What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-20 · 312 added, 270 removed, 362 unchanged (62% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

(In thousands, except share and

per share data)

thousands, except share and per share data)

Current assets

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Stockholders' equity

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of March 31, 2024 and December 31, 2023.

Common stock, $ 0.001 par value, 350,000,000 shares authorized, 14,438,270 and 14,398,243 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of June 30, 2024 and December 31, 2023.

Common stock, $ 0.001 par value, 350,000,000 shares authorized, 14,608,342 and 14,398,243 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.

Additional paid-in-capital

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Three Months Ended

Six Months Ended

Cost of revenues

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Balance at March 31, 2023

Stock issued for director services - vested

Stock issued to (released from) escrow account - unvested

Settlement of earnout related to acquisition

Employee stock-based compensation expense

Proceeds from issuance of common stock, pursuant to public offering

Warrants exercised for cash

Sale of stock under Committed Equity Facility

Balance at June 30, 2023

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders'

Balance at December 31, 2023

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Stock issued to (released from) escrow account - unvested

Stock-based compensation to consultants

Employee stock-based compensation expense

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Balance at March 31, 2024

Stock issued for director services - vested

Stock issued to (released from) escrow account - unvested

Employee stock-based compensation expense

Warrants exercised for cash

Impact of foreign currency translation

Sale of stock under Committed Equity Facility

Balance at June 30, 2024

$ ( 101,314 )

The accompanying unaudited notes are an integral

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(Unaudited, in thousands)

Three Months Ended

Six Months Ended

Operating Activities:

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Disposal of property and equipment

Amortization of operating lease right of use asset

Abandoned patent costs

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Prepaid expenses and other current assets

Operating lease right of use asset

Increase (decrease) in:

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Borrowings of note payable

Net cash used in financing activities

Proceeds from issuance of common stock, pursuant to public offering

Net cash provided by financing activities

Effect of exchange rate changes

Net decrease in cash

Net (decrease) increase in cash

Cash at beginning of period

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Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Fair value of common stock issued as consideration for business combination

Purchase of property and equipment by incurring debt

Purchase of property and equipment by incurring current liabilities

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Nature of Operations

Beam is a clean technology

innovator based in San Diego, California;

Broadview, Illinois and Kraljevo, Serbia.

We develop, design, engineer, manufacture and sell

high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, outdoor media and branding,

and energy security and disaster preparedness as well as safe and compact, highly energy-dense battery solutions.

Beam’s products

enable vital and highly valuable energy production in locations where it is either too expensive or too impactful to connect to the utility

grid, or where the requirements for electrical power are so important that grid failures, like blackouts, are intolerable.

energy storage products provide high energy density in a safe, compact and bespoke form-factors ideal for the rapidly increasing numbers

of mobile and stationary equipment and products which require electrical energy without being connected to the electrical grid.

Beam is a sustainable technology

innovation company based in San Diego, California;

Broadview, Illinois;

Belgrade and Kraljevo, Serbia.

We develop, design, engineer, manufacture

and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, energy security and

disaster preparedness.

We also manufacture highly energy-dense battery solutions in safe, compact and unique form-factors.

Additionally,

we manufacture street lighting, communications and energy infrastructure products.

Beam’s products enable vital and highly valuable

energy production in locations where it is either too expensive or too impactful to connect to the utility grid, or where the requirements

for electrical power are so important that grid failures, like blackouts, are intolerable.

Beam’s energy storage products provide

high energy density in a safe, compact and bespoke form-factors ideal for the rapidly increasing numbers of mobile and stationary equipment

and products which require electrical energy without being connected to the electrical grid.

Beam’s products and

proprietary technology solutions target four markets that are experiencing significant growth with annual global spending in the billions

proprietary technology solutions target markets that are experiencing significant growth with annual global spending in the billions of

electric vehicle (EV) charging infrastructure;

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energy security and disaster preparedness;

outdoor media advertising.

transportation infrastructure products.

Basis of Presentation

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In management’s opinion, all adjustments (consisting of normal recurring

adjustments and reclassifications) necessary to present fairly our results of operations and cash flows for the three months ending March

31, 2024 and 2023, and our financial position as of March 31, 2024, have been made.

The results of operations for such interim periods

are not necessarily indicative of the operating results to be expected for the full year.

adjustments and reclassifications) necessary to present fairly our results of operations and cash flows for the three months and six months

ending June 30, 2024 and 2023, and our financial position as of June 30, 2024, have been made.

The results of operations for such interim

periods are not necessarily indicative of the operating results to be expected for the full year.

Certain information and disclosures

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

Actual results could

differ from those estimates.

Significant estimates in the accompanying financial statements include the allowance for credit losses (CECL),

valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of contingent consideration

liability, valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related

right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Actual results could differ

from those estimates.

Significant estimates in the accompanying financial statements include the allowance for certain expected credit

losses (CECL), valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of contingent

consideration liability, valuation of intangible assets, estimates of loss contingencies, estimates of the valuation of lease liabilities

and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Recent Accounting Pronouncements

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ASU 2023-09 requires disaggregated information about a company’s effective tax rate reconciliation and information on income taxes

This standard is effective for Beam beginning with our annual financial statements for the fiscal year ending December 31, 2025.

This standard will be effective for Beam beginning with our annual financial statements for the fiscal year ending December 31,

Early adoption is permitted.

The Company is currently evaluating the impact that the updated standard will have on our consolidated financial

The Company is currently evaluating the impact that the updated standard will have on our consolidated

financial statements.

Concentrations

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The Company has not experienced any losses

in such accounts from inception through March 31, 2024.

As of March 31, 2024, approximately $ 4.8 million of the Company’s cash deposits

in such accounts from inception through June 30, 2024.

As of June 30, 2024, approximately $ 8.1 million of the Company’s cash deposits

were greater than the federally insured limits.

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We are not aware of any material credit risks associated with our customers.

84 % of our first

69 % of our second

quarter revenues were derived from pre-funded federal, state and local government programs, and the remaining 31 % were derived from commercial

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such customers.

For the three months ended March 31, 2024, two customers accounted for 30 % and 18 % of total revenues, with no other single

customer accounting for more than 10 % of total revenues.

At March 31, 2024, accounts receivable from three customers accounted for 22 %,

18 % and 14 % of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.

At December 31, 2023, accounts receivable from four customers accounted for 11 %, 10 %, 10 % and 10 % of total accounts receivable each with

no other single customer accounting for more than 10% of the accounts receivable balance.

For the three months ended March 31, 2024 and

2023, the Company’s sales to federal, state and local governments represented 84 % and 86 % of revenues, respectively.

For the three months ended June 30, 2024, three customers accounted for 21 %, 11 % and 10 % of total revenues and for the

six months ended June 30, 2024, one customer accounted for 25 % of total revenues, with no other single customer accounting for more than

10 % of total revenues.

At June 30, 2024, accounts receivable from three customers accounted for 22 %, 13 % and 10 % of total accounts receivable

with no other single customer accounting for more than 10% of the accounts receivable balance.

At December 31, 2023, accounts receivable

from four customers accounted for 11 %, 10 %, 10 % and 10 % of total accounts receivable each with no other single customer accounting for

more than 10% of the accounts receivable balance.

For the three months ended June 30, 2024 and 2023, the Company’s sales to federal,

state and local governments represented 69 % and 86 % of revenues, respectively.

Fair Value Measurement

The Company follows the authoritative guidance that

establishes a formal framework for measuring fair values of assets and liabilities in the consolidated financial statements that are already

required by generally accepted accounting principles to be measured at fair value.

The guidance defines fair value as the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

date (exit price).

The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from

the perspective of the market participant that holds the asset or owes the liability.

The Company utilizes market data or assumptions that

market participants who are independent, knowledgeable, and willing and able to transact would use in pricing the asset or liability,

including assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable,

market corroborated or generally unobservable.

The Company attempts to utilize valuation techniques that maximize the use of observable

inputs and minimize the use of unobservable inputs.

The Company is able to classify fair value balances

based on the observability of those inputs.

The guidance establishes a formal fair value hierarchy based on the inputs used to measure

The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to level 3 measurements, and accordingly,

Level 1 measurement should be used whenever possible.

The hierarchy is broken down into three levels based

on the reliability of inputs as follows:

Level 1 – Quoted prices in active markets for

identical assets or liabilities or published net asset value for alternative investments with characteristics similar to a mutual fund.

Level 2 – Inputs other than quoted prices included

within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for the asset or

The methods used may produce a fair value

calculation that may not be indicative of net realizable value or reflective of future fair values.

The Company follows the authoritative

guidance that establishes a formal framework for measuring fair values of assets and liabilities in the consolidated financial statements

that are already required by generally accepted accounting principles to be measured at fair value.

The guidance defines fair value as

the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date (exit price).

The transaction is based on a hypothetical transaction in the principal or most advantageous market

considered from the perspective of the market participant that holds the asset or owes the liability.

The Company utilizes market

data or assumptions that market participants who are independent, knowledgeable, and willing and able to transact would use in pricing

the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

can be readily observable, market corroborated or generally unobservable.

The Company attempts to utilize valuation techniques that maximize

the use of observable inputs and minimize the use of unobservable inputs.

The Company is able to classify

fair value balances based on the observability of those inputs.

The guidance establishes a formal fair value hierarchy based on the inputs

used to measure fair value.

The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to level 3 measurements,

and accordingly, Level 1 measurement should be used whenever possible.

The hierarchy is broken down

into three levels based on the reliability of inputs as follows:

Level 1 – Quoted prices

in active markets for identical assets or liabilities or published net asset value for alternative investments with characteristics similar

to a mutual fund.

Level 2 – Inputs other

than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for the asset

or liability.

The methods used may produce

a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

Furthermore, while management

believes its valuation methods are appropriate, the fair value of certain financial instruments could result in a difference fair

value measurement at the reporting date.

There were no changes in the Company’s valuation methodologies from the prior

For purpose of this disclosure, the carrying amounts

for financial assets and liabilities such as cash and cash equivalents, accounts receivable – trade, other prepaid expenses and

current assets, accounts payable and other current liabilities, all approximate fair value due to their short-term nature as of March

The Company had Level 3 liabilities as of March 31, 2024.

There were no transfers between levels during the reporting period.

Fair value of contingent consideration

believes its valuation methods are appropriate, the fair value of certain financial instruments could result in a difference fair value

measurement at the reporting date.

There were no changes in the Company’s valuation methodologies from the prior year.

For purpose of this disclosure,

the carrying amounts for financial assets and liabilities such as cash and cash equivalents, accounts receivable – trade, other

prepaid expenses and current assets, accounts payable and other current liabilities, all approximate fair value due to their short-term

nature as of June 30, 2024.

The Company had Level 3 liabilities as of June 30, 2024.

There were no transfers between levels during the

reporting period.

Schedule of contingent consideration

Contingent Consideration as of December 31, 2023

Change in fair value

Contingent Consideration as of March 31, 2024

Contingent Consideration as of June 30, 2024

Significant Accounting Policies

During the three months ended

March 31, 2024, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the year

During the six months ended

June 30, 2024, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the year

ended December 31, 2023.

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Options to purchase 594,558

shares of common stock and warrants to purchase 570,718 shares of common stock were outstanding at March 31, 2024.

shares of common stock and warrants to purchase 200,000

shares of common stock were outstanding at June 30, 2024.

Options to purchase 354,498

346,758 common shares and warrants to purchase 624,306 shares of common stock were outstanding at March 31, 2023.

These options and warrants

were not included in the computation of diluted loss per share for the three months ended March 31, 2024 and 2023 because the effects

would have been anti-dilutive.

common shares and warrants to purchase 620,105

shares of common stock were outstanding at June 30, 2023.

These options and warrants were not included in the computation of diluted

loss per share for the three months and six months ended June 30, 2024 and 2023 because the effects would have been anti-dilutive.

These options and warrants may dilute future earnings per share.

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The Company had net losses

of $ 3 .0 million

(which includes $ 1.1 million of non-cash

expenses) and $ 3.8

million (which includes $ 0.9 million

of non-cash expenses) and net cash used in operating activities of $ 3 .0 million and $ 0.6 million for the three months ended March 31,

2024 and 2023, respectively.

At March 31, 2024, the Company had a cash balance of $ 5 .0

million and working capital of $ 17.8 million.

on the Company’s current operating plan and the available working capital that can be converted to cash, particularly the accounts

receivable balance of approximately $ 20.1 million

the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve months from

the date of this report.

of $ 8 .0 million (which includes $ 4.2 million of non-cash expenses) and $ 7.4 million (which includes $ 2.1 million of non-cash expenses)

and net cash used in operating activities of $ 0.1 million and $ 5.1 million for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, the Company had a cash balance of $ 8.7 million and working capital of $ 16 .0 million.

Based on the Company’s current

operating plan and the available working capital that can be converted to cash (specifically the accounts receivable balance of approximately

$ 12.7 million), the Company believes that it has the ability to fund its operations and meet contractual obligations for at least twelve

months from the date of this report.

In 2022, the Company entered

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than 2.0 million shares of its common stock over a period of 24 months in its sole discretion (see note 11 for further information).

Company has issued 199,469 shares for $ 2.5 million since 2022 under this agreement.

There is $ 27.5 million worth of shares of common stock

remaining under this facility available to sell through Q4 2024.

The Company’s outstanding

warrants generated $ 0.3 million and $ 0.1 million of proceeds during each of the three months ended March 31, 2024 and 2023, respectively.

Warrants to purchase 370,718 shares of common stock which were issued in our 2019 public offering expired on April 18, 2024.

the warrants issued in our 2019 public offering which recently expired, the Company has a warrant outstanding to purchase up to 200,000

shares of our common stock at an exercise price equal to $ 17.00 per share that expires in March 2028 that could potentially generate an

additional $3.4 million of proceeds, conditioned upon the market price of our common stock and the warrant holder’s ability and

decision to exercise them.

Company has issued 281,157 shares for approximately $ 3 .0 million since 2022 under this agreement.

Subject to the terms and conditions

of the purchase agreement, the Company may sell up to either (i) an additional 1,718,843 shares of common stock or (ii) $ 27 .0 million

worth of shares of common stock under this facility.

The facility terminates on October 1, 2024.

The Company’s

outstanding warrants generated $ 0.8

million and $ 0.1

million of proceeds during each of the six months ended June 30, 2024 and 2023, respectively.

The remaining warrants to purchase

282,334 shares of common stock which were issued as part of our 2019 public offering expired on April 18, 2024.

has a warrant outstanding to purchase up to 200,000

shares of our common stock at an exercise price equal to $ 17.00

per share that expires in March 2028 and that could generate up to an additional $3.4 million of proceeds, conditioned upon the

market price of our common stock and the warrant holder’s ability and decision to exercise them.

In March 2023, the Company

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Subject to the terms of the agreement, OCI Group will make available to the Company funding based on amounts owed to the Company by its

The Company believes that

it will become profitable in the next few years as our revenues continue to grow, we improve our gross margins and we leverage our overhead

costs, but we expect to continue to incur losses for a period of time.

If necessary, the Company may raise additional capital to finance

its future operations through equity or debt financings.

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.

To date, the Company has not borrowed against this line of credit.

Although the Company believes

that it will become profitable in the next few years as our revenues continue to grow, we improve our gross margins and we leverage our

overhead costs, we expect to continue to incur losses for a period of time.

If necessary, the Company may raise additional capital to

finance its future operations through equity or debt financings.

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.

obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.

BUSINESS COMBINATION

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With respect to the cash portion of the purchase price, the Company paid to the Sellers 4.6 million euros ($ 4.9 million) at closing

and an additional 2.5 million euros ($ 2.7 million) was deferred on December 31, 2023, and paid on January 2, 2024.

With respect to the

equity portion of the purchase price, the Company issued to the Sellers 293,675 shares of our common stock upon closing and an additional

158,132 shares before December 31, 2023.

The Sellers are eligible to earn

additional shares of the Company’s common stock if Amiga meets certain revenue milestones for the years ended December 31, 2024

and 2025 (the “Earnout Consideration”).

The Earnout Consideration that Sellers are eligible to receive is equal to two times

the amount of revenue of Amiga (“Amiga Net Revenue”) that is greater than specific revenue targets for each of the years ended

December 31, 2024 and 2025.

The Earnout Consideration will be paid in the Company’s stock for each annual target period and will

be calculated based on the volume weighted average price of Beam’s common stock for the thirty trading days prior to the end of

the applicable measurement period.

In no event and under no circumstances will the Company issue to the Sellers an amount of the Company’s

common stock that exceeds 19.99% of the total outstanding common stock of the Company immediately prior to the closing.

An estimate of

the fair value of the contingent consideration has been recorded in the opening balance sheet.

Additionally , if within five years

of the closing date of the acquisition Amiga receives a final award in specific legal proceedings in excess of EUR 3.8 million, the amount

exceeding EUR 3.8 million is payable to the Sellers.

This is not currently considered probable and therefore no accrual has been established.

O n February 16, 2024, the Company and the Sellers entered into an amendment to the Purchase Agreement

to remove the requirement that the Sellers shall be providing services to Amiga as a condition to receive the Earnout Consideration.

the three months ended March 31, 2024, the Company recorded $ 0.1 million of income related to the fair value adjustment of the liability

for Earnout Consideration.

and an additional 2.5 million euros ($ 2.7 million) was paid on January 2, 2024.

With respect to the equity portion of the purchase price,

the Company issued to the Sellers an aggregate of 451,807 shares of our common stock.

Sellers are eligible to earn additional shares of the Company’s common stock if Amiga meets certain revenue milestones for the years

ended December 31, 2024 and 2025 (the “Earnout Consideration”).

The Earnout Consideration that Sellers are eligible to receive

is equal to two times the amount of revenue of Amiga (“Amiga Net Revenue”) that is greater than specific revenue targets for

each of the years ended December 31, 2024 and 2025.

The Earnout Consideration will be paid in the Company’s stock for each annual

target period and will be calculated based on the volume weighted average price of Beam’s common stock for the thirty trading days

prior to the end of the applicable measurement period.

In no event and under no circumstances will the Company issue to the Sellers an

amount of the Company’s common stock that exceeds 19.99% of the total outstanding common stock of the Company immediately prior

to the closing.

An estimate of the fair value of the contingent consideration has been recorded in the opening balance sheet.

February 16, 2024, the Company and the Sellers entered into an amendment to the Purchase Agreement to remove the requirement that the

Sellers shall be providing services to Amiga as a condition to receive the Earnout Consideration.

During the six months ended June

30, 2024, the Company recorded $ 1.5 million of loss related to the fair value adjustment of the liability for Earnout Consideration.

located in Serbia, is engaged in the manufacture and distribution of steel structures with integrated electronics, such as streetlights,

cell towers, and ski lift towers.

We expect the acquisition of Amiga to assist in introducing our products to Europe, increasing

and diversifying our revenues, enhancing our manufacturing and engineering capabilities, accelerating the development of EV Standard™

and other products both in Europe and the US, adding new customer segments in both Europe and the US, increasing barriers to entry for

future competition, and advancing Beam’s position as a leader in the green economy.

The acquisition of Amiga is assisting in introducing our products to Europe, increasing and diversifying

our revenues, enhancing our manufacturing and engineering capabilities, accelerating the development of BeamSpot™ (formerly named

EV Standard™) and other products both in Europe and the US, adding new customer segments in both Europe and the US, and we believe,

increasing barriers to entry for future competition, and advancing Beam’s position as a leader in the green economy.

The acquisition was accounted

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the premium the Company paid over net fair value of tangible and intangible assets acquired.

On November 7, 2023, Amiga changed

its name to Beam Europe LLC.

On November 7, 2023, Amiga

changed its name to Beam Europe LLC.

Pro Forma Financial Information

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information summarizes the combined results of operations of Beam Global and Amiga as if the companies had been combined as of the beginning

of the three months ended March 31, 2023 (in thousands):

Schedule of pro forma financial information

of the six months ended June 30, 2023 (in thousands):

Schedule of pro forma financial

The pro forma financial information

is presented for information purposes only and is not indicative of the results of operations that would have been achieved had the acquisition

been completed at the beginning of the three months ended March 31, 2023.

In addition, the unaudited pro forma financial information is

not a projection of future results of operations of the combined company, nor does it reflect the expected realization of any synergies

or cost savings associated with the acquisition.

been completed at the beginning of the six months ended June 30, 2023.

In addition, the unaudited pro forma financial information is not

a projection of future results of operations of the combined company, nor does it reflect the expected realization of any synergies or

cost savings associated with the acquisition.

The unaudited pro forma financial information includes adjustments to reflect the incremental

amortization expense of the identifiable intangible assets and transaction costs.

The statement of operations, in the table above,

for the three months ended March 31, 2023 includes revenues of $ 1.4 million and loss from operations of $ 0.5 million from the acquired

Amiga business.

The statement of operations,

in the table above, for the six months ended June 30, 2023 includes revenues of $ 4.5 million and loss from operations of $ 0.7 million

from the acquired Amiga business.

Inventory consists of the following (in thousands):

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Property and Equipment, net

Depreciation expense

during the three months ended March 31, 2024 and March 31, 2023 was $ 0.7

million and $ 0.1

million, respectively.

Depreciation expense during

the three months and six months ended June 30, 2024 and June 30, 2023 was $ 0.7 million, $ 1.4 million, $ 0.1 million and $ 0.2 million, respectively.

INTANGIBLE ASSETS

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Intangible assets

March 31, 2024

June 30, 2024

Gross Carrying Amount

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Intangible assets

Amortization expense

during the three months ended March 31, 2024 and March 31, 2023 was $ 0.2

million and $ 0.3

million, respectively.

Amortization expense during

the three and six months ended June 30, 2024 and June 30, 2023 was $ 0.2 million, $ 0.5 million, $ 0.2 million and $ 0.6 million, respectively.

ACCRUED EXPENSES

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are summarized as follows (in thousands):

Schedule of accrued expenses

Schedule of major components of accrued expenses

Accrued Expenses:

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Accrued warranty

Customer prepayments

Other accrued expense

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Total long-term liabilities

Acquired long-term liability of $ 3.8 million consists

of a restructuring debt settlement from the acquisition of Amiga.

The debt restructuring was entered into in 2021 for a nine year term

with six years and nine months remaining at March 31, 2024.

Payments are due quarterly as a percent of the remaining balance due.

Acquired long-term

liability of $ 3.7 million

consists of a restructuring debt settlement from the acquisition of Amiga.

The debt restructuring was entered into in 2021 for a

nine-year term with six years and six months remaining at June 30, 2024.

Payments are due quarterly as a percent of the remaining

balance due and carry no interest.

In May 2023, the Company

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The loan has a term of 60 months, requires monthly payments

of approximately $ 4

thousand, and bears interest at a rate of 7.55

percent per year.

Payment on the loan began in July 2023, and the loan has a short-term balance of $ 40

of approximately $ 4 thousand, and bears interest at a rate of 7.55 % per year.

Payment on the loan began in July 2023, and the loan has

a short-term balance of $ 40 thousand.

In March 2024, the Company purchased a forklift and financed the purchase through an auto loan.

The loan has a term of 60

months, requires monthly payments of approximately $ 661 ,

and bears interest at a rate of 6.54

percent per year.

Payment on the loan began in February 2024, and the loan has a short-term balance of $ 6

The loan has a term of 60 months, requires monthly payments of approximately $ 661 , and bears interest at a rate of 6.54 % per year.

on the loan began in February 2024, and the loan has a short-term balance of $ 6 thousand.

In April 2024, a second forklift was purchased

and financed through an auto loan.

The loan has a term of 60 months, requires monthly payments of approximately $ 1,661 , and bears interest

at a rate of 7.89 % per year.

Payment on the loan began in April 2024, and the loan has a short-term balance of $ 14 thousand.

COMMITMENTS AND CONTINGENCIES

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be involved in litigation relating to claims arising out of our operations in the normal course of business.

As of March 31, 2024, there

were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

As of June 30, 2024, after

consulting with legal counsel, management believes there were no pending or threatened lawsuits that could reasonably be expected to have

a material effect on the results of our operations.

Other Commitments:

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There was no Federal income

tax expense for the three months ended March 31, 2024 or 2023 due to the Company’s net losses.

Income tax expense represents the

minimum state taxes due.

As a result of the Company’s history of incurring operating losses, a full valuation allowance has been

established to offset all deferred tax assets as of March 31, 2024 and no benefit has been provided for the quarter-to-date loss.

quarterly basis, the company evaluates the positive and negative evidence to assess whether the more likely than not criteria have been

satisfied in determining whether there will be further adjustments to the valuation allowance.

tax expense for the six months ended June 30, 2024 or 2023 due to the Company’s net losses.

Income tax expense represents the minimum

state taxes due.

As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established

to offset all deferred tax assets as of June 30, 2024 and no benefit has been provided for the quarter-to-date loss.

On a quarterly basis,

the Company evaluates the positive and negative evidence to assess whether the more likely than not criteria have been satisfied in determining

whether there will be further adjustments to the valuation allowance.

STOCKHOLDERS’ EQUITY

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September 2, 2022, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B.

Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B.

Riley up to $30.0 million, but

in any event, a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price of the

Company’s common stock, as calculated in accordance with the Purchase Agreement, over a period of 24 months subject to certain

limitations and conditions contained in the Purchase Agreement.

Sales and timing of any sales are solely at the election of the

Company, and the Company is under no obligation to sell any common stock to B.

to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B.

Riley up to $30.0 million, but in any event,

a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price of the Company’s

common stock, as calculated in accordance with the Purchase Agreement, over a period of 24 months subject to certain limitations and conditions

contained in the Purchase Agreement.

Sales and timing of any sales are solely at the election of the Company, and the Company is under

no obligation to sell any common stock to B.

Riley under the Purchase Agreement.

As consideration

Riley’s commitment to purchase shares of the Company’s common stock the Company issued B.

shares of its common stock in both September 2022 and April 2023.

As consideration for B.

Riley’s commitment to purchase

shares of the Company’s common stock the Company issued B.

Riley 10,484 shares of its common stock in both September 2022 and April

The facility terminates on October 1, 2024.

Company incurred an aggregate cost of approximately $0.5 million in connection with the Purchase Agreement, including the fair value of

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Company has issued 281,157 shares under the Purchase Agreement for $ 3 .0 million in proceeds, of which $ 0.5 million was offset by the offering

costs as of March 31, 2024.

costs as of June 30, 2024.

Stock Options

Option activity for the three months ended March

Option activity for the six months ended June 30,

2024 is as follows:

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Outstanding at December 31, 2023

Outstanding at March 31, 2024

Outstanding at June 30, 2024

The fair value of each option

is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions in the table below and we assumed

there would not be dividends paid during the life of the options granted during the three months ended March 31, 2024 and 2023:

there would not be dividends paid during the life of the options granted during the six months ended June 30, 2024 and 2023:

Schedule of assumptions for options granted

Three months ended March 31,

Six months ended

June 30, 2024

Expected volatility

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Expected term

6.5 - 7 Years

Risk-free interest rate

2 unchanged sentences

The Company’s stock

option compensation expense was $ 0.2 million for the three months ended March 31, 2024, and $ 0.1 million for the three months ended March

There was $ 1.6 million of total unrecognized compensation costs related to outstanding stock options at March 31, 2024 which

will be recognized over 3.0 years.

Total intrinsic value of options outstanding and options exercisable were $ 0.4 million and $ 0.2 million,

respectively, as of March 31, 2024.

The number of shares of common stock underlying stock options vested and unvested as of March 31,

2024 were 351,788 and 240,870 , respectively.

option compensation expense was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2024, and $ 0.1 million and $ 0.2

million for the three and six months ended June 30, 2023.

There was $ 1.3 million of total unrecognized compensation costs related to outstanding

stock options at June 30, 2024 which will be recognized over 3.5 years.

Total intrinsic value of options outstanding and options exercisable

was $ 4 thousand and $ 0.2 million, respectively, as of June 30, 2024.

The number of shares of common stock underlying stock options vested

and unvested as of June 30, 2024 were 370,408 and 224,150 , respectively.

Restricted Stock Units

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based on the achievement of specific performance metrics during the three-years ending December 31, 2024.

There was no activity during

the three months ended March 31, 2024.

142,500 PSUs and 71,250 RSUs remain outstanding as of March 31, 2024, with weighted-average grant-date

fair values of $ 13.05 each.

142,500 PSUs and 35,625 RSUs

remain outstanding as of June 30, 2024, with weighted-average grant-date fair values of $ 13.05 each.

Stock compensation expense

related to the RSUs and PSUs was $ 0.3 million during the three months ended March 31, 2024, with $ 1.1 million in unrecognized stock compensation

expense remaining to be recognized over 1.0 years as of March 31, 2024.

related to the RSUs and PSUs was $ 0.3 million and $ 0.6 million during the three and six months ended June 30, 2024, with $ 0.8 million

in unrecognized stock compensation expense remaining to be recognized over 8 months as of June 30, 2024.

Restricted Stock Awards

The Company issues restricted

stock to the members of its board of directors as compensation for such members’ services.

Such grants generally vest ratably over

four quarters.

The Company also previously issued restricted stock awards to its CEO, for which generally 50% of the shares granted vest

ratably over four quarters and the remaining 50% vest ratably over twelve quarters.

The common stock related to these awards are issued

to an escrow account on the date of grant and released to the grantee upon vesting.

The fair value is determined based on the closing

stock price of the Company’s common stock on the date granted and the related expense is recognized ratably over the vesting period.

A summary of activity of the restricted stock

awards for the three months ended March 31, 2024 is as follows:

stock to its non-employee members of its board of directors as compensation for such members’ services.

Such grants generally vest

ratably over four quarters.

In 2024, the Company issued 80,645 shares of restricted stock awards to its non-employee directors on July

Since these awards were not issued until July 2024, half of the restricted stock awards were fully vested on grant date with

the remaining shares vesting in equal amounts on September 30 and December 31, 2024.

The Company also previously

issued restricted stock awards to its CEO, for which generally 50% of the shares granted vest ratably over four quarters and the remaining

50% vest ratably over twelve quarters.

The common stock related to these awards are issued to an escrow account on the date of grant and

released to the grantee upon vesting.

The fair value is determined based on the closing stock price of the Company’s common stock

on the date granted and the related expense is recognized ratably over the vesting period.

A summary of activity of the restricted stock awards

for the six months ended June 30, 2024 is as follows:

Schedule of restricted stock awards

Nonvested at December 31, 2023

Nonvested at March 31, 2024

Nonvested at June 30, 2024

Stock compensation expense

related to restricted stock awards was $ 37 thousand and $ 0.1 million during each of the three months ended March 31, 2024 and 2023 respectively.

As of March 31, 2024, there

related to restricted stock awards was $ 0.3 million and $ 0.2 million during each of the six months ended June 30, 2024 and 2023 respectively.

As of June 30, 2024, there

were unvested shares of common stock representing $ 12 thousand of unrecognized restricted stock grant expense which will be recognized

over 9 months.

In 2023, the Company issued

warrants to purchase up to 200,000 shares of the Company’s common stock at a price per share equal to $17.00 to a consultant for

investor relations services to be provided over a five-year period.

The warrants were immediately exercisable but are subject to repurchase

by the Company until the required service is provided.

The fair value of such warrants was $8.05 per share or $ 1.6 million on the date

of grant using the Black-Scholes option-pricing model.

This model incorporated certain assumptions for inputs including a risk-free market

interest rate of 3.86%, expected dividend yield of the underlying common stock of 0%, expected life of 2.5 years and expected volatility

in the market value of the underlying common stock based on our historical volatility of 99.6%.

The fair value of the warrants was recorded

to prepaid expenses and other current assets to be recognized over the service period.

During the three months ended March 31, 2024, $ 0.3

million was recorded as expense and $1.3 million of cost has not been recognized and will be recognized over the next 4.0 years.

services to be provided over a five-year period.

The warrants were immediately exercisable but are subject to repurchase by the Company

until the required service is provided.

The fair value of such warrants was $8.05 per share or $ 1.6 million on the date of grant using

the Black-Scholes option-pricing model.

This model incorporated certain assumptions for inputs including a risk-free market interest rate

of 3.86%, expected dividend yield of the underlying common stock of 0%, expected life of 2.5 years and expected volatility in the market

value of the underlying common stock based on our historical volatility of 99.6%.

The fair value of the warrants was recorded to prepaid

expenses and other current assets to be recognized over the service period.

During the six months ended June 30, 2024, $ 0.8 million was

recorded as expense and $1.2 million of cost has not been recognized and will be recognized over the next 3.9 years.

A summary of activity of warrants outstanding

for the three months ended March 31, 2024 is as follows:

Schedule of warrants outstanding

for the six months ended June 30, 2024 is as follows:

Schedule of activity of warrants outstanding

Number of Warrants

Weighted Average Exercise Price

Outstanding at December 31, 2023

Outstanding at March 31, 2024

Exercisable at March 31, 2024

Exercisable at December 31, 2023

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Exercisable warrants as of

March 31, 2024 have a weighted average remaining contractual life of 1.44 years.

The intrinsic value of the exercisable shares of the

warrants at March 31, 2024 was $ 0.2 million.

Warrants to purchase 370,718 shares of common stock at an exercise price equal to $ 6.30

which were issued in our 2019 public offering expired on April 18, 2024.

June 30, 2024 have a weighted average remaining contractual life of 3.76 years.

The intrinsic value of the exercisable shares of the warrants

at June 30, 2024 was $ 0 .0.

Warrants to purchase 282,334 shares of common stock at an exercise price equal to $ 6.30 which were issued in

our 2019 public offering expired on April 18, 2024.

For each of the identified

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Three Months Ended

Six Months Ended

Product sales

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Total revenues

During the three months ended

March 31, 2024 and 2023, 27 % and 60 % of revenues were derived from customers located in California, respectively.

In addition, 11 % and

10 % of revenues in the three months ended March 31, 2024 and 2023 were international sales, respectively.

At March 31, 2024 and December

Revenues derived from customers

located in California during the three months ended June 30, 2024 and 2023 were, 26 % and 17 %, respectively.

During the six months ended

June 30, 2024 and 2023, California customer revenues were 27 % and 35 %, respectively.

In addition, 15 % and 10 % of revenues in the six months

ended June 30, 2024 and 2023 were international sales, respectively.

At June 30, 2024 and December

31, 2023, deferred revenue was $ 1.5 million and $ 1.2 million, respectively.

These amounts consisted mainly of customer deposits in the

amount of $ 0.9 million and $ 0.7 million for March 31, 2024 and December 31, 2023, respectively and prepaid multi-year maintenance plans

for previously sold products which account for $ 0.6 million and $ 0.5 million for March 31, 2024 and December 31, 2023, respectively, and

amount of $ 1 .0 million and $ 0.7 million for June 30, 2024 and December 31, 2023, respectively, and prepaid multi-year maintenance plans

for previously sold products which account for $ 0.8 million and $ 0.5 million for June 30, 2024 and December 31, 2023, respectively, and

pertain to services to be provided through 2031.

SUBSEQUENT EVENTS

Management has evaluated events that have occurred subsequent to the date of these condensed consolidated financial statements and has determined that no such reportable subsequent events exist through March 31, 2024.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Management has evaluated

events that have occurred subsequent to the date of these condensed consolidated financial statements and has determined that no

such reportable subsequent events exist through date of filing.

Based upon this review, the Company did not identify any

subsequent events that would have required adjustment or disclosure in the financial statements.

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 1. Financial Statements