price of $ 8.25 per share,

generating approximately $ 10.5 million after deducting underwriting discounts and commissions and estimated offering expenses payable

by the Company.

On November 27, 2020, the Company closed a second underwritten public offering issuing 250,000 shares, with a public offering

price of $ 30.00 per share, generating approximately $ 6.9 million after deducting underwriting discounts and commissions and estimated

offering expenses payable by the Company.

On November 27, 2020, the Company closed a second underwritten public offering issuing

250,000 shares, with a public offering price of $30.00 per share, generating approximately $6.9 million 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.

The Company intends to use the aggregate net proceeds primarily for working capital and general

corporate purposes.

Other Securities

In July 2020, 3,000

stock options were exercised on a cashless basis for 2,199 registered shares of the Company’s common stock at an exercise

price of $4.09.

In August 2020, a stock

grant was issued for 2,700 unregistered shares of the Company’s common stock to a consultant as payment for services.

shares were valued on the grant dates’

stock price of $5.46 per share or $14,742.

During the year ended

December 31, 2020, 1,456,406 warrants to purchase shares of the Company’s registered common stock and 95,800 warrants to

purchase shares of the Company’s unregistered common stock were exercised generating $9,926,858, of which $9,732,408 in cash

was received and $194,450 is included in other assets as a receivable (see Note 4) which was collected in January 2021.

warrants were cashless exercises in 2020 and the Company issued 11,304 unregistered shares of common stock.

The unregistered securities

described above were issued pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933,

Director Compensation

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.

During the year ended December 31, 2020, 10,203

shares vested generating an expense of $75,000.

On October 20, 2020,

upon recommendation of its Compensation Committee, the Board granted two directors annual stock grants of 12,200 each and the lead

director was issued an annual grant of 17,100, 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 quoted trading price, or $620,425.

During the year ended December 31, 2020, 10,375

shares vested generating an expense of $155,107.

As of December 31,

2020, there were unreleased shares of common stock representing $571,568 of unrecognized restricted stock grant expense related

to the Restricted Stock Grant Agreements for our Directors which will be recognized over 2.25 years.

See a summary of unvested

shares of common stock below.

Reverse Stock Split

In April 2019, the

Company effected a one-for-fifty reverse split of its issued and outstanding common stock (the “Reverse Stock Split”)

and reduced the number of authorized shares of common stock from 490,000,000 to 9,800,000.

No fractional shares were issued as

a result of the Reverse Stock Split.

Fractional shares were rounded up or down to the nearest whole share, after aggregating all

fractional shares held by a stockholder, resulting in the issuance of 187 round-up shares.

Any stockholder holding less than 24

shares of Common Stock on a pre-reverse stock basis were paid in cash for such fractional share of Common Stock, which totaled

All share and per share data in the accompanying financial statements and footnotes for all periods presented have been retroactively

adjusted for this Reverse Stock Split.

Stock Issued in Cash Sales

In April 2019, the

Company closed an underwritten public offering with Maxim Group LLC (“Maxim”), as representative for the several underwriters

(the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters an aggregate of 2,000,000

units with each unit consisting of one (1) share of the Company’s common stock, par value $0.001 per share (the “Common

Stock”), and a warrant to purchase one (1) share of Common Stock at an exercise price equal to $6.30 per share (the “Warrants”).

In addition, the Company granted the Underwriters a 45-day option to purchase up to 300,000 additional shares of Common Stock,

or Warrants, or any combination thereof, at the public offering price to cover over-allotments, if any.

The Common Stock and the

Warrants were offered and sold to the public (the “Offering”) pursuant to the Company’s registration statement

on Form S-1 (File Nos.

333-226040), filed by the Company with the Securities and Exchange Commission (the “Commission”)

on July 2, 2018, as amended, which became effective on April 15, 2019, and a related registration statement filed pursuant to Rule

462 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

The offering price to the public

was $6.00 per unit and the Underwriters purchased 2,000,000 units.

In addition, the Underwriters purchased 300,000 Warrants for

$3,000 upon the exercise of the Underwriters’

over-allotment option.

The Company received gross proceeds of approximately

$12,003,000, before deducting underwriting discounts and commissions and estimated offering expenses.

In addition, on May 15, 2019,

the Company sold 200,000 shares of common stock in accordance with the terms of the Underwriting Agreement in connection with the

partial exercise of the over-allotment option granted to the Underwriters (the “Over-allotment) for $5.99 per share.

Company received gross proceeds of approximately $1,198,000, before deductions from the Over-allotment.

Total aggregate proceeds

were $13,201,000 and the total expenses of the offering were approximately $1,371,000.

In addition, the underwriters were issued

110,000 warrants as a fee based on 5% of total shares sold.

Director Compensation

the Company issued a total of 25,000 shares of common stock to two directors that vested from restricted stock grants dated January

1, 2017, whereby each director was granted 15,000 shares that vest on a pro rata basis over a three year period (which represents

7,500 of these shares) and 15,000 shares that vest based on performance criteria (which represents 17,500 of these shares).

pro rata shares have a per share fair value of $7.50, or $56,250 (based on the market price at the time of the agreement) and the

performance shares have a per share fair value of $5.50, or $96,250 (based on the market price on September 17, 2019, which is

the date of grant based on when the performance criteria was defined).

Additionally, during 2019, the Company issued 8,750 shares

of common stock to one director that vested from restricted stock grants dated August 21, 2018, whereby the director was granted

15,000 shares that vest on a pro rata basis over a three year period (which represents 3,750 of these shares) and 15,000 shares

that vest based on performance criteria (which represents 5,000 of these shares).

The pro rata shares have a per share fair value

of $10.00, or $37,500 (based on the market price at the time of the agreement) and the performance shares have a per share fair

value of $5.50, or $27,500 (based on the market price on September 17, 2019, which is the date of grant based on when the performance

criteria were defined).

On September 17, 2019,

the Board of Directors (the “Board”), upon the recommendation of its Compensation Committee, and based on input from

a third party, nationally recognized compensation consultant, approved the following compensation for non-employee directors of

(1) a quarterly cash retainer of $2,500 to be paid retroactively as of April 1, 2019;

(2) an annual grant of 12,500

shares of restricted stock to be issued under the Company’s 2011 Stock Incentive Plan (the “Plan”) annually on

October 1 and which shall vest quarterly in four (4) equal installments;

(3) a payment of $1,000 for attendance in person (or $500

for attendance telephonically) for regularly scheduled board meetings;

and (4) to the independent lead director, who is currently

Schweitzer, an additional annual grant of 5,000 shares of restricted stock to be issued under the Plan annually on October

1 and which shall vest quarterly in four (4) equal installments.

As a result of the above changes to the non-employee directors’

compensation, all unvested shares of restricted stock held by non-employee directors as of October 1, 2019 were cancelled.

result of these changes, each director was paid $6,000 for retroactive and current board and meeting fees in the quarter ended

September 30, 2019.

On September 17, 2019,

the Board, upon the recommendation of its Compensation Committee, granted two directors annual grants of 12,500 shares each, and

the lead director was issued an annual grant of 17,500 shares, which vest quarterly in four (4) equal installments.

The grant date

was determined to be September 17, 2019 as that was when a mutual understanding of the key terms and conditions of the grants was

On the grant date, these shares had a per share fair value of $5.50 based on the quoted trading price, or $233,750.

shares vested in 2019 generating an expense of $63,431 during the three months ended December 31, 2019.

In July 2020, 3,000 stock

options were exercised on a cashless basis for 2,199 registered shares of the Company’s common stock at an exercise price of $ 4.09 .

In August 2020, a stock grant

was issued for 2,700 unregistered shares of the Company’s common stock to a consultant as payment for services.

The shares were

valued on the grant dates’ stock price of $ 5.46 per share or $ 14,742 .

During the year ended December

31, 2020, the remaining 31,875 of these shares vested generating an expense of $170,325.

On October 1, 2019, the Board approved two

grants of restricted stock of the Company 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 October 1, 2019.

On the grant date,

the shares had a per share fair value of $5.97 and 25,124 shares were granted.

12,562 shares vested in 2019 generating an expense

During the year ended December 31, 2020, 7,329 of these shares vested generating an expense of $43,750.

Nonvested Shares

A summary of activity of the nonvested shares

for the years ended December 31, 2020 and 2019 is as follows:

Average Grant-

Date Fair Value

Nonvested at December 31, 2018

Nonvested at December 31, 2019

Nonvested at December 31, 2020

STOCK OPTIONS AND WARRANTS

On August 10, 2011,

the Company’s Board of Directors approved and caused the Company to adopt the Beam Global 2011 Stock Incentive Plan (the

“Plan”), which authorizes the issuance of up to 630,000 shares of the Company’s common stock pursuant to the

exercise of stock options or other awards granted under the Plan.

31, 2020, 1,456,406 warrants to purchase shares of the Company’s registered common stock and 95,800 warrants to purchase shares

of the Company’s unregistered common stock were exercised generating $ 9,926,858 , of which $ 9,732,408 in cash was received and $ 194,450

was included in other assets as a receivable (see note 3) which was collected in January 2021.

18,000 warrants were cashless exercises

in 2020 and the Company issued 11,304 unregistered shares of common stock.

The unregistered securities

described above were issued pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as

Awards Under Stock Incentive Plans

On June 9, 2021, the Company’s

stockholders approved the Beam Global 2021 Equity Incentive Plan (the “2021 Plan”) under which 2,000,000 shares of the Company’s

common stock are allowed to be issued pursuant to the exercise of stock options or other awards granted under such plan in addition to

the 630,000 shares previously allowed under the Beam Global 2011 Stock Incentive Plan.

The number of shares reserved for issuance under

the 2021 Plan will increase automatically on January 1 of each of 2022 through 2031 by the number of shares equal to 5% of the aggregate

number of outstanding shares of the Company’s common stock as of the immediately preceding December 31, or a lesser number

as may be determined by our board of directors or compensation committee.

Stock Options

The Company follows

the provisions of ASC Topic 718, “Compensation –

Stock Compensation.”

ASC Topic 718 establishes standards surrounding

the accounting for transactions in which an entity exchanges its equity instruments for goods or services.

ASC Topic 718 focuses

primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such

as options issued under the Company’s Stock Option Plans.

The fair value of each

option is estimated on the date of grant using the Black-Scholes option-pricing model.

This model incorporates certain assumptions

for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option

life and expected volatility in the market value of the underlying common stock based on our historical volatility.

During the year ended

December 31, 2020, the Company granted 105,604 stock options under the plans with a total valuation of $1,374,394 and a 10-year

Stock options are granted

to new and existing employees.

New employee option grants generally have a term of ten years and vest ratably over four years.

employee option grants generally have a term of ten years and vest immediately upon grant.

The Company follows the provisions of ASC Topic

718, “Compensation – Stock Compensation.” ASC Topic 718 establishes standards surrounding the accounting for transactions

in which an entity exchanges its equity instruments for goods or services.

ASC Topic 718 focuses primarily on accounting for transactions

in which an entity obtains employee services in share-based payment transactions, such as options issued under the Company’s Stock

Option Plans.

During the year ended

December 31, 2019, the Company granted 58,204 stock options under the plans with a total valuation of $58,204 and a 10-year term.

The Company’s stock option compensation

expense was $722,549 and $48,915 for the years ended December 31, 2020 and 2019, respectively, and there was $823,680 of total

unrecognized compensation costs related to outstanding stock options at December 31, 2020 which will be recognized over 3.75

We used the following

assumptions for options granted in fiscal 2020 and 2019:

December 31, 2021, the Company granted 43,300

stock options under the plans with a total valuation of $ 905,658 and a 10-year term.

During the year ended December 31, 2020, the Company granted 105,604

stock options under the plans with a total valuation of $ 1,374,394

and a 10-year term.

The fair value of each option

is estimated on the date of grant using the Black-Scholes option-pricing model.

This model incorporates certain assumptions for inputs

including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected

volatility in the market value of the underlying common stock based on our historical volatility.

The Black-Scholes option-pricing

model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.

In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.

Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes

in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models

do not necessarily provide a reliable single measure of the fair value of such stock options.

We used the following assumptions

for options granted in fiscal 2021 and 2020:

Assumptions for options granted

Expected volatility

3 unchanged sentences

Risk-free interest rate

1.25 % - 1.38 %

0.37 % - 1.79 %

Weighted average FV

The Black-Scholes option-pricing

model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.

In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.

Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because

changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing

models do not necessarily provide a reliable single measure of the fair value of such stock options.

The Company’s stock

option compensation expense was $ 444,713 and $ 722,549 for the years ended December 31, 2021 and 2020, respectively, and there was

$ 1,040,700 of total unrecognized compensation costs related to outstanding stock options at December 31, 2021 which will be recognized

over 4 .0 years.

Option activity for the years ended December 31,

31, 2020 and 2019 under the 2011 Plan is as follows:

2021 and 2020 is as follows:

option activity

Contractual Life

Outstanding at December 31, 2019

2 unchanged sentences

Exercisable at December 31, 2021

The following table

summarizes information about employee stock options outstanding at December 31, 2019:

Options Outstanding

Options Exercisable

Range of Exercise Price

Number Outstanding at December 31, 2019

Weighted Average Remaining Contractual life

Weighted Average Exercise Price

Aggregate Intrinsic Value

Number Exercisable at December 31, 2019

Weighted Average Exercise Price

Aggregate Intrinsic Value

$4.09 - $8.00

$10.00 - $13.50

The following table

summarizes information about employee stock options outstanding at December 31, 2020:

Options Outstanding

Options Exercisable

Range of Exercise Price

Number Outstanding at December 31, 2020

Weighted Average Remaining Contractual life

Weighted Average Exercise Price

Aggregate Intrinsic Value

Number Exercisable at December 31, 2020

Weighted Average Exercise Price

Aggregate Intrinsic Value

$4.09 - $8.00

$10.00 - $13.50

$17.44 - $52.69

Options exercisable

have a weighted average remaining contractual life of 4.64 years as of December 31, 2020.

There were no warrants

granted during the year ended December 31, 2020.

During the year ended December 31, 2020, 1,552,206 warrants to purchase shares

of the Company’s common stock were exercised generating $9,926,858, of which $9,732,408 in cash was received and $194,450

is included in other assets as a receivable (see Note 4) which was collected in January 2021.

18,000 warrants were cashless exercises

in 2020 and the Company issued 11,304 shares.

At December 31, 2020, there were warrants outstanding to purchase up to 965,584 shares

of the Company’s common stock at a weighted average exercise price of $6.33.

As part of the Company’s

public offering (see Note 15), the Company issued 2,300,000 warrants in April 2019 to the Underwriters.

These warrants are exercisable

for five years at an exercise price of $6.30 per share.

In April 2019, pursuant to the Underwriting Agreement, the Company issued

as a fee to the Underwriters warrants to purchase up to a total of 110,001 shares of common stock (5% of the shares of common stock

The warrants are exercisable at $6.60 per share and have a term of five years.

There was no financial statement accounting

effect for the issuance of these warrants.

Number of Warrants

Total intrinsic value of options

exercised was $ 1,775,213 and $ 33,660 during the years ended December 31, 2021 and 2020, respectively.

Total intrinsic value of options

outstanding and options exercisable were $ 2,391,810 and $ 1,796,153 , respectively, as of December 31, 2021.

Restricted Stock

The Company issues restricted

stock to the members of its board of directors as compensation for such members’ services.

Such grants generally vest ratably over

four quarters.

The Company also issues restricted stock to Mr.

Wheatley, for which generally 50% of the shares granted vest ratably over

four quarters and the remaining 50% vest ratably over twelve quarters.

The common stock related to these awards are issued to an escrow

account on the date of grant and released to the grantee upon vest.

The fair value is determined based on the closing stock price of the

Company’s common stock on the date granted and the related expense is recognized ratably over the vesting period.

A summary of activity of the restricted stock

awards for the years ended December 31, 2021 and 2020 is as follows:

of restricted stock award activity

Average Grant-

Date Fair Value

Nonvested at December 31, 2019

Nonvested at December 31, 2020

Nonvested at December 31, 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.

During the year ended December 31, 2020, 10,203 shares vested generating an

expense of $ 75,000 .

On October 20, 2020, upon recommendation of its

Compensation Committee, the Board granted two directors annual stock grants of 12,200 each and the lead director was issued an annual

grant of 17,100 , 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 quoted trading price, or $ 620,425 .

During the year ended December 31, 2020, 10,375 shares vested generating an expense of

Fair values of restricted stock vested during

the year ended December 31, 2021 and 2020 were $ 1,367,138

and $ 1,539,637 ,

respectively.

As of December 31, 2021, there

were unreleased shares of common stock representing $ 279,578 of unrecognized restricted stock grant expense which will be recognized over

A summary of activity of warrants outstanding

for the years ended December 31, 2021 and 2020 is as follows:

Warrant activity

Weighted Average Exercise Price

Outstanding at December 31, 2019

( 1,570,206 )

Outstanding at December 31, 2020

1 unchanged sentence

Exercisable at December 31, 2021

Exercisable warrants

have a weighted average remaining contractual life of 3.26 years as of December 31, 2020.

The intrinsic value of the exercisable

shares of the warrants at December 31, 2020 was $65,131,885.

Exercisable warrants as

of December 31, 2021 have a weighted average remaining contractual life of 2.30

The intrinsic value of the exercisable shares of the warrants at December 31, 2021 was $ 6,391,793 .

During the year ended December 31, 2020, 1,552,206 warrants to purchase shares of the Company’s common stock were exercised

generating $ 9,926,858 .

18,000 warrants were cashless exercises in 2020 and the Company issued 11,304 shares.

During the year ended December

31, 2021, 433,937 warrants to purchase shares of the Company’s registered common stock and 11,989 warrants to purchase shares of

the Company’s unregistered common stock were exercised generating $ 2,854,222 .

The unregistered securities were issued pursuant to

the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

For each of the identified

periods, revenues can be categorized into the following:

For the year ended December 31,

Schedule of revenues

For the Years Ended

Product sales

1 unchanged sentence

Professional services

Shipping and handling

Discounts and allowances

1 unchanged sentence

International revenues

were $84,081, or 2% of revenues, and $0 during the year ended December 31, 2020 and 2019, respectively.

and $ 84,081 ,

or 0 % and 1 %

of revenues, during the years ended December 31, 2021 and 2020, respectively.

During the year ended

December 31, 2020, 75% of revenues were derived from customers located in California.

At December 31, 2020

and 2019, deferred revenue was $107,489 and $93,609, respectively.

These amounts represented customer deposits in the amount of

$0 and $35,520 for December 31, 2020 and 2019, respectively and prepaid multi-year maintenance plans for previously sold products

which account for $107,489 and $58,089 for December 31, 2020 and 2019, respectively and pertain to services to be provided through

$35,520 of 2019 customer deposits were received in 2018 and recorded as revenue in 2020.

$13,056 of revenue reported in fiscal

2019 pertained to revenue deferred from prior years.

$19,459 of revenue reported in 2020 pertained to revenue deferred from prior

There was no Federal

income tax expense for the years ended December 31, 2020 and 2019 due to the Company’s net losses.

Income tax expense represents

minimum state taxes due.

The blended Federal

and State tax rate of 28.91% applies to loss before taxes.

The Company’s tax expense differs from the “expected”

tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 21% to loss before taxes),

December 31, 2021 and 2020, 62 %

and 75 % of revenues were derived from customers located in California, respectively.

At December 31, 2021 and 2020,

deferred revenue was $ 253,751 and $ 107,489 , respectively.

These amounts represented customer deposits in the amount of $ 91,651 and $ 0

for December 31, 2021 and 2020, respectively and prepaid multi-year maintenance plans for previously sold products which account for $ 162,100

and $ 107,489 for December 31, 2021 and 2020, respectively and pertain to services to be provided through 2027.

Revenue recognized during

the year ended December 31, 2021 and 2020 which pertained to revenue deferred in prior years were $ 37,778 and $ 19,459 , respectively.

There was no Federal income

tax expense for the years ended December 31, 2021 and 2020 due to the Company’s net losses.

Income tax expense represents minimum

state taxes due.

The blended Federal and State

tax rate of 28.04 %

applies to loss before taxes.

The Company’s tax expense differs from the “expected” tax expense for Federal income

tax purposes, (computed by applying the United States Federal tax rate of 21 %

to loss before taxes), as follows:

Income tax reconciliation

Year ended December 31,

Computed “expected”

tax expense (benefit)

Computed “expected” tax expense (benefit)

$ ( 1,384,995 )

$ ( 1,093,697 )

State taxes, net of federal benefit

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Income tax expense

Deferred income taxes

reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for income tax purposes.

The effects of temporary differences that gave rise to significant portions

of deferred tax assets and liabilities are as follows:

Deferred income taxes reflect

the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes.

The effects of temporary differences that gave rise to significant portions of deferred

tax assets and liabilities are as follows:

Deferred tax assets and liabilities

Deferred tax assets:

Reserve for bad debt

Stock options

4 unchanged sentences

( 12,978,187 )

( 10,656,461 )

Total net deferred tax assets

2 unchanged sentences

Total net deferred taxes

As a result of the

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

The valuation allowance

at December 31, 2020 was $10,656,461.

As a result of the Company’s

history of incurring operating losses, a full valuation allowance has been established.

The valuation allowance at December 31, 2021

was $12,978,187.

The increase in the valuation allowance during 2021 was $ 2,321,726 .

At December 31, 2021,

2020, the Company has a net operating loss carry forward of $32,827,007, of which $25,107,807 is available to offset future net

income through 2037.

The net operating loss (“NOL”) expires during the years 2019 to 2037 and $11,721,225 may be carried

forward indefinitely and limited to offsetting 80% of taxable income.

The utilization of the net operating loss carryforwards is

dependent upon the ability of the Company to generate sufficient taxable income during the carryforward period.

In the event that

a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization

of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code.

Management does not

presently believe that such a change has occurred.

No liability related

to uncertain tax positions is recorded on the financial statements related to uncertain tax positions.

There are no unrecognized

tax benefits as of December 31, 2020.

The Company does not expect that uncertain tax benefits will materially change in the next

the Company has a net operating loss carry forward of $ 45,229,370 , of which $ 25,107,807 is available to offset future net income through

The net operating loss (“NOL”) expires during the years 2027 to 2037 and $ 20,121,563 may be carried forward indefinitely

and limited to offsetting 80% of taxable income.

The utilization of the net operating loss carryforwards is dependent upon the ability

of the Company to generate sufficient taxable income during the carryforward period.

In the event that a significant change in ownership

of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject

to limitation under certain provisions of the Internal Revenue Code.

Management does not presently believe that such a change has occurred.

No liability related to uncertain

tax positions is recorded on the financial statements related to uncertain tax positions.

There are no unrecognized tax benefits as of

December 31, 2021.

The Company does not expect that uncertain tax benefits will materially change in the next 12 months.

The Company files U.S.

federal, California, Illinois, New York, and Wisconsin State tax returns, and a New York City tax return.

All tax returns will

remain open for examination by the federal and state taxing authorities for three and four years, respectively, from the date of

utilization of any net operating loss carryforwards.

On March 27, 2020,

the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law and GAAP requires recognition

of the tax effects of new legislation during the reporting period that includes the enactment date.

The CARES Act includes changes

to the tax provisions that benefits business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act.

The tax relief measures for businesses in the CARES Act include a five-year net operating loss carryback for certain net operating

losses, suspension of the annual deduction limitation of 80% of taxable income for certain net operating losses, changes in the

deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction

to allow accelerated deductions for qualified improvement property.

The CARES Act also provides other non-tax benefits to assist

those impacted by the pandemic.

The Company evaluated the impact of the CARES Act and determined that there is no material impact

to the income tax provision for the year ended December 31, 2020.

The Consolidated Appropriation

Act (“CAA”) of 2021 was signed into law by the President on December 27, 2020, containing the most recent COVID-19

relief provisions as well as many tax provisions including renewals of several popular tax extenders.

The Company evaluated the

impact of the CAA and determined that there is no material impact to the income tax provision for the year ended December 31, 2020.

California, New York, and Wisconsin State tax returns, and a New York City tax return.

All tax returns will remain open for examination

by the federal and state taxing authorities for three and four years, respectively, from the date of utilization of any net operating

loss carryforwards.

SUBSEQUENT EVENTS

On January 26, 2021,

2,000 stock options were exercised on a cashless basis issuing 977 shares of common stock and on February 4, 2021, 300 stock options

were exercised on a cashless basis issuing 86 shares of common stock.

Between January 1,

2021 through March 24, 2021, 375,999 public warrants were exercised at $6.30 per share and 8,156 private warrants were exercised

at $8.89 per share to purchase a total of 384,155 shares of the Company’s common stock generating proceeds of $2,441,301.

On February 9, 2021,

Beam Global entered into an Amended and Restated Employment Agreement with Desmond Wheatley, the Company’s president and

chief executive officer.

The agreement extends the prior agreement to December 31, 2024 and is on substantially the same terms

and conditions.

Pursuant to the Agreement, on April 1, 2021, the Company will grant Mr.

Wheatley a number of shares of restricted

stock equal to $112,500 based on the closing price of the Company’s common stock on such date.

Fifty percent of the shares

of restricted stock will vest in three (3) equal quarterly installments at the end of each calendar quarter following the grant

The remaining fifty percent of the restricted stock will vest in eleven (11) equal amounts at the end of each calendar quarter

following the grant date.

In addition, commencing on January 1, 2022, the Company will grant Mr.

Wheatley a number of shares of

restricted stock equal to $150,000 based on the closing price of the Company’s common stock on such date.

Fifty percent of

the shares of restricted stock will vest in four (4) equal quarterly installments at the end of each calendar quarter following

the grant date.

The remaining fifty percent of the restricted stock will vest in twelve (12) equal amounts at the end of each calendar

quarter following the grant date.

Pursuant to the requirements of Section

13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its

behalf by the undersigned, thereunto duly authorized.

March 4, 2022, the Company completed its acquisition of AllCell Technologies, LLC (“AllCell”), a leader in energy storage

This strategic acquisition is expected to increase and diversify our Company’s revenue, gross profitability, manufacturing

capabilities, intellectual portfolio and customer base.

The Company purchased substantially all of the assets and business of AllCell

for 1,055,000 shares of Beam Common Stock (“Closing Consideration”) (on the closing date, based on the closing price of the

Beam Common Stock of $13.61, such shares had a value of approximately $14.4 million) plus an additional $911,711 in cash for the net working

capital of primarily inventory held by AllCell at closing.

In addition, AllCell is eligible to earn an additional number of shares of

Beam Common Stock if it meets certain revenue milestones (the “Earnout Consideration”).

The Earnout Consideration is:

two times the amount of AllCell revenue and contracted backlog that is greater than $7.5 million for 2022, and (ii) two times the amount

of AllCell 2023 revenue only which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0

Revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration.

The maximum aggregate amount

of shares of Common Stock that Buyer will issue to Seller for the Closing Consideration and Earnout

Consideration will not exceed 1.8 million shares.

of the Company’s Common Stock issued to AllCell to satisfy the Closing Consideration and any Earnout Consideration will be issued

in a private placement and will be subject to transfer restrictions under the Securities Act of 1933, as amended.

Beam has agreed to file

a resale registration statement with the SEC to register the resale of up to $10.0 million of the Common Stock issued to AllCell for the

Closing Consideration.

Pursuant to the terms of the Purchase Agreement, AllCell agreed not to sell shares of Beam Common Stock (i) in

an amount greater than four percent (4%) of the average weekly volume of shares of Beam Common Stock during any trading week and (ii)

on more than three days in any week and (iii) in an amount greater than ten percent (10%) of the average daily trading volume on any trading

The acquisition of AllCell will

be accounted for as a business combination using the acquisition method of accounting in the first quarter of 2022.

Given the recent timing

of the transaction close, we are in the process of estimating the fair value of the Earnout Consideration as well as the assets acquired

and liabilities assumed in the business combination.

As a result, we are currently unable to provide the estimate of the purchase consideration

or the preliminary allocation of purchase consideration based on the acquisition date fair values of the assets acquired and liabilities

assumed as well as other related information, including pro forma disclosures, determination of segments, reporting units, and the final

amount of transaction costs, which will be included in the Quarterly Report on Form 10-Q for the three months ending March 31, 2022.

Pursuant to the requirements of Section 13 or

15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

March 31, 2022

3 unchanged sentences

Power of Attorney

Each person whose signature appears below

constitutes and appoints each of Desmond Wheatley and Katherine H.

McDermott, true and lawful attorney-in-fact, with the power

of substitution, for him in any and all capacities, to sign amendments to this Annual Report on Form 10-K, and to file the

same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby

ratifying and confirming all that said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue

Each person whose signature appears below constitutes

and appoints each of Desmond Wheatley and Katherine H.

McDermott, true and lawful attorney-in-fact, with the power of substitution, for

him in any and all capacities, to sign amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto

and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said

attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities

16 unchanged sentences

Anthony Posawatz

/s/ Nancy Floyd

March 31, 2022

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-K

Item 9A. Controls and Procedures