What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 261 added, 206 removed, 126 unchanged (79% 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 and

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

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

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

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 the power.

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.

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.

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

The battery design uses a proprietary phase change

material which provides a low-cost thermal management solution and a unique safety mechanism to prevent propagation of thermal runaway.

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

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.

The battery design uses a proprietary phase

change material which provides a low-cost thermal management solution and a unique safety mechanism to prevent propagation of thermal

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

Drones, submersibles, medical and recreational products and a host of micro mobility products benefit from this technology.

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

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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.

six months of 2023 were $30.8 million, a 312% increase over $7.5 million for the first six months in 2022, primarily derived from delivery

of EV ARC™ systems to federal customers.

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 $2.1 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 from both government and commercial entities, including a number of federal grants available

under the Inflation Reduction Act in 2022.

In addition, certain of our commercial customers can benefit from the Federal Solar Investment

Tax Credit and accelerated depreciation as allowed under Section 179 of IRS code which, we believe, provide a competitive advantage for

our products over traditionally installed EV charging infrastructure which is not eligible for these incentives.

Given these available

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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 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

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.

In the six months ended June 30, 2023, we

recorded revenues of $23.4 million for federal customers, compared to $0.9 million for the same period in 2022.

Ongoing efforts to expand revenues

to state agencies have also been successful.

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 and contract terms 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, partially due to

companies requiring employees to return 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 which we expect to continue.

We expect the electric vehicle market

to continue to experience significant growth over the next decade which will in turn cause a requirement for additional EV charging infrastructure.

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

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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

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

a host of micro mobility and electric vehicle products are already benefiting from our Beam All-Cell ™ 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.

In June 2023, the Company announced

that it executed a binding Letter of Intent to acquire Europe based Amiga DOO Kraljevo (“Amiga”).

Amiga is an established manufacturer of specialized structures and equipment, producing street lights, communications and energy infrastructure

whose manufacturing, engineering and sales teams service municipalities, states and commercial customers in 16 nations.

of the acquisition of Amiga, which we expect to occur in Q4 2023, is subject to customary closing conditions, including but not limited

to, the completion of our due diligence of Amiga to our satisfaction.

The Company believes that should

this transaction close, it will expand Beam Global’s presence into the European market and increase its production, engineering,

sales and product development expertise.

The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused

on green and sustainable energy.

An increase in electric vehicles adoptions will increase the demand for charging infrastructure.

believe that our sustainably energized EV ARC TM and EV Standard™ products can play a major role in the provision of

EV charging infrastructure in Europe.

We continued to make progress in finding a sponsor for our outdoor media advertising business

during 2022 and 2023, working with The Superlative Group (“Superlative”), an industry leading consultant engaged in selling

corporate sponsorships.

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”

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

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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

process improvements and making engineering changes to our product where we expect to benefit from cost reductions.

Many of the components

that we integrate into our products are manufactured by others.

This is consistent with our strategy to take advantage of the investment

by large and well-funded organizations in the improvement of various components and sub-assemblies which we integrate into our final product.

We continue to identify components and sub-assemblies that may be more cost effective to outsource, which may further reduce our costs,

increase our gross margins, and significantly increase the potential output from our factory.

We expect to see a significant increase

in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing pressure on our products.

The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and the cost cutting measures

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

Our gross profit improved as a

percentage of sales reporting a continued positive gross margin in Q2 2023 of 2.8% of revenues, compared to a .03% gross profit in the

Q1 2023 and -$8.8% in Q2 2022.

Gross margins improved to 1.6% as a percentage of revenues in the six months ended June 30, 2023, compared

to an 8.4% loss as a percentage of revenue for the same period in 2022.

Additionally, our cost of goods sold included non-cash intellectual

property amortization of $0.4 million and $0.3 million for the first six months of 2023 and 2022, respectively, related to the acquisition

of All Cell in 2022.

Excluding this non-cash expense results in a positive gross profit of 2.9% for the six months ended June 30, 2023.

We increased the number of EV ARC deliveries from 74 in the first six months of 2022 to 354 in the first six months of 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 the high costs of many of our components, including steel, that began during the Covid pandemic

and are only starting to decrease on new supply chain orders placed in 2023.

We expect to see these costs continue to decrease over time.

Batteries are the highest cost contributor to our bill of materials, but with the March 2022 purchase of All Cell’s assets, we have

seen these costs decrease.

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

we expect to benefit from cost reductions.

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

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

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

We continue to identify components and sub-assemblies that may

be more cost effective to outsource, which may further reduce our costs, increase our gross margins, and significantly increase the potential

output from our factory.

We expect to see a significant increase in the demand for electric vehicle charging infrastructure and as such

we do not anticipate significant pricing pressure on our products.

The combination of this increase in demand for electric vehicle charging

infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will see 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, 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.

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 three months ended March 31, 2023.

There were no significant

changes in accounting principles that were adopted during the six months ended June 30, 2023.

Results of Operations

Comparison of Results of Operations for the

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.

Three Months Ended June 30, 2023 and 2022

For the quarter ended June 30, 2023, our revenues increased 379% to $17.8 million compared to $3.7 million for the same period in

Revenues to federal customers increased by $12.7 million in Q2 2023.

During the quarter, revenues from Florida accounted for 20%

of total revenues and included federal, state and enterprise customers.

We also recorded energy storage revenues of $2.1 million as a

result of our acquisition of All Cell in 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.

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

quarter ended June 30, 2023, our gross profit was $0.5 million, or 3% of sales, compared to a gross loss of $0.3 million, or 9% of sales

for the same period in 2022.

As a percentage of sales, the margin improved by 12%, primarily due to the increase in production levels

in the current quarter compared to the prior year, which resulted in favorable fixed overhead absorption.

Our gross profits were negatively

impacted by $0.2 million for non-cash intangible amortization.

We began to see some improvements on material pricing in 2023, which we

believe will continue to improve over time.

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

We also implemented some new equipment and design changes in Q1 and Q2 2023 which helped to increase our production to meet

the growing demand and which is helping to reduce the labor and material cost of our product.

In addition, as our revenues continue to

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

Operating Expenses.

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.

operating expenses were $4.0 million, or 23% of revenues, for the quarter ended June 30, 2023, compared to $2.5 million, or 67% of revenues,

for the same quarter in the prior year, a decrease of 44% as a percentage of revenues.

The $1.5 million increase is attributable to $0.5

million for the change in fair value of contingent consideration, $0.4 million for sales and marketing expenses, primarily for commissions

due to higher revenues, $0.4 million for non-cash compensation expenses, $0.2 million for admin salaries and bonus accrual.

Comparison of Results of Operations for the

Six Months Ended June 30, 2023 and 2022

For the six months

ended June 30, 2023, our revenues increased 312% to $30.8 million compared to $7.5 million for the same period in 2022.

Revenues to federal

customers increased by $22.5 million in 2023.

During the first six months of 2023, revenues from California and Florida represented 13%

and 12% of total revenues.

In both instances revenues were diverse across federal, state and local governments, as well as enterprise

and education sector customers.

International customers comprised 10% of the revenues through June 30, 2023, and were primarily from our

energy storage business.

Revenues derived from non-government, commercial entities increased by 42% from Q2 2022 to Q2 2023 representing

a partial return to pre-COVID levels.

We recorded energy storage revenues of $3.9 million as a result of our acquisition of All Cell in

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.

For the six months ended June 30, 2023, our gross profit was $0.5 million, or 2% of sales, compared to a gross loss of $0.6

million, or 8% of sales in the same period of 2022.

As a percentage of sales, the margin improved by 10%, primarily due to the increase

in production levels in the current quarter compared to the prior year, which resulted in favorable fixed overhead absorption.

profits were negatively impacted by $0.4 million for non-cash intangible amortization.

We began to see some improvements on material

pricing in 2023, which we believe will continue to improve over time.

In addition, our labor efficiency improved during the quarter as

a result of a steady flow of units through the factory.

We continue to make engineering changes and work with suppliers to improve our

costs which will continue to improve our gross profit over time.

Operating Expenses.

operating expenses were $7.9 million, or 26% of revenues, for the six months ended June 30, 2023, compared to $4.5 million, or 60% of

revenues, for the same quarter in the prior year, an improvement of 34% as a percentage of revenues.

Due to the acquisition of All Cell

that closed in March 2022, expenses for the first six months of 2022 do not include operating expenses for January and February, which

accounts for approximately $0.5 million of the increase.

In addition, increases are also attributable to, $0.7 million for non-cash compensation

expenses, $0.6 million for administrative salaries and bonus accrual, $0.5 million for the change in fair value of contingent consideration,

$0.4 million for investment in R&D salaries and expenses, $0.3 million for sales and marketing expenses, primarily for commissions

due to higher revenues and $0.3 million of other expenses.

Liquidity and Capital Resources

At March 31, 2023, we had

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

At June 30, 2023, we had cash

of $23.7 million, compared to cash of $1.7 million at December 31, 2022.

We have historically met our cash needs through a combination

of debt and equity financings.

of debt and equity financing.

Our cash requirements are generally for operating activities.

Our cash flows from operating,

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

Cash provided by (used in):

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Net cash used in investing activities

Net cash provided by financing activities

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 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.

Net cash (used in) provided by financing activities

Our cash flows from operating,

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

For the six months ended June

30, 2023, our cash used in operating activities was $5.1 million compared to $7.4 million for the six months ended June 30, 2022.

loss of $7.4 million for the six months ended June 30, 2023 was increased by $2.1 million of non-cash expense items that included depreciation

and amortization of $0.7 million, common stock issued for services for director compensation of $0.2 million, employee stock-based compensation

expense of $0.9 million, change in the fair value of contingent consideration liabilities of $0.3 million and $0.1 million of other for

stock compensation for non-employees.

Further, cash used in operations included a $6.0 million increase in accounts receivable due to

the increase in revenues in the quarter and $0.4 million decrease in deferred revenue.

Cash generated from operations included a $4.3

million increase in accounts payable primarily for inventory, $1.9 million increase in accrued expenses, and $0.3 million decrease in

prepaid expenses and other current assets.

For the six months ended June

30, 2022, our cash used in operating activities was $7.4 million.

Net loss of $5.1 million for the six months ended June 30, 2022 was

increased by $0.7 million of non-cash expense items that included depreciation and amortization of $0.5 million, common stock issued for

services for director compensation of $0.2 million and non-cash compensation expense related to the grant of stock options of $0.2 million.

Further, cash used in operations included an increase in prepaid expenses and other current assets by $3.0 million, primarily related

to the purchase of cells and $3.5 million increase in inventory based on the sales forecast.

Cash used in operations included a $0.9 million

decrease in accounts receivable due to the collection of accounts from 2021, $2.1 million increase in accounts payable, $0.1 million increase

in accrued expenses and $0.3 million increase in deferred revenue.

Cash used in investing activities

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.

in the six months ended June 30, 2023 included $0.5 million for the purchase of equipment;

primarily transportation equipment, a sleeving

machine and an automated welder used in our battery manufacturing and $0.1 million for patent costs.

The six months ended June 30, 2022

included $0.8 million cash payment for working capital payment related to the acquisition of All Cell and $0.3 million to purchase equipment

and patent costs.

For the six months ended June

30, 2023, cash generated by our financing activities included $25.4 million in proceeds from the public offering issuance of common stock,

net of offering expenses, $2.1 million for shares sold through the Company’s equity facility and $0.1 million from the exercise

of warrants, compared to $0.3 million for the exercise of warrants for the same period in the prior year.

Current assets were $49.3

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

million on June 30, 2023, an increase from $19.9 million at December 31, 2022, primarily due to increases of $22.0 million in cash, $6.0

million in accounts receivable and $1.2 million in prepaid expenses and other current assets.

Current liabilities decreased to $12.1 million

at June 30, 2023 from $13.2 million at December 31, 2022, primarily due to a $6.8 million decrease in a non-cash contingent consideration

reserve attributable to our March 2022 acquisition of All Cell, and a $0.4 million decrease in deferred revenue, offset by a $4.3 million

increase in accounts payable and $1.8 million increase in accrued expenses.

As a result, our working capital increased to $37.1 million

at June 30, 2023 compared to $6.8 million at December 31, 2022.

The Company has been focused

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.

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

first half of 2023 was 312% higher than the first half of 2022 demonstrating that this investment has been successful.

Improvements to

gross profitability 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 2023, which will help us to continue to increase gross profit on products in the future.

On March 22, 2023, the Company

entered into a supply chain line of credit agreement with OCI Group (“OCI”).

Subject to the terms of the agreement, OCI will

make available to the Company funding based on amounts owed to the Company by Customers.

The Company will make a transaction request to

drawdown a portion of the line of credit along with documents to support the specific customer receivable being requested and a repayment

OCI has sole discretion to accept or refuse a transaction request.

Once accepted, the funds are provided to Beam, net of fees.

maximum amount of the line of credit is $100 million.

The initial term of the agreement is five years, and it can be renewed for additional

one year terms until such time as notice is given per the terms of the agreement.

The Company may be required

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which the Company has the right to sell up to $2 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.

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

Furthermore, the Company has warrants to purchase 620,105 shares

of our Common Stock outstanding at June 30, 2023, which could potentially generate an additional $6.0 million of proceeds over the next

4.8 years, depending the warrant holders’ ability and decision 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 strategy.

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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What changed 10-Q

Item 2. Management’s Discussion and Analysis