Beam Global 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW: Beam develops, manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media advertising. The Company has designed five product lines that incorporate the same underlying proprietary technology and value for producing a unique alternative to grid-tied charging, having a built-in renewable energy source in the form of attached solar panels and/or light wind generator to produce power and battery storage to store the power. These products are rapidly deployable and attractively designed. Our product lines include: - EV ARC™ Electric Vehicle Autonomous Renewable Charger – a patented, rapidly deployed, infrastructure product that uses integrated solar power and battery storage to provide a mounting asset and a source of power for factory installed electric vehicle charging stations of any brand. The electronics are elevated to the underside of the solar array making the unit flood-proof up to nine and a half feet and allowing adequate space on the engineered ballast and traction pad which gives the product stability. - Solar Tree® DCFC – Off-grid, renewably energized and rapidly deployed, patented single-column mounted smart generation and energy storage system with the capability to provide a 50kW DC fast charge to one or more electric vehicles or larger vehicles. - EV ARC™ DCFC – DC Fast Charging system for charging EVs. - EV-Standard TM – patent issued on December 31, 2019 and still under development. A lamp standard, EV charging and emergency power product which uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging. - UAV ARC™ - patent issued on November 24, 2020 and still under development. An off-grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets. We believe that there is a clear need for a rapidly deployable and highly scalable EV charging infrastructure, and that our products fulfill that requirement. Unlike grid-tied installations which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring concrete, wiring, and ongoing utility bills, the EV ARC™ system can be deployed in minutes, not months, and is powered by renewable energy so there is no utility bill. We are agnostic as to the EV charging service equipment or provider and integrate best of breed solutions based upon our customer’s requirements. For example, our EV ARC™ and Solar Tree® products have been deployed with Chargepoint, Blink, Enel X, Electrify America and other high quality EV charging solutions. We can make recommendations to customers, or we can comply with their specifications and/or existing charger networks. Our products replace the infrastructure required to support EV chargers, not the chargers themselves. We do not sell EV charging, rather we sell products which enable it. We believe our chief differentiators for our electric vehicle charging infrastructure products are: · our patented, renewably energized products which dramatically reduce the cost, time and complexity of the installation and operation of EV charging infrastructure and outdoor media platforms when compared to traditional, utility grid tied alternatives; · our first-to-market advantage with EV charging infrastructure products which are renewably energized, rapidly deployed and require no construction or electrical work on site; · our products’ capability to operate during grid outages and to provide a source of EV charging and emergency power rather than becoming inoperable during times of emergency or other grid interruptions; and · our ability to continuously create new and patentable inventions which are marketable and a complex integration of our own proprietary technology and parts, and other commonly available engineered components, creating a further barrier to entry for our competition. 24 Our revenues increased from $6.2 million in 2020 to $9.0 million in 2021 primarily due to an investment in sales and marketing resources over the past two years. During the year ended December 31, 2021, product sales were generated from a wide variety of markets, including state and local government agencies, colleges, commercial businesses, utilities, and federal customers. Our contract with the State of California included a 52-unit EV ARC TM purchase to provide sustainable EV charging and emergency power for 12 state government agencies in California. In late 2020, we entered into a Multiple Award Schedule Contract with the General Services Administration (GSA) that helps streamline purchases from Federal agencies and state and local governments. We have also invested in our federal business channel by adding a federal lobbyist, a federal business development resource and a government relations employee. These resources have helped with language in legislature to include renewable charging instead of just grid-tied, to raise awareness of our product and to increase outreach with federal agencies. This resulted in several orders in 2021, including a 21-unit order from the US Marine Corps at 14 bases throughout the U.S. In addition, there is increased support for funding EV charging infrastructure on the state and federal level, as well as a number of federal grants available in addition to the Federal Solar Investment Tax Credit and Rule 179 accelerated depreciation which provide a strong financial incentive for many of our target customers. We expect the electric vehicle market to continue to experience significant growth over the next decade as supported by an expected 61 new electric vehicles launching in 2022 which will require additional EV charging infrastructure. We believe our products are uniquely positioned to benefit from this growth. We made progress in our outdoor media advertising business during 2021 and entered into a collaboration agreement with the City of San Diego to deploy solar-powered EV charging infrastructure across the city. We are currently working with The Superlative Group, an industry leading consultant engaged in the selling of corporate sponsorships, and have identified several corporate sponsors for a global naming rights agreement to our network of EV ARC units. Superlative is compensated when they are successful in securing a sponsor for our Driving on Sunshine network. This business model can be replicated in other cities throughout the country. Our energy security business is connected with the deployment of our EV charging infrastructure products and serves as an additional benefit to the value proposition of our charging products which, along with their integrated emergency power panels, can continue to operate, charge EVs, and deliver emergency power during utility grid failures. Our state-of-the-art storage batteries installed on our EV chargers are immune to grid failures and provide another benefit for certain customers such as municipalities, counties, states, the federal government, hospitals, fire departments, large private enterprises with substantial facilities, and vehicle fleet operators. We have begun development on our newest patented products - our EV Standard TM and UAV ARC™, which we expect will expand our product offerings with the same proprietary technology as our current products and allow us to expand into new markets. Several contributing factors resulted in reporting a gross loss in both 2021 and 2020. We currently have a fixed overhead structure and facility that will support expected growth over the next several years. Until our revenues increase, we have underutilized capacity that adds a fixed cost burden to our margins. As we have increased our production volumes, we have increased our fixed overhead absorption which reduces our fixed overhead cost allocation per unit, as well as benefited from improved labor efficiencies and utilization and cost improvements by negotiating volume purchase discounts. We are also implementing lean manufacturing process improvements and making engineering changes to our product where we can benefit from cost reductions. Many of the components that we integrate into our products are manufactured by others. This is consistent with our strategy to take advantage of the investment by large and well-funded organizations in the improvement of various components and sub-assemblies which we integrate into our final product. We experienced cost increases on many of our components in 2021, most notably our steel cost, which we believe to be largely a temporary increase brought on by supply chain issues resulting from plant closures and staffing shortages brought on by the Covid-19 virus. As those costs begin to come back down, and other components such as battery cells and solar panels continue to decrease in cost precipitously in the coming months and years, we expect to see a reduction in the cost of our bill of materials. Batteries are the highest cost contributor to our bill of materials, but with the March 2022 purchase of AllCell Technologies, LLC, a lithium-ion battery manufacturer, we expect those costs to be significantly reduced. We are in the process of identifying certain components and sub-assemblies which we manufacture or assemble in-house for which we intend to seek outsourced contracted manufacturing expertise. We believe that outsourcing certain components and sub-assemblies will further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory. We expect to see a significant increase in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing pressure on our products. The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will see significant improvement in our gross margins in the near future. 25 Critical Accounting Policies Please refer to Note 1 in the financial statements for further information on the Company’s critical accounting policies which are summarized as follows: 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 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. Inventory. Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method of accounting. 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. Impairment of Long-lived Assets. 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,” which 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. Revenue Recognition. Beam follows the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “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; 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 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. 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. 26 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. Revenues from professional services are recognized as services are performed. Revenue values are based upon fixed fee arrangements or hourly fee-based arrangements with agreed to hourly rates of service categories in line with expertise requirements. These services are billed to a customer as such services are provided and the customer will be obligated to make payments for such services typically within a 30-45 day period. 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. The Company generally provides a standard one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and it will pass on the warranties from its vendors, if any, which generally covers this one-year period. The Company accrues for product warranties when the loss is probable and can be reasonably estimated. 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, which are included in inventory prior to a sale, as cost of revenues. The Company further includes shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues. Results of Operations Comparison of Results of Operations for Fiscal Years Ended December 31, 2021 and 2020 Revenues. For the year ended December 31, 2021, our revenues were $9,001,751 compared to $6,210,350 for the same period in 2020, an increase of $2,791,401 or 45% which was driven by sales volume. Revenues for the year ended December 31, 2021 included the sale of 118 EV ARC™ units including the delivery of most of the 52 units ordered by the State of California. Sales to federal agencies also grew in 2021, including a 21-unit order from the U.S. Marine Corps. This is further supported by a federal infrastructure bill that was passed in November 2021 that designates $7.5 billion for the nationwide deployment of 500,000 EV charging stations and $6.1 billion for electric vehicle related initiatives in Governor Newsom’s California budget proposal. We are currently engaged in a contract renewal process with the State of California’s Department of General Services. In addition, we continue to see an increase in repeat orders and multiple unit orders compared to any prior year. During 2020, we experienced some delays in customers placing orders as a result of the COVID-19 pandemic, but this improved as we moved into 2021. Revenues for the year ended December 31, 2020 included the sale of 69 EV ARC™ units including 29 units to Electrify America for deployment in California, as well as to various municipalities, colleges, utilities and federal agencies. It also included the sale of three Solar Tree® systems and an EV ARC ™ DC fast charging system for a rest stop in California. During fiscal 2021, we invested in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our products. The receipt of orders may continue to be uneven due to the timing of customer approvals or budget cycles, however we believe that as EV adoption increases in concert with increased availability of infrastructure funding, our business will be less impacted by specific variations in order timing. 27 Gross Loss. For the year ended December 31, 2021, we had a gross loss of $971,644 compared to a gross loss of $710,974 for the same period in 2020. Gross loss as a percentage of revenue decreased to 10.8% for the year ended December 31, 2021, compared to 11.4% for the same period in 2020. As a result of the increase in production levels in 2021 compared to 2020, we benefited from an increase in fixed overhead absorption. We have also implemented certain design changes and value engineering on our EV ARC TM which streamlined the manufacturing process and reduced material and labor costs in the latter part of the year. We are implementing lean manufacturing process improvements which resulted in some labor efficiency improvements and increased our output to allow us to meet production demand. These cost improvements were offset by increases in material costs, especially for steel and batteries, due to the Covid-19 pandemic and resulting inflationary pressures. Shipping costs have increased globally as well which has increased our delivery costs. However, we made some changes to our shipping practices in the second half of 2021 to minimize the use of third-party logistics companies, which helped to mitigate some of the increased cost. We expect our cost per unit to continue to decrease as we expect to see material costs return to normalcy post pandemic. We also acquired a lithium-ion battery manufacturer, AllCell Technologies, LLC in March 2022, which should significantly reduce the cost of the batteries in our units. In addition, as we expect the Company to grow in 2022 and beyond, we expect our fixed overhead absorption to continue to improve. Operating Expenses. Total operating expenses were $5,627,674 for the year ended December 31, 2021 compared to $4,496,660 for the same period in 2020, a 25% increase. Our operating expense decreased as a percentage of sales from 72.4% of sales in 2020 to 62.5% of sales in 2021. The increase was primarily due to $573,235 for increased sales and marketing expense to support revenue growth, $98,975 for research and development increased headcount to support development projects, $86,926 for increased directors and officers insurance premiums, $77,683 for increased costs related to the 2021 annual shareholder meeting, $56,781 for increased accountant fees, $55,696 for building repairs, $32,834 for increased director cash compensation, $32,575 for legal fees and $116,309 of other net increases. Income Tax Expense. Our tax expense for the year ended December 31, 2021 related to minimum taxes due, primarily for the California Franchise Tax Board. We did not incur any federal tax liability for the years ended December 31, 2021 or December 31, 2020 because we incurred operating losses for tax purposes in these periods. 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. Due to continuing losses, recoverability is not considered likely and as such we have provided a valuation allowance which will remain until the Company becomes profitable in an adequate amount that it becomes likely the deferred tax assets can be recovered. Other Income and Expense. Interest income decreased by $6,844 in the year ended December 31, 2021 due to lower interest rates. Interest expense decreased from $11,893 for the year ended December 31, 2020 to $498 for the year ended December 31, 2021 due to the repayment of debt in 2020. Liquidity and Capital Resources At December 31, 2021, we had cash of $21,948,512, compared to cash of $26,702,804 at December 31, 2020. We have historically met our cash needs through a combination of proceeds received from private and public offerings of our securities and loans. Our cash requirements are generally for operating activities. Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the table below: December 31, 2021 2020 Cash provided by (used in): Net cash used in operating activities $ (6,406,707 ) $ (4,138,138 ) Net cash used in investing activities $ (582,141 ) $ (358,901 ) Net cash provided by financing activities $ 2,234,556 $ 27,350,387 28 For the year ended December 31, 2021, our cash used in operating activities was $6,406,707 compared to $4,138,138 for the year ended December 31, 2020. Net loss of $6,596,039 for the year ended December 31, 2021 was increased by $1,312,113 of non-cash expense items that included depreciation and amortization of $92,775, common stock issued for services for director compensation of $742,285, non-cash compensation expense related to the grant of stock options of $444,713 primarily due to an increase in the stock price in the year ended December 31, 2021, and $32,340 for amortization of operating lease right of use asset. Further, cash used in operations included an increase in accounts receivable of $2,040,783 due to a strong fourth quarter revenue in 2021 compared to 2020, $485,961 increase in inventory due to inventory purchases to support increased sales activity and $34,569 decrease in sales tax payable for California Q4 2021 shipments. Cash provided by operations included a decrease in prepaid expenses and other current assets of $141,199, an increase in accounts payable of $815,950 due to inventory purchases, $335,121 increase in accrued expenses primarily due to compensation related accruals at the end of the year and $146,262 for an increase in deferred revenue. Our operating activities resulted in cash used in operations of $4,138,138 for the year ended December 31, 2020. Net loss of $5,213,025 for the year ended December 31, 2020 was increased by $1,208,504 of non-cash expense items that included depreciation and amortization of $40,952, common stock issued for services for director compensation of $458,924, non-cash compensation expense related to the grant of stock options of $722,549 primarily due to an increase in the stock price in the quarter ended December 31, 2020, amortization of debt discount of $5,990, offset by $19,911 for amortization of operating lease right of use asset. Further, cash used in operations included an increase in accounts receivable of $1,021,937 due to a strong fourth quarter revenue in 2020 compared to 2019, an increase in prepaid expenses and other current assets of $385,895 primarily due to warrants that were exercised but the payment was pending, and $220,417 for the payment of a convertible note to a related party for deferred compensation. Cash provided by operations included a reduction of inventory of $1,060,614, an increase in accounts payable of $242,900 due to inventory purchases to support Q4 2020 shipments, $86,452 increase in accrued expenses, $85,917 increase in sales tax payable for California Q4 2020 shipments, $13,880 for an increase in deferred revenue, and $4,869 for a decrease in deposits. Cash used in investing activities in the year ended December 31, 2021 included $83,871 to fund patent related costs and $498,270 to purchase equipment, primarily for production and transportation. The year ended December 31, 2020 included $93,137 to fund patent related costs and $265,764 to purchase equipment, primarily for transportation equipment and a forklift truck. In 2021, cash generated by our financing activities included $2,854,223 from the exercise of warrants and $10,706 from the exercise of stock options, offset by $630,373 used to cover payroll taxes for cashless stock option exercises. In 2020, cash generated by our financing activities included $18,999,675 in proceeds from the issuance of common stock pursuant to a public offering and $9,926,858 from the exercise of warrants, offset by the funding of equity offering costs of $1,566,852 and the payment of an auto loan. Current assets decreased to $27,566,820 at December 31, 2021 from $29,903,431 at December 31, 2020, primarily due to a $4,754,292 decrease in cash, offset by a $2,040,783 increase in accounts receivable. Current liabilities increased to $2,955,010 at December 31, 2021 from $1,770,400 at December 31, 2020, primarily due to an increase in accounts payable for purchases of inventory to support the increased sales forecast and an increase in accrued expenses driven by accrued compensation costs at December 31, 2021. As a result, our working capital decreased to $24,611,810 at December 31, 2021 compared to $28,133,031 at December 31, 2020. In May 2020, the Company received a Small Business Administration Payroll Protection Plan loan for $339,262 for protection against potential impact from the COVID-19 virus which was repaid with interest in November 2020. The Company has been focused on marketing and sales efforts over the past two years to support an increase in revenues. While we did see a 45% increase in revenues in 2021 compared to 2020, the Company has still not earned a gross profit on its sale of products. However, the revenue growth in the quarter ended December 31, 2021 was 59% over the prior year and the gross loss improved by 37% primarily as a result of the increased fixed overhead absorption. Management has made several design changes and process improvements in our manufacturing operations in 2021 as well which has helped to increase labor efficiency and reduce costs. At the same time, supply chain issues related to the COVID-19 virus has caused an increase in certain of our material costs, most notably in steel purchases, which has offset some of the improvements made. However, we believe that we will continue to improve our gross profit as our revenues grow. Management believes that with increased production volumes that we believe are forthcoming, efficiencies will continue to improve, and the fixed overhead cost per unit will decrease. In addition, our suppliers believe that costs that have increased this past year should start to come back down in the later part of 2022. This should result in increasing gross profits on the EV ARC ™ and Solar Tree® products in the future. 29 The Company may be required to raise capital from the private or public issuance of its securities or debt instruments until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. The Company has 519,658 warrants remaining at December 31, 2021, which could potentially generate an additional $3,273,845 of proceeds over the next 2.3 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. Management cannot currently predict when or if it will achieve positive cash flow. On March 4, 2022, the Company completed an acquisition of AllCell Technologies, LLC (“AllCell”), a leader in energy storage solutions. 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 to the cash paid at closing of $911,711, the Purchase Agreement requires a capital investment of not less than $1,500,000 of equipment to be used for the business. 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. Management believes that evolution in the operations of the Company may allow it to execute on its strategic plan and enable it to experience profitable growth in the future. This evolution is anticipated to include the following continual steps: addition of sales personnel and independent sales channels, continued management of overhead costs, increased overhead absorption resulting from revenue growth, process improvements and vendor negotiations leading to cost reductions, increased public awareness of the Company and its products, and the maturation of certain long sales cycle opportunities. Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue operations. There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives. Capitalization On April 18, 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. Concurrent with the offering, 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 $171. On May 15, 2019, the Company closed the Underwriters Second Over-Allotment partial exercise option to purchase 200,000 shares of Common Stock at $5.99 per share (the "Second Over-Allotment Exercise") for additional gross proceeds of $1.198 million, prior to deducting underwriting discounts and commissions and offering expenses payable by the Company, pursuant to and in compliance with the terms and conditions of the previously announced April 16, 2019 Underwriting Agreement and Offering. 30 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 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. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial statements required by this item begin on page F-1 with the index to financial statements followed by the financial statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.