What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 295 added, 249 removed, 138 unchanged (80% of the section changed)

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

failure to realize the anticipated benefits of any acquisition or difficulties

in integrating any acquisition with the Company and its operations;

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;

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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

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 and a certified wind rating of 160 miles per hour.

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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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/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

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 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 proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition.

our ability to continuously create new and patentable marketable inventions by integrating our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition;

our international operations in two of the three largest automotive markets in the world today.

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/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.

Our batteries

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.

On October 20, 2023, Beam

acquired Amiga DOO Kraljevo (“Amiga”), pursuant to a Share Sale and Purchase Agreement

dated October 6, 2023 (the “Purchase Agreement”) by and among Beam and the owners of Amiga (the “Sellers”).

Amiga is a business located in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration,

including (i) infrastructure products for public lighting;

(ii) infrastructure products for mobile telephone, networks and transmission

(iii) infrastructure products for tram, trolleybus, and railways;

(iv) infrastructure products for contact networks, masts, portals

and semi-portals for road and railway signaling;

(v) large steel lattice structures for specific purposes (e.g., stadiums, factories,

power plants, etc.);

and (vi) distribution and command electrical cabinets.

Amiga has engineering, product development and manufacturing

capabilities which we believe are well suited to manufacture and sell Beam’s current and future products in the European market.

As a large European manufacturer of streetlights, we believe Amiga is well positioned to assist in the development of the EV-Standard ™

for both the European and US markets.

Overall Business Outlook

Our revenues for the first

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

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 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.

nine months of 2023 were $47.3 million, a 236% increase over $14.1 million for the first nine months in 2022, primarily derived from delivery

of EV ARC™ systems to federal and other customers, as well as energy storage solutions in the U.S.

and internationally.

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

Additionally, we reported revenues of $6.0 million year-to-date through September 30, 2023 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 addition, certain of our commercial customers may 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 incentives, 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.

In 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 nine months ended September 30, 2023, we recorded revenues of $33.2

million for federal customers, compared to $3.2 million for the same period in 2022 due to these orders.

We expect to see uneven orders

from quarter to quarter, especially with our federal customers, but over time we expect our revenues to grow.

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 requests 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™ 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 ™ highly differentiated

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

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.

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

other storage technology solutions engineered by our team of engineers and scientists in Broadview, IL, in its EV ARCs™ systems,

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 ™ highly differentiated products.

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

October 2023, the Company completed the acquisition of Amiga.

Amiga is an established manufacturer of specialized steel 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.

The Company believes that the addition of Amiga will

expand Beam’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.

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

We 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.

Beam Europe is already

producing components for EV ARC™ systems in our factory in Kraljevo at the time of this filing.

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.

The 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 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.

Beam Europe is one of Europe’s largest

manufacturers of streetlights and has a team of qualified structural, electrical and civil engineers who are experts in the field of development

and deployment of street lighting.

They are working with our engineers in San Diego and Chicago to finalize the engineering and product

development on our new EV Standard™ product.

We believe that EV Standard™ may become our largest selling product when available

Our gross profit as a percentage

of sales in Q3 2023 was 1.7% of revenues, compared to -$5.1% gross loss in Q3 2022.

Gross margins improved to 1.7% as a percentage of

revenues in the nine months ended September 30, 2023, compared to a -6.9% gross loss for the same period in 2022.

Additionally, our cost

of goods sold included non-cash intellectual property amortization of $0.6 million and $0.5 million for the first nine 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 nine months ended September 30, 2023.

We increased the number of EV ARC deliveries from 136 in the first nine months of

2022 to 537 in the first nine months of 2023 which resulted in favorable fixed overhead absorption and improved labor efficiencies gained

by the higher volume.

There is no guarantee that our growth will continue at this same pace and expect that the receipt of orders may

be choppy quarter over quarter, but we expect that in the long-term, our revenues will continue to grow.

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

Batteries are the highest cost contributor to our bill of materials, but with the acquisition of All Cell, 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.

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

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gross margins over the next year.

Beam Europe has capabilities to self perform several activities which we outsource in the US.

that in combination with a generally less expensive operating environment in Serbia, we will be able to produce our products in Europe

less expensively than in the US even as we continue to reduce our costs in there.

Significant Accounting Policies and Estimates

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Use of Estimates.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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

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

reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates in the accompanying financial statements include the allowance

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

of intangible assets, 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.

Significant estimates

in the accompanying financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost

allocations, depreciable lives of property and equipment, valuation of intangible assets, 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 six months ended June 30, 2023.

There were no significant changes in accounting principles that were adopted during the nine months ended September 30, 2023.

Results of Operations

Comparison of Results of Operations for the

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.

Three Months Ended September 30, 2023 and 2022

For the quarter

ended September 30, 2023, our revenues increased 149% to $16.5 million compared to $6.6 million for the same period in 2022.

to federal customers increased by $7.5 million in Q3 2023 compared to the quarter ended September 30, 2022.

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.

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 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.

quarter ended September 30, 2023, our gross profit was $0.3 million, or 2% of sales, compared to a gross loss of $0.3 million, or 5% of

sales for the same period in 2022.

As a percentage of sales, the margin improved by 7%, primarily due to the increase in production levels

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

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

We began to see some improvements in 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.

We also implemented some new equipment and design changes during 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.

Our engineering and operations teams have identified further

cost reductions and efficiencies which we believe will improve our gross margins further in Q4 of 2023 and Q1 of 2024.

Operating Expenses.

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.

operating expenses were $4.0 million, or 24% of revenues, for the quarter ended September 30, 2023, compared to $6.5 million, or 98% of

revenues, for the same quarter in the prior year, a decrease of 73% as a percentage of revenues.

The $2.4 million decrease is mostly attributable

to $3.9 million increase in the fair value of contingent consideration in the prior year compared to no change in the third quarter of

2023, partially offset by increases of $0.5 million for sales and marketing expenses, primarily for commissions due to higher revenues,

$0.3 million for non-cash compensation expenses, $0.1 million for recruiting fees, $0.3 admin salaries and bonus accrual, $0.1 million

for facility costs and $0.2 million of other increases as we scale up the business.

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

Nine Months Ended September 30, 2023 and 2022

months ended September 30, 2023, our revenues increased 236% to $47.3 million compared to $14.1 million for the same period in 2022.

to federal, state and local governments increased by $31.6 million in the first nine months of 2023 compared to the same period in the

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

Revenues derived from non-government, commercial entities increased by 28% from Q3 2022 to Q3 2023 year to date representing

a partial return to pre-COVID levels.

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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.

Gross Profit.

nine months ended September 30, 2023, our gross profit was $0.8 million, or 2% of sales, compared to a gross loss of $1.0 million, or

7% of sales in the same period of 2022.

As a percentage of sales, the margin improved by 9%, 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 $0.6 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.

operating expenses were $11.9 million, or 25% of revenues, for the nine months ended September 30, 2023, compared to $10.9 million, or

78% of revenues, for the same period in the prior year, an improvement of 53% as a percentage of revenues.

The $1.0 million increase is

mostly attributable to $1.0 million for non-cash compensation expenses, $1.0 million for admin salaries and bonus accrual, $0.8 million

increase in sales and marketing expense, primarily for commissions due to higher revenues, $0.6 million for R&D salaries and expenses,

$0.2 million for recruiting costs, $0.2 million for accounting fees, $0.2 million for facility costs, and $0.4 million of other increases,

offset by a $3.4 million decrease in the fair value of contingent consideration in the prior year to date compared to 2023.

acquisition of All Cell that closed in March 2022, expenses for the first nine months of 2022 do not include operating expenses for January

and February, which accounts for approximately $0.5 million of the increase.

$3.0 million of the $11.9 million year to date 2023 operating

expense is comprised on non-cash expense.

Liquidity and Capital Resources

At June 30, 2023, we had cash

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

At September 30, 2023, we

had cash of $14.8 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 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:

September 30,

Cash provided by (used in):

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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.

For the nine months ended

September 30, 2023, our cash used in operating activities was $13.8 million compared to $15.7 million for the nine months ended September

Net loss of $11.0 million for the nine months ended September 30, 2023 was increased by $3.2 million of non-cash expense items

that included depreciation and amortization of $1.1 million, common stock issued for services for director compensation of $0.3 million,

employee stock-based compensation expense of $1.3 million, change in the fair value of contingent consideration liabilities of $0.3 million

and $0.3 million of other for stock compensation for non-employees.

Further, cash used in operations included a $10.5 million increase

in accounts receivable due to the increase in revenues and the timing of customer payments, $1.1 million increase in inventory and $0.6

million decrease in deferred revenue for customer deposits.

Cash generated from operations included a $4.3 million increase in accounts

payable primarily for inventory, $1.4 million increase in accrued expenses, and $0.5 million decrease in prepaid expenses and other current

For the nine months ended

September 30, 2022, our cash used in operating activities was $15.7 million.

Net 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 services for director compensation of $0.3 million and

non-cash compensation expense related to the grant of stock options of $0.3 million.

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, 2022.

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.

Cash used in investing activities

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

in the nine months ended September 30, 2023 included $0.8 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 nine months ended September

30, 2022 included a $0.8 million working capital cash payment related to the acquisition of All Cell and $0.8 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.

For the nine months ended

September 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, $0.2 million for repayment

of note payable 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 $45.8

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.

million on September 30, 2023, an increase from $19.9 million at December 31, 2022, primarily due to increases of $13.1 million in cash,

$10.5 million in accounts receivable, $1.1 million in prepaid expenses and other current assets and $1.3 million in inventory.

liabilities decreased to $11.5 million at September 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 $0.7 million decrease

in deferred revenue, offset by a $4.3 million increase in accounts payable and $1.3 million increase in accrued expenses.

our working capital increased to $34.4 million at September 30, 2023 compared to $6.8 million at December 31, 2022.

The Company has been focused

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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.

first nine months of 2023 was 236% higher than the first nine months of 2022 demonstrating that this investment has been successful.

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 2023 which has helped to increase labor

efficiency and reduce material costs.

In addition, the Company has increased pricing for the first time to cover some of the inflationary

cost increases, which we should benefit from as those proposals become orders and are shipped in future quarters.

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.

entered into that certain Supply Chain Line of Credit with OCI Limited (“OCI”), whereby OCI may provide a supply chain line

of credit in the amount of up to $100 million based on the amounts of approved accounts receivable of the Company (the “Credit Facility”).

In order to request a drawdown on the Credit Facility, the Company is required to submit a transaction request to OCI which sets forth

the terms of the applicable account receivables, including but not limited to the name of the party responsible for the applicable account

receivables (the “Obligor”), the terms of repayment and the amount of such receivables.

The Company has no obligation to submit

a drawdown request and OCI is not obligated to accept any drawdown request from the Company.

In the event OCI accepts a drawdown request

of the Company and upon satisfaction of certain conditions required by OCI to issue the drawdown, OCI will disburse funds to the Company

for such drawdown in an amount equal to the full value of the applicable account receivables assigned to OCI minus any transaction expenses

incurred by OCI and the full amount of interest to be incurred for such receivables over the term of the drawdown.

The Company will pay

interest on any drawdown at the Secured Overnight Financing Rate +300 basis points.

Upon the disbursement of funds to the Company for

a drawdown, the Company will assign all rights to such account receivables of the Obligor to OCI.

The Company will act as collection agent

on any account receivables assigned to OCI and agrees to establish a designated bank account for the purpose of collecting payment on

any applicable account receivables that are assigned to OCI.

In the event (i) the Company is in material breach of the Credit Facility,

(ii) the Company or the Obligor is insolvent or is subject to reorganization or liquidation, or (iii) any dispute related to an agreement

with an Obligor or non-payment by an Obligor, OCI has the right to exercise any contractual rights it may have against Obligor, increase

the interest rate to the agreed upon default interest rate, and demand immediate repayment by the Company for the outstanding amounts

owed under such account receivables.

The Company has also agreed to indemnify OCI for any losses incurred by OCI in connection with the

Credit Facility.

Either party may terminate the Credit Facility at any time by providing fifteen (15) days prior written notice to the

To date, Beam Global has not drawn on this line of credit.

The Company may be required

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

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 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.

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

Furthermore, the Company has warrants to purchase 618,395 shares of our Common

Stock outstanding at September 30, 2023, which could potentially generate an additional $6.0 million of proceeds over the next 4.5 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.

6 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis