What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-04-16 compared with 2023-03-31 · 333 added, 392 removed, 75 unchanged (91% of the section changed)

12 unchanged sentences

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

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

EVStandard TM – patent issued on December 31, 2019, and currently under development.

A lamp standard, EV charging and emergency power product which uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging.

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

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

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

In addition, with the acquisition

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

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

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.

With the acquisition of All

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

lithium-ion and 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.

Drones, 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.

October 20, 2023, we acquired Amiga DOO Kraljevo (“Amiga”) a business located in Serbia and engaged in the manufacture and

distribution of steel structures with electronic integration, such as streetlights, cell towers, and ski lift towers.

In addition to their

current products, Amiga has engineering, product development and manufacturing capabilities which we believe are well suited to

manufacture and sell Beam’s current products in the European market.

Also, Amiga is one of Europe’s leading manufacturers

of streetlights and Beam believes it is well positioned to develop and manufacture Beam’s patented EV Standard™ for sale in

both Europe and the U.S.

We believe this provides Beam with a growth opportunity to sell its products in the European market through Amiga’s

extensive customer base.

We believe that there is a

18 unchanged sentences

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 revenues increased

from $9.0 million in 2021 to $22.0 million in 2022 we believe as a result of the ongoing maturation of the electric vehicle

ecosystem, increased urgency for charging infrastructure as more EVs are adopted, an increased understanding of the challenges

facing the installation and operation of utility grid-tied chargers and due to an increased investment in sales and marketing

resources over the past two years.

During the year ended December 31, 2022, product sales were generated from a wide variety of

markets, including state and local government agencies, federal customers, commercial businesses, colleges and utilities.

52-unit EV ARC™ purchase was made under our contract with the State of California to provide sustainable EV charging and emergency

power for 12 state government agencies in California.

In 2022, we also received an order for $5.3 million from New York City to

deliver EV ARCs TM throughout the city.

As a result of our acquisition of All Cell in March 2022, we generated revenues of

$5.2 million from sales of our solid, state-of-the-art energy storage product.

In late 2020, we entered into a Multiple Award

Schedule Contract with the General Services Administration (GSA) that helps streamline purchases from Federal agencies and state and

local governments.

our ability to continuously create new and patentable products which are marketable and are 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.

Beam’s revenues increased

from $22.0 million in 2022 to $67.4 million in 2023.

We believe this was the result of the ongoing maturation of the electric vehicle

ecosystem, increased urgency for charging infrastructure as more EVs are adopted, an increased understanding of the challenges facing

the installation and operation of utility grid-tied chargers and due to our increased investment in sales and marketing resources over

the past two years which has increased awareness of our products.

During the year ended December 31, 2023, 64% of product sales were to

Federal customers, a 569% increase over the prior year, primarily due to several large orders received in late 2022, including a $29.4

million order through Techflow, Inc.

for the US Army (IMCOM), an $11.7 million order for the General Services Administration for the Department

of Veterans Affairs, and several other orders for the Department of Homeland Security, US Navy Facilities, US Marine Corps, and others.

State and Local governments accounted for 16% of revenues driven by a $5.3 million order from New York City to deliver EV ARCs TM

throughout the city.

Revenues from our energy storage products were $8.5 million in 2023, a 63% increase over 2022 revenues.

as a result of our acquisition of Amiga in October 2023, we reported revenues of $3.4 million for the period from October 20, 2023 through

December 31, 2023.

We have in place a Multiple

Award Schedule Contract with the General Services Administration (GSA) that helps streamline purchases from Federal agencies and state

and local governments.

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

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

We have also invested

in our federal business channel by adding a federal lobbyist, a federal business development resource and a government relations

These resources have helped to identify opportunities on the federal side and are increasing awareness of our product and

We have also continued to

invest in our federal business channel which has helped us to identify federal opportunities and increased awareness of our product and

outreach with federal agencies.

They are also able to support language in legislature to increase opportunities for federal

contracts or federal grants and other funding.

This resulted in several large federal orders in 2022, including a $29.4 million

order through Techflow, Inc.

for the US Army (IMCOM), a $11.7 million order for the General Services Administration for the

Department of Veterans Affairs, and several other orders for the Department of Homeland Security, US Navy Facilities, US Marine

Corps, and others.

In addition, there is increased support for funding EV charging infrastructure on the state and federal level, as

well as a number of federal grants available in addition to the 30% Federal Solar Investment Tax Credit and Rule 179 accelerated

In addition, there continues to be support for funding EV charging infrastructure on the state and federal

level, as well as a number of federal grants available in addition to the 30% Federal Solar Investment Tax Credit and Rule 179 accelerated

depreciation which provide a strong financial incentive for many of our target commercial customers.

We expect the electric vehicle

market to continue to experience significant growth over the next decade as evidenced by 61 new electric vehicles that were launched

in 2022 which will require additional EV charging infrastructure.

We believe our products are uniquely positioned to benefit from

continued to made progress in finding a sponsor for our outdoor media advertising business during 2022, working with The Superlative

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

sponsors for a global naming rights agreement to 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 can be replicated in other cities throughout the country.

Our energy security business is connected with the deployment of our EV charging infrastructure products and serves as an additional

benefit to the value proposition of our charging products which, along with their integrated emergency power panels, can continue to

operate, charge EVs, and deliver emergency power during utility grid failures.

Our 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 have begun development

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

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

Several contributing factors resulted

in reporting a gross loss in both 2022 and 2021.

We currently have a fixed overhead structure and facility that is underutilized but will

support our expected growth over the next several years.

As our revenues continue to increase, and we increase our production volumes,

we will continue to increase our fixed overhead absorption which reduces our fixed overhead cost allocation per unit, as well as benefit

from improved labor efficiencies and utilization and cost improvements by negotiating volume purchase discounts.

We are also implementing

lean manufacturing process improvements and making engineering changes to our product which we believe will result in further 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 experienced cost increases on many of our components during 2021 and 2022, most notably our steel cost, which

were brought on by supply chain issues resulting from plant closures and staffing shortages during the Covid-19 pandemic.

In late 2022,

we started to see these increases flatten out and some are starting to decrease, and we 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 AllCell Technologies,

LLC, a lithium-ion battery manufacturer, we expect those costs to be significantly reduced.

We have design changes to our EV ARC TM

planned for 2023 that will reduce component costs and streamline the manufacturing process which will reduce the cost.

We continually

review the components and sub-assemblies which we manufacture or assemble in-house for which we intend to seek outsourced contracted manufacturing

We believe that outsourcing certain components and sub-assemblies will further reduce our costs, increase our gross margins,

and significantly increase the potential output from our factory.

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

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

The combination of this increase

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

that we will see significant improvement in our gross margins in the near future.

Critical Accounting Policies

Please refer to Note 1 in

the financial statements for further information on the Company’s critical accounting policies which are summarized as follows:

Strength in federal orders continued

with a new order announced in January 2024 from the U.S.

Army Corps of Engineers, Army Material Command (AMC) for $7.4 million.

acquisition of Amiga in October 2023, we now have a facility in Europe that can manufacture and sell Beam products for the European market.

Europe is the largest market in the world for electric vehicles and is a strong proponent of clean energy.

We believe there is a lot of

potential for growth in this region.

We also expect the electric vehicle market to continue to experience significant growth over the

next decade as evidenced by 61 new electric vehicles that were launched in 2022 which will require additional EV charging infrastructure.

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

Our energy security business

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

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

power during utility grid failures.

Our 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 continue development of

our EV Standard™ and UAV ARC™, which we expect will expand our product offerings with the same proprietary technology as our

current products and allow us to expand into new markets.

Beam Europe’s team of engineers is integrated with Beam’s U.S.

team which Beam believes will provide a valuable enhancement and acceleration of product development cycles.

The Company reported a positive

gross profit of $1.2 million for 2023, compared to a $1.7 million gross loss in 2022.

The gross profit benefited from increased volume

resulting in increased fixed overhead absorption, partially offset by an increase in fixed overhead spending (including indirect headcount,

service support, depreciation for capital to increase capacity, etc.).

We realized labor efficiencies because of the higher volume being

produced, but this was partially offset by a higher labor rate due to the use of temporary agencies to meet our delivery requirements.

Material costs increased during the Covid-19 pandemic, but we have seen some reduction in costs in the second half of 2023 for certain

steel components and cells.

Our engineering team has implemented some design changes during 2023 which reduced the bill of materials for

the EV ARC TM , improving our product margins especially in Q4 2023.

This was partially offset by $0.1 million increase in warranty

cost and $0.5 million increase in scrap due to a favorable adjustment in 2022.

We continually review the components and sub-assemblies

which we manufacture or assemble in-house to determine if costs can be reduced further if we outsource, and we are constantly looking

for cost reductions on our purchased parts.

We implemented a price increase on our EV ARC TM which we began to quote in 2023

and we should begin to benefit from in 2024, after our proposals convert to orders and are delivered to our customers.

We expect the increase

in demand for electric vehicle charging infrastructure to continue and as such we do not anticipate any negative impact on our price increase.

We expect to get a full-year benefit from the design changes implemented in 2023, which should also increase our 2024 gross profit.

volumes will also continue to provide favorable fixed overhead absorption in the future.

The combination of the increase in demand for

electric vehicle charging infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will

see significant improvement in our gross profit margins in the near future.

Critical Accounting Estimates

financial statements and related disclosures were prepared in accordance with U.S.

generally accepted accounting principles which require

us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

We base our estimates and assumptions on historical experience

and on various other factors that we believe to be reasonable under the circumstances, and we continually evaluate our assumptions and

modify as needed.

To the extent there are material differences between our estimates and the actual results, our future results of operations

will be affected.

Business Combination.

The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on

their estimated fair values at the acquisition date.

To the extent the purchase price exceeds the fair value of the net identifiable tangible

and intangible assets assumed, such excess is allocated to goodwill.

The Company determines the estimated fair values after review and

consideration of relevant information, including discounted cash flows and estimates made by management.

The Company records the net assets

and results of operations of an acquired entity from the acquisition date.

Acquisition-related costs are recognized separately from the

acquisition and are expensed as incurred.

Contingent consideration liability

is recognized at the estimated fair value on the acquisition date.

Subsequent changes to the fair value of contingent consideration liability

are recognized in operating expenses in the statement of operations.

Contingent consideration liability related to the acquisition consists

of commercial milestone payments and are valued using a Monte Carlo simulation.

The fair value of commercial milestone payments reflects

management’s estimates of discount rates and probability of achieving certain milestones.

Changes in the fair value of contingent

consideration subsequent to the acquisition date are recognized in operating expense in our consolidated statements of operations.

is stated at the lower of cost and net realizable value.

Cost is determined using the first-in, first-out method of accounting.

costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products

being manufactured, and finished goods.

Included in these costs are direct labor and certain manufacturing overhead costs associated with

normal capacity in the manufacturing process.

The Company regularly reviews inventory components and quantities on hand and performs annual

physical inventory counts.

Impairment of Long-lived

The Company accounts for long-lived assets in accordance with the provisions of Accounting Standards Codification (“ASC”)

360-10-35-15 “Impairment or Disposal of Long-Lived Assets,” which requires that long-lived assets and certain identifiable

intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not

be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future

undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be

recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Assets to be disposed

of are reported at the lower of the carrying amount or fair value less costs to sell.

Revenue Recognition.

Beam follows the revenue standards of Financial Accounting Standards Board Update No.

“Revenue from Contracts with Customers

(Topic 606).” The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods

Revenue is recognized in accordance with that core principle by applying the following five steps:

1) identify the contracts

with a customer;

2) identify the performance obligations in the contract;

3) determine the transaction price;

4) allocate the transaction

price to the performance obligations;

and 5) recognize revenue when (or as) we satisfy a performance obligation.

Revenues are primarily derived

from the direct sales of manufactured products.

Revenues may also consist of maintenance fees for the maintenance of previously sold products

and revenues from sales of professional services.

Revenues from inventoried

product are recognized upon the final delivery of such product to the customer or when legal transfer of ownership takes place.

values are fixed price arrangements determined at the time an order is placed or a contract is entered into.

The customer is typically

obligated to make payment for such products within a 30-45 day period after delivery.

Revenues from maintenance

fees for services provided by the Company are recognized equally over the period of the maintenance term.

Revenue values are fixed price

arrangements determined at the time an order is placed or a contract is entered into.

The customer is typically obligated to make payment

for the service in advance of the maintenance period.

Extended maintenance or warranty

services, where the customer has the option to purchase this extension as a separate purchase option, are considered a separate performance

If the Company does not control the extended services, in terms of having the responsibility for fulfillment of the obligation

or the option to choose who will perform the services, the Company is acting as an agent and would report the revenues on a net basis.

Revenues from professional

services for relocations, charger replacements or out of warranty repairs are recognized as services are performed.

Revenue values are

based upon fixed fee arrangements or hourly fee-based arrangements with agreed to hourly rates of service categories in line with expertise

requirements.

These services are billed to a customer as such services are provided and the customer will be obligated to make payments

for such services typically within a 30-45 day period.

The Company has a policy of

recording sales incentives as a contra revenue.

The Company includes shipping

and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

Any deposits received from

a customer prior to delivery of the purchased product or monies paid prior to the period for which a service is provided are accounted

for as deferred revenue on the balance sheet.

Sales tax is recorded on a

net basis and excluded from revenue.

The Company generally provides

a standard one-year warranty on its EV charging infrastructure products for materials and workmanship but may provide multiple year warranties

as negotiated, and it will pass on the warranties from its vendors, if any, which generally covers this one-year period.

The Company accrues

for product warranties when the loss is probable and can be reasonably estimated.

Cost of Revenues.

Company records direct material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision,

manufacturing equipment depreciation, rent, and utility costs, which are included in inventory prior to a sale, as cost of revenues.

Company further includes shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

Share-Based Compensation.

We measure and recognize compensation expense for all share-based payments based on estimated fair value.

Share-based compensation

expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards.

The fair value

of our restricted stock and performance stock units is based on the market price of our common stock on the date of grant.

The determination

of the amount of share-based compensation expense for our performance stock units requires the use of certain estimates and assumptions

that affect the amount of share-based compensation expense recognized in our consolidated statements of operations.

At each reported period,

we reassess the probability of the achievement of corporate performance goals to estimate the amount of shares to be released.

or decrease in share-based compensation expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative

catch-up in the period of adjustment.

If any of the assumptions or estimates used change significantly, share-based compensation expense

may differ materially from what we have recorded in the current period.

purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated

fair values at the acquisition date.

To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible

assets assumed, such excess is allocated to goodwill.

Contingent consideration liability is estimated using a Monte Carlo simulation model

to determine the probability of achieving certain milestones.

There are a number of estimated inputs required to perform the fair value

calculations including future expected revenues, expenses, capital expenditures, discount rates, market values of assets, etc.

value for contingent consideration is reviewed each quarter after the original valuation to determine if revised estimates are necessary.

It is often very difficult to obtain information to help in the estimation process, depending on the sophistication of the acquired company

or market data on this company’s products.

Valuation of Inventory

and standard cost allocations.

Inventory is stated at the lower of cost or net realizable value.

Cost is determined using the first-in,

first-out method of accounting.

Inventory costs primarily relate to purchased raw materials and components used in the manufacturing of

our products, work in process for products being manufactured, and finished goods.

Included in these costs are direct labor and certain

manufacturing overhead costs associated with normal capacity in the manufacturing process.

During 2023, the Company applied labor and

overhead based on a standard costing model that required a number of assumptions to determine an optimal labor and overhead allocation

which requires an estimate of total shipments and forecasted spending.

In addition, a review of inventory is required to estimate whether

specific reserve estimates are needed for warranty or for excess or obsolete inventory.

Changes in demand can significantly impact our

amount of excess inventory or inventory shortages.

Availability of product and unusually long lead times that were not anticipated could

impact our production.

Valuation Allowance on

Deferred Income Taxes .

The Company ensures that taxes are computed in accordance with ASC 740 and the appropriate valuation allowance

Management estimates the percentage change in pre-tax book loss/income and makes projections of future taxable loss/income

in order to perform this assessment.

We have recorded a valuation allowance to reduce our net deferred tax assets to zero, primarily

due to historical net operating losses (“NOLs”) and uncertainty of generating future taxable income.

If we determine that

it is more likely than not that we will realize a deferred tax asset that currently has a valuation allowance, we would need to reverse

the valuation allowance, reflecting an income tax benefit in our statements of operations at that time.

This type of adjustment

could result in a material adjustment to our financial statements.

Valuation of Share-Based

We currently have share-based awards that include warrants, stock options, restricted stock awards, restricted stock units

and performance stock units.

We measure and recognize compensation expense for all share-based payments based on an estimation of grant

date fair value of our share-based awards.

The fair value of stock options and the warrants are calculated using a black-scholes model

which requires input of interest rates, stock volatility, stock prices, etc.

Share-based compensation expense is then recognized based

on an allocation of the fair value on a straight-line basis over the requisite service periods of the awards.

The RSU and RSAs fair value

is based on the market price of our common stock on the date of grant.

The determination of the amount of share-based compensation expense

for our performance stock units requires the use of certain estimates and assumptions that affect the amount of share-based compensation

expense recognized in our consolidated statements of operations.

For performance RSUs, at each reported period, we reassess the probability

of the achievement of corporate performance goals to estimate the number of shares to be recorded as a liability.

Stock compensation expense

is a very large expense on our statement of operations and poor estimates could have a material effect on our financial statements.

Results of Operations

2 unchanged sentences

ended December 31, 2023, our revenues increased 206% to $67.4 million compared to $22.0 million for 2022.

Revenues to federal customers

increased by $4.5 million.

In addition, we were awarded a number of contracts from federal agencies in late September and early October

of 2022 totaling more than $46.0 million, which we intend to deliver over the next 12 months.

Some of these units shipped in the quarter

ended December 31, 2022, with the balance scheduled for delivery in 2023.

We recorded energy storage revenues of $5.2 million as a result

of our acquisition of All Cell which closed on March 4, 2022.

Our revenue to state agencies increased by $0.8 million compared to the

prior year, and we continue to have a strong concentration of revenues to the State of California and state of New York, which represent

29% and 18% of total revenues, respectively.

Revenues derived from non-government entities increased to 37% of our total revenues

in 2022 representing a partial return to pre-COVID levels, compared to 13% of our total revenues in 2021.

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.

ended December 31, 2022, our gross loss was $1.7 million, or 8% of sales, compared to $1.0 million, or 11% of sales in the prior year.

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

quarter compared to 2021, which resulted in favorable fixed overhead absorption.

In addition, our labor efficiency improved during the

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

This was partially offset by an increase of $0.8 million for non-cash

intangible amortization and an increase in material costs for steel, batteries and other components, due to the COVID-19 pandemic and

other inflationary pressures.

Shipping costs have increased globally as well as gas and transportation prices which have increased our

delivery costs.

Toward the end of the year, we started to see some reduction in gas prices and our products’ components.

our cost per unit to improve as we expect to see material costs start to decrease and as our volumes increase.

We also acquired a battery

manufacturer, All Cell in March 2022, which should significantly reduce the cost of the batteries in our units.

In addition, as we expect

the Company to grow in 2023 and beyond, we expect our fixed overhead absorption to continue to improve.

During the year ended December

31, 2023, $41.2 million, or 64% of product sales, were to Federal customers which increased by 544% over the prior year, primarily due

to several large orders received in late 2022, including a $29.4 million order through Techflow, Inc.

for the US Army (IMCOM), an $11.7

million order for the General Services Administration for the Department of Veterans Affairs, and several other orders for the Department

of Homeland Security, US Navy Facilities, US Marine Corps, and others.

State and Local governments accounted for 16% of revenues and included

a $5.3 million order from New York City to deliver EV ARCs TM throughout the city.

Revenues from our energy storage products

were $8.5 million in 2023, a 63% increase over 2022 revenues.

In addition, as a result of our acquisition of Amiga in October 2023, we

reported revenues of $3.4 million for the period from October 20, 2023 through December 31, 2023.

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.

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/(Loss).

Company reported a positive gross profit of $1.2 million for the year ended December 31, 2023, compared to a $1.7 million gross loss in

As a percentage of sales, the margin improved by nine percentage points.

The gross profit includes a non-cash negative impact of

$0.8 million for amortization of intangible assets resulting from the All Cell acquisition.

Without this non-cash expense, gross profit

for 2023 would be $2.0 million.

The gross profit benefited from the increased volume resulting in increased fixed overhead absorption,

partially offset by an increase in fixed overhead spending (including indirect headcount, service support, depreciation for capital to

increase capacity, etc.).

Direct headcount realized labor efficiencies as a result of the increased throughput, with a partial offset

due to higher temporary agency labor rates when rapid delivery of products to customers were required.

Material costs increased during

the Covid 19 pandemic but are finally showing some reduction in the second half of 2023 for certain materials and components.

Our engineering

team has implemented design changes during 2023 which reduced the bill of materials for the EV ARC TM , improving the product

margins especially in Q4 2023.

Gross profit on EV ARC™ products at the unit level increased by 197% from Q4 2022 to Q4 2023.

had a $0.1 million increase in warranty cost and a $0.1 million scrap cost which was a $0.5 million increase due to a favorable adjustment

We expect to benefit from a price increase that was introduced in 2023 and should be reflected in orders delivered in 2024.

Additionally,

we expect to get a full-year benefit from the design changes and material cost reductions that began in late 2023 which should improve

our 2024 gross profit margin.

In addition, as we expect the Company to grow in the future, we expect our fixed overhead absorption to

continue to improve.

Operating Expenses.

operating expenses were $18.0 million for the year ended December 31, 2022, compared to $5.6 million in the prior year, primarily due

to a $5.5 million change in fair value of contingent consideration related to the All Cell acquisition.

Excluding such cost, the operating

expenses for the year ended December 31, 2022 increased by $6.9 million compared to the prior year, driven by $3.4 million in expenses

attributable to the newly acquired All Cell business, $2.3 million increase in employee non-cash compensation, including a $1.6 million

increase in employee non-cash stock-based compensation, $0.6 million increase for legal and accounting services, primarily attributable

to the acquisition, and $0.5 million increase for sales and marketing costs to generate increased sales levels.

As a percentage of revenue,

operating expenses excluding the change in fair value of contingent consideration decreased by 6 percentage points.

operating expenses were $17.5 million for the year ended December 31, 2023, compared to $18.0 million in the prior year.

The 2022 operating

expenses included a $5.5 million expense to increase ithe fair value of contingent consideration related to the All Cell acquisition but

the 2023 expense was only $0.3 million resulting in a $5.3 million benefit in.

2023 operating expense increases included $1.1 million

for commissions due to the increase in revenues, $0.8 million for operating expense for Amiga for Q4 following the acquisition, $0.8 million

for salaries, benefits and related costs due to increased headcount, $0.7 million for increased consultants primarily for R&D related

to the development of the new EV Standard™ product as well as for public relations, investor relations and recruiting, $0.3 million

for audit, legal and filing fees primarily due to the acquisition, $0.2 million for increased board fees, $0.2 million of expenses related

to the ERP implementation and $0.7 million of additional increases.

Liquidity and Capital Resources

2 unchanged sentences

We have historically met our cash needs through a combination

of debt and equity financings.

Our cash requirements are generally for operating activities.

of debt and equity financings and more recently through gross profit contributions.

Our cash requirements are generally for operating

activities and acquisitions.

Our cash flows from operating,

6 unchanged sentences

31, 2023, our cash used in operating activities was $13.3 million compared to $18.1 million for the year ended December 31, 2022.

of $19.7 million for the year ended December 31, 2022 was increased by $9.1 million of non-cash expense items that included a change in

fair value of contingent consideration of $5.5 million, depreciation and amortization of $1.1 million, common stock issued for services

loss of $16.1 million for the year ended December 31, 2023 was increased by $4.3 million of non-cash expense items that included $2.7

million for Stock-based compensation, $1.9 million for depreciation and amortization and $0.2 million for change in fair value of contingent

consideration liabilities pertaining to the true-up of the 2022 earnout payment for All Cell, offset by a $0.5 million decrease in provision

on credit losses pertaining to Amiga.

Cash used in operations included a $9.5 million increase in accounts receivable due to the revenue

increase and the acquisition of Amiga, $1.2 million decrease in deferred revenue because of lower customer deposits, $0.6 million for

a decrease in operating lease liability, $0.9 million for an increase in prepaid expenses and other current assets and $0.3 million decrease

in noncurrent liabilities.

In addition, cash provided by operations included $4.8 million increase in accounts payable, $2.6 million decrease

in inventory, $1.0 million increase in accrued expenses, $0.6 million decrease in operating lease right of use asset and $0.2 million

increase in sales tax payable.

For the year ended December

31, 2022, our cash used in operating activities was $18.1 million compared to $6.4 million for the year ended December 31, 2021.

of $19.7 million for the year ended December 31, 2022, was increased by $9.1 million of non-cash expense items that included a change

in fair value of contingent consideration of $5.5 million, depreciation and amortization of $1.1 million, common stock issued for services

for director compensation of $0.4 million and employee stock-based compensation expense of $2.0 million.

4 unchanged sentences

units as well as finished EV ARC TM units awaiting final delivery at December 31, 2022.

The increases in prepayments and inventory

are not expected to continue in future quarters, but rather should remain flat or reduce to lower levels over the next 12 months.

provided by operations included a $1.3 million increase in accounts payable primarily for inventory and $0.9 million increase in accrued

Our operating activities resulted

in cash used in operations of $6.4 million for the year ended December 31, 2021.

Net loss of $6.6 million for the year ended December

31, 2021 was increased by $1.3 million of non-cash expense items that included depreciation and amortization of $0.1 million, common stock

issued for services for director compensation of $0.7 million and non-cash compensation expense related to the grant of stock options

of $0.4 million primarily due to an increase in the stock price in the year ended December 31, 2021.

Further, cash used in operations

included an increase in accounts receivable of $2.0 million due to a strong fourth quarter revenue in 2021 compared to 2020 and $0.5 million

increase in inventory due to inventory purchases to support increased sales activity.

Cash provided by operations included a decrease

in prepaid expenses and other current assets of $0.1 million, an increase in accounts payable of $0.8 million due to inventory purchases,

$0.3 million increase in accrued expenses primarily due to compensation related accruals at the end of the year and $0.1 million for an

increase in deferred revenue.

Cash used in investing activities

in the year ended December 31, 2022 included $0.8 million cash payment for working capital payment related to the acquisition of All Cell,

$0.9 million to purchase equipment and $0.1 million in patent costs.

The year ended December 31, 2021 included $0.1 million to fund patent

related costs and $0.5 million to purchase equipment, primarily for production and transportation.

In 2022, cash generated by

our financing activities included $0.5 million from the exercise of warrants, $0.5 million used to cover payroll taxes related to stock-based

compensation and $0.3 million payment of equity offering costs related to the committed equity line agreement entered into with B.

In 2021, cash generated by our financing activities included $2.9 million from the exercise of warrants, offset by $0.6 million used to

cover payroll taxes for cashless stock option exercises.

Current assets decreased to

$19.9 million at December 31, 2022 from $27.6 million at December 31, 2021, primarily due to a $20.3 million decrease in cash, offset

by a $10.6 million increase in inventory and $1.4 million increase in prepaid expenses and other current assets.

Current liabilities increased

to $13.2 million at December 31, 2022 from $3.0 million at December 31, 2021, primarily due to the recording of $6.8 million current portion

of contingent consideration, a $1.3 million increase in accounts payable for purchases of inventory to support the increased sales forecast,

$1.0 million increase in current deferred revenue and a $1.0 million increase in accrued expenses.

As a result, our working capital decreased

to $6.8 million at December 31, 2022 compared to $24.6 million at December 31, 2021.

The Company has been focused on

marketing and sales efforts to increase our revenues.

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

that this investment has been successful.

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

has improved even during an inflationary period, and as revenues increase, we expect to see our fixed overhead costs spread over more

units, which will reduce the cost per unit.

Management has made several design changes and process improvements in our manufacturing operations

in 2021 and 2022 which has helped to increase labor efficiency and reduce costs.

At the same time, supply chain issues related to the

COVID-19 virus have caused an increase in certain of our material costs, most notably in steel purchases.

However, we believe that we

will continue to improve our gross profit as our revenues grow.

Management believes that with anticipated increased production volumes,

efficiencies will continue to improve, and the fixed overhead cost per unit will decrease.

In addition, our suppliers believe that costs

that have increased over the past year should start to decrease beginning in 2023.

This should result in increasing gross profits on the

EV ARC ™ and Solar Tree® products in the future.

The Company may be required to

raise capital until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation

of production cost reduction measures.

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

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

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

Furthermore, the Company has warrants to purchase 440,204

shares of our Common Stock outstanding at December 31, 2022, which could potentially generate an additional $2.8 million of proceeds over

the next 1.3 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.

Cash provided by operations included

a $1.3 million increase in accounts payable primarily for inventory and $0.9 million increase in accrued expenses.

For the year ended December

31, 2023, cash used in investing activities included $4.7 million cash for the acquisition of Amiga, net of cash acquired, $0.9 million

for the purchase of equipment to increase the throughput in our facilities to meet the increased production levels and $0.1 million for

spending on patents.

Cash used in investing activities in the year ended December 31, 2022, included $0.8 million cash payment for working

capital payment related to the acquisition of All Cell, $0.9 million to purchase equipment and $0.1 million in patent costs.

For the year ended December

31, 2023, cash generated by our financing activities included $25.4 million proceeds from a public offering to fund our acquisition of

Amiga and for working capital, $2.1 million from the sale of stock under our committed equity facility and $0.2 million proceeds from

public warrant exercises.

In 2022, cash generated by our financing activities included $0.5 million from the exercise of warrants, $0.5

million used to cover payroll taxes related to stock-based compensation and $0.3 million payment of equity offering costs related to the

committed equity line agreement entered into with B.

Current assets increased to

$40.7 million at December 31, 2023 from $19.9 million at December 31, 2022, primarily due to an $8.7 million increase in cash and $11.5

million increase in accounts receivable.

Current liabilities increased to $16.9 million at December 31, 2023 from $13.2 million at December

31, 2022, primarily due to a $6.9 million increase in accounts payable, $2.7 million deferred consideration, current for a cash payment

owed for the Amiga acquisition and $1.0 million increase in accrued expenses, partially offset by a decrease of $6.8 million for contingent

consideration, due to payment of the 2022 earnout for All Cell in 2023.

As a result, our working capital increased to $23.8 million at

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

The Company has been focused

on marketing and sales efforts to increase our revenues and we believe those efforts have led to an increase in revenues by 144% from

2021 to 2022 and 206% from 2022 to 2023.

The Company reached a positive gross profit in 2023 and it is expected to continue to improve

in the future as a result of a price increase and a full year benefit from cost reductions from several design changes implemented in

2023, most of which occurred later in the year.

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

more units, which will reduce the cost per unit further.

The Company started to see some material cost reductions in the latter part of

2023, especially with steel and battery cells, and we expect this trend to continue.

This combined with engineering and manufacturing

improvements should result in increasing gross profit margin on the EV ARC™ in the future.

The Company may be required

to raise capital to fund its operations until it achieves positive cash flow, which is predicated on increasing sales volumes and the

continuation of production cost reduction measures.

Currently, the Company has the right to sell up to $30.0 million or two million shares

of its common stock over a period of 24 months (see note 12 for further information) to B.

Riley pursuant to a Common Stock Purchase Agreement

entered in September 2022.

Otherwise, we could pursue other equity or debt financing.

Furthermore, there are outstanding warrants to purchase

610,745 shares of our Common Stock at December 31, 2023, of which 410,745 will expire in April 2024.

The proceeds from these offerings

are expected to provide working capital to fund business operations and the development of new products.

Management cannot currently predict

when or if it will achieve positive cash flow.

On March 22, 2023, the Company

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

believe this strategic acquisition will increase and diversify our revenue, gross profitability, manufacturing capabilities, intellectual

portfolio and customer base.

The Company purchased substantially all of the assets and business of All Cell for 1,055,000 shares of Beam

Common Stock (“Closing Consideration”) (on the closing date, based on the closing price of the Beam Common Stock of $13.61,

such shares had a value of approximately $14.4 million) plus an additional $0.8 million in cash for the net working capital of primarily

inventory held by All Cell at closing.

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

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

All Cell is eligible to earn an additional

number of shares of Beam Common Stock if Beam’s new energy storage business meets certain revenue milestones (the “Earnout

Consideration”).

The Earnout Consideration is:

(i) two times the amount of energy storage products revenue and contracted backlog

that is greater than $7.5 million for 2022, and (ii) two times the amount of energy storage products 2023 revenue only which exceeds the

greater of either $13.5 million or 135% of the 2022 cumulative revenue, capped at $20.0 million.

Revenues exceeding $20.0 million in 2023

will not be eligible for the Earnout Consideration.

The maximum aggregate number of shares of Common Stock that the Company will issue

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

Management believes that evolution

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

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

applicable account receivable 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

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

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

October 20, 2023, Beam completed an acquisition of Amiga DOO Kraljevo (“Amiga”).

Amiga is a business located in Serbia

and engaged in the manufacture and distribution of steel structures with electronic integration, such as streetlights, cell towers, and

ski lift towers.

Amiga currently has engineering, product development and manufacturing capabilities which we believe are well

suited to manufacture and sell Beam’s current products into the European market.

Also, Amiga is one of Europe’s leading manufacturers

of streetlights and Beam believes it is well positioned to develop and manufacture Beam’s patented EV Standard™ for sale in

both Europe and the U.S.

This will provide a growth opportunity for Beam to sell its products in the European market through Amiga’s

extensive customer base.

Management believes

that evolution in the operations of the Company may allow it to execute its strategic plan and enable it to experience profitable growth

in the future.

This evolution is anticipated to include the following continual steps:

addition of sales personnel and independent sales channels, continued

management of overhead costs, increased overhead absorption resulting from volume growth, process improvements and vendor negotiations

leading to cost reductions, increased public awareness of the Company and its products, and the continued acceleration of average sales

cycle opportunities.

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

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

Capitalization

On April 18, 2019, the Company

closed an underwritten public offering with Maxim Group LLC (“Maxim”), as representative for the several underwriters (the

“Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters an aggregate of 2,000,000 units

with each unit consisting of one (1) share of the Company’s common stock, par value $0.001 per share (the “Common Stock”),

and a warrant to purchase one (1) share of Common Stock at an exercise price equal to $6.30 per share (the “Warrants”).

addition, the Company granted the Underwriters a 45-day option to purchase up to 300,000 additional shares of Common Stock, or Warrants,

or any combination thereof, at the public offering price to cover over-allotments, if any.

The Common Stock and the Warrants were offered

and sold to the public (the “Offering”) pursuant to the Company’s registration statement on Form S-1 (File Nos.

filed by the Company with the Securities and Exchange Commission (the “Commission”) on July 2, 2018, as amended, which became

effective on April 15, 2019, and a related registration statement filed pursuant to Rule 462 promulgated under the Securities Act of 1933,

as amended (the “Securities Act”).

The offering price to the public was $6.00 per unit and the Underwriters purchased 2,000,000

In addition, the Underwriters purchased 300,000 Warrants for $3,000 upon the exercise of the Underwriters’ over-allotment

The Company received gross proceeds of approximately $12,003,000, before deducting underwriting discounts and commissions and

estimated offering expenses.

Concurrent with the offering,

the Company effected a one-for-fifty reverse split of its issued and outstanding common stock (the “Reverse Stock Split”)

and reduced the number of authorized shares of common stock from 490,000,000 to 9,800,000.

No fractional shares were issued as a result

of the Reverse Stock Split.

Fractional shares were rounded up or down to the nearest whole share, after aggregating all fractional shares

held by a stockholder, resulting in the issuance of 187 round-up shares.

Any stockholder holding less than 24 shares of Common Stock on

a pre-reverse stock basis were paid in cash for such fractional share of Common Stock, which totaled $171.

May 15, 2019, the Company closed the Underwriters Second Over-Allotment partial exercise option to purchase 200,000 shares of Common Stock

at $5.99 per share (the "Second Over-Allotment Exercise") for additional gross proceeds of $1.198 million, prior to deducting

underwriting discounts and commissions and offering expenses payable by the Company, pursuant to and in compliance with the terms and

conditions of the previously announced April 16, 2019 Underwriting Agreement and Offering.

The Company filed a “shelf”

registration statement on Form S-3 and an accompanying prospectus with the Securities and Exchange Commission on May 26, 2020.

7, 2020, the Company closed an underwritten public offering issuing 1,393,900 shares, with a public offering price of $8.25 per share,

generating approximately $10.5 million after deducting underwriting discounts and commissions and estimated offering expenses payable

by the Company.

On November 27, 2020, the

Company closed a second underwritten public offering issuing 250,000 shares, with a public offering price of $30.00 per share, generating

approximately $6.9 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In September 2022, the Company entered into a

Common Stock Purchase Agreement with B.

Riley Principal Capital II, LLC (“B.

Riley”) under

which the Company has the right, but not the obligation, to sell up to $30.0 million shares or a maximum of 2.0 million shares of its

common stock over a period of 24 months in its sole discretion.

addition of sales personnel and independent sales

channels, reductions in direct costs due to engineering and manufacturing improvements, continued management of overhead costs, increased

overhead absorption resulting from volume growth, process improvements and vendor negotiations leading to cost reductions, increased public

awareness of the Company and its products, and the continued acceleration of average sales cycle opportunities.

Management believes that

these steps, if successful, may enable the Company to generate sufficient revenue to continue operations.

There is no assurance, however,

as to if or when the Company will be able to achieve those operating objectives.

Off-Balance Sheet Arrangements

9 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis