What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-20 compared with 2023-11-14 · 176 added, 250 removed, 183 unchanged (70% 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;

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

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.

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 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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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.

acquired Amiga DOO Kraljevo (“Amiga”), a business located in Serbia and engaged in the

manufacture and distribution of steel structures with electronic integration, including (i) infrastructure products for public

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

(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

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.

three months of 2024 were $14.6 million, a 12% increase over $13.0 million for the same quarter in 2023, primarily derived from delivery

of EV ARC™ systems to federal, state and local governments.

We have invested in sales and marketing resources over the past three

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

For the period, we reported revenues of $1.4 million

as a result of our acquisition of Amiga in October 2023.

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

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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.

Administration (GSA) awarded Beam Global a federal blanket purchase agreement in April 2022 which provides federal agencies a streamlined

procurement process for procuring EV ARC™ systems.

In the three months ended March 31, 2024, we recorded revenues of $12.2 million

for federal customers, compared to $11.2 million for the same period in 2023.

We expect to see uneven orders from quarter to quarter,

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

We expect the electric vehicle

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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 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.

acquisition of All Cell, we believe Beam’s gross margin will continue to improve as a result of our storage technology solutions

engineered by our team of engineers and scientists in Illinois.

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 acquired Amiga, 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.

An increase 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.

Amiga is already producing components for EV

ARC™ systems in our factory in Kraljevo at the time of this filing.

Our energy security business

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

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.

Amiga 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 for sale.

Our gross profit improved

as a percentage of sales reporting a positive 10.2% gross margin in Q1 2024, up 10.1% from the gross profit reported in Q1 2023.

Additionally,

our cost of goods sold included non-cash intellectual property amortization of $0.2 million for the first three months of both 2024 and

2023, related to the acquisition of All Cell in 2022.

Excluding this non-cash expense results in a gross profit of 11.4% for the three

months ended March 31, 2024.

We implemented engineering design changes to our EV ARC TM in Q4 2023 that resulted in cost reductions

to our bill of materials.

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.

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

implementing lean manufacturing process improvements and making engineering changes to our product where we expect to benefit from cost

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

This is consistent

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

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

We continue to identify components and sub-assemblies that may be more cost

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

from our factory.

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

not anticipate significant pricing pressure on our products.

The combination of this increase in demand for electric vehicle charging

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

gross margins over the next year.

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

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 we believe may further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory.

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

over quarter.

We expect that in the long-term, our revenues will continue to grow as 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 continue to see improvement in our gross margins during the year.

Amiga has capabilities to perform several

activities which we outsource in the US.

We believe 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 the US.

Critical Accounting Policies and Estimates

The Company’s significant

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Changes in Accounting Principles .

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

There were no significant changes in accounting principles that were adopted during the three months ended March 31, 2024.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended September 30, 2023 and 2022

Three Months Ended March 31, 2024 and 2023

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 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

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

Our gross profits were negatively

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

We began to see some improvements 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 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 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

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.

We recorded energy storage revenues of $6.0 million as a result of our acquisition of All Cell in

We continue to invest in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our

products, which is reflected in the strong year over year sales growth in the quarter.

The receipt of orders may continue to be uneven

due to the timing of customer approvals or budget cycles, however we believe that as EV adoption increases in concert with increased availability

of infrastructure funding, our business will be less impacted by specific variations in order timing.

ended March 31, 2024, our revenues increased 12% to $14.6 million compared to $13.0 million for the same period in 2023.

Revenues to federal

customers increased by $1.0 million in Q1 2024 compared to the quarter ended March 31, 2023.

We also recorded revenues of $1.4 million

as a result of our acquisition of Amiga in 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 in the quarter.

receipt of orders may continue to be uneven due to the timing of customer approvals or budget cycles, however we believe that as EV adoption

increases in concert with increased availability of infrastructure funding, our business will be less impacted by specific variations

in order timing.

Gross Profit.

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.

quarter ended March 31, 2024, our gross profit was $1.5 million, or 10.2% of sales, compared to a gross profit of .04% of sales for the

same period in 2023.

As a percentage of sales, the margin improved by 10.1%, primarily because of cost reductions implemented in late

2023 as a result of design changes to the EV ARC TM as well as an increase in production levels in the current quarter compared

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

Our gross profits included $0.2 million for non-cash intangible

amortization.

We began to see some improvements in the reduction of material costs in late 2023, which we believe should continue to improve.

In addition, as our revenues continue to increase in 2024 and beyond, we expect our fixed overhead absorption to continue to improve.

Our engineering and operations teams continue to identify further cost reductions and efficiencies which we believe will improve our gross

margins in future quarters.

Operating 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.

operating expenses were $4.5 million, or 31% of revenues, for the quarter ended March 31, 2024, compared to $3.8 million, or 30% of revenues,

for the same quarter in the prior year.

The $0.7 million increase is mostly attributable to a $0.4 million increase in consultant costs

related to the integration of our new ERP Accounting software, Sales and Marketing, Government Relations and engineering design support,

$0.3 million for operating expenses pertaining to our new Amiga operations, partially offset by $0.1 million reduction for favorable change

in the present value factor of our contingent consideration related to the earnout for the Amiga acquisition.

Liquidity and Capital Resources

At September 30, 2023, we

had cash of $14.8 million, compared to cash of $1.7 million at December 31, 2022.

At March 31, 2024, we had

cash of $5.0 million, compared to cash of $10.4 million at December 31, 2023.

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,

Our cash flows from operating,

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

Cash provided by (used in):

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Net cash used in investing activities

Net cash (used in) provided by financing activities

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.

Net cash provided by financing activities

For the three months ended

March 31, 2024, our cash used in operating activities was $3.0 million compared to $0.6 million for the three months ended March 31, 2023.

Net loss of $3.0 million for the three months ended March 31, 2024 was adjusted by $1.1 million of non-cash expense items that included

depreciation and amortization of $0.9 million, employee stock-based compensation expense of $0.6 million, offset by decreases of $0.3

million provision on credit losses and $0.1 million for a change in fair value of contingent consideration liabilities.

Further, cash

used in operations included a $3.9 million increase in accounts receivable due to the increase in revenues and the timing of customer

Cash generated from operations included a $1.0 million increase in accounts payable primarily for inventory, $1.1 million increase

in accrued expenses, $0.4 million decrease in inventory, $0.3 million increase in deferred revenue and $0.2 million decrease in prepaid

expenses and other current assets.

the three months ended March 31, 2023, our cash used in operating activities was $0.6 million.

Net loss of $4.1 million for the three

months ended March 31, 2023 was increased by $0.9 million of non-cash expense items that included depreciation and amortization of $0.3

million, common stock issued for services for director compensation of $0.1 million and employee stock-based compensation expense of $0.5

Further, cash used in operations included a $2.4 million increase in accounts receivable due to the increase in revenues in the

quarter, $0.3 million decrease in deferred revenue, and a $0.2 million increase in inventory.

Cash used in operations included a $4.2

million increase in accounts payable primarily for inventory, $0.9 million increase in accrued expenses and a $0.4 million decrease in

prepaid expenses and other current assets.

Cash used in investing activities

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 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.

in the three months ended March 31, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition

and $0.1 million for the purchase of equipment compared to $0.3 million purchased in the same period in the prior year.

For the three months ended

March 31, 2024, cash generated by our financing activities included $0.3 million for the exercise of warrants compared to $0.2 million

in proceeds from the public offering issuance of common stock, net of offering expenses, and $0.1 million from the exercise of warrants

for the same period in the prior year.

Current assets were $38.8

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.

million on March 31, 2024, a decrease from $40.7 million at December 31, 2023, primarily due to decreases of $5.4 million in cash, $0.5

million in inventory, $0.2 million in prepaid expenses and other current assets offset by an increase of $4.2 million in accounts receivable.

Current liabilities increased to $21.0 million at March 31, 2024 from $16.9 million at December 31, 2023, primarily due to a $1.0 million

increase accounts payable and $1.1 million increase in accrued expenses.

As a result, our working capital decreased to $17.8 million at

March 31, 2024 compared to $23.8 million at December 31, 2023.

The Company has been focused

on marketing and sales efforts to increase our revenues.

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

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.

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

and 206% from 2022 to 2023 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 which has helped to increase labor efficiency and reduce material costs.

the Company increased pricing in Q3 of 2023 for the first time to cover some of the inflationary cost increases, which we should benefit

from as new orders are received and are shipped in future quarters.

On March 22, 2023, the Company

30 unchanged sentences

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 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.

which the Company has the right to sell up to the lesser of either two million shares or $30 million of our common stock over a period

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

The rest of which could

potentially generate an additional $3.4 million of proceeds over the next 4.0 years, depending on 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, 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.

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

in significant dilution to our stockholders.

Off-Balance Sheet Arrangements

2 unchanged sentences

condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors.

Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

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