Beam Global 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations References 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 statements that are based on current expectations, estimates, forecasts, and projections about us, the industry in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” and variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company’s actual results to be materially different from any future results expressed or implied by the Company in those statements. The most important factors that could prevent the Company from achieving its stated goals include, but are not limited to, the following: (a) volatility or decline of the Company’s stock price, or absence of stock price appreciation; (b) fluctuation in quarterly results; (c) failure of the Company to earn revenues or profits; (d) inadequate capital to continue or expand its business, and the inability to raise additional capital or financing to implement its business plans; (e) reductions in demand for the Company’s products and services, whether because of competition, general industry conditions, loss of tax incentives for solar power, technological obsolescence or other reasons; (f) litigation with or legal claims and allegations by outside parties; (g) insufficient revenues to cover operating costs, resulting in persistent losses; (h) rapid and significant changes to costs of raw materials from government tariffs or other market factors; (i) failure to realize the anticipated benefits of any acquisition or difficulties in integrating any acquisition with the Company and its operations; (j) the preceding and other factors discussed in Part I, Item 1A, “Risk Factors,” and other reports we may file with the Securities and Exchange Commission from time to time; and (k) the factors set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Because factors referred to elsewhere in this report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 (sometimes referred to as the “2023 Form 10-K”) that we previously filed with the Securities and Exchange Commission, including without limitation the “Risk Factors” section in the 2023 Form 10-K, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as may be required by applicable law, we undertake no obligation to release publicly the results of any revisions to these forward-looking statements or to reflect events or circumstances arising after the date of this report on Form 10-Q. 22 Overview Beam Global develops, manufactures, and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy 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. The electronics are elevated to the underside of the sun-tracking solar array making the unit flood-proof up to nine and a half feet and allowing adequate space to park a vehicle on the engineered ballast and traction pad which gives the product stability and a certified wind rating of 160 miles per hour. - Solar Tree® DCFC – Patented off-grid, renewably energized and rapidly deployed, single-column mounted smart generation and energy storage system with the capability to provide a 150kW DC fast charge to one or more electric vehicles or larger vehicles. - 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.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. An off-grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets. 23 We believe that there is a clear need for a rapidly deployable and highly scalable EV charging infrastructure, and that our products fulfill that requirement. Unlike grid-tied installations which require general and electrical contractors, engineers, consultants, digging trenches, permitting, pouring concrete, wiring, and ongoing utility bills, the EV ARC™ system can be deployed in minutes, not months, and is powered by renewable energy so there is no utility bill. 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. We believe our chief differentiators for our electric vehicle charging and energy security infrastructure products are: · our patented, renewable energy products dramatically reduce the cost, time and complexity of the installation and operation of EV charging infrastructure and outdoor media platforms when compared to traditional, utility grid tied alternatives; · our proprietary and patented energy storage solutions; · our first-to-market advantage with EV charging infrastructure products which are renewably energized, rapidly deployed and require no construction or electrical work on site; · our products’ capability to operate during grid outages and to provide a source of EV charging and emergency power rather than becoming inoperable during times of emergency or other grid interruptions; and · our ability to continuously create new and patentable marketable inventions by integrating our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition; · our international operations in two of the three largest automotive markets in the world today. 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 spaces. 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. The 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” 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; (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. 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 equipment. 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. 24 Overall Business Outlook Our revenues for the first 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 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 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 acquisition of All Cell, a battery technology company, will increase our new customer opportunities. We now have the ability to value engineer bespoke battery solutions for our products. Beam All-Cell ™ batteries are ideally suited for applications where energy density, safety and bespoke enclosures require high power in small spaces. Drones, submersibles, recreational products and a host of micro mobility and electric vehicle products are already benefiting from our Beam All-Cell ™ highly differentiated products. With the continued growth of untethered electrification, we believe there is an opportunity for increased demand in these markets and others. In 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 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. 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 equipment. 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. 25 Our energy security business 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 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. We 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. 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 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. We expect 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 in the US. 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. 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. 26 Results of Operations Comparison of Results of Operations for the Three Months Ended September 30, 2024 and 2023 Revenues. For the quarter 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. For the 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. Total 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 Nine Months Ended September 30, 2024 and 2023 Revenues. For 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. 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. 27 Gross Profit. For 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. This is primarily a result of cost improvements developed during 2023 which are now being recognized and the positive margins we are generating from the acquisition of Amiga. Our gross profits were negatively impacted by $2.8 million for non-cash depreciation and intangible amortization. Our gross 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. Total 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 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 of debt and equity financing. 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, 2024 2023 Cash provided by (used in): Net cash used in provided by operating activities $ (3,052 ) $ (13,768 ) Net cash used in investing activities $ (3,658 ) $ (881 ) Net cash provided by financing activities $ 1,218 $ 27,726 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. For the nine months ended September 30, 2023, our cash used in operating activities was $13.8 million compared to $15.7 million for the nine months ended September 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 assets. Cash used in investing activities 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. 28 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 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 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. Improvements 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 entered into that certain Supply Chain Line of Credit with OCI Limited (“OCI”), whereby OCI may provide a supply chain line of credit in the amount of up to $100 million based on the amounts of approved accounts receivable of the Company (the “Credit Facility”). In order to request a drawdown on the Credit Facility, the Company is required to submit a transaction request to OCI which sets forth the terms of the applicable account receivables, including but not limited to the name of the party responsible for the applicable account receivables (the “Obligor”), the terms of repayment and the amount of such receivables. The Company has no obligation to submit a drawdown request and OCI is not obligated to accept any drawdown request from the Company. In the event OCI accepts a drawdown request of the Company and upon satisfaction of certain conditions required by OCI to issue the drawdown, OCI will disburse funds to the Company for such drawdown in an amount equal to the full value of the applicable account receivables assigned to OCI minus any transaction expenses incurred by OCI and the full amount of interest to be incurred for such receivables over the term of the drawdown. The Company will pay interest on any drawdown at the Secured Overnight Financing Rate +300 basis points. Upon the disbursement of funds to the Company for a drawdown, the Company will assign all rights to such account receivables of the Obligor to OCI. The Company will act as 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, (ii) the Company or the Obligor is insolvent or is subject to reorganization or liquidation, or (iii) any dispute related to an agreement with an Obligor or non-payment by an Obligor, OCI has the right to exercise any contractual rights it may have against Obligor, increase the interest rate to the agreed upon default interest rate, and demand immediate repayment by the Company for the outstanding amounts owed under such account receivables. The Company has also agreed to indemnify OCI for any losses incurred by OCI in connection with the Credit Facility. Either party may terminate the Credit Facility at any time by providing fifteen (15) days prior written notice to the other party. To date, Beam Global has not drawn on this line of credit. The Company may be required to raise capital until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. In 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. 29 Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable