What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-10 · 231 added, 319 removed, 101 unchanged (84% of the section changed)

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“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).

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

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

These forward-looking statements

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

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;

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;

litigation with or legal claims and allegations by outside parties;

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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;

the preceding and other factors discussed in Part I, Item 1A, “Risk Factors,” and other reports we may file with the Securities and Exchange Commission from time to time;

the factors set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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 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 for the electrification of transportation, that incorporate the same underlying proprietary technology and value for producing

a unique alternative to utility 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, 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™ – patent issued on December 31, 2019 and still under development.

Beam Global develops,

manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure,

energy storage, energy security, disaster preparedness and outdoor media.

The Company has five

product lines that incorporate our proprietary technology 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

These products are rapidly deployable and attractively designed and include:

EV ARC™ Electric Vehicle Autonomous Renewable Charger – a

patented, rapidly deployed, infrastructure product that uses integrated solar power and battery storage to provide a mounting asset

and a source of power for factory installed electric vehicle charging stations of any brand.

The electronics are elevated to the

underside of the sun-tracking solar array making the unit flood-proof up to nine and a half feet and allowing adequate space to park

a vehicle on the engineered ballast and traction pad which gives the product stability.

Solar Tree® DCFC – Patented off-grid, renewably energized and rapidly deployed, single-column mounted smart generation and energy storage system with the capability to provide a 150kW DC fast charge to one or more electric vehicles or larger vehicles.

EV ARC™ DCFC – DC Fast Charging system for charging EVs comprised of four interconnected EV ARC™ systems and a 50kW DC fast charger.

EV-Standard™ – patent issued on December 31, 2019 and currently 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.

UAV ARC™ - patent issued on November 24, 2020 and currently under development.

An off-grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets.

In addition, with the acquisition

of All Cell Technologies, LLC (“All Cell”) in March 2022, we now offer Beam AllCell™ energy storage technology with

a highly flexible lithium-ion and lithium iron phosphate battery platform architecture.

a highly flexible lithium-ion and/or lithium iron phosphate battery platform architecture.

The battery design uses a proprietary phase change

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They are ideally suited for applications where energy density, safety and specialized enclosures require high power in small spaces.

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 plans to incorporate this battery technology in our new product

designs that are under development.

We believe that we are living

in an increasingly electrified era, where electricity is replacing other forms of fuel and energy without being connected to the utility

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.

Unlike utility grid-tied installations

which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring 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 solutions.

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

Because they generate and store

all their own electricity, our products replace the utility grid and civil infrastructure required to support EV chargers, but not the

chargers themselves.

submersibles, medical and 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 plans to incorporate this battery technology in our

new product designs that are under development.

We believe that there is a

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

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

concrete, wiring, and ongoing utility bills, the EV ARC™ system can be deployed in minutes, not months, and is powered by renewable

energy so there is no utility bill.

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

based upon our customer’s requirements.

For example, our EV ARC™ and Solar Tree® products have been deployed with Chargepoint,

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

We can make recommendations to customers, or we can comply

with their specifications and/or existing charger networks.

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

the chargers themselves.

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

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for our electric vehicle charging infrastructure products are:

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

our patented, renewable energy 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 proprietary and patented energy storage solutions;

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

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

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

Overall Business Outlook

Our revenues increased

156% from $5.5 million in the first nine months of 2021 to $14.1 million for the first nine months of 2022, primarily due to our

investment in sales and marketing resources over the past three years which has created increased demand for our EV ARC™

renewable chargers, as well as an increase of $3.5 million in sales from our battery storage business since the closing of our

acquisition of All Cell in March 2022.

The Company believes there continues to be a high level of support for funding EV charging

infrastructure on the federal level, including a number of federal grants available in addition to the Federal Solar Investment Tax

Credit and accelerated depreciation as allowed under Section 179 of IRS code which provide a strong financial incentive for many of

our target customers.

Given these available resources, we invested in a federal lobbyist, a federal business development resource

and a government relations employee, who are helping to identify opportunities on the federal side and are increasing awareness of

our product and outreach with federal agencies.

In addition, the General Services Administration (GSA) awarded Beam Global a federal

blanket purchase agreement (BPA) which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems.

a direct result, during the first nine months of 2022, revenues from the federal government increased by $2.3 million compared to

the prior year.

In addition, we were awarded several large federal orders in September through November 2022 that are scheduled to

deliver within 12 months:

Techflow, Inc.

for the US Army (IMCOM)

Veterans Administration

Department of Homeland Security

Navy Facilities - Navfac (4 orders)

US Marine Corps (4 orders)

General Services Administration (3 orders)

Science Applications International Corp (SAIC) for the US Army (2 orders)

Our revenues for the first

three months of 2023 were $13.0 million, a 245% increase over $3.8 million for the same quarter in 2022, primarily derived from delivery

of a significant backlog of orders received during the latter part of 2022.

We have invested in sales and marketing resources over the

past three years which has created increased demand for our EV ARC™ renewable chargers.

Additionally, we had an increase of $1.8

million in sales from our battery storage business as a result of our acquisition of All Cell in March 2022.

The Company believes there

continues to be a high level of support for funding EV charging infrastructure on the federal level, including a number of federal grants

available under the Inflation Reduction Act in 2022, in addition to the Federal Solar Investment Tax Credit and accelerated depreciation

as allowed under Section 179 of IRS code which provide a strong financial incentive for many of our target customers.

Given these available

resources, we have invested in a federal lobbyist, a federal business development resource and a government relations employee, who have

helped to identify opportunities on the federal side and have increased awareness of our product and outreach with federal agencies.

addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement which provides federal agencies

a streamlined procurement process for procuring EV ARC™ systems.

As a direct result, Beam Global was awarded a number of federal

government orders in September through November 2022 that have or will be delivered in 2023.

In the quarter ended March 31, 2023, we recorded

revenues of $10.6 million for federal customers, compared to $0.8 million for the same period in 2022.

Ongoing efforts to expand

revenues to state agencies have also been successful.

In June, we were awarded a new three-year statewide contract with the State of California

which can be used by state, local and municipal government entities throughout the U.S., not just California, and provides previously

negotiated pricing to make the procurement process easier.

During the first nine months of 2022, we increased revenues to state agencies

by $1.6 million compared to the same period in the prior year.

In addition, in early October 2022, we were awarded a $5.3 million contract

from the Department of Citywide Administrative Services (DCAS) to deploy units throughout New York City.

In June 2022, we were awarded a new three-year statewide contract with the State

of California which can be used by state, local and municipal government entities throughout the U.S., not just California, and provides

previously negotiated pricing to make the procurement process easier.

In addition, in early October 2022, we were awarded a $5.3 million

contract from the Department of Citywide Administrative Services to deploy units throughout New York City.

In addition, as companies

are moving back to work from working from home during the past two years due to the pandemic, we are seeing an increase in orders for

workplace charging and corporate fleets for enterprise customers.

Revenues to enterprise customers for the first nine months of 2022 increased

by $1.1 million compared to the same period in the prior year.

We expect the electric vehicle market to continue to experience significant

growth over the next decade which will require additional EV charging infrastructure.

We believe our products are uniquely positioned

to benefit from this growth.

require employees to return back to the workplace rather than working remotely from home as was the case during the pandemic, we are seeing

an increase in orders for workplace charging and corporate fleets for enterprise customers which we expect to continue.

We expect the

electric vehicle market to continue to experience significant growth over the next decade which will require additional EV charging infrastructure.

We believe our products are positioned to benefit significantly from this growth.

We believe the Company’s

acquisition of the assets of All Cell, a battery storage company, will provide new customer opportunities for our products.

of the acquisition of All Cell, we believe Beam’s gross margin will improve by utilizing the Beam All Cell battery in its EV ARCs™

as it did for eight 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 All Cell’s highly differentiated products.

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 to engage in a global naming rights agreement that would provide their corporate branding to network(s) of EV ARC™

units deployed throughout a city.

Superlative is compensated when they are successful in securing a sponsor for our Driving on Sunshine

This business model can be replicated in other cities throughout the country.

Our energy security business is connected with

the deployment of our EV charging infrastructure products and serves as an additional benefit to the value proposition of our charging

products which, along with their integrated emergency power panels, can continue to operate, charge EVs, and deliver emergency power during

utility grid failures.

Our proprietary and state-of-the-art storage batteries, combined with solar or wind generation, integrated into

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 as

a percentage of sales in the nine months ended September 30, compared to the same period in 2021.

The gross margin is the nine months

ended 2022 includes $0.5 million of non-cash intangible amortization, which is not included in the prior year.

The increase in EV ARC ™

systems sold from 76 units in the first nine months of 2021 to 136 units in the first nine months 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 pandemic as well as other transitory inflationary pressures.

We are starting to see some pricing increases

leveling off, and we expect costs to begin to come back down in the coming months and years.

We also expect to see a reduction in the

cost of our bill of materials.

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

All Cell’s assets, a battery manufacturer, we expect those costs to be significantly reduced.

acquisition of the assets of All Cell, a battery technology company, will increase our new customer opportunities.

As a result of the

acquisition of All Cell, we believe Beam’s gross margin will continue to improve by utilizing the Beam All-Cell TM battery

in its EV ARCs™, because we can reduce costs by retaining gross profits previously paid to battery vendors.

We now also have the

ability to value engineer bespoke battery solutions for our products.

Beam All-Cell TM 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 our Beam All-Cell TM highly differentiated

With the continued growth of untethered electrification, we believe there is opportunity for increased demand in these markets

We continued to make progress

in finding a sponsor for our outdoor media advertising business during 2022 and the beginning of 2023, working with The Superlative Group

(“Superlative”), an industry leading consultant engaged in selling corporate sponsorships and they have identified several

potential corporate sponsors for a global naming rights agreement to our network of EV ARC™ systems.

Superlative is compensated

only when they are successful in securing a sponsor for our “Driving on Sunshine” network.

This business model, if successful,

can be replicated in other cities throughout the country.

Our energy security business is connected with the deployment of our EV charging

infrastructure products and serves as an additional benefit and value proposition for our charging products which, along with their integrated

emergency power panels, can continue to operate, charge EVs, and deliver emergency power during utility grid failures.

Our state-of-the-art

storage batteries installed on our EV charging systems 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.

We are in 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.

Our gross profit improved as a percentage of sales reporting a positive

gross margin in Q1 2023, compared to 8.1% gross loss in the first quarter of 2022.

Additionally, our cost of goods sold (COGS) for the

first quarter of 2023 included $0.2 million of non-cash intellectual property amortization from the acquisition of All Cell in 2022.

this non-cash expense results in a further improved gross profit of 1.8% for the quarter.

We increased the number of EV ARC deliveries

from 45 in Q1 2022 to 152 in Q1 2023 which resulted in favorable fixed overhead absorption and improved labor efficiencies gained by the

higher volume.

Our gross profit improvements were achieved in spite of 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 began to see some improvements

in pricing on new supply chain orders placed in Q1 2023 which we expect to start to realize benefit from in Q2 2023 and forward.

expect to see a reduction in the cost of our bill of materials.

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

with the March 2022 purchase of All Cell’s assets, we expect those costs to be significantly reduced.

We are implementing lean manufacturing

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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 over the next year.

described above lead us to believe that we will see improvement in our gross margins over the next year.

Significant Accounting Policies and Estimates

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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,

of intangible assets, valuation of contingent consideration liability, 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 nine months ended September 30, 2022.

There were no significant changes in accounting principles that were adopted during the three months ended March 31, 2023.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended September 30, 2022 and 2021

For the quarter

ended September 30, 2022, our revenues increased 227% to $6.6 million compared to $2.0 million for the same period in 2021.

federal customers increased by $2.1 million compared to the same quarter in the prior year.

In addition, we were awarded a number of contracts

from federal agencies in late September and early October in line with the federal year-end.

Revenues to corporate enterprises also increased

during the quarter by $0.9 million compared to the prior year as employees are returning to working on-site, and as large employers are

converting to electric fleets.

Revenues to customers in California, consisting mostly of state agencies and municipalities, represented

24% of the total, which continues to be a strong market for EV ARC™ systems.

In early October 2022, we received a contract from

the Department of Citywide Administrative Services (DCAS) for $5.3 million to deploy units throughout New York City in the coming months.

We also recorded energy storage revenue of $1.7 million as a result of our acquisition of All Cell which closed on March 4, 2022.

backlog consisting of undelivered purchase orders scheduled to deliver within 12 months was $32.3 million at September 30, 2022 and has

increased significantly in October with the Federal and DCAS orders.

We continue to invest 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 September 30, 2022, our gross loss was $0.3 million, or 5% of sales, compared to $0.2 million, or 10% of sales in the same

quarter of the prior year.

As a percentage of sales, the margin improved by 5 percentage points, primarily due to the increase in production

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

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 of $0.2 million for non-cash intangible amortization and an increase in material costs for steel, batteries and other components,

due to the COVID-19 pandemic and other inflationary pressures.

Shipping costs have increased globally as well as gas prices which have

increased our delivery costs.

Toward the end of the third quarter, we started to see some reduction in gas prices and cost increases from

our suppliers have begun to level off.

We expect our cost per unit to improve as we expect to see material costs start to decrease and

as our volumes increase.

We also acquired a battery manufacturer, All Cell in March 2022, which is expected to 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 $6.5 million for the quarter ended September 30, 2022, compared to $1.5 million for the same period in the prior

The increase was primarily due to a $3.9 million change in fair value of contingent consideration related to the All Cell acquisition

based on an increase in 2022 forecasted revenues and backlog than expected earlier in the year.

Excluding such cost, the operating expenses

for the quarter ended September 30, 2022 increased by 74% compared to the same period in the prior year, driven by expenses attributable

to the newly acquired All Cell business of $1.1 million.

Comparison of Results of Operations for the

Nine Months Ended September 30, 2022 and 2021

months ended September 30, 2022, our revenues increased 156% to $14.1 million compared to $5.5 million for the same period in 2021.

to federal customers increased by $2.3 million year to date, compared to the same period in the prior year.

In addition, we were awarded

a number of contracts from federal agencies in late September and early October totalling more than $46.0 million, which will be delivered

over the next 12 months.

We recorded energy storage revenues of $3.5 million as a result of our acquisition of All Cell which closed on

March 4, 2022.

Our revenue to state agencies increased by $1.6 million year to date compared to the prior year, and we continue to have

a strong concentration of revenues to the State of California which represents 34% of total revenues.

We continue to invest 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.

nine months ended September 30, 2022, our gross loss was $1.0 million, or 7% of sales, compared to $0.6 million, or 11% of sales in the

same period of the prior year.

As a percentage of sales, the margin improved by four percentage points, primarily due to the increase

in production levels in the current quarter compared to the same period in 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 of $0.5 million for non-cash intangible amortization and an increase in material costs for steel, batteries and

other components, due to the COVID-19 pandemic and other inflationary pressures.

Shipping costs have increased globally as well as gas

prices which have increased our delivery costs.

Toward the end of the third quarter, we started to see some reduction in gas prices and

cost increases for some of our products’ components have begun to level off.

We expect our cost per unit to improve as we expect

to see material costs start to decrease and as our volumes increase.

We also acquired a battery manufacturer, All Cell 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.

Three Months Ended March 31, 2023 and 2022

For the first

quarter ended March 31, 2023, our revenues increased 245% to $13.0 million compared to $3.8 million for the first quarter of 2022.

to federal customers increased by $9.8 million in Q1 2023, resulting from a number of large awards from federal agencies in late September

and early October of 2022 totaling more than $46.0 million.

Some of these units shipped in the quarter ended December 31, 2022, with the

balance scheduled for delivery by the end of 2023.

We continue to have a strong concentration of revenues from the State of California

which represents 60% of total revenues.

Revenues derived from non-government, commercial entities increased by 55% from Q1 2022 to Q1

2023 representing a partial return to pre-COVID levels.

We recorded energy storage revenues of $1.8 million as a result of our acquisition

of All Cell which closed on March 4, 2022.

We continue to invest 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.

Gross Profit.

quarter ended March 31, 2023, we recorded a marginal positive gross profit at .04% of revenues, compared to a gross loss of $0.3 million,

or 8.1% of sales in the prior year.

As a percentage of sales, the margin improved by 8.1%, primarily due to the increase in production

levels in the current quarter compared to the prior year, 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.

Our gross profits, while positive, were

negatively impacted by $0.2 million for non-cash intangible amortization and further by an increase in material costs for steel, batteries

and other components compared to the first quarter of 2022, due to the COVID-19 pandemic and other inflationary pressures.

see some improvements in pricing on new orders placed in Q1 2023 which we believe we will start to realize benefit from in Q2 2023 and

We also implemented some design changes in Q1 2023 which we believe will reduce the labor and material cost of our product.

acquisition of All Cell in March 2022 should significantly reduce the cost of the batteries in our products.

In addition, as our revenues

increase in 2023 and beyond, we expect our fixed overhead absorption to also improve.

Operating Expenses.

operating expenses were $10.9 million for the nine months ended September 30, 2022, compared to $4.0 million for the same period in the

prior year, primarily due to a $3.7 million change in fair value of contingent consideration related to the All Cell acquisition.

such cost, the operating expenses for the quarter ended September 30, 2022 increased by 83% compared to the same period in the prior year,

driven by $2.3 million in expenses attributable to the newly acquired All Cell business, $0.4 million increase for legal and accounting

services, primarily attributable to the acquisition, and $0.3 million increase for sales and marketing costs to generate increased sales

As a percentage of revenue, operating expenses excluding the change in fair value of contingent consideration represented a decrease

of 20 percentage points.

operating expenses were $3.8 million, or 30% of revenues, for the quarter ended March 31, 2023, compared to $2.0 million, or 52% of revenues,

for the same quarter in the prior year, an improvement of 22% of revenues.

Operating expenses in Q1 2022 included only one month of expenses

for our battery operation based on the acquisition of All Cell that closed in March 2022.

This accounts for approximately $0.5 million

of the increase.

In addition, we increased $0.4 million for R&D salaries and expenses, $0.3 million for non-cash compensation expense,

$0.3 million for audit fees, and $0.3 million for admin salaries and bonus expense.

Operating expenses decreased from 52% to 30% of revenues

from Q1 2022 to Q1 2023.

Liquidity and Capital Resources

At September 30, 2022, we

had cash of $4.7 million, compared to cash of $21.9 million at December 31, 2021.

At March 31, 2023, we had

cash of $1.0 million, compared to cash of $1.7 million at December 31, 2022.

We have historically met our cash needs through a combination

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Our cash flows from operating,

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

September 30,

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

Cash provided by (used in):

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Net cash provided by financing activities

For the nine months ended

September 30, 2022, our cash used in operating activities was $15.7 million compared to $5.2 million for the same period in 2021.

loss of $11.9 million for the nine months ended September 30, 2022 was increased by $5.1 million of non-cash expense items that included

a change in fair value of contingent consideration of $3.7 million, depreciation and amortization of $0.8 million, common stock issued

For the three months

ended March 31, 2023, our cash used in operating activities was $0.6 million compared to $1.9 million for the three months ended

March 31, 2022.

Net loss of $4.1 million for the three months ended March 31, 2023 was increased by $0.9 million of non-cash expense

items that included depreciation and amortization of $0.3 million, common stock issued for services for director compensation of

$0.1 million and employee stock-based compensation expense of $0.5 million.

Further, cash used in operations included a $2.4 million

increase in accounts receivable due to the increase in revenues in the quarter, $0.3 million decrease in deferred revenue, and a

$0.2 million increase in inventory.

Cash used in operations included a $4.2 million increase in accounts payable primarily for

inventory, $0.9 million increase in accrued expenses and a $.4M decrease in prepaid expenses and other current assets.

For the three months ended

March 31, 2022, our cash used in operating activities was $1.9 million.

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

Further, cash used in operations included a $2.2 million increase in accounts receivable, $1.0 million increase in prepaid expenses

and other current assets, primarily related to the prepayment of battery cells, and $8.3 million increase in inventory (i) to secure battery

cells required for battery manufacturing in case of potential future supply chain challenges and (ii) due to higher work in process inventory

of nearly complete EV ARC units that were waiting for parts as well as finished EV ARC units awaiting final delivery at September 30,

The increases in prepayments and inventory are not expected to continue in future quarters, but rather should remain flat or reduce

to lower levels over the next 12 months.

Cash provided by operations included a $2.3 million increase in accounts payable primarily for

inventory, $0.2 million increase in deferred revenue and $0.2 million increase in accrued expenses.

Net loss of $4.6 million for

the nine months ended September 30, 2021 was decreased by $0.9 million in 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

of operating lease right of use asset.

Cash used in operations for the period included a $1.0 million increase in inventory based on forecasted

requirements and a $0.7 million increase in accounts receivable due to some slow payments.

Cash provided by operations included a $0.1

million increase in prepaid expenses and other current assets due to insurance prepayments, a $0.1 million increase in accounts payable

for inventory purchases, and a $0.1 million increase in deferred revenue due to an increase in the sale of maintenance plans.

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 used in 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.

Cash used in investing activities

in the nine months ended September 30, 2022 included $0.8 million cash payment for working capital payment related to the acquisition

of All Cell, $0.8 million to purchase equipment and $0.1 million in patent costs.

The nine months ended September 30, 2021 included $0.5

million to fund patent related costs and to purchase equipment.

In the nine months ended September

30, 2022, cash generated by our financing activities included $0.3 million from the exercise of warrants, compared to $2.6 million for

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

Current year period also includes a $0.2 million payment of equity offering

costs related to the committed equity line agreement entered into with B.

in the three months ended March 31, 2023 included $0.3 million for the purchase of equipment and patent costs.

The three months ended

March 31, 2022 included $0.8 million cash payment for working capital payment related to the acquisition of All Cell and $0.1 million

to purchase equipment.

For the three months ended

March 31, 2023, cash generated by our financing activities included $0.2 million proceeds from the sale of stock and $0.1 million from

the exercise of warrants, compared to $0.1 million for the exercise of warrants for the same period in the prior year.

Current assets were $23.4

million at September 30, 2022 and $27.6 million at December 31, 2021.

Current liabilities increased to $8.7 million at September 30, 2022

from $3.0 million at December 31, 2021, primarily due to the acquisition of All Cell, including additions of $1.3 million in accounts

payable and accrued liabilities, $4.8 million in contingent consideration, current, based on the terms of the acquisition, and $1.3 million

in deferred revenue for customer deposits.

In addition, accounts payable for the remainder of the Company increased by $1.3 million due

to increased purchases of inventory to support the increased revenue activity.

As a result, our working capital decreased to $12.8 million

at September 30, 2022 compared to $24.6 million at December 31, 2021.

million at March 31, 2023, an increase from $19.9 million at December 31, 2022, primarily due to a $2.5 million increase in accounts receivable,

a $1.3 million increase in prepaid expenses and other current assets and $0.5 million increase in inventory, partially offset by a $0.7

million decrease in cash.

Current liabilities, which include a $6.7 million non-cash contingent consideration attributable to our March

2022 acquisition of All Cell, increased to $17.9 million at March 31, 2023 from $13.2 million at December 31, 2022, primarily due to a

$4.2 million increase in accounts payable and $0.9 million increase in accrued expenses, partially offset by a $0.3 million decrease in

deferred revenue, current.

As a result, our working capital decreased to $5.5 million at March 31, 2023 compared to $6.8 million at December

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 nine months of 2022 was 156% higher than the first nine months 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 the first nine months of 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 over the past year should start to decrease beginning in 2023.

should result in increasing gross profits on the EV ARC ™ and Solar Tree® products in the future.

on marketing and sales efforts to increase our revenues.

Revenues increased by 45% from 2020 to 2021, 144% from 2021 to 2022, and 245%

from Q1 2022 to Q1 2023 demonstrating that this investment has been successful.

The Company has now earned a gross profit on its sale

of products, which includes $0.2 million of non-cash amortization of acquired intangible assets.

Improvements have been made despite the

current inflationary period.

As revenues increase, we expect to continue to see our fixed overhead costs spread over more units, which

will reduce the cost per unit.

Our engineering and operations teams have made several design changes and process improvements in our product

development and manufacturing operations in 2022 and early 2023 which has helped to increase labor efficiency and reduce material costs.

At the same time, the Company is still recovering from supply chain issues related to the COVID-19 virus which caused an increase in certain

of our material costs, most notably in steel purchases.

However, we are seeing these costs start to decline in early 2023, which will

help us to increase gross profit on the EV ARC ™ and Solar Tree® products in the future.

The Company may be required

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of production cost reduction measures.

In September 2022, the Company entered into a Common Stock Purchase Agreement and Registration

Rights Agreement with B.

Riley under which the Company has the right to sell up to $30.0 million shares of its common stock over a period

of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financings.

Furthermore, the Company

has warrants to purchase 469,305 shares of our Common Stock outstanding at September 30, 2022, which could potentially generate an additional

$3.0 million of proceeds over the next 2 years, depending on the market value of our stock and the warrant holders’ ability to exercise

The proceeds from these offerings are expected to provide working capital to fund business operations and the development of new

Management cannot currently predict when or if it will achieve positive cash flow.

On March 4, 2022, the Company

completed an acquisition of the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions.

believe this strategic acquisition will increase and diversify our 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.

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 Common Stock that the Company will issue

to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares.

Management believes that evolution

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

This evolution is anticipated to include the following continual steps:

addition of sales personnel and independent sales channels, continued

management of overhead costs, increased overhead absorption resulting from 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

opportunities.

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

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

In September 2022, the Company entered into a Common Stock Purchase Agreement with B.

which the Company has the right to sell up to $30.0 million shares of its common stock over a period of 24 months (see note 10 for further

information.) In addition, we could pursue other equity or debt financings.

Furthermore, the Company has warrants to purchase 624,306

shares of our Common Stock outstanding at March 31, 2023, which could potentially generate an additional $6.1 million of proceeds over

the next 5.1 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.

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 on a timely basis, on favorable terms, or at

all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business

In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution

to our stockholders.

Off-Balance Sheet Arrangements

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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