What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-25 compared with 2021-11-12 · 268 added, 252 removed, 72 unchanged (88% of the section changed)

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This report contains forward-looking

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

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

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

These statements include,

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

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

"anticipates," "intends," "plans," "believes," "seeks," "estimates," "should,"

"would," "could," "will," “opportunity," "potential" or "may," and variations

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

statements that are based on current expectations, estimates, forecasts, and projections about us, the industry in which we operate and

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

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

For example, when we use words such as “projects,”

“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”

“estimates,” “should,” “would,” “could,” “will,” “opportunity,”

“potential” or “may,” and variations of such words or other words that convey uncertainty of future events or

outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and

Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).

These forward-looking statements

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failure of the Company to earn revenues or profits;

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

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

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

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

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

rapid and significant changes in markets;

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

litigation with or legal claims and allegations by outside parties;

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

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

rapid and significant changes to costs of raw materials.

rapid and significant changes to costs of raw materials from government tariffs or other market factors;

increasing spread of the COVID-19 pandemic and its impact on the Company’s business as well as worldwide financial markets;

New factors emerge from time

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

Beam is a cleantech innovation

company based in San Diego, California that develops, manufactures and sells high-quality, renewably energized infrastructure products

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

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 for producing a unique alternative to grid-tied charging of

electric vehicles, having a built-in renewable energy source in the form of attached solar panels and/or light wind generator to produce

power and battery storage to store the power.

product lines for the electrification of transportation, 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.

In 2019, we began deploying our upgraded version, the EV ARC™ 2020, which provides all of the features of the original EV ARC™ in addition to elevating the electronics to the underside of the solar array making the unit flood-proof up to nine feet and making more space available on the engineered ballast and traction pad which gives the product stability.

Solar Tree® 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 ™ – patent issued on December 31, 2019 and still under development.

A Lamp Standard replacement 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, street lighting and emergency power.

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.

EV ARC™ Electric Vehicle Autonomous Renewable Charger – a patented, rapidly deployed, infrastructure product that uses integrated solar power, battery storage and electronics and computing, to provide a mounting asset and a source of power for factory installed electric vehicle charging stations of any brand.

The electronics and energy storage are elevated to the underside of the tracking solar array, making the unit flood-proof up to nine and a half feet and allowing adequate parking 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 fast charging 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.

All Beam Global products are capable of operating

completely independent of the utility grid but can also connect to the grid where it is advantageous to do so.

In addition, with the acquisition

of All Cell Technologies, LLC, we now offer Beam AllCell™ energy storage technology with a highly flexible lithium-ion battery platform

architecture.

The battery design uses a proprietary phase change material which provides a low-cost thermal management solution and a

unique safety mechanism to prevent propagation of thermal runaway.

They are ideally suited for applications where energy density, safety

and specialized enclosures require high power in small spaces.

Drones, submersibles, recreational products and a host of micro mobility

products benefit from this technology.

Beam is already using AllCell™ energy storage products in EV ARC™ products for EV charging

and plan to incorporate this battery technology in our new product designs that are under development.

We believe that we are living

in an increasingly electrified and untethered era, where electricity is replacing other forms of fuel and energy and doing so, increasingly

without being connected to the grid through the use of batteries and other forms of energy storage.

We also believe that there is a clear

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

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, BTC Power 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.

concrete, wiring, and ongoing utility bills, the EV ARC™ systems, equipped with our proprietary battery technologies, can be deployed

in minutes, not months, and are 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

We can make recommendations to customers, or we can comply with their specifications and/or existing charger networks.

they generate and store all their own electricity, our products replace the infrastructure required to support EV chargers, but not the

chargers themselves.

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

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for our electric vehicle charging infrastructure products are:

Our patented, renewably energized products 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 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 proprietary and patented energy storage solutions;

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

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

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

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

Overall Business Outlook

Our revenues increased from

$4,009,644 in the first nine months of 2020 to $5,514,102 for the same period in 2021.

Of our revenues in the first nine months of 2021,

71% were to state and local governments, primarily due to the delivery of 30 units of a 52 unit order from the State of California.

have also experienced growth from federal customers through our Federal General Services Administration (GSA) Multiple Award Schedule

(MAS) contract which represented 14% of revenues in the first nine months of 2021 and enterprise customers represented 11% of revenues

for the same period.

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

relations firm and a rebranding, to communicate and increase awareness of our products to potential customers.

On January 27, 2021, President

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

Also, the Senate passed a bill on August 10, 2021 which Congress passed on November 5, 2021 for a $1.2 trillion infrastructure package

that includes $7.5 billion for building a nationwide network of plug-in electric vehicle chargers.

Beam Global views federal investment

in EV infrastructure as an important potential source of future revenues particularly now that the Company has been awarded a Federal

General Services Administration (GSA) Multiple Award Schedule (MAS) contract that will make the procurement process by federal agencies

much easier and faster.

We have hired a government relations person and engaged a lobbying firm in Washington DC to support this opportunity

We are also increasing our sales across the U.S.

to add to our significant presence in California.

We believe that our opportunities

in corporate markets will increase as demand for workplace and public charging increases.

We believe our products are uniquely positioned

to benefit from this growth, as well as increased market share as a result of our ability to rapidly deploy resilient and low total cost

EV charging infrastructure without the complexities of construction, electrical work or permitting.

We continue to make progress

in our outdoor media advertising business in 2021, where the efforts of our contracted industry expert are identifying and vetting potential

corporate sponsors to receive global naming rights to the network of EV ARC™ systems planned for the City of San Diego and other

major US cities.

We have two new patents that

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

UAV ARC™ which we expect will expand our product offerings with the same proprietary technology as our current products and allow

us to expand into new markets.

We have also been issued a new patent for our transformable EV ARC™ in China.

We had a gross loss of $631,020

in the nine months ended September 30, 2021, compared to a gross loss of $173,037 for the same period in the prior year.

have a fixed overhead structure and facility that will support our expected growth over the next several years.

Until our production increases,

we have underutilized capacity that adds a fixed cost burden to our margins.

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

improve our fixed cost per unit, as well as benefit from improved labor efficiencies and utilization and cost improvements by negotiating

volume purchase discounts.

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

where we can benefit from cost reductions.

Our revenues increased 175%

from $1.4 million in the first quarter of 2021 to $3.8 million for the first quarter of 2022.

Primarily due to our investment in sales

and marketing resources over the past two years which has created increased demand for our product, as well as an increase of $.4 million

of sales for our battery storage business in March following the acquisition of All Cell Technologies, LLC.

During the first quarter of

2022, revenues from federal customers and from enterprise customers showed strong growth compared to the same period in the prior year.

We invested in our federal business channel with the addition of a federal lobbyist, a federal business development resource and a government

relations employee who are helping to identify opportunities on the federal side, including increased awareness of our product and outreach

with federal agencies.

In addition, as companies are moving back to work from working from home during the past two years due to the pandemic,

there is an increase in demand for workplace charging and corporate fleets.

We continued to have material revenues from state and local

agencies which comprised 69% and 70% of our sales in Q1 of 2022 and 2021, respectively.

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.

Net Zero Emission Initiatives continues to expand at the federal, state and local levels and with private enterprise.

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.

The Company’s acquisition

of All Cell Technologies, LLC, a battery storage company, will provide new customer opportunities for Beam Global’s products and

We believe Beam’s gross margin will improve by utilizing the Beam All Cell battery in its EV ARCs™ as it did for

10 years in the past, but now at lower cost.

Beam’s All Cell batteries are ideally suited for applications where energy density,

safety and bespoke enclosures require high power in small spaces.

Drones, submersibles, recreational products and a host of micro mobility

and electric vehicle products are already benefiting from AllCell’s highly differentiated products.

With the continued growth of

untethered electrification, we believe there is opportunity for increased demand in these markets and others.

We continue to work with The

Superlative Group, an industry leading consultant engaged in the selling of corporate sponsorships and have identified several potential

corporate sponsors for a global naming rights agreement to network(s) 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

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 proprietary and state-of-the-art storage batteries

installed on our products and powering EV chargers are immune to grid failures and provide another benefit for customers such as municipalities,

counties, states, the federal government, hospitals, fire departments, large private enterprises with substantial facilities, and vehicle

fleet operators or anyone who needs a reliable source of electricity to fuel electric vehicles.

We have begun development

on our newest patented products - our EV Standard™ and UAV ARC™, which we expect will expand our product offerings leveraging

the same proprietary technology as our current products and allow us to expand into new markets.

Gross margins improved in

the quarter ended March 31, 2022, compared to the same period in 2021.

The increase in revenues of EV ARC TM systems from 18

in the first quarter of 2021 to 45 in the first quarter of 2022 resulted in favorable fixed overhead absorption and improved labor efficiencies

gained by the higher volume.

This was partially offset by ongoing inflation and supply chain driven cost increases on many of our components,

including steel, in addition to increased delivery charges due to fuel price increases.

We believe these cost increases are largely a

temporary increase brought on by supply chain issues resulting from plant closures and staffing shortages due to the Covid-19 virus as

well as other transitory inflationary pressures.

As the supply chain issues are resolved over time and costs begin to come back down in

the coming months and years, we expect to see a reduction in the cost of our bill of materials, which when combined with the cost reductions

we anticipate through use of our in-house battery manufacturing, should contribute to a material reduction in our product costs.

implementing lean manufacturing process improvements and making engineering changes to our product where we expect to benefit from cost

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

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

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

Components such as battery cells and solar panels are expected

to continue to decrease in cost in the coming months and years.

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

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

The combination of this increase

in demand for electric vehicle charging infrastructure and therefore our revenues, and the cost cutting measures described above lead

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

In the short-term, we are experiencing increases

in steel pricing and transportation cost.

We are working with our suppliers to get the best pricing we can and to ensure adequate supply

until such time as production supply improves and pricing is expected to go back to normal pricing.

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.

Batteries are the highest cost contributor to our bill of materials, but with the March 2022

purchase of All Cell Technologies, LLC, a lithium-ion battery manufacturer, we expect those costs to be significantly reduced.

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.

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.

Significant Accounting Policies and Estimates

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Use of Estimates.

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

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

reported amounts of revenues and expenses during the reporting period.

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 valuation of inventory and standard cost allocations, depreciable lives of property

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

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

Significant estimates in the accompanying financial statements include the allowance

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

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

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

Changes in Accounting Principles .

There were no significant changes in accounting principles that were adopted during the three months ended September 30, 2021.

There were no significant changes in accounting principles that were adopted during the three months ended March 31, 2022.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended September 30, 2021 and 2020

For the three

months ended September 30, 2021, revenues were $2,020,612, a 63% increase over $1,237,434 for the three months ended September 30, 2020.

During the third quarter of 2021, we had a heavy concentration of revenues from California as we deployed an additional 23 of the 52 units

ordered by the State of California through the state-wide Department of General Services (DGS) contract.

These units are being deployed

at various State agencies, including Cal Fire, Cal OES and Caltrans.

We also delivered our first order on our state-wide Florida Sheriff’s

Association contract.

We received new orders of $5.4 million during the quarter which resulted in a strong backlog on September 30, 2021

of $7.1 million.

three months ended September 30, 2021, we had a gross loss of $208,023 compared to a gross loss of $188,732 for the three months ended

September 30, 2020.

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

due to an increase in costs for the new EV ARC™ 2020 unit that was launched at the end of 2019 and rolled out in 2020, compared

to the original EV ARC™.

Based on our experience with the production of our original EV ARC™, we believe our production costs

per unit for the new EV ARC TM 2020 will reduce over time as our operations and engineering teams improve the production process.

We are also being negatively impacted by increases in steel and other components due to high demand.

We saw a significant increase on

many of our steel component orders during the quarter which is beginning to be reflected in our cost of revenues and will continue to

increase as more orders are received.

We expect that these higher material costs may continue for several more quarters until global production

levels increase.

We made some changes to our shipping practices in Q3 2021 to minimize the use of third party logistics companies due

to significant pricing increases.

This resulted in deployment cost savings compared to recent quarters.

This was partially offset by decreased

revenue for shipping and handling during the current quarter as the DGS contract is exempt from paying for shipping and handling.

Operating Expenses.

operating expenses were $1,481,306 for the three months ended September 30, 2021, compared to $906,962 for the same period in 2020, a

63% increase.

The increase was primarily due to $202,463 for non-cash compensation expense for stock option expense and vesting of director

restricted shares, $243,614 for increased sales and marketing expense to support revenue growth, $31,997 for increased costs related to

our 2021 annual shareholder meeting and $96,269 of other net increases.

Other Income and Expense.

Other income and expense were $698 of income in the quarter ended September 30, 2021, compared to $159 of expense the quarter ended September

was $1,688,631 for the three months ended September 30, 2021, a $592,777 increase from a net loss of $1,100,023 for the same period in

2020, primarily due to the increase in gross loss and increased operating expenses.

Comparison of Results of Operations for the

Nine Months Ended September 30, 2021 and 2020

months ended September 30, 2021, revenues were $5,514,102, a 38% increase over $4,009,644 for the nine months ended September 30, 2020,

primarily due to the delivery of 30 of the 52 units ordered by the State of California.

Sales from Federal agencies also grew in the first

nine months of 2021 compared to the same period in the prior year.

In addition, we continue to see more multiple unit orders compared

to prior quarters as evidenced by a 52 system order from the State of California and several others.

During 2020, we experienced some

delays in customers placing orders as a result of the COVID-19 pandemic, which are now moving forward in 2021.

Our backlog on September

30, 2021 was $7.1 million.

nine months ended September 30, 2021, we had a gross loss of $631,020 compared to a gross loss of $173,037 for the nine months ended September

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

to increased costs for the new EV ARC™ 2020 unit that was launched at the end of 2019 and rolled out in 2020, compared to the original

Based on our experience with the production of our original EV ARC™, we believe our production costs per unit for

the new EV ARC 2020 will reduce over time as our operations and engineering teams improve the production process.

We are also being negatively

impacted by increases in steel prices and shipping costs due to high demand.

Steel costs have increased significantly in the past two

quarters, and we expect this to continue for the next several quarters until global production improves.

Our shipping costs using third

party logistics companies also increased in the first nine months of 2021 compared to the prior year.

However, we made some changes to

our shipping practices in Q3 2021 to minimize the use of third party logistics companies, which resulted in significant savings over the

prior quarter.

Three Months Ended March 31, 2022 and 2021

For the quarter

ended March 31, 2022, our revenues increased 175% to $3.8 million compared to $1.4 million for the same period in 2021.

Revenues to customers

in California represented 48% of the total, which continues to be a strong market for EV ARC TM systems.

Most of these customers

were state agencies or municipalities.

Revenues to federal customers and corporate enterprises also increased during the quarter compared

to the prior year.

We recorded revenues in March 2022 of $0.4 million for energy storage as a result of our acquisition of All Cell Technologies

which closed on March 4, 2022.

We are currently engaged in a contract renewal process with the State of California’s Department

of General Services.

In addition, the General Services Administration (GSA) Beam was awarded a federal blanket purchase agreement (BPA)

which will provide federal agencies a streamlined procurement process for procuring EV ARCs.

During fiscal 2021, we invested in sales

and marketing employees, resources and programs to raise awareness of the benefits and value of our products, which is reflected in the

strong year over year sales growth in the quarter.

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.

quarter ended March 31, 2022, our gross loss was $0.3 million, or 8% of sales, compared to $0.1 million, or 11% of sales in the same quarter

of the prior year.

As a percentage of sales, the margin improved by 3 percentage points, primarily due to the increase in production levels

in the current quarter compared to the first quarter of 2021, which resulted in favorable fixed overhead absorption.

In addition, our

labor efficiency improved during the quarter as a result of a steady flow of units through the factory.

This was partially offset by an

increase in material costs for steel, batteries and other components, due to the Covid-19 pandemic and other inflationary pressures.

costs have increased globally as well as gas prices which have increased our delivery costs.

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, All

Cell 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.

operating expenses were $3,952,991 for the nine months ended September 30, 2021, compared to $2,697,418 for the same period in 2020, a

operating expenses were $2.0 million for the first quarter of 2022, compared to $1.1 million for the same period in the prior year, a

79% increase.

The increase was primarily due to $475,559 for non-cash compensation expense for stock option expense and vesting of director

restricted shares, $394,177 for increased sales and marketing expense to support revenue growth, $78,310 for research and development

increased headcount to support development projects, $71,934 for increased costs related to the 2021 annual shareholder meeting, $57,190

for increased directors and officers insurance premiums, $33,334 for increased director cash compensation, $39,790 for increased accounting

fees, $21,562 for recruiting fees and $83,717 of other net increases.

Other Income and Expense.

Interest income was $3,658 in the nine months ended September 30, 2021, compared to $10,280 for the same period in 2020, due to a significantly

lower average gross yield on our investments.

Interest expense was $11,357 in the nine months ended September 30, 2020, compared to a

nominal $50 in the nine months ended September 30, 2021.

was $4,581,228 for the nine months ended September 30, 2021, a $1,704,727 increase from a net loss of $2,876,501 for the same period in

2020, primarily due to the increase in gross loss and increased operating expenses.

The increase was primarily due to $0.3 million for increased sales and marketing expense to support revenue growth, $0.2

million for expenses related to the newly acquired All Cell Technologies, $0.2 million increase for legal and accounting services, partially

attributable to the acquisition, and $0.2 million of other net expenses.

Liquidity and Capital Resources

At September 30, 2021, we

had cash of $23,078,452, compared to cash of $26,702,804 at December 31, 2020.

At March 31, 2022, we had

cash of $19.2 million, compared to cash of $21.9 million at December 31, 2021.

We have historically met our cash needs through a combination

of equity and debt financings.

Our cash requirements are generally for operating activities.

of proceeds received from private and public offerings of our securities and loans.

Our cash requirements are generally for operating

Our cash flows from operating,

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

September 30,

Cash (used in) provided by:

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

Cash provided by (used in):

Net cash used in operating activities

$ (5,160,604 )

$ (3,231,325 )

Net cash used in investing activities

Net cash provided by financing activities

Operating Activities

Net loss of $4,581,228 for

the nine months ended September 30, 2021 decreased by $899,123 for non-cash expense items that included depreciation and amortization,

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

For the three months ended

March 31, 2022, our cash used in operating activities was $1.9 million compared to $0.9 million for the three months ended March 31, 2021.

Net loss of $2.3 million for the quarter ended March 31, 2022 was increased by $0.4 million of non-cash expense items that included depreciation

and amortization of $0.2 million, common stock issued for services for director compensation of $0.1 million and non-cash compensation

expense related to the grant of stock options of $.01 million.

Further, cash used in operations included an increase in prepaid expenses

and other current assets by $1.5 million, primarily related to the purchase of cells and $0.6 million increase in inventory based on the

sales forecast.

Cash provided by operations included a $1.2 million decrease in accounts receivable due to the collection of a couple

slow pay accounts from 2021, $0.5 million decrease in accounts payable, $0.4 million increase in accrued expenses and $0.1 million increase

in deferred revenue.

Net loss of $1.2 million for

the three months ended March 31, 2021 decreased by $0.2 million for non-cash expense items that included depreciation and amortization,

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

of operating lease right of use asset.

Cash used in operations for the period included a $1,011,971 increase in inventory based on forecasted

requirements, a $689,353 increase in accounts receivable due to some slow payments and an $18,691 decrease in sales tax payable.

provided by operations included an $89,663 increase in prepaid expenses and other current assets due to insurance prepayments, a $62,549

increase in accounts payable for inventory purchases, a $52,107 increase in deferred revenue due to an increase in the sale of maintenance

plans and a $37,198 increase in accrued expenses.

Net loss of $2,876,501 for

the nine months ended September 30, 2020 was decreased by $345,899 for non-cash expense items that included depreciation and amortization,

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

of debt discount associated with the related party note, and amortization of operating lease right of use asset.

Cash used in operations

for the period included a $545,619 increase in accounts receivable due to higher revenues in Q3 2020 compared to Q4 2019, a $239,863 increase

in prepaid expenses and other current assets for inventory prepayments and insurance deposits, payment of a convertible note originally

issued in lieu of salary for a related party of $220,417, and a decrease in accounts payable of $114,228.

Cash provided by operations

included an increase of $177,640 for accrued expenses, primarily for payroll and related expenses, $143,224 for a decrease in inventory

purchases, $74,703 for an increase for sales tax payable, $18,968 for increased deferred revenue for maintenance contracts, and $4,869

for deposits.

Cash used in operations for the period included a $0.5 million increase in inventory purchases

and a $0.1 million reduction of sales tax payable.

Cash provided by operations included a $0.2 million decrease in accounts receivable

due to lower revenues in the first quarter of 2021, compared to the fourth quarter of 2020, a $0.2 million decrease in prepaid expenses

and other current assets as the December 31, 2020 balance included a receivable for payment due for warrant exercises, a $0.2 million

increase in accounts payable primarily due to increased inventory purchases, and a $0.1 million increase in accrued expenses for accrued

payroll for Q1 2021 that was paid in Q2 2021.

Cash used in investing activities

included $473,318 to purchase manufacturing equipment, including two trucks for product delivery and $60,681 for patent related costs

during the nine months ended September 30, 2021.

In the nine months ended September 30, 2020, $153,097 was used to purchase manufacturing

equipment and $69,551 was used to fund patent related costs.

During the nine months ended

September 30, 2021, cash generated by our financing activities included $2,684,519 in proceeds received from the exercise of warrants

and we used cash of $614,269 to cover payroll taxes related to cashless stock option exercises.

During the nine months ended September

30, 2020, cash generated by our financing activities included $11,499,675 in proceeds from the issuance of common stock pursuant to a

public offering, offset by funding of deferred equity offering costs of $960,833, $1,066,912 from the exercise of warrants, we borrowed

$339,262 through the Small Business Administration Paycheck Protection Program made available through the Coronavirus Aid, Relief, and

Economic Security Act (CARES Act), and we paid $8,275 toward the repayment of an auto loan.

Working capital has decreased

from $28,133,031 at December 31, 2020 to $26,125,088 at September 30, 2021, primarily due to operating cash usage, partially offset by

cash proceeds from warrant exercises.

While the Company continues

to focus on sales and increased market awareness of its products, the Company has not generally earned a net profit on its sales of products

during recent years.

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

Management believes that with increased

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

thus allowing for increasing gross profits on the EV ARC™ and Solar Tree® products in the future.

The Company may raise capital

from the issuance of its securities or debt instruments until it achieves positive cash flow from its business, which is predicated on

increasing sales volumes and the continuation of production cost reduction measures.

Management cannot currently predict when or if it

will achieve positive cash flow.

On July 7, 2020, the Company

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

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

On November 27, 2020, the Company

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

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

The Company intends to use the

aggregate net proceeds from these offerings primarily for working capital and general corporate purposes.

in the three months ended March 31, 2022 included $0.8 million cash payment for working capital payment related to the acquisition of

All Cell Technologies, LLC and $0.1 million to purchase equipment.

The three months ended March 31, 2021 included $0.1 million to fund

patent related costs and to purchase equipment.

In the three months ended

March 31, 2022, cash generated by our financing activities included $0.1 million from the exercise of warrants, compared to $2.4 million

for the exercise of warrants for the same period in the prior year.

Current assets increased to

$28.0 million at March 31, 2022 from $27.6 million at December 31, 2021.

Current liabilities increased to $6.1 million at March 31, 2022

from $3.0 million at December 31, 2021, primarily due to the recording of $0.9 million for contingent consideration, current based on

the terms of the acquisition of All Cell Technologies, LLC, and a $1.3 million increase in deferred revenue for customer deposits received

from customers.

As a result, our working capital decreased to $21.8 million at March 31, 2022 compared to $24.6 million at December 31,

The Company has been

focused on marketing and sales efforts over the past two years to support an increase in revenues.

We saw a 45% increase in revenues

in 2021 compared to 2020, and the first quarter of 2022 was 175% higher than the first quarter of 2021 which shows continued

improvement on revenues.

While the Company has still not earned a gross profit on its sale of products, as revenues increase, we

expect to see our fixed overhead costs spread over more units, which will reduce the cost per unit.

Management has made several

design changes and process improvements in our manufacturing operations in 2021 and Q1 2022 which has helped to increase labor

efficiency and reduce costs.

At the same time, supply chain issues related to the COVID-19 virus have caused an increase in certain

of our material costs, most notably in steel purchases.

However, we believe that we will continue to improve our gross profit as our

revenues grow.

Management believes that with anticipated increased production volumes, 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.

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

505,714 warrants remaining at March 31, 2022, which could potentially generate an additional $3.2 million of proceeds over the next 2

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 All Cell Technologies, LLC (“All Cell”), 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 All Cell 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 $0.8 million in cash for the net working capital of primarily

inventory held by All Cell at closing.

In addition to the cash paid for the working capital of $0.8 million, the Purchase Agreement requires

a capital investment of not less than $1.5 million of equipment to be used for the business.

The maximum aggregate number of shares of

Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million

Management believes that evolution

2 unchanged sentences

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

management of overhead costs, increased overhead absorption resulting from volume 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

9 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis