What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-13 · 335 added, 269 removed, 141 unchanged (81% of the section changed)

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

in this Report to “we,” “us,” “our,” the “Company” or “Beam” means Beam

Global, a Nevada corporation, and its subsidiaries.

This report contains forward-looking

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and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy

security, and disaster preparedness.

The Company has five product

lines that incorporate our proprietary technology for producing a unique alternative to grid-tied charging, having a built-in renewable

energy source in the form of attached solar panels and/or light wind generator to produce power and battery storage to store the power.

These products are rapidly deployable and attractively designed and include:

security, smart city infrastructure and disaster preparedness.

The Company has multiple product

lines that incorporate our proprietary technology.

Our off-grid EV charging and energy security products produce a unique alternative

to grid-tied charging, having a built-in renewable energy source in the form of attached solar panels and/or light wind generator to produce

power and battery storage to store the power.

Versions of our charging infrastructure products are modified to support EVs, eMotorcycles,

eBikes, desalination and auxiliary power.

Our Smart Cities products combine structural elements with built in electronics, renewable energy

generation and IoT capabilities.

These products are scalable and attractively designed and include:

EV ARC™ Electric Vehicle Autonomous Renewable Charger – a patented, rapidly deployed, infrastructure product that uses integrated solar power and battery storage to provide a mounting asset and a source of power for factory installed electric vehicle charging stations of any brand.

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EV ARC™ DCFC – DC Fast Charging system for charging EVs comprised of four interconnected EV ARC™ systems and a 24kW DC fast charger.

BeamSpot™ – patent issued on December 31, 2019 and currently

under development.

A lamp standard, EV charging and emergency power product which uses an existing streetlight’s foundation and

a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging and emergency power.

BeamSpot™ – patent issued on December 31, 2019 and currently.in the process of initial installation.

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

BeamBike™ - rapidly deployed, construction free, solar-powered charging system based on the patented EV ARC™ platform which generates and stores its own clean electricity, accessed through twelve integrated, weatherized 120 V outlets supporting any eBike charger.

Supports 12 eBikes and is available with or without bundled eBike packages.

BeamPatrol™ - Rapidly deployed and easily transported, the BeamPatrol™ station allows law enforcement and safety personnel to charge and quickly access nimble, quiet and responsive motorcycles without the need for any additional infrastructure or fuel.

This innovative solution is ideal for law enforcement, customs and border patrol, the military, park services, air and seaport operations and any situation where the ability to rapidly gain access to an environment, without alerting targets of the operation, is required.

BeamPatrol™ and the motorcycles it supports generate low to no maintenance or fuel costs and provide a highly reliable mobility solution while assisting in the carbon reduction efforts of the agencies that use the product.

Available with, or without bundled eMotorcyles.

BeamWell™ - based on the patented EV ARC™ system, is a self-sufficient, self-contained operational system for use in war zones and remote or disaster areas where only salt, brackish or dirty water is available because a reliable clean water supply is not available or has been interrupted.

The BeamWell™ system provides three essential services to regions in crisis:

it turns seawater into fresh water, which is then stored in an integrated 3000-liter tank that is replenished daily;

it provides a source of electricity which can be used for medical or communications devices as well as cooking and lighting;

and it charges four integrated and bundled Benzina Zero electric mopeds for the rapid distribution of food, water, medications or other vital resources, to those in need.

Smart Cities Infrastructure products – Street lighting, street furniture, communications infrastructure products, energy infrastructure products, with electronics integration including renewable energy sources, battery storage, sensors and IoT integration.

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

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energy so there is no utility bill.

We are agnostic as to the EV charging service equipment or provider and integrate best of breed solutions

based upon our customer’s requirements.

For example, our EV ARC™ and Solar Tree® products have been deployed with Chargepoint,

Blink, Enel X, Electrify America and other high quality EV charging solutions.

We can make recommendations to customers, or we can comply

with their specifications and/or existing charger networks.

Our products replace the infrastructure required to support EV chargers, not

the chargers themselves.

We are agnostic as to the EV charging service equipment or provider and integrate the best of breed

solutions based upon our customers’ requirements.

For example, our EV ARC™ and Solar Tree® products have been deployed

with Chargepoint, Blink, Enel X, Electrify America and other high quality EV charging solutions.

We can make recommendations to customers,

or we can comply with their specifications and/or existing charger networks.

Our products replace the infrastructure required to support

EV chargers, not the chargers themselves.

We do not sell EV charging, rather we sell products which enable it.

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

With the acquisition of All

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

flexible lithium-ion and/or lithium iron phosphate battery platform architecture.

The battery design uses a proprietary phase change material

which provides a low-cost and passive (does not require energy) thermal management solution and a unique safety mechanism to prevent propagation

of thermal runaway.

Our batteries are ideally suited for applications where energy density, safety and specialized enclosures require

high power in small spaces.

Drones, submersibles, medical and recreational products and a host of micro mobility products benefit from

this technology.

Beam is already using AllCell™ energy storage products in EV ARC™ products for EV charging and plans to incorporate

this battery technology in our new product designs that are under development.

Beam AllCell™ designs,

manufactures and sells custom, high-quality, bespoke lithium-ion energy storage solutions.

Our world-class battery engineering team rigorously

creates unique battery formats and shapes to the highest standards, delivering highly flexible solutions that maximize power in compact

Our patented PCC™ phase change material, manufactured in-house, provides passive thermal management solution and critical

safety features against thermal runaway.

Our proprietary Smart BMS, designed by the Company, further differentiates our products, ensuring

superior customer satisfaction.

Our battery is ideal for applications requiring high energy density, high power, and safe, space

efficient enclosures.

Our batteries power drones, submersibles, medical devices, recreational products and micro-mobility solutions.

Company is integrating these advanced batteries and technologies into our new product designs under development.

On October 20, 2023, Beam

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

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

acquired Amiga DOO Kraljevo (“Amiga” or “Beam Europe”), a business located

in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration, including (i) infrastructure

products for public lighting;

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

(iii) infrastructure products for tram,

trolleybus, and railways;

(iv) infrastructure products for contact networks, masts, portals and semi-portals for road and railway signaling;

(iii) infrastructure

products for tram, trolleybus, and railways;

(iv) infrastructure products for contact networks, masts, portals and semi-portals for road

and railway signaling;

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

and (vi) distribution and command

electrical cabinets.

Amiga has engineering, product development and manufacturing capabilities which are well suited to manufacture and

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

As a large European manufacturer of streetlights, Amiga is well

positioned to assist in the development of the EV-Standard ™ for both the European and US markets.

distribution and command electrical cabinets.

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

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

As a large European manufacturer of streetlights,

Amiga is well positioned to assist in the development of the EV-Standard ™ for both the European and US markets.

On August 30, 2024, Beam acquired

Telcom d.o.o.

Beograd (“Telcom”), a business located in Serbia and engaged in the manufacturing of power electronics and telecommunications

Telcom engineers and manufacturers specialized power electronics includer invertors, charge controllers, power supplies and

LED lighting.

Telcom has electrical engineering, product development and manufacturing capabilities which Beam believes are ideally suited

to improve the Company’s current and future products for the global market.

Telcom has a well-respected and highly talented team

of electrical engineers, focused on power electronics and the integration of renewables and energy storage.

Overall Business Outlook

Our revenues for the first

six months of 2024 were $29.4 million, a 5% decrease from $30.8 million for the first six months in 2023.

nine months of 2024 were $40.9 million, a 14% decrease from $47.3 million for the first nine months in 2023.

We believe that the decrease

in revenue is as a result of order timing, particularly from some of our larger federal customers rather than any fundamental reduction

in demand for our products.

Our pipeline of prospective customer orders has increased during the same period, although we cannot be sure

of when, or if, those prospective orders will turn into actual sales.

We have continued investment in our sales and marketing resources

over the past three years which we believe has created increased demand for our EV ARC™ renewable charging infrastructure products

during that time.

The Company believes there continues to be a high level of support for funding EV charging infrastructure from both

government and commercial entities, including a number of federal grants available under the Inflation Reduction Act.

In addition, certain

of our commercial customers may benefit from the Federal Solar Investment Tax Credit and accelerated depreciation as allowed under Section

179 of IRS code which, we believe, provide a competitive advantage for our products over traditionally installed EV charging infrastructure

which is not eligible for these incentives.

Given these available incentives, we have invested in a federal lobbyist, a federal business

development resource and a government relations employee, who have helped to identify opportunities and increased awareness of our product

and outreach with federal agencies.

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

agreement in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems.

six months ended June 30, 2024, we recorded revenues of $22.4 million for federal customers, compared to $26.5 million for the same period

We expect to see uneven orders from quarter to quarter, especially with our federal customers, but over time we expect our revenues

Our commercial, non-government, revenues increased as a percentage of our revenues from 14% to 24% in the first six months of

2023 to the first six months of 2024.

in revenue is a result of order timing, uncertainty in the U.S.

government’s zero emission vehicle strategy related to the presidential

election and evolving certification requirements for energy storage systems requiring updates to our EV ARC™ products which we believe

will be completed in the first quarter of 2025.

These matters have particularly impacted our larger federal customers and we do not believe

that they signify any fundamental reduction in demand for our products.

Our pipeline of prospective customer orders has increased during

the same period, although we cannot be sure of when, or if, those prospective orders will turn into actual sales.

As we have continued

investment in our sales resources, in September of 2024, we hired a new Vice President of Sales in the U.S.

and a new Director of Channel

Partnerships in Europe to drive growth in commercial and government sectors.

The Company believes there continues to be a high level of

support for funding EV charging infrastructure from both commercial and government entities, including a number of federal grants available

under the Inflation Reduction Act.

In addition, certain of our commercial customers may benefit from the Federal Solar Investment Tax

Credit and accelerated depreciation as allowed under Section 179 of the IRS code which, we believe, provides a competitive advantage for

our products over traditionally installed EV charging infrastructure which is not eligible for these incentives.

Given these available

incentives, we have invested in a federal lobbyist, a federal business development resource and a government relations employee, who have

helped to identify opportunities and increase awareness of our product and outreach with federal agencies.

In addition, the General Services

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

procurement process for procuring EV ARC™ systems.

In the nine months ended September 30, 2024, we recorded revenues of $28.4 million

for federal customers, compared to $39.9 million for the same period in 2023.

We expect to see uneven orders from quarter to quarter,

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

Our commercial, non-government, revenues increased

as a percentage of our revenues from 11% to 31% from the first nine months of 2023 to the first nine months of 2024.

Our geographic expansion

into Europe and our additional business development activities in the Middle East and Africa are, we believe, also providing opportunities

for growth which are not dependent on, or impacted by, shifts in US government and zero emission vehicle strategies.

The new products

we have brought to market offer values which are also not dependent upon US federal government investment.

We expect the electric vehicle

market to continue to experience significant growth over the next decade which will in turn increase demand for additional EV charging

infrastructure.

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

market to continue to experience significant growth globally over the next decade, which will in turn increase demand for additional EV

charging infrastructure.

We believe we are positioned to benefit significantly from this growth.

We believe the Company’s

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

October 2023, the Company acquired Amiga, an established manufacturer of specialized steel structures and equipment, producing streetlights,

communications and energy infrastructure whose manufacturing, engineering and sales teams service municipalities, states and commercial

customers in 16 nations.

The addition of Amiga has expanded Beam’s presence into the

European market and increase its production, engineering, sales and product development expertise.

The EU has mandated a transition to

zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy.

An increase in electric vehicles adoptions

will increase the demand for charging infrastructure.

We believe that our sustainably energized EV ARC TM and BeamSpot™

products can play a major role in the provision of EV charging infrastructure in Europe.

October 2023, the Company acquired Amiga (now renamed Beam Europe), an established manufacturer of specialized steel structures and equipment,

producing streetlights, communications and energy infrastructure whose manufacturing, engineering and sales teams service municipalities,

states and commercial customers in 16 nations.

The addition of Amiga has expanded Beam’s

presence into the European, Middle Eastern and African markets and increased our production, engineering, sales and product development

The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy.

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

We believe that our sustainably energized

EV ARC TM and BeamSpot™ products can play a major role in the provision of EV charging infrastructure in Europe.

On August 30, 2024, Beam acquired

Telcom d.o.o.

Beograd (“Telcom”), a business located in Serbia and engaged in the manufacturing of power electronics and telecommunications

Telcom engineers and manufacturers specialized in power electronics including invertors, charge controllers, power supplies

and LED lighting.

Telcom has electrical engineering, product development and manufacturing capabilities which Beam believes are ideally

suited to improve the Company’s current and future products for the global market.

Telcom has a well-respected and highly talented

team of electrical engineers, focused on power electronics and the integration of renewables and energy storage.

Existing Telcom customers

include the region’s largest telecommunications company as well as other corporate entities which we believe provide further opportunities

for cross selling the other products in our portfolio.

Our energy security business

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

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

emergency power during utility grid failures.

The state-of-the-art storage batteries installed on our EV charging systems are immune to

grid failures and provide another benefit for customers such as municipalities, counties, states, the federal government, hospitals, fire

departments, large private enterprises with substantial facilities, and vehicle fleet operators.

is connected with the deployment of our EV charging and our Smart Cities infrastructure products and serves as an additional benefit and

value proposition for our charging products which, along with their integrated emergency power panels, can continue to operate, charge

EVs, and deliver emergency power during utility grid failures.

The state-of-the-art storage batteries installed on our EV charging systems

are immune to grid failures and provide another benefit for customers such as municipalities, counties, states, the federal government,

hospitals, fire departments, large private enterprises with substantial facilities, and vehicle fleet operators.

We are in development on our

newest patented products - our BeamSpot™ and UAV ARC™, which we expect will expand our product offerings leveraging the same

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

Amiga is one of Europe’s largest manufacturers

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

deployment of street lighting.

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

on our new BeamSpot™ product.

We believe that BeamSpot™ may become our largest selling product when available for sale.

Our gross profit improved

as a percentage of sales and was 15.9% in Q2 2024, up 13.1% from the gross profit reported in Q2 2023.

Additionally, our cost of goods

sold included non-cash intellectual property amortization of $0.2 million for the first three months of both 2024 and 2023, related to

the acquisition of All Cell in 2022.

Excluding this non-cash expense results in a gross profit of 17.1% for the three months ended June

30, 2024, up from 3.8% for the same period ending June 30, 2023.

We implemented engineering design changes to our EV ARC TM

in Q4 2023 that resulted in cost reductions to our bill of materials.

Our gross profit improvements were achieved in spite of ongoing

inflation and the high costs of many of our components, including steel, that began during the Covid pandemic.

We expect to see these

costs continue to decrease over time.

We are implementing lean manufacturing process improvements and making engineering changes to our

products which we expect to result in cost reductions.

We have observed that we are able to manufacture certain elements of our products

in Serbia and ship them to the U.S.

newest patented products which include- BeamSpot™, UAV ARC™ and others, which we expect will continue to expand our product

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

Amiga is one of

Europe’s largest manufacturers of streetlights and has a team of qualified structural, electrical and civil engineers who are experts

in the field of development and deployment of street lighting.

They are working with our engineers in San Diego and Broadview to continually

improve the engineering and development of our new BeamSpot™ product.

We believe that BeamSpot™ may become our largest selling

product when available for sale.

BeamSpot™ is currently in the process of being installed and we received our first order for that

product within two months of it being launched.

Our gross margin improved

as a percentage of sales, year over year, and was 10.7% in Q3 2024, up 9.0% from the gross margin reported in Q3 2023.

Additionally, our

cost of goods sold included non-cash intellectual property amortization of $0.7 million for the first nine months of 2024 and $0.8 million

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

Excluding this non-cash expense results in a gross margin of 12.3% for the three

months ended September 30, 2024, up from 2.8% for the same period ending September 30, 2023.

We implemented engineering design changes

to our EV ARC TM in Q4 2023 that resulted in cost reductions to our bill of materials.

Our gross margin improvements were achieved

in spite of ongoing inflation and the high costs of many of our components, including steel, that began during the Covid pandemic.

expect to see our costs of goods sold continue to decrease over time.

We are implementing lean manufacturing process improvements and

making engineering changes to our products which we expect to result in cost reductions.

We have observed that we are able to manufacture

certain elements of our products in Serbia and ship them to the U.S.

less expensively than we can manufacture them in the U.S.;

largely because we are better equipped

in Serbia and as a result can self-perform certain processes which we outsource in the U.S.

We anticipate further reductions in direct

costs as a result of having our Serbian operations support our U.S.

because we are better equipped in Serbia and as a result can self-perform certain processes which we outsource in the U.S.

We anticipate

further reductions in direct costs as a result of having our Serbian operations support our U.S.

manufacturing.

Many of the components that we integrate into our products

are manufactured by others.

This is consistent with our strategy to take advantage of the investment by large and well-funded organizations

in the improvement, and reducing cost, of various components and sub-assemblies which we integrate into our final product.

to identify components and sub-assemblies that may be more cost effective to outsource, which we believe may further reduce our costs,

increase our gross margins, and significantly increase the potential output from our factory.

We expect that the receipt of orders may

be inconsistent quarter over quarter, however, we expect that in the long-term, our revenues will continue to grow as we expect to see

a significant increase in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing

pressure on our products.

The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and

the cost cutting measures described above lead us to believe that we will continue to see improvement in our gross margins in the future.

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

We believe that in combination with a generally

less expensive operating environment in Serbia, we will be able to produce our products in Europe less expensively than in the US, even

as we continue to reduce our costs in the US.

Many of the components

that we integrate into our products are manufactured by others.

This is consistent with our strategy to take advantage of the investment

by large and well-funded organizations in the improvement, and reducing costs, of various components and sub-assemblies which we integrate

into our final product.

We continue to identify components and sub-assemblies that may be more cost effective to outsource, which we believe

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

that the receipt of orders may be inconsistent quarter over quarter, however, we expect that in the long term, our revenues will grow

as we expand our product offerings and geographic reach and because we expect to see a significant increase in the demand for electric

vehicle charging infrastructure.

As such we do not anticipate significant pricing pressure on our products.

The increase in demand for

electric vehicle charging infrastructure and, we believe, over the long term, our revenues, combined with the cost cutting measures described

above, lead us to believe that we will continue to see improvement in our gross margins in the future.

Beam Europe has the capability

to perform several activities which we outsource in the US.

We believe that in combination with a generally less expensive operating environment

in Serbia, we will be able to produce our products in Europe less expensively than in the US, even as we continue to reduce our costs

Critical Accounting Estimates

The financial statements and

related disclosures were prepared in accordance with U.S.

generally accepted accounting principles which require us to make estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts

of revenues and expenses during the reporting period.

We base our estimates and assumptions on historical experience and on various other

factors that we believe to be reasonable under the circumstances, and we continually evaluate our assumptions and modify as needed.

the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

Use of Estimates.

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

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

The financial statements

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

generally accepted accounting principles which require us to make

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

reported amounts of revenues and expenses during the reporting period.

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 intangible assets, valuation of contingent consideration liability,

estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right of use assets, valuation of share-based

costs, and the valuation allowance on deferred tax assets.

We base our estimates and assumptions on historical

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

assumptions and modify as needed.

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

future results of operations will be affected.

There have been no changes since year end, refer back to the Company’s Form 10-K for December 31, 2023.

Results of Operations

Comparison of Results of Operations for the

Three Months Ended June 30, 2024 and 2023

Three Months Ended September 30, 2024 and 2023

For the quarter

ended June 30, 2024, our revenues decreased 17% to $14.8 million compared to $17.8 million for the same period in 2023.

Revenues to federal

customers decreased by $5.1 million in Q2 2024 compared to the quarter ended June 30, 2023.

We also recorded revenues of $2.8 million

as a result of our acquisition of Amiga.

We continue to invest in sales and marketing employees, resources and programs to raise awareness

of the benefits and value of our products.

The receipt of orders may continue to be uneven due to the timing of customer approvals or

budget cycles, however, we believe that as EV adoption increases in concert with increased availability of infrastructure funding, our

business will be less impacted by specific variations in order timing.

ended September 30, 2024, our revenues, though they were the second highest third quarter revenues in our history, decreased 30% to $11.5

million compared to $16.5 million for the same period in 2023.

Revenues to federal customers decreased by $7.5 million in Q2 2024 compared

to the quarter ended September 30, 2023.

During the first three months of 2024, revenues from California represented 21% of total revenues.

We recorded revenues of $3.5 million as a result of our acquisition of Amiga and $67 thousand as a result of our acquisition of Telcom,

demonstrating the positive contribution of our geographic expansions.

Revenues derived from non-government commercial entities increased

by 80% for the three months from 2023 to 2024 and were 11% of total revenues.

The receipt of orders may continue to be uneven due to the

timing of customer approvals or budget cycles, however, we believe that the diversification of our product offerings combined with our

geographic expansions, recent hires and as EV adoption increases, our business will be less impacted by specific variations in order timing.

Gross Profit.

the quarter ended June 30, 2024, our gross profit was $2.4 million, or 15.9% of sales, compared to a gross profit of 2.8% of sales for

the same period in 2023.

The margin improved by 13.1 percentage points, primarily because we have implemented cost improvements in late

2023 as a result of design changes to the EV ARC TM as well as operational improvements and positive margins generated from

the acquisition of Amiga.

Our gross profits included a negative impact of $0.3 million for non-cash depreciation and intangible amortization.

Our gross profits net of non-cash items was 18.0%.

We began to see some improvements in the reduction of material costs in late 2023,

which we believe should continue to improve.

Our engineering and operations teams continue to identify further cost reductions and efficiencies

which, along with support from our Serbian facilities, we believe will improve our gross margins in future quarters.

quarter ended September 30, 2024, our gross profit was $1.2 million, or 10.7% of sales, compared to a gross profit of $0.8 million or

1.7% of sales for the same period in 2023.

The margin improved by 9 percentage points, primarily because we have implemented cost improvements

in late 2023 as a result of design changes to the EV ARC TM as well as operational improvements and positive margins generated

from the acquisition of Amiga.

Additionally, 48.6% of ARC sales reflected the price increase implemented in 2024.

Our gross profits included

a negative impact of $0.8 million for non-cash depreciation and intangible amortization.

Our gross margin net of non-cash items was 17.6%.

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

Our engineering

and operations teams continue to identify further cost reductions and efficiencies which, along with support from our Serbian facilities,

we believe will improve our gross margins in future quarters.

Operating Expenses.

operating expenses were $7.1 million, or 48% of revenues, for the quarter ended June 30, 2024, compared to $4.0 million, or 23% of revenues,

for the same quarter in the prior year.

The $3.1 million increase is mostly attributable to $1.4 million related to the change in fair

value of contingent consideration, which is non-cash, for the Amiga acquisition, $0.6 million for operating expenses for Beam Europe,

$0.5 million in Audit and Accounting services, $0.4 million in commission expenses, $0.1 million in legal costs and $0.1 million allowance

for credit losses.

Total operating expenses excluding non-cash items were $4.3 million, 29% of revenues, which included $1.7 million

fair value of contingent consideration, $0.8 million for non-cash compensation, $0.3 million allowance for credit losses and $0.1 million

depreciation and amortization.

operating expenses were a credit of $50 thousand, or (0.4%) of revenues, for the quarter ended September 30, 2024, compared to $4.0 million,

or 24% of revenues, for the same quarter in the prior year.

The $4.1 million decrease is mostly attributable to $6.1 million related to

the non-cash change in fair value of contingent consideration for the Amiga acquisition, offset by non-cash warrants amortization increase

of $0.2 million and stock compensation increase of $0.2 million, resulting in $1.7 million increase in operating expenses quarter over

quarter mainly related to $1.2 million for operating expenses for Beam Europe, $0.3 million in customer service accommodation costs, $0.1

million related to facility expansion and $0.1 million mainly for consulting for government relations and engineering.

Comparison of Results of Operations for the

Six Months Ended June 30, 2024 and 2023

the six months ended June 30, 2024, our revenues decreased 5% to $29.4 million compared to $30.8 million for the same period in 2023.

Revenues to federal customers decreased by $5.1 million in 2024.

During the first six months of 2024, revenues from California represented

27% of total revenues.

Revenues were diverse across federal, state and local governments, as well as enterprise and education sector

International customers comprised 15% of the revenues through June 30, 2024, and were primarily from Beam Europe.

derived from non-government, commercial entities increased by 83% from Q2 2023 to Q2 2024.

We continue to invest in sales and marketing

employees, resources and programs to raise awareness of the benefits and value of our products.

The receipt of orders may continue to

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

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

Nine Months Ended September 30, 2024 and 2023

the nine months ending September 30, 2024 our revenues, while they were the second highest nine month revenues in our history and higher

than any full year barring 2023, decreased 14% to $41.0 million compared to $47.3 million for the same period in 2023.

Revenues to federal

customers decreased by $11.5 million in 2024.

During the first nine months of 2024, revenues from California represented 25% of total

Revenues were diverse across federal, state and local governments, as well as enterprise and education sector customers.

International

customers comprised 20% of the revenues through September 30, 2024, and were primarily from Beam Europe.

Revenues derived from non-government

commercial entities increased by 136% for the nine months from 2023 to 2024 and were 30.5% of total revenues in 2024.

For the nine months

ended September 30, 2024, the Company’s sales to federal, state and local governments represented 69% of revenues.

We continue to

invest in sales employees, diversifying our product portfolio and expanding our geographic footprint to reduce our reliance on single

large orders of our EV ARC™ product by federal agencies, although we believe that that opportunity still exists.

The receipt of

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

and our new and existing products are brought to larger international audiences, our business will be less impacted by specific variations

in order timing.

Gross Profit.

the six months ended June 30, 2024, our gross profit was $3.8 million, or 13% of sales, compared to a gross loss of $0.5 million, or

2% of sales in the same period of 2023.

the nine months ended September 30, 2024, our gross profit was $5.1 million, or 12% of sales, compared to a gross profit of $0.8 million,

or 2% of sales in the same period of 2023.

The margin improved by 11 percentage points, compared to prior year.

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Our gross profits were negatively impacted by $2.8 million for non-cash depreciation and intangible amortization.

profits net of non-cash items was 14.9%.

We began to see some improvements on material pricing in 2023, which has continued to improve

We continue to make engineering changes and work with suppliers to improve our costs which, along with support from our Serbian

facilities, we believe will continue to improve our gross profit over time.

margin net of non-cash items was 18.3% in 2024 and 3.1% in 2023.

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

has continued to improve over time.

We continue to make engineering changes and work with suppliers to improve our costs which, along

with support from our Serbian facilities, we believe will continue to improve our gross profit over time.

Operating Expenses.

operating expenses were $11.7 million, or 40% of revenues, for the six months ended June 30, 2024, compared to $7.9 million, or 26% of

revenues, for the same period in the prior year.

The $3.8 million increase is mostly attributable to $1.3 million related to the change

in fair value of contingent consideration, which is non-cash, for the Amiga acquisition, $0.9 million for operating expenses for Beam

Europe, $0.7 million in Audit and Accounting services, $0.4 million in commission expenses, $0.3 million in consultant costs for Design

Engineering, and $0.1 million allowance for credit losses.

Total operating expenses excluding non-cash items were $8.1 million, 28% of

revenues, which included $1.5 million fair value of contingent consideration, $1.3 million for non-cash compensation, $0.4 million allowance

for credit losses and $0.3 million depreciation and amortization.

operating expenses were $11.6 million, or 28% of revenues, for the nine months ended September 30, 2024, compared to $11.9 million, or

25% of revenues, for the same period in the prior year.

When you remove the $4.5 million the non-cash decrease in fair value of contingent

consideration for the Amiga acquisition in 2024 and $0.3 million increase in fair value of contingent consideration for the All Cell acquisition

in 2023, the net change in fair value contingent consideration is $4.3 million offset by non-cash increases in warrants amortization expense

$0.3 million, stock compensation $0.3 million, bad debt allowance $0.4 million resulting in $3.3 million increase in operating expenses.

The increase is mainly related to $2.1 million for operating expenses for Beam Europe, $0.4 million for facility expansion, $0.3 million

commissions due to earned at time of customer payment, $0.3 million in customer accommodation service costs and $0.2 million related to

acquisition costs.

Liquidity and Capital Resources

At June 30, 2024, we had

cash of $8.7 million, compared to cash of $10.4 million at December 31, 2023.

At September 30, 2024, we

had cash of $4.8 million, compared to cash of $10.4 million at December 31, 2023.

We have historically met our cash needs through a combination

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Our cash requirements are generally for operating activities.

Management believes the Company’s present cash flows will enable

it to meet its obligations for twelve months from the date of these financial statements.

Management will continue to assess its operational

needs and seek additional financing as needed to fund its operations.

Our cash flows from operating,

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

September 30,

Cash provided by (used in):

Net cash used in operating activities

Net cash used in provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

For the six months ended June

30, 2024, our cash used in operating activities was $0.1 million compared to cash used of $5.1 million for the six months ended June 30,

Net loss of $8.0 million for the six months ended June 30, 2024 was increased by $4.2 million of non-cash expense items that included

depreciation and amortization of $1.9 million, employee stock-based compensation expense of $1.3 million, offset by decreases of $0.6

million provision on credit losses and $1.5 million for a change in fair value of contingent consideration liabilities.

Cash used in operations

included a $3.3 million decrease in accounts receivable as well as a $1.7 million decrease in accounts payable primarily for inventory,

$0.3 million decrease in prepaid expenses and other current assets offset by $1.7 million increase in accrued expenses, $1.0 million increase

in inventory, and $0.3 million increase in deferred revenue.

the six months ended June 30, 2023, our cash used in operating activities was $5.1 million compared to $7.4 million for the six months

ended June 30, 2022.

Net loss of $7.4 million for the six months ended June 30, 2023 was increased by $2.1 million of non-cash expense

items that included depreciation and amortization of $0.7 million, common stock issued for services for director compensation of $0.2

million, employee stock-based compensation expense of $0.9 million, change in the fair value of contingent consideration liabilities of

$0.3 million and $0.1 million of other for stock compensation for non-employees.

Cash used in operations included a $6.0 million increase

in accounts receivable due to the increase in revenues in the quarter and $0.4 million decrease in deferred revenue.

Cash generated from

operations included a $4.3 million increase in accounts payable primarily for inventory, $1.9 million increase in accrued expenses, and

$0.3 million decrease in prepaid expenses and other current assets.

For the nine months ended

September 30, 2024, our cash used in operating activities was $3.1 million compared to cash used of $13.8 million for the nine months

ended September 30, 2023.

Net loss of $6.7 million for the nine months ended September 30, 2024 was decreased by ($1.2) million of non-cash

expense items that included depreciation and amortization of $2.8 million, and employee stock-based compensation expense of $2.0 million

offset by decreases of ($4.3) million for a change in fair value of contingent consideration liabilities and $0.1 million provision on

credit losses.

Cash used in operations included a $5.0 million decrease in accounts receivable as well as a $1.7 million decrease in accounts

payable primarily for inventory, $0.6 million decrease in operating lease liability and $0.5 million decrease in long term liabilities

offset by $0.4 million increase in inventory, $0.3 million increase in deferred revenue, and $0.2 million increase in accrued expenses.

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

months ended September 30, 2022.

Net loss of $11.0 million for the nine months ended September 30, 2023 was increased by $3.2 million

of non-cash expense items that included depreciation and amortization of $1.1 million, common stock issued for services for director compensation

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

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

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

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

million decrease in deferred revenue for customer deposits.

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

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

Cash used in investing activities

in the six months ended June 30, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition

and $0.2 million for the purchase of equipment compared to $0.5 million purchased in the same period in the prior year.

For the six months ended June

30, 2024, cash generated by our financing activities included $0.8 million for the exercise of warrants and $0.5 million in proceeds from

public offering issuance of common stock compared to $2.1 million in proceeds from the public offering issuance of common stock, net of

offering expenses, and $0.1 million from the exercise of warrants for the same period in the prior year.

in the nine months ended September 30, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga

acquisition, $0.5 million used for the Telcom acquisition and $0.4 million for the purchase of equipment compared to $0.8 million purchased

in the same period in the prior year, primarily transportation equipment, a sleeving machine and an automated welder used in our battery

manufacturing and $0.1 million for patent costs.

For the nine months ended

September 30, 2024, cash generated by our financing activities included $0.8 million for the exercise of warrants and $0.5 million in

proceeds from public offering issuance of common stock compared to $25.4 million in proceeds from the public offering issuance of

common stock, net of offering expenses, $2.1 million for shares sold through the Company’s equity facility, $0.2 million for repayment

of note payable and $0.1 million from the exercise of warrants for the same period in the prior year.

Current assets were $31.1

million on June 30, 2024, a decrease of $4.4 million at December 31, 2023, primarily due to decreases of $3.3 million in accounts receivable,

$1.6 million in cash, $0.3 million in prepaid expenses and other current assets, offset by an increase of $1.0 million in inventory.

liabilities increased to $20.2 million at June 30, 2024 from $16.9 million at December 31, 2023, primarily due to a $1.7 million increase

accrued expenses and $5.4 million increase in the fair value of contingent consideration liabilities.

As a result, our working capital

decreased to $16.0 million at June 30, 2024 compared to $23.8 million at December 31, 2023.

million on September 30, 2024, a decrease of $9.6 million at December 31, 2023, primarily due to decreases of $4.6 million in accounts

receivable, $5.5 million in cash, $0.3 million in prepaid expenses and other current assets, offset by an increase of $0.8 million in

inventory, $0.8 million in operating lease costs for Right of Use assets and $0.8 million in Goodwill related to the Telcom acquisition.

Current liabilities decreased to $13.3 million at September 30, 2024 from $16.9 million at December 31, 2023, primarily due to a $2.7

million decrease in the fair value of contingent consideration liabilities and $1.4 million decrease in accounts payable offset by $0.2

million in operating lease liabilities and.

As a result, our working capital decreased to $17.9 million at September 30, 2024 compared

to $23.8 million at December 31, 2023.

The Company has been focused

on marketing and sales efforts to increase our revenues.

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

and 206% from 2022 to 2023 demonstrating that this investment has been successful.

Improvements to gross profitability have been made

despite the current inflationary period.

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

units, which will reduce the cost per unit.

Our engineering and operations teams have made several design changes and process improvements

in our product development and manufacturing operations which has helped to increase labor efficiency and reduce material costs.

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

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

Our Serbian operations are also able to contribute to further cost

reductions to produce our products both in Europe and the U.S.

on product development, geographic expansion and on marketing and sales efforts to increase our revenues.

Revenues increased annually

by 45% from 2020 to 2021, 144% from 2021 to 2022, and 206% from 2022 to 2023 demonstrating that this investment has been successful.

to gross profitability have been made despite the recent inflationary period.

As revenues increase in the future, we expect to continue

to see our fixed overhead costs spread over more units, which will reduce the cost per unit.

Our engineering and operations teams have

made several design changes and process improvements in our product development and manufacturing operations which have helped to increase

labor efficiency and reduce material costs.

In addition, the Company increased pricing in Q3 of 2023 for the first time to cover some

of the inflationary cost increases, which we are beginning to benefit from as new orders are received and are shipped.

Our Serbian operations

are also able to contribute to further cost reductions to produce our products both in Europe and the U.S.

On March 22, 2023, the Company

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

The Company will act as collection agent

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

any applicable account receivables that are assigned to OCI.

The Company will act as a collection

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

on any applicable account receivables that are assigned to OCI.

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

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of production cost reduction measures.

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

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

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

The proceeds from these

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

Management cannot currently

predict when or if it will achieve positive cash flow.

There is no guarantee that profitable operations will be achieved, or that additional

capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be

sufficient to meet our obligations or enable us to continue to implement our long-term business strategy.

In addition, obtaining

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

In addition, we could pursue other equity or debt financing.

The proceeds from these offerings

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

Management cannot currently predict

when or if it will achieve positive cash flow.

There is no guarantee that profitable operations will be achieved, or that additional capital

or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient

to meet our obligations or enable us to continue to implement our long-term business strategy.

In addition, obtaining additional

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

Off-Balance Sheet Arrangements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis