Beam Global 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management is responsible 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 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. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible 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 procedures. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, 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. 33 Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. All internal control systems, no matter how well designed, have inherent limitations. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. During the period covered by this filing, 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 internal controls over financial reporting. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, we do not yet have sufficient internal controls over financial reporting and procedures to ensure that all the information required to be disclosed in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis. We identified the following material weakness which existed as of December 31, 2022: · 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. While manual controls improved significantly in 2022 at our San Diego location, we determined we had similar issues with manufacturing systems at our Chicago facility that was added in 2022 as a result of the AllCell Technologies, Inc. acquisition. A manufacturing system will provide automated processes, better controls, and improved management tools to analyze and plan production. This will avoid over-purchasing or shortages of inventory. 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, 2022. No Attestation Report by Independent Registered Accountant The effectiveness of our internal control over financial reporting as of December 31, 2022 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company. 34 Changes in Internal Controls Over Financial Reporting During the three months ended September 30, 2022, we significantly improved our manual inventory processes related to ordering, counting, warehousing, valuing and transacting our inventory at our San Diego facility. We selected an ERP System and began planning the implementation scheduled for January through June 2023. At the same time, we continue to implement process improvements in our Chicago facility which will provide for better controls in manufacturing. At March 31, 2022, we identified the following material weakness: · With regard to a business combination that was completed during the quarter ended March 31, 2022, we identified that the controls over the review of the business combination were not designed effectively such that a material error in the calculation of the purchase price was not detected in a timely manner. During the quarters ended June 30, September 30, 2022, and December 31, 2022, the Company implemented a control to review third-party valuation reports, which include formalized review procedures and enhanced communications with third-party experts. We believe that these controls have effectively addressed the material weakness identified in the quarter ended March 31, 2022 and that this no longer represents a material weakness. ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. None. 35 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by Item 10 will be incorporated herein by reference to our definitive proxy statement, to be filed within 120 days of our fiscal year end or will be included in an amendment to this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION. The information required by Item 11 will be incorporated herein by reference to our definitive proxy statement, to be filed within 120 days of our fiscal year end, or will be included in an amendment to this Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by Item 12 will be incorporated herein by reference to our definitive proxy statement, to be filed within 120 days of our fiscal year end, or will be included in an amendment to this Form 10-K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by Item 13 will be incorporated herein by reference to our definitive proxy statement, to be filed within 120 days of our fiscal year end, or will be included in an amendment to this Form 10-K. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by Item 14 will be incorporated herein by reference to our definitive proxy statement, to be filed within 120 days of our fiscal year end, or will be included in an amendment to this Form 10-K. 36 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. 1. Financial Statements The financial statements required by this item are submitted in a separate section beginning on page F-1 of this annual report. 2. Financial Statement Schedules None 3. Exhibits The following exhibits are included with this filing: Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 2.1 Asset Purchase Agreement By and Between Beam Global and AllCell Technologies, LLC dated February 16, 2022 8-K 001-38868 10.1 2/23/2022 3.1 Articles of Incorporation SB-2 333-147104 3.1 11/2/2007 3.2 Amendment to Articles of Incorporation dated December 23, 2016 S-1/A 333-226040 3.1.2 4/4/2019 3.3 Certificate of Change to Articles of Incorporation dated April 11, 2019 8-K 001-38868 3.1 4/18/2019 3.4 Certificate of Amendment to Articles of Incorporation dated September 14, 2020 8-K 000-53204 3.1 9/14/2020 3.5 Bylaws of Registrant SB-2 333-147104 3.2 11/2/2007 3.6 Amendment to Bylaws 8-K 000-53204 10.2 7/16/2014 37 4.1 Description of Registrant's Securities Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. 10-K 001-38868 4.1 3/30/2020 4.2 Form of Investor Warrant S-1 333-226040 4.2 4/11/2019 4.3 Warrant Agency Agreement by and between Envision Solar International, Inc. and Corporate Stock Transfer, Inc. 8-K 001-38868 4.2 4/18/2019 4.4 Form of Representative Warrant 8-K 001-38868 4.1 4/18/2019 4.5 Form of Warrant issued to bridge lender on August 27, 2018 8-K 001-38868 10.3 8/31/2018 4.6 Form of Warrant for Bridge Refinance Convertible Secured Promissory Note S-1 333-226040 4.6 3/25/2019 10.1* 2011 Stock Incentive Plan of Envision Solar International, Inc., dated as of August 10, 2011 10-Q 001-38868 4.1 8/15/2011 10.2* Form of Restricted Stock Agreement 10-Q 001-38868 10.3 11/14/2019 10.3* Form of Stock Option Agreement 10-Q 001-38868 10.4 11/14/2019 10.4 Amended and Restated 10% Subordinated Convertible Promissory Note, dated as of December 31, 2010, issued to John Evey 8-K 000-53204 10.22 2/12/2010 10.5* Employment Agreement by and between Envision Solar International, Inc. and Desmond Wheatley, effective as of January 1, 2016 8-K 000-53204 10.1 10/20/2016 10.6* Amendment to Employment Agreement for Desmond Wheatley, effective as of January 1, 2016 S-1 333-226040 10.30 9/24/2018 10.7* Amendment to Employment Agreement for Desmond Wheatley, effective as of January 1, 2021 8-K 000-53204 10.1 2/12/2021 10.8 Revolving Convertible Promissory Note, dated September 18, 2017 8-K 000-53204 10.1 9/22/2017 38 10.9 Security Agreement -Purchase Order Financing, dated September 18, 2017 8-K 000-53204 10.3 9/22/2017 10.10 Security Agreement – Convertible Secured Promissory Note, dated September 18, 2017 8-K 000-53204 10.4 9/22/2017 10.11 Promissory Note for bridge loan, dated August 27, 2018 8-K 001-38868 10.1 8/31/2018 10.12 Securities Purchase Agreement for the bridge loan, dated August 27, 2018 8-K 000-53204 10.2 8/31/2018 10.13* Promissory Note for Deferred Compensation of Desmond Wheatley, dated effective January 15, 2016 S-1 333-226040 10.31 9/24/2018 10.14 Amendment to Promissory Note with SFE VCF, LLC, dated December 1, 2018 S-1 333-226040 10.35 3/25/2019 10.15* Offer letter to Katherine H. McDermott, dated July 12, 2019 8-K 001-38868 10.1 7/23/2019 10.16* Change in Control Severance Benefit Plan 8-K 000-53204 10.2 2/12/2021 10.17 Lease Agreement – 5660 Eastgate Dr. 10-Q 000-53204 10.1 11/12/2020 10.18 2021 Beam Global Equity Incentive Plan 8-K 001-38868 10.1 6/14/2021 10.19 Common Stock Purchase Agreement 8-K 001-38868 10.1 9/2/2022 10.20 Registration Rights Agreement 8-K 001-38868 10.2 9/2/2022 10.21* Restricted Stock Unit Award Agreement 8-K 001-38868 10.1 11/17/2022 10.22* Performance Stock Unit Award Agreement 8-K 001-38868 10.2 11/17/2022 23.1 Consent of Independent Registered Public Accounting Firm (RSM US LLP) X 39 31.1 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. X 31.2 Certification of Principal Financial 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. X 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101.INS 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) X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). X * Indicates a management contract or compensatory plan or arrangement ITEM 16. FORM 10-K SUMMARY Not applicable 40 Beam Global Index to Financial Statements Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 49 ) F-2 Balance Sheets at December 31, 2022 and 2021 F-4 Statements of Operations for the Years Ended December 31, 2022 and 2021 F-5 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2022 and 2021 F-6 Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-7 Notes to Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Beam Global Opinion on the Financial Statements We have audited the accompanying balance sheets of Beam Global (the Company) as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity and cash flows, for the years 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, 2022 and 2021, and the results of its operations and its cash flows for the years 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 audit. 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 Matter The critical audit matter communicated below is a matter 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Acquired Intangible Assets and Contingent Consideration As described in Note 3 to the financial statements, the Company completed the acquisition of substantially all the assets of All Cell Technologies, LLC. (“All Cell”) for $16.4 million on March 4, 2022. The purchase price included contingent consideration of $1.25 million. The Company accounted for this transaction under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values, including identified intangible assets of $10.4 million and resulting goodwill of $4.6 million. In order to value the identified intangible assets, which included developed technology, a tradename, and customer relationships, the Company used an income approach and valuation model. The model requires management to make significant assumptions, which include, where applicable, forecasted future cash flows, forecasted revenue growth rates, a royalty rate and discount rates. F- 2 We identified the valuation of acquired intangible assets and contingent consideration as of acquisition date as a critical audit matter as there was a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, when performing audit procedures and evaluating audit evidence related to the reasonableness of significant estimates and assumptions utilized in management’s calculations. Our audit procedures related to the significant estimates and assumptions over the valuation of acquired intangibles and contingent consideration included the following, among others: • We evaluated the reasonableness of management’s forecasts of future cash flows and revenue growth rates by comparing historical results of All Cell, certain peer companies, and actual results to management’s forecasts. • We evaluated the reasonableness of managements’ projections of future revenue and estimated backlog used in measuring the fair value of the contingent consideration and intangible assets by comparing the significant assumptions used to market participant projection growth rates, current industry and economic trends and actual historical performance. • With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology, royalty rate and discount rates utilized by management by: − Testing the source information underlying the determination of the royalty rate and discount rates and testing the mathematical accuracy of the calculations. − Developing a range of independent estimates for the discount rates and comparing those to the discount rates selected by management. /s/ RSM US LLP We have served as the Company's auditor since 2021. Los Angeles, California March 31, 2023 F- 3 Beam Global Balance Sheets (In thousands) December 31, December 31, 2022 2021 Assets Current assets Cash $ 1,681 $ 21,949 Accounts receivable 4,429 3,827 Prepaid expenses and other current assets 1,579 180 Inventory 12,246 1,611 Total current assets 19,935 27,567 Property and equipment, net 1,548 650 Operating lease right of use asset 1,638 2,030 Goodwill 4,600 – Intangible assets, net 9,947 359 Deposits 62 52 Total assets $ 37,730 $ 30,658 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 2,865 $ 1,567 Accrued expenses 1,687 727 Sales tax payable 33 57 Deferred revenue, current 1,183 136 Contingent consideration, current 6,776 – Operating lease liabilities, current 628 468 Total current liabilities 13,172 2,955 Deferred revenue, noncurrent 266 118 Contingent consideration, noncurrent 15 – Operating lease liabilities, noncurrent 1,070 1,607 Total liabilities 14,523 4,680 Stockholders' equity Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of December 31, 2022 and December 31, 2021. – – Common stock, $ 0.001 par value, 350,000,000 shares authorized, 10,178,306 and 8,971,711 shares issued or issuable and outstanding as of December 31, 2022 and December 31, 2021, respectively. 10 9 Additional paid-in-capital 100,498 83,588 Accumulated deficit ( 77,301 ) ( 57,619 ) Total stockholders' equity 23,207 25,978 Total liabilities and stockholders' equity $ 37,730 $ 30,658 The accompanying notes are an integral part of these Financial Statements F- 4 Beam Global Statements of Operations (In thousands, except per share data) 2022 2021 Revenues $ 21,995 $ 9,002 Cost of revenues 23,662 9,974 Gross loss ( 1,667 ) ( 972 ) Operating expenses 18,049 5,627 Loss from operations ( 19,716 ) ( 6,599 ) Other income (expense) Interest income 37 5 Interest expense ( 1 ) ( 1 ) Total other income, net 36 4 Loss before income tax expense ( 19,680 ) ( 6,595 ) Income tax expense 2 1 Net loss $ ( 19,682 ) $ ( 6,596 ) Net loss per share - basic $ ( 1.99 ) $ ( 0.74 ) Net loss per share - diluted $ ( 1.99 ) $ ( 0.74 ) Weighted average shares outstanding - basic 9,909 8,882 Weighted average shares outstanding - diluted 9,909 8,882 The accompanying notes are an integral part of these Financial Statements F- 5 Beam Global Statements of Changes in Stockholders' Equity For the Years Ended December 31, 2022 and 2021 (In thousands) Common Additional Paid-in- Total Accumulated Stockholders' Stock Amount Capital Deficit Equity Balance at December 31, 2020 8,482 $ 8 $ 80,166 $ ( 51,023 ) $ 29,151 Stock issued for director services - vested 41 – 742 – 742 Stock issued to escrow account - unvested ( 34 ) – – – – Stock option expense – – 445 – 445 Warrants exercised for cash 446 1 2,854 – 2,855 Stock option exercise (cashless) 36 – ( 630 ) – ( 630 ) Stock option exercise (for cash) 1 – 11 – 11 Net loss – – – ( 6,596 ) ( 6,596 ) Balance at December 31, 2021 8,972 9 83,588 ( 57,619 ) 25,978 Stock issued for director services - vested 22 – 410 – 410 Stock issued to escrow account - unvested 4 – – – – Stock issued for acquisition 1,055 1 14,358 – 14,359 Employee stock-based compensation expense – – 2,000 – 2,000 Warrants exercised for cash 79 – 501 – 501 Stock option exercise and restricted stock unit vestings (cashless) 34 – ( 499 ) – ( 499 ) Stock issued for Committed Equity Facility 11 – 140 – 140 Sale of stock under Committed Equity Facility 1 – – – – Net loss – – – ( 19,682 ) ( 19,682 ) Balance at December 31, 2022 10,178 $ 10 $ 100,498 $ ( 77,301 ) $ 23,207 The accompanying notes are an integral part of these Financial Statements F- 6 Beam Global Statements of Cash Flows (In thousands) Year Ended December 31, 2022 2021 Operating Activities: Net loss $ ( 19,682 ) $ ( 6,596 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,104 93 Common stock issued for services 410 742 Change in fair value of contingent consideration liabilities 5,540 – Employee stock-based compensation 2,000 445 Amortization of operating lease right of use asset 15 32 Other 27 – Changes in assets and liabilities: (Increase) decrease in: Accounts receivable ( 602 ) ( 2,041 ) Prepaid expenses and other current assets ( 846 ) 141 Inventory ( 8,244 ) ( 486 ) Increase in: Accounts payable 1,293 816 Accrued expenses 919 335 Sales tax payable ( 24 ) ( 35 ) Deferred revenue ( 24 ) 146 Net cash used in operating activities ( 18,114 ) ( 6,408 ) Investing Activities: Working capital payment for acquisition ( 811 ) – Purchases of equipment ( 872 ) ( 498 ) Funding of patent costs ( 129 ) ( 84 ) Net cash used in investing activities ( 1,812 ) ( 582 ) Financing Activities: Taxes paid related to net share settlement of equity awards ( 499 ) ( 630 ) Proceeds from stock option exercises – 11 Proceeds from warrant exercises 501 2,855 Payments of equity offering costs ( 344 ) – Net cash (used in) provided by financing activities ( 342 ) 2,236 Net decrease in cash ( 20,268 ) ( 4,754 ) Cash at beginning of period 21,949 26,703 Cash at end of period $ 1,681 $ 21,949 Supplemental Disclosure of Cash Flow Information: Cash paid for taxes $ 1 $ 1 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Fair value of common stock issued as consideration for business combination $ 14,359 $ – Purchase of property and equipment by incurring current liabilities $ 5 $ 23 Depreciation cost capitalized into inventory $ 245 $ 32 Right-of-use assets obtained in exchange for lease liabilities $ 192 $ – Issuance of stock for Committed Equity Line $ 140 $ – The accompanying notes are an integral part of these Financial Statements F- 7 BEAM GLOBAL NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CORPORATE ORGANIZATION 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 Corporation. 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. On March 4, 2022, the Company acquired substantially all the assets of All Cell Technologies, LLC (“All Cell”), an energy storage solutions and technologies company based in Broadview, Illinois. Refer to note 3, Business Combination for additional details. NATURE OF OPERATIONS Beam is a cleantech innovation company based in San Diego, California and Broadview, Illinois. 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 as well as safe and compact, highly energy-dense battery solutions. 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. Beam’s energy storage products provide high energy density in a safe, compact and bespoke form-factors ideal for the rapidly increasing numbers of mobile and stationary equipment and products which require electrical energy without being connected to the electrical grid. Beam’s products and proprietary technology solutions target four markets that are experiencing significant growth with annual global spending in the billions of dollars: · electric vehicle (EV) charging infrastructure; · energy storage solutions; · energy security and disaster preparedness; and · outdoor media advertising. 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 contingent consideration liability, 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. F- 8 CONCENTRATIONS Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist of cash and accounts receivable. The Company maintains its cash in banks and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through December 31, 2022. As of December 31, 2022, approximately $ 2.2 million of the Company’s cash deposits were greater than the federally insured limits. On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which immediately appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. All deposits and substantially all the asset of SVB were transferred to Silicon Valley Bridge Bank, N.A. (“SVBB”), which is no longer affiliated with SVB. The Company has full access to all of its deposited funds with SVBB and is in the process of establishing new accounts with a separate bank for its operations. Major Customers The Company continually assesses the financial strength of its customers. For the year ended December 31, 2022, one customer accounted for 11 % of total revenues. For the year ended December 31, 2021, revenues from two customers accounted for 33 % and 13 % of total revenues each. At December 31, 2022, accounts receivable from three customers accounted for 30 %, 15 % and 11 % of total accounts receivable each with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2021, accounts receivable from four customers accounted for 30 %, 22 %, 13 % and 10 % of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. For the years ended December 31, 2022 and 2021, the Company had a heavy concentration of sales to federal, state and local governments which represented 62 % and 87 % of revenues, respectively. CASH AND 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 equivalents. There were no cash equivalents at December 31, 2022 or December 31, 2021. FAIR VALUE MEASUREMENTS The fair value of assets and liabilities are based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: · Level 1 — Quoted prices in active markets for identical assets or liabilities. · Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial instruments such as accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses are carried at historical cost basis. At December 31, 2022, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. F- 9 ACCOUNTS RECEIVABLE 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 write-offs for bad debt in 2022 or 2021, and no allowances for doubtful accounts as of the years ended December 31, 2022 and 2021. 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. 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 , except for leasehold improvements for which the depreciation is recorded over the shorter of the lease term or the estimated useful life. Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are expensed as incurred. LEASES 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. BUSINESS COMBINATION The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Contingent consideration liability is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent consideration liability are recognized in operating expenses in the statement of operations. Contingent consideration liability related to the acquisition consists of commercial milestone payments and are valued using a Monte Carlo simulation. The fair value of commercial milestone payments reflects management’s estimates of discount rates and probability of achieving certain milestones. F- 10 GOODWILL AND DEFINITE-LIVED INTANGIBLE ASSETS Administrative costs for patents for which it believes it will achieve future economic value benefits 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. Assets acquired, including identifiable intangible assets, are recorded at fair value upon acquisition and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives except for customer relationships, for which the amortization is recorded on an accelerated method over the estimate useful life. Goodwill represents the excess of the purchase prices of an acquired business over the fair value of the underlying net tangible and intangible assets. The Company is required to assess goodwill for impairment annually, or more frequently if circumstances indicate impairment may have occurred. Such assessment is performed at the reporting unit level, for which the Company has one. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test, including macroeconomic conditions, industry and market considerations, and our overall financial performance. If, after completing the qualitative assessment, it is determined it is more likely than not that the estimated fair value is greater than the carrying value, the Company concludes no impairment exists. Alternatively, if the Company determines in the qualitative assessment, it is more likely than not that the fair value is less than its carrying value, then the Company performs a quantitative goodwill impairment test to identify both the existence of an impairment and the amount of impairment loss, by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, then a goodwill impairment charge is recognized in the amount by which the carrying amount exceeds the fair value, limited to the total amount of goodwill allocated to that reporting unit. The goodwill annual assessment test is performed in the fourth quarter of every year or when an event occurs, or circumstances change such that it is reasonably possible that an impairment may exist. There were no such triggering events during the year ended December 31, 2022 and the annual testing was performed in the fourth quarter with no impairment identified. 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. There were no events triggering a review for impairment during the year ended December 31, 2022. REVENUE RECOGNITION Revenue is recognized 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. F- 11 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. Revenues from professional services such as relocations, charger replacements or out of warranty repairs are recognized when services are performed. Revenue values are based upon fixed fee arrangements or hourly fee-based arrangements with agreed to hourly rates of service categories in line with expertise requirements. These services are billed to a customer as such services are provided and the customer will be obligated to make payments for such services typically within a 30-45 day period. Revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities; shipping and handling fees billed to customers are recorded 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. The Company generally provides a standard one-year warranty on its EV charging infrastructure 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. During the year-ended December 31, 2022, the Company recorded a $ 0.2 million product warranty accrual in Accrued Expenses with an offset to Cost of Revenues, of which $ 0.1 million in repairs were completed during the year ended December 31, 2022. For the year ended December 31, 2021, the Company had no product warranty accrual based on the Company’s minimal warranty expense. COST OF REVENUES The Company records direct material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision, manufacturing equipment depreciation, rent, and utility costs, all of which are included in inventory prior to a sale, as costs of revenues. The Company further includes shipping and handling costs as cost of revenues. 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 $ 1.2 million and $ 0.4 million for the years ending December 31, 2022 and 2021, respectively. ADVERTISING The Company conducts advertising for the promotion of its products and services. Advertising costs are charged to operations and included in operating expenses when incurred. Such amounts aggregated $ 0.2 million in 2022 and $ 0.1 million in 2021. F- 12 STOCK-BASED COMPENSATION Compensation expense related to stock awards are measured based on an estimated fair value and the portion of the 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 fair value of restricted stock units is determined based on the closing market price of the Company’s common stock on the grant date. Compensation expense for time-based restricted stock units (RSUs) is recognized ratably over the vesting period. A portion of RSUs granted contain performance conditions for vesting tied to specific Company goals, such as gross margin and revenue targets (PSUs). For the purpose of measuring compensation expense of PSUs, the number of shares expected to vest is estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. INCOME TAXES 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 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. As of December 31, 2022, tax years 2019 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. NET LOSS PER SHARE Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using the weighted average number of common stock outstanding for the period, and, if dilutive, potential common stock outstanding during the period. Potential common stock 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 336,758 common shares, warrants to purchase 440,204 shares of common stock, and restricted stock units to purchase 213,750 common shares were outstanding at December 31, 2022. Options to purchase 263,433 common shares and warrants to purchase 519,658 shares of common stock were outstanding at December 31, 2021. There were no restricted stock units outstanding at December 31, 2021. These shares were not included in the computation of diluted loss per share for the years ended December 31, 2022 and 2021 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share. F- 13 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. SEGMENTS The Company assesses its segment reporting based on how it internally manages and reports the results of its business to its chief operating decision maker. For periods through the date of the All Cell acquisition, the Company had, and reported in, one reportable segment. Subsequent to the acquisition of All Cell, management continues to review financial results, manage the business and allocate resources on an aggregate basis. Therefore, financial results continue to be reported in a single operating segment. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 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. 2. LIQUIDITY The Company has a history of net losses, including in the accompanying financial statements for the years ended December 31, 2022 and 2021 where the Company had net losses of $ 19.7 million (which includes $ 9.1 million of non-cash expenses) and $ 6.6 million (which includes $ 1.3 million of non-cash expenses), respectively, and net cash used in operating activities of $18.1 million and $6.4 million, respectively. During 2022, the $18.1 million of operating cash usage included $9.0 million increase in inventory and inventory-related prepayments to vendors to reduce the risk of potential shortages of cells required for battery manufacturing, and to increase work in process and finished inventory of EV ARC™ units based on forecasted requirements. At December 31, 2022, the Company had a cash balance of $ 1.7 million and working capital of $ 6.8 million . The working capital balance has been reduced by a current liability of $6.8 million for contingent consideration, which is non-cash. Based on the Company’s current operating plan, the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from the date of this report. In September 2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B. Riley Principal Capital II, LLC (“B. Riley”) under which the Company has the right, but not the obligation, to sell up to $30.0 million shares or a maximum of 2.0 million shares of its common stock over a period of 24 months in its sole discretion (see note 11 for further information). The Company issued 37,741 shares in January and February 2023 for $ .7 million under this agreement. Furthermore, we could pursue other equity or debt financings. In addition, the Company’s outstanding warrants have generated $ 0.5 million and $ 2.9 million of proceeds during the year ended December 31, 2022 and 2021, respectively. The Company believes that it will become profitable in the next few years as our revenues continue to grow, we improve our gross margins and we leverage our overhead costs, but we expect to continue to incur losses for a period of time. There is no guarantee that profitable operations will be achieved, the warrants will be exercised or that additional capital or debt financing will be available. F- 14 3. BUSINESS COMBINATION On March 4, 2022, the Company completed its acquisition of substantially all the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions. We believe this strategic acquisition will 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”) plus an additional $0.8 million in cash for the net working capital held by All Cell at closing. In addition, All Cell is eligible to earn an additional number of shares of Beam Common Stock if Beam’s new energy storage business meets certain revenue milestones (the “Earnout Consideration”). The Earnout Consideration is: (i) two times the amount of energy storage products revenue and contracted backlog that is greater than $7.5 million for 2022, and (ii) two times the amount of energy storage products 2023 revenue only which exceeds the greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million. Revenues exceeding $20.0 million in 2023 will not be eligible for the Earnout Consideration. The maximum aggregate number of shares of Beam Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares. Revenue from energy storage products used in Beam Global products will not be considered as contributing to the Earnout calculation. The fair value of consideration transferred consisted of the following (in thousands): Schedule of consideration for acquisitions Common Stock $ 14,359 Working Capital Cash Payment 811 Earnout Consideration 1,251 Total consideration transferred $ 16,421 The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands): Schedule of assets acquired and liabilities assumed Inventory $ 2,146 Prepaid expenses 28 Deposits 10 Property, plant and equipment 397 Right-of-use asset 192 Intangible assets, including goodwill 15,059 Total assets acquired 17,832 Customer deposits ( 1,219 ) Lease liability ( 192 ) Total liabilities assumed ( 1,411 ) Total assets and liabilities assumed $ 16,421 F- 15 The Company incurred $ 0.1 million of transaction costs during the year ended December 31, 2022, directly related to the acquisition that is reflected in operating expenses in the statement of operations. Goodwill represents the excess of the total purchase price over the fair value of the underlying net assets, largely arising from synergies expected to be achieved by the combined company and expanded market opportunities. The goodwill is expected to be fully deductible for tax purposes. The valuation of the Earnout Consideration was performed using a two-factor Monte Carlo simulation, which includes estimates and assumptions such as forecasted revenues of All Cell, volatility, discount rates, share price and the milestone settlement value. As such valuation includes the use of unobservable inputs, it is considered to be a Level 3 measurement. The fair value of the Earnout Consideration is reassessed on a quarterly basis with the change recorded to operating expenses. Change in the fair value of the Earnout Consideration during the year ended December 31, 2022 is as follows (in thousands): Schedule of fair value earnout Balance as of December 31, 2021 $ – Acquisition of All Cell 1,251 Change in estimated fair value 5,540 Balance as of December 31, 2022 $ 6,791 The fair values assigned to identifiable intangible assets and goodwill acquired are as follows ($ in thousands): Schedule of acquired intangible assets Value Useful Life (yrs.) Developed technology $ 8,074 11 Trade name 1,756 10 Customer relationships 444 13 Backlog 185 1 Goodwill 4,600 N/A $ 15,059 The fair values of the developed technology, trade name, customer relationships and backlog were estimated using an income approach. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits in the form of cash flows to be derived from ownership of the asset. The estimated fair values were developed by discounting future net cash flows to their present value at market-based rates of return. The useful lives of the intangible assets for amortization purposes were determined by considering the period of expected cash flows used to measure the fair values of the intangible assets adjusted as appropriate for entity-specific factors including legal, competitive, and other factors that may limit the useful life. The identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives except for customer deposits which uses accelerated depreciation. F- 16 Pro Forma Unaudited Financial Information The following pro forma unaudited financial information summarizes the combined results of operations of Beam Global and All Cell as if the companies had been combined as of the beginning of the year ended December 31, 2021 (unaudited and in thousands): Schedule of Pro Forma Information Year Ended December 31, 2022 2021 Revenues $ 22,241 $ 14,399 Net Loss $ ( 20,395 ) $ ( 10,551 ) The pro forma unaudited financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been completed at the beginning of the year ended December 31, 2021. In addition, the pro forma unaudited financial information is not a projection of future results of operations of the combined company, nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition. The pro forma unaudited financial information includes adjustments to reflect the incremental amortization expense of the identifiable intangible assets and transaction costs, as well as removes the impact of the debt that was not acquired by the Company and payments to a non-employee. The statement of operations for the year ended December 31, 2022 includes revenues of $ 5.2 million and loss from operations of $ 10.1 million , respectively, from the acquired All Cell business. 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets are summarized as follows (in thousands): Schedule of Other Current Assets December 31, December 31, 2022 2021 Vendor prepayments $ 1,049 $ 87 Deferred equity offering costs 344 – Prepaid insurance 106 66 Related party receivable 38 27 Other 42 – Total prepaid expenses and other current assets $ 1,579 $ 180 Related party receivables as of December 31, 2022 and 2021 consisted primarily of payroll related taxes due for stock-based compensation. F- 17 5. INVENTORY Inventories are stated at the lower of cost and net realizable value. Costs are determined using the first in-first out (FIFO) method. As of December 31, 2022 and 2021, inventory consists of the following (in thousands): Schedule of Inventory December 31, December 31, 2022 2021 Finished goods $ 2,814 $ – Work in process 1,771 425 Raw materials 7,661 1,186 Total inventory $ 12,246 $ 1,611 6. PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): Schedule of property and equipment December 31, December 31, 2022 2021 Office furniture and equipment $ 186 $ 132 Computer equipment and software 118 74 Leasehold improvements 180 28 Autos 337 337 Machinery and equipment 1,556 562 Total property and equipment 2,377 1,133 Less accumulated depreciation ( 829 ) ( 483 ) Property and Equipment, net $ 1,548 $ 650 Depreciation expense for 2022 and 2021 was $ 0.4 million and $ 0.1 million , respectively. In 2022, $ 0.2 million of depreciation was capitalized into inventory as manufacturing overhead costs. Depreciation capitalized in 2021 was immaterial. F- 18 7. INTANGIBLE ASSETS Intangible assets, net as of December 31, 2022 consist of the following (in thousands) : Schedule of intangible assets December 31,2022 Gross Carrying Amount Accumulated Amortization Weighted-average Amortization Period (yrs) Developed technology $ 8,074 $ ( 612 ) 11 Trade name 1,756 ( 146 ) 10 Customer relationships 444 ( 49 ) 13 Backlog 185 ( 154 ) 1 Patents 491 ( 42 ) 20 Intangible assets, net $ 10,950 $ ( 1,003 ) Intangible assets as of December 31, 2021 consisted of patents, for which the gross carrying amount was $ 0.4 million . Amortization expense for the year ended December 31, 2022 was $ 1.0 million and immaterial for the year ended December 31, 2021. Amortization expense for intangible assets held as of December 31, 2022 will be $ 1.2 million for 2023, and $ 1.1 million for each of the years 2024 – 2027. 8. ACCRUED EXPENSES The major components of accrued expenses are summarized as follows (in thousands): Schedule of accrued expenses December 31, December 31, 2022 2021 Accrued vacation $ 190 $ 238 Accrued salaries and bonus 1,220 353 Vendor accruals 85 36 Other accrued expense 192 100 Total accrued expenses $ 1,687 $ 727 F- 19 9. 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. As of December 31, 2022, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations. 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; 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, software licenses, 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. 10. LEASES On September 1, 2020, the Company entered into a five-year operating lease with two one-year options to extend the term of the lease. 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. As part of the All Cell acquisition, the Company assumed a facility lease located in Broadview, Illinois, and recorded $ 0.2 million in right-of-use asset and lease liability. The lease term ends on August 31, 2023 and contains clauses for annual rent escalation. The present values of the lease payment streams were calculated using an effective borrowing rate of 10 %. The Company is currently evaluating options for its battery manufacturing facility. During the twelve months ended December 31, 2022 and 2021, cash paid for amounts included in the measurement of operating lease liabilities was $ 0.6 million and $ 0.4 million , respectively. Operating lease cost for the twelve months ended December 31, 2022 and 2021 were $ 0.8 million and $ 0.7 million , respectively. The future minimum rental commitments for our operating leases reconciled to the lease liability as of December 31, 2022 is as follows (in thousands): Schedule of minimum lease payments December 31, 2022 2023 762 2024 689 2025 468 Total undiscounted future minimum payments 1,919 Less imputed interest ( 221 ) Total lease liability $ 1,698 F- 20 11. STOCKHOLDERS’ EQUITY Stock Issued For Acquisition The Company issued 1,055,000 shares of its common stock upon acquiring certain assets of All Cell during the year ended December 31, 2022. See further discussion in note 3. Business Combination. Committed Equity Facility On September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement with B. Riley. Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B. Riley up to $ 30.0 million , or a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price (“VWAP”) of the Company’s common stock on the trading day, calculated in accordance with the Purchase Agreement, over a period of 24 months subject to certain limitations and conditions contained in the Purchase Agreement. Sales and timing of any sales are solely at the election of the Company, and the Company is under no obligation to sell any securities to B. Riley under the Purchase Agreement. As consideration for B. Riley’s commitment to purchase shares of the Company’s common stock, the Company issued 10,484 shares of its common stock and will issue an additional 10,484 shares of its common stock or a cash payment of $ 150,000 , at the Company’s sole discretion, sometime after the first VWAP purchase occurs. The Company incurred an aggregate cost of approximately $0.4 million in connection with the Purchase Agreement, including the fair value of the 10,484 shares of common stock issued to B. Riley upon the execution of the agreement, which was recorded to prepaid expenses and other current assets on the Balance Sheet to be offset against future proceeds from the sale of the Company’s common stock under the Purchase Agreement. During the year ended December 31, 2022, the Company issued 1,436 shares under this agreement. The proceeds were fully offset by costs previously deferred. 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. As of December 31, 2022, 1.9 million shares remain available to grant under the 2021 Plan. F- 21 Stock Options 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. Existing employee option grants generally have a term of ten years and vest immediately upon grant. 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. We used the assumptions in the table below and we assumed there would not be dividends granted for the options granted in fiscal 2022 and 2021: Assumptions for options granted 2022 2021 Expected volatility 94.94 % - 97.41 % 93.03 % - 99.32 % Expected term 5 - 7 Years 5 - 7 Years Risk-free interest rate 1.55 % - 3.86 % 1.25 % - 1.38 % Weighted average FV $ 13.02 $ 19.55 Option activity for the years ended December 31, 2022 and 2021 is as follows: Schedule of option activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2020 341,808 $ 11.27 Granted 43,300 24.63 Exercised ( 97,192 ) 13.28 Forfeited ( 24,483 ) 23.84 Outstanding at December 31, 2021 263,433 11.56 Granted 78,400 16.72 Exercised ( 1,750 ) 6.67 Forfeited ( 3,325 ) 36.25 Outstanding at December 31, 2022 336,758 $ 12.54 7.04 Years Exercisable at December 31, 2022 225,360 $ 8.89 6.30 Years F- 22 The Company’s stock option compensation expense was $ 0.9 million and $ 0.4 million for the years ended December 31, 2022 and 2021, respectively, and there was $ 1.1 million of total unrecognized compensation costs related to outstanding stock options at December 31, 2022 which will be recognized over 3.9 years. Total intrinsic value of options exercised was immaterial for the year ended December 31, 2022 and $ 1.8 million during the year ended December 31, 2021. Total intrinsic value of options outstanding and options exercisable were $ 2.2 million and $ 1.9 million , respectively, as of December 31, 2022. Number of stock options vested and unvested as of December 31, 2022 were 251,129 and 85,629 , respectively. Restricted Stock Units In November 2022, the Company granted 285,000 restricted stock units (RSUs) to its Chief Executive Officer (CEO), half of which contains performance conditions (PSUs). 50% of the RSUs without performance condition vested upon grant, with 25% vesting on February 1 st of 2024 and 2025. The number of shares issuable under the PSUs are determined based on the achievement of performance metrics specific to the Company that is measured at the end of fiscal year 2024. A summary of activity of the RSUs for the year ended December 31, 2022 is as follows : Schedule of restricted stock units PSU Nonvested Shares RSU Nonvested Shares Weighted-Average Grant-Date Fair Value Nonvested at December 31, 2021 – – $ – Granted 142,500 142,500 13.05 Vested – ( 71,250 ) 13.05 Nonvested at December 31, 2022 142,500 71,250 $ 13.05 Stock compensation expense related to restricted stock units was $ 1.1 million during the year ended December 31, 2022, with $ 2.6 million in unrecognized stock compensation expense remaining to be recognized over 2.2 years as of December 31, 2022. Fair value of restricted stock units vested during the year ended December 31, 2022 was $ 0.9 million . Restricted Stock Awards 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 its CEO, 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. F- 23 A summary of activity of the restricted stock awards for the years ended December 31, 2022 and 2021 is as follows: Schedule of restricted stock award activity Weighted- Nonvested Average Grant- Shares Date Fair Value Nonvested at December 31, 2020 46,563 $ 12.28 Granted 20,444 31.41 Vested ( 40,513 ) 18.32 Forfeited ( 12,825 ) 14.95 Nonvested at December 31, 2021 13,669 20.45 Granted 26,136 14.68 Vested ( 21,940 ) 18.75 Nonvested at December 31, 2022 17,865 $ 14.11 Stock compensation expense related to restricted stock awards was $ 0.4 million and $ 0.7 million during the years ended December 31, 2022 and 2021, respectively. Fair values of restricted stock vested during the years ended December 31, 2022 and 2021 were $ 0.4 million and $ 1.4 million , respectively. As of December 31, 2022, there were unreleased shares of common stock representing $ 0.3 million of unrecognized restricted stock grant expense which will be recognized over two years. Warrants A summary of activity of warrants outstanding for the years ended December 31, 2022 and 2021 is as follows: Schedule of warrant activity Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2020 965,584 $ 6.33 Exercised ( 445,926 ) 6.40 Outstanding at December 31, 2021 519,658 6.30 Exercised ( 79,454 ) 6.30 Outstanding at December 31, 2022 440,204 $ 6.30 Exercisable at December 31, 2022 440,204 $ 6.30 F- 24 Exercisable warrants as of December 31, 2022 have a weighted average remaining contractual life of 1.30 years. The intrinsic value of the exercisable shares of the warrants at December 31, 2022 was $ 4.9 million . 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 $ 2.9 million . 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. All warrants exercised during the year ended December 31, 2022 were for the Company’s common stock. 12. REVENUES For each of the identified periods, revenues can be categorized into the following (in thousands): Schedule of disaggregated revenues Year Ended December 31, 2022 2021 Product sales $ 20,347 $ 8,574 Maintenance fees 53 44 Professional services 527 98 Shipping and handling 1,137 319 Discounts and allowances ( 69 ) ( 33 ) Total revenues $ 21,995 $ 9,002 During the year ended December 31, 2022 and 2021, 29 % and 62 % of revenues were derived from customers located in California, respectively. In addition, 9 % of revenues in the year ended December 31, 2022 were international sales compared to none in the prior year. At December 31, 2022 and 2021, deferred revenue was $ 1.4 million and $ 0.3 million , respectively. These amounts consisted mainly of customer deposits in the amount of $ 1.0 million and $ 0.1 million for December 31, 2022 and 2021, respectively and prepaid multi-year maintenance plans for previously sold products which account for $ 0.3 million and $ 0.2 million for December 31, 2022 and 2021, respectively, and pertain to services to be provided through 2028. Revenue recognized during the year ended December 31, 2022 which pertained to revenue deferred in prior years was $ 0.1 million and immaterial for the year ended December 31, 2021. F- 25 13. INCOME TAXES There was no Federal income tax expense for the years ended December 31, 2022 and 2021 due to the Company’s net losses. Income tax expense represents minimum state taxes due. The blended Federal and State tax rate of 28.50 % 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 (in thousands): Income tax reconciliation Year Ended December 31, 2022 2021 Computed “expected” tax expense (benefit) $ ( 4,136 ) $ ( 1,385 ) State taxes, net of federal benefit ( 1,383 ) ( 568 ) Non-deductible stock options ( 3 ) ( 329 ) Non-deductible items 154 2 True-up to tax return 9 ( 41 ) Change in deferred tax asset valuation allowance 5,361 2,322 Total $ 2 $ 1 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 (in thousands): Deferred tax assets and liabilities Year Ended December 31, 2022 2021 Stock options $ 701 $ 407 Deferred Revenue 118 71 Capitalized R&D 234 – Change in fair value of contingent consideration 1,579 – Patents/Intangible Assets 113 – Other 278 93 Net operating loss carryforward 15,372 12,484 Total gross deferred tax assets 18,395 13,055 Less: Deferred tax asset valuation allowance ( 18,339 ) ( 12,978 ) Total net deferred tax assets 56 77 Deferred tax liabilities: Patents – ( 24 ) Depreciation ( 56 ) ( 53 ) Total deferred tax liabilities ( 56 ) ( 77 ) Total net deferred taxes $ – $ – F- 26 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, 2022 was $ 18.3 million . The increase in the valuation allowance during 2022 was $ 5.4 million . At December 31, 2022, the Company has a net operating loss carry forward of $ 55.2 million , of which $ 25.1 million is available to offset future net income through 2037. The net operating loss (“NOL”) expires during the years 2027 to 2037 and $ 30.1 million 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, 2022. The Company does not expect that uncertain tax benefits will materially change in the next 12 months. 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. 14. SUBSEQUENT EVENTS On March 22, 2023, Beam Global entered into a five year agreement with OCI Limited to provide a supply chain line of credit for up to $100 million. Beam Global intends to use the funds to provide working capital to support business growth. F- 27 SIGNATURES 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. Beam Global Dated: March 31, 2023 By: /s/ Desmond Wheatley Desmond Wheatley, Chief Executive Officer President and Chairman 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 thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons in the capacities and on the dates indicated: Name Title Date Principal Executive Officer: /s/ Desmond Wheatley Chief Executive Officer, President and Chairman March 31, 2023 Desmond Wheatley Principal Financial Officer and Principal Accounting Officer: /s/ Katherine H. McDermott Chief Financial Officer March 31, 2023 Katherine H. McDermott Directors: /s/ Peter Davidson Director March 31, 2023 Peter Davidson /s/ Anthony Posawatz Director March 31, 2023 Anthony Posawatz /s/ Nancy Floyd Director March 31, 2023 Nancy Floyd S- 1