What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-14 compared with 2024-08-13 · 373 added, 229 removed, 445 unchanged (57% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

thousands, except share and per share data)

(In thousands,

except share and per share data)

September 30,

Current assets

14 unchanged sentences

Deferred consideration, current

Contingent consideration, current

Operating lease liabilities, current

8 unchanged sentences

Stockholders' equity

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.

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

Common stock, $ 0.001 par value, 350,000,000 shares authorized, 14,773,901 and 14,398,243 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Additional paid-in-capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of revenues

Operating expenses

Loss from operations

Income/Loss from operations

Other income (expense)

2 unchanged sentences

Interest expense

Loss before income tax expense

Income/Loss before income tax expense

Income tax expense

Net Income/Loss

Net foreign currency translation adjustments

Total Comprehensive Loss

Total Comprehensive Income/Loss

Net loss per share - basic

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Sale of stock under Committed Equity Facility

Net income (loss)

Balance at March 31, 2023

6 unchanged sentences

Sale of stock under Committed Equity Facility

Net income (loss)

Balance at June 30, 2023

Stock issued for director services - vested

Stock issued to (released from) escrow account - unvested

Employee stock-based compensation expense

Warrants exercised for cash

Expenses to maintain Committed Equity Facility

Net income (loss)

Balance at September 30, 2023

Additional Paid-in

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$ ( 101,314 )

Stock issued for director services - vested

Stock issued to (released from) escrow account - unvested

Employee stock-based compensation expense

Proceeds from issuance of common stock, pursuant to public offering

Stock option exercise and restricted stock unit vestings (cashless)

Impact of foreign currency translation

Stock issued for acquisition and expenses

Balance at September 30, 2024

$ ( 100,017 )

The accompanying unaudited notes are an integral

2 unchanged sentences

(Unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating Activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

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Investing Activities:

Acquisition, net of cash acquired

Purchase of property and equipment

4 unchanged sentences

Proceeds from sale of common stock under committed equity facility, net of offering costs

Taxes paid related to net share settlement of equity awards

Proceeds from warrant exercises

Borrowings of note payable

Payments of equity offering costs

Proceeds from issuance of common stock, pursuant to public offering

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Nature of Operations

References in this Report to

“we,” “us,” “our,” the “Company” or “Beam” means Beam Global, a Nevada

corporation, and its subsidiaries.

Beam is a sustainable technology

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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.

high energy density in a safe, compact and bespoke form-factors, which we believe are ideal for the rapidly growing mobile and stationary

equipment product market which often requires electrical energy without being connected to the electrical grid.

Beam’s products and

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

proprietary technology solutions target the following markets:

electric vehicle (EV) charging infrastructure;

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energy security and disaster preparedness;

mobile and stationary equipment;

transportation infrastructure products;

power electronics and telecommunications equipment

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 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.

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

months ending September 30, 2024 and 2023, and our financial position as of September 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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with early adoptions prohibited.

In November 2023, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 requiring enhanced segment

ASU 2023-07 requires disclosure of significant segment expenses regularly provided to the chief operating decision maker

(“CODM”) included within segment operating profit or loss.

Additionally, ASU 12 2023-07 requires a description of how the

CODM utilizes segment operating profit or loss to assess segment performance.

The requirements of ASU 2023-07 are effective for annual

periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company's annual

reporting requirements will be effective for the year ending 2024 and interim reporting requirements will be effective beginning with

the first quarter of fiscal 2025.

Early adoption is permitted, and retrospective application is required for all periods presented.

Company is in the process of analyzing the impact of ASU 2023-07 on its related Condensed Consolidated Financial Statements.

In December 2023, the FASB

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The Company has not experienced any losses

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.

in such accounts from inception through September 30, 2024.

As of September 30, 2024, approximately $ 4.1 million of the Company’s

cash deposits were greater than the federally insured limits.

Major Customers

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

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

customers that we believe have good credit or, alternatively, favorable payment terms which minimizes our credit risk with respect to

such customers.

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.

of our third quarter revenues were derived from pre-funded federal, state and local government programs, and the remaining 48 %

were derived from commercial customers that we believe have good credit or, alternatively, favorable payment terms which minimizes our

credit risk with respect to such customers.

For the three months ended September 30, 2024, no single customer accounted for more than

10% of total revenues and for the nine months ended September 30, 2024, one customer accounted for 18 %

of total revenues, with no other single customer accounting for more than 10% of total revenues.

At September 30, 2024, accounts receivable

from two customers accounted for 19 %

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

31, 2023, accounts receivable from four customers accounted for 11 %,

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

the three months ended September 30, 2023, the Company’s sales to federal, state and local governments represented 82 %

A summary of the allowance for credit losses for

the nine months ending September 30, 2024 and December 31, 2023:

Summary of allowance for credit losses

September 30,

(Dollars in thousands)

Allowance for credit losses:

Beginning of period

Net provision for credit losses

(Charge-offs)/recoveries, net

End of Period

Allowance for credit losses as a % of total Accounts Receivable

Fair Value Measurement

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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.

nature as of September 30, 2024.

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

There were no transfers between levels

during the reporting period.

Schedule of contingent consideration

1 unchanged sentence

Change in fair value

Contingent Consideration as of June 30, 2024

Contingent Consideration as of September 30, 2024

Significant Accounting Policies

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.

Net Loss Per Share

Basic net loss per share is

computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented.

net loss per share of common stock is computed using the weighted average number of common stock outstanding for the period, and, if dilutive,

potential common stock outstanding during the period.

Potential common stock outstanding consists of shares of common stock issuable upon

the exercise of stock options, stock warrants, or other common stock equivalents.

Potentially common stock outstanding are excluded from

the computation if their effect is anti-dilutive.

During the nine months ended

September 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.

Earnings (Loss) Per Share

Basic net income (loss) per

share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the periods

presented using the treasury stock method for options, restricted stocks and warrants.

Diluted net income (loss) per share is computed

By giving effect to all potential dilutive common share equivalents outstanding for the period.

For periods in which Beam has reported

net losses, diluted loss per share is the same as basic loss per share, as the effects of common stock equivalents outstanding and shares

issuable upon conversion of convertible debt instruments are antidilutive and, therefore, excluded from the calculation of diluted loss

Options to purchase 703,658

shares of common stock and warrants to purchase 200,000

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

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

Options to purchase 363,598

common shares and warrants to purchase 618,395

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.

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

The following table presents the calculation of basic and diluted

loss per share:

Calculation of earnings (loss) per share

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

Numerator for basic and diluted loss per share - net income (loss)

Number of shares used in basic computation

Denominator for diluted loss per share - weighted-average number of shares of common stock outstanding

Loss per share

The Company assesses its segment

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of $ 6.7 million (which includes $ 0.4 million of non-cash expenses) and $ 11 .0 million (which includes $ 3 .0 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.

and net cash used in operating activities of $ 3.1 million and $ 13.8 million for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, the Company had a cash balance of $ 4.9 million and working capital of $ 17.9 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 $ 11.3 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

into a Common Stock Purchase Agreement and Registration Rights Agreement with B.

Riley Principal Capital II, LLC (“B.

under which the Company has the right, but not the obligation, to sell up to $30.0 million worth of shares, but in any event, no more

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 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.

Riley Principal Capital II, LLC under which the Company

issued 281,157 shares for approximately $ 3 .0 million.

The facility was terminated on October 1, 2024.

The Company’s outstanding

warrants generated $ 0.7 million and $ 0.3 million of proceeds during each of the nine months ended September 30, 2024 and 2023, respectively.

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

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 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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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

that it will become profitable in the next few years as our revenues grow, we improve our gross profit 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.

In addition, obtaining additional funding

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

BUSINESS COMBINATIONS

Amiga DOO Kraljevo

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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.

During the nine months ended

September 30, 2024, the Company recorded $ 4.5 million of income 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,

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changed its name to Beam Europe LLC.

Pro Forma Financial Information

The following pro forma financial

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

Schedule of pro forma financial

On August 30, 2024, the Company

acquired Telcom d.o.o Beograd (“Telcom”), pursuant to a Share Sale and Purchase Agreement dated as of August 30, 2024 (the

“Agreement”) with the owners (the “Sellers”) of Telcom.

Telcom is a business located in Serbia and engaged in

the manufacturing of telecommunications equipment.

Beam acquired all of the equity stock of Telcom from the Sellers in exchange for cash

and Beam common stock.

The total purchase price was subject to adjustment based on the amount of cash held by Telcom at closing.

on Telcom’s cash balance at closing equal to approximately EUR 220,298 , Beam paid to the Sellers a purchase price equal to EUR 815,298

which was paid to the Sellers as follows:

(i) EUR 430,000 cash and (ii) issued 82,506 shares of Beam common stock.

At closing, Telcom

had a positive working capital balance of approximately EUR 500,000 which consisted of (i) a cash balance equal to EUR 220,000, accounts

receivables of approximately EUR 115,000, inventory of approximately EUR 275,000 and accounts payable of approximately EUR 110,000.

addition to the above payments, the Sellers are eligible to earn up to EUR 250,000 (the “Earnout Cap”) in additional shares

of Beam common stock if Telcom meets certain revenue milestones for fiscal years 2024 and 2025 (the “Earnout Consideration”).

The Telcom Earnout Consideration that Sellers are eligible to receive for 2024 will be equal to the amount the net revenue of Telcom (“Telcom

Net Revenue”) exceeds EUR 850,000 for 2024 up to the Earnout Cap.

Provided that Sellers Earnout Consideration was less than the

Earnout Cap, the Sellers will be eligible for additional Telcom Earnout Consideration in 2025 if (i) 2025 Telcom Net Revenue exceeds 2024

Telcom Net Revenue, and (ii) 2025 Telcom Net Revenue exceeds $850,000.

The Telcom Earnout Consideration for 2025 will be calculated based

on the amount the 2025 Net Revenue exceeds the 2024 Net Revenue subject to the Earnout Cap.

In no event, will the Sellers Earnout Consideration

for 2024 and 2025, in the aggregate, exceed the Earnout Cap.

The Earnout Consideration for each period 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 calendar year.

In no event and under no circumstances will the Sellers receive from Beam or will Beam issue to the Sellers in connection with the transaction

Beam’s common stock in an amount that exceeds 19.99% of the outstanding common stock of Beam immediately prior to closing.

The acquisition was accounted

for as a business combination in accordance with Accounting Standards Codification (ASC) 805, Business Combinations .

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

The valuation of the Earnout

Consideration was performed using a discounted cash flow analysis to determine the fair value of the contingent consideration, which

includes estimates and assumptions such as forecasted revenues of Telcom, discount rates, and the milestone settlement value.

valuation includes the use of unobservable inputs, it is considered to be a Level 3 measurement.

The fair value of the Earnout Consideration

will be reassessed on a quarterly basis with the change recorded to operating expenses.

Change in the fair value of the Earnout Consideration

during the nine months ended September 30, 2024 is as follows (in thousands):

Schedule of change in the fair value of earnout consideration - Telcom

Balance as of December 31, 2023

Acquisition of Telcom

Balance as of September 30, 2024

The following table summarizes the estimated fair

value allocation of consideration exchanged for the estimated fair value of tangible assets acquired and liabilities assumed at the acquisition

The estimated fair value for working capital is generally equivalent to the net book value of the acquired assets and liabilities

on the acquisition date.

Fair value assigned to property, plant and equipment is based on real estate appraisals, market value comparisons,

or acquired net book value of recently acquired assets.

The valuation of the contingent consideration is based on a discounted cash flow

analysis using the Company’s forecasted results for the operations for the two years subject to revenue earn-out targets.

Consideration is comprised of the following

(in thousands):

Schedule of consideration comprised

Earnout Consideration

Total Consideration

The following table shows the allocation of consideration

to assets and liabilities at fair value (in thousands):

Schedule of consideration to assets and liabilities

Assets Acquired

Cash and cash equivalents

Accounts Receivable

Prepaid expenses

Property, plant and equipment

Total assets acquired

Liabilities Assumed

Accounts payable

Accrued Expenses

Other liabilities

Total liabilities assumed

Net assets acquired

The estimated fair values assigned to identifiable

assets acquired and liabilities assumed are provisional pending the finalization of the working capital and purchase price allocation

and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities

The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities

assumed, but the Company is waiting for additional information necessary to finalize those fair values.

Therefore, the provisional measurements

of fair value reflected are subject to change and such changes could be significant.

The Company expects to complete the allocation of

purchase price as soon as practicable, but no later than one year after the acquisition date.

Pro Forma Unaudited Financial Information

The unaudited pro forma financial

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

the beginning of the nine months ended September 30, 2024 and 2023 (in thousands):

Schedule of pro forma financial information

September 30,

Net Income (Loss)

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 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.

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

acquisition been completed at the beginning of the nine months ended September 30, 2024 and 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 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.

in the table above, for the nine months ended September 30, 2024 includes revenues of $ 0.5 million and loss from operations of $ 50 thousand

from the acquired Telcom business.

For the nine months ended September 30, 2023 includes revenues of $ 4.1 million and loss from operations

of $ 0.4 million from the acquired Amiga business and revenues of $ 0.5 million and gain from operations of $ 5 thousand from the acquired

Telcom business.

Inventory consists of the following (in thousands):

Schedule of inventory

September 30,

Finished goods

1 unchanged sentence

Raw materials

Total inventory, net

Total inventory

PROPERTY AND EQUIPMENT

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Schedule of property and equipment

September 30,

Office furniture and equipment

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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.

the three months and nine months ended September 30, 2024 and September 30, 2023 was $ 0.7 million, $ 2.1 million, $ 0.1 million and $ 0.3

million, respectively.

INTANGIBLE ASSETS

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Intangible assets

June 30, 2024

September 30, 2024

Gross Carrying Amount

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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.

the three and nine months ended September 30, 2024 and September 30, 2023 was $ 0.2 million, $ 0.7 million, $ 0.2 million and $ 0.8 million,

respectively.

ACCRUED EXPENSES

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Schedule of major components of accrued expenses

September 30,

Accrued Expenses:

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Total long-term liabilities

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

purchased two new trucks and financed the purchase through an auto loan.

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

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.

Acquired long-term liability

of $ 3.4 million consists of $ 3.3 million 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 three months remaining at September 30, 2024.

Payments are due quarterly as a percentage

of the remaining balance due and carry no interest.

$ 63 thousand consists of non-current liabilities related to the acquisition of Telcom.

In May 2023, the Company purchased

two new trucks and financed the purchase through an auto loan.

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

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.

Payment 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 %

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

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

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.

As of September 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 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.

tax expense for the nine months ended September 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 September 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

Committed Equity Facility

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

2022, the Company entered into a Common Stock Purchase Agreement and Registration Rights Agreement with B.

Riley Principal Capital II,

LLC under which the Company issued 281,157 shares for approximately $ 3 .0 million.

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

the shares of common stock issued to B.

Riley, which were recorded as equity on the Balance Sheet and offset proceeds from the sale of

the Company’s common stock under the Purchase Agreement.

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 June 30, 2024.

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 2023.

The facility was terminated on October 1, 2024.

Company 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 September 30, 2024.

Stock Options

Option activity for the six months ended June 30,

Option activity for the nine months ended September

30, 2024 is as follows:

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Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at September 30, 2024

The stock options terminate ten (10) years from the date of grant or

upon termination of employment.

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 six months ended June 30, 2024 and 2023:

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

Schedule of assumptions for options granted

Six months ended

June 30, 2024

Nine months ended

September 30, 2024

Nine months ended

September 30, 2023

Expected volatility

89.04 % - 90.37 %

90.2 % - 94.5 %

Expected term

6.5 - 7 Years

Risk-free interest rate

3.67 % - 4.25 %

3.55 % - 4.47 %

Weighted-average FV

The Company’s stock

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.

option compensation expense was $ 0.2 million and $ 0.4 million for the three and nine months ended September 30, 2024, and $ 0.1 million

and $ 0.3 million for the three and nine months ended September 30, 2023.

There was $ 1.8 million of total unrecognized compensation costs

related to outstanding stock options at September 30, 2024 which will be recognized over 4 .0 years.

Total intrinsic value of options outstanding

and options exercisable were $ 18 thousand and $ 0.2 million, respectively, as of September 30, 2024.

The number of shares of common stock

underlying stock options vested and unvested as of September 30, 2024 were 355,034 and 348,624 , respectively.

Restricted Stock Units

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Executive Officer (“CEO”).

For the RSUs, 50% vested upon the grant date, 25% vested

on February 1, 2024 and 25% will vest on February 1, 2025.

The number of shares that will be earned under the PSUs will be determined

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

For the RSUs, 50% vested upon the grant date, 25% vested on February 1, 2024 and 25% will vest

on February 1, 2025.

The number of shares that will be earned under the PSUs will be determined based on the achievement of specific performance

metrics during the three-year period ending December 31, 2024.

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.

remain outstanding as of September 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 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.

related to the RSUs and PSUs was $ 0.3 million and $ 0.9 million during the three and nine months ended September 30, 2024, with $ 0.5 million

in unrecognized stock compensation expense remaining to be recognized over 5 months as of September 30, 2024.

Restricted Stock Awards

3 unchanged sentences

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

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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:

A summary of activity of the restricted stock

awards for the nine months ended September 30, 2024 is as follows:

Schedule of restricted stock awards

Average Grant-

Date Fair Value

Nonvested at December 31, 2023

Nonvested at June 30, 2024

Nonvested at September 30, 2024

Stock compensation expense

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

related to restricted stock awards was $ 0.4 million and $ 0.3 million during each of the nine months ended September 30, 2024 and 2023

respectively.

As of September 30, 2024,

there were unvested shares of common stock representing $ 0.1 million of unrecognized restricted stock grant expense which will be recognized

over 3 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

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.

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 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

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%, an 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 nine months ended September 30, 2024, $ 0.2

million was recorded as expense and $1.1 million of cost has not been recognized and will be recognized over the next 3.5 years.

A summary of activity of warrants outstanding

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

for the nine months ended September 30, 2024 is as follows:

Schedule of activity of warrants outstanding

Number of Warrants

Weighted Average Exercise Price

Exercisable at December 31, 2023

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Outstanding at September 30, 2024

Exercisable at September 30, 2024

Exercisable warrants as of

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.

September 30, 2024 have a weighted average remaining contractual life of 3.5 years.

The intrinsic value of the exercisable shares of the

warrants at September 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

periods, revenues can be categorized into the following (in thousands):

periods, revenues are categorized as follows (in thousands):

Schedule of revenues

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Product sales

4 unchanged sentences

Total revenues

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 $ 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.

Percentages of our revenues

derived from customers located in California during the three months ended September 30, 2024 and 2023 were 21 % and 14 %, respectively.

During the nine months ended September 30, 2024 and 2023, California customer revenues were 25 % and 28 %, respectively.

Our international

sales represented 20 % and 8 % of revenues in the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024 and

December 31, 2023, deferred revenue was $ 1.6 million and $ 1.2 million, respectively.

These amounts consisted mainly of customer deposits

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

plans for previously sold products which account for $ 0.9 million and $ 0.5 million for September 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 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.

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