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. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 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, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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) (i) rapid and significant changes to costs of raw materials from government tariffs or other market factors; significant currency fluctuation or foreign regulations that could impact our business; (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 II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution you that the foregoing list may not contain all of the forward-looking statements made in this Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors" and elsewhere in this Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. 23 The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances or to reflect new information or the occurrence of unanticipated events, except as required by law. Overview Beam is a clean-technology innovation company headquartered in San Diego, California with factories in the U.S. in San Diego, California and Broadview, Illinois and in Europe in Belgrade and Kraljevo, Serbia. We develop, design, engineer, manufacture, and sell high-quality, renewably energized infrastructure products for electric vehicle (“EV”) charging, infrastructure for Smart Cities (the interconnected physical and digital elements within a city that utilize technology to enhance efficiency, sustainability, and quality of life for residents), energy security and disaster preparedness and highly energy-dense battery solutions in safe, compact and unique form-factors. Additionally, we manufacture steel structures with electronic integration such as street lighting, cell towers and energy infrastructure products as well as power electronics including invertors, charge controllers, power supplies and LED lighting. Beam’s energy storage products provide high energy density in safe, compact and bespoke form-factors, which we believe are ideal for the rapidly growing mobile and stationary equipment product market which often requires electrical energy without being connected to the electrical grid. Our EV charging infrastructure products are powered by locally generated renewable energy and enable vital and highly valuable services in locations where it is either too expensive, disruptive, or impossible to connect to a utility grid, or where the requirements for electrical power are so important that grid failures, like blackouts, are intolerable. We do not compete with EV charging companies; rather, we assist these companies by offering infrastructure solutions that replace the time-consuming and expensive process of construction and electrical work which are usually required to install traditional grid-tied EV chargers. We also do not compete with utility companies. Our products enable utilities and others to deliver reliable and low-cost electricity to EV chargers and, in the case of a grid failure, to first responders and others, through our integrated emergency power panels. Our charging products are rapidly deployed without the need for construction or electrical work. We compete with the highly fragmented and disintegrated ecosystem of general contractors, electrical contractors, consultants, engineers, permitting specialists and others, who are required to perform a traditional grid-tied EV charger installation construction and electrical project. Our clean-technology products are designed to replace a complicated, expensive, time-consuming and risk prone process with an easy, robust and reliable product at a low cost of total ownership. We provide energy storage technologies that we believe make commodity battery cells safer, longer lasting and more energy efficient. Our battery management systems, and associated packaging, make batteries safer and usable in a variety of mobility, energy-security, and stationary applications. Our street lighting and other street furniture products are mass produced and sold in 18 nations globally. We are increasingly adding power electronics, energy storage, computing, sensing and reporting to our street furniture products as we evolve them to provided greater levels of Smart Cities services. Beam’s renewably energized infrastructure products and proprietary technology solutions target markets that are experiencing significant growth with annual global spending in billions of dollars. · EV charging infrastructure; · Smart Cities infrastructure; · energy storage solutions; · energy security and disaster preparedness; · transportation infrastructure products; and · Power electronics and telecommunications equipment 24 The Company focuses on creating high-quality products that are powered primarily by renewable energy, rapidly deployable, have diverse use cases and are attractively designed. We believe that there is a clear need for rapidly deployable and highly scalable EV charging and infrastructure for Smart Cities, and that our EV ARC™, BeamBike™, BeamPatrol™, BeamSkoot™, BeamSpot™ and other street furniture products fulfill that requirement. We are agnostic to the EV charging service equipment as we do not sell EV charging, rather we sell products which enable it. Our EV charging infrastructure products replace the traditional infrastructure required to support EV chargers, not the chargers themselves. We have over thirty years of experience deploying street-lighting, transportation, energy and telecommunications infrastructure products as a result of our 2023 acquisition of Amiga in Serbia. We have relationships with existing customers to whom we are now able to sell our renewably energized EV charging infrastructure products as well as our Smart Cities products. During the second half of 2024 we significantly expanded our product portfolio with the addition of rapidly deployed and highly scalable charging infrastructure products for electric bicycles, electric scooters, and electric motorcycles. We also introduced de-salination as a capability to enhance the lifesaving aspects of our disaster preparedness products. Powered by 100% renewable energy, our BeamWell™ self-sufficient water treatment system converts seawater into vital freshwater. It is equipped with four eMopeds for efficient and rapid transport in environments such as war zones, disaster or crisis zones, where people need drinking water, electricity and mobility most. Our ability to make commodity battery cells safer, longer lived and more energy efficient in bespoke enclosures is, we believe, a significant differentiator as we move to an increasingly electrified and untethered world. All of our renewably energized products generate their own electricity and are stored in our integrated batteries. Our ability to develop energy-dense, highly safe batteries in unique shapes and sizes allows us to serve customers with specialized needs, including manufacturers of drones, robotic and medical devices, submersibles, refrigerated transport units, and a wide range of other applications. We are also able to enhance our patented products which provide electric vehicle charging, energy security disaster preparedness through the creation of bespoke energy-dense and safe battery products which are unique to our in-house portfolio. We believe our chief differentiators are: · Our patented, renewably energized products dramatically reduce the cost, time and complexity of the installation and operation of EV charging infrastructure 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; · Our ability to add electrical capacity to provide for the significant increase demand brought by electrified transportation, data centers, AI and the electrification of industry, without having to go through expensive, time-consuming and risky utility grid expansion (adding power stations, transmission lines and distribution infrastructure like substations); · Our ability to create new and patentable products which are marketable and consist of a complex integration of our proprietary technology and parts with other commonly available engineered components, which create a further barrier to entry for our competition; · Our ability to create products which provide valuable solutions to nascent industries with very large market opportunities globally; · Our geographic footprint in North America and Europe, and existing customer base and contracts. 25 Overall Business Outlook Our revenues for the first three months of 2025 were $6.3 million, a 57% decrease from $14.6 million for the first three months in 2024. We believe that the decrease in revenue is a result of uncertainty in the U.S. government’s zero emission vehicle strategy related to the presidential election. 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 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. Revenues were diverse across federal, state and local governments, as well as enterprise and education sector customers. International customers comprised 25% of all revenue as of March 31, 2025 verses 11% for the three months ended March 31, 2024. Revenues derived from non-government commercial entities increased by 41% for the three months from 2024 to 2025 and were 53% of total revenues in 2025. For the three months ended, March 31, 2025, the Company’s sales to federal, state and local governments represented 47% of revenues verses 84% of the same period revenues in 2024. We continue to invest in sales employees, marketing resources, diversifying our product portfolio with new product offerings and expanding our geographic footprint to reduce our reliance on single large orders of our EV ARC™ product from 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. We have initiated a program of resellers, agents and distributors, as a sales force multiplication strategy without adding to our operating costs, as they are only compensated when they sell products. This means that we can take our greatly expanded product portfolio and sell it into greatly expanded geographic opportunities, without having to invest significantly. We now have resellers and agents in the United States, Spain, Portugal, Italy, Caribbean, Central America, the Balkans, the Middle East, Africa and Australia. 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. We have in place a Multiple Award Schedule Contract with the General Services Administration (GSA) that helps streamline purchases from Federal agencies and state and local governments. In addition, the GSA awarded Beam Global a federal blanket purchase agreement in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. In the three months ended March 31, 2025, we recorded revenues of $3.0 million for federal customers, compared to $12.2 million for the same period in 2024. 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 16% to 53% from the first three months of 2024 to the first three months of 2025. 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 zero emission vehicle policies. 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. Additionally, by achieving compliance with the Build America, Buy America Act, which ensures that our products are manufactured in the United States using a sufficient amount of domestically sourced materials, we will meet federal domestic production requirements. Furthermore, obtaining the CE mark (Conformité Européenne) a mandatory certification indicating that a product complies with European Union (EU) health, safety, and environmental protection standards, on EV ARC™, BeamBike™, BeamWell™ and BeamPatrol™ products, will allow our products to be freely traded within the European Economic Area (EEA). We believe these achievements will enhance our credibility, strengthen consumer trust, and increase demand for our products, particularly among federal, state, and local government agencies. 26 As a result of the acquisition of All Cell 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 18 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, rapidly deployed and highly scalable products can play a major role in the provision of EV charging infrastructure for all types of electric vehicles, bikes, scooters and motorcycles in Europe, the Middle East and Africa. 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 while reducing our costs and improving our margins. 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. In November 2024, we deployed our first sponsorship funded network of EV ARC™ systems at Belgrade International Airport in Serbia. Beam Global retains ownership of the deployed EV ARC™ units and receives recurring payments from Globos Osiguranje, the region’s fastest growing insurance company. In return, Globos Osiguranje benefits from prominent brand visibility, with their branding displayed on EV ARC™ systems installed in high-traffic parking spaces closest to the airport terminal. These branded systems are strategically positioned to be visible to travelers as they arrive at and depart from the airport. We also entered into an agreement with Vinci Airports, the world’s leading private airport operator with over 70 airports under management internationally, which does not require us to pay rent because of the amenity value that is delivered to the airport through the provision of a free driving on sunshine experience for their visitors and guests. We believe that we may be able to repeat this model in other Vinci airports around the world. We also believe that now that we have successfully proved that this business model works, we can further expand it into different types of environments where there are sufficient densities of people to make the advertising worthwhile. In December 2024, we partnered with Benzina Zero, an innovative provider of electric mopeds and scooters, electric bicycles and micro-mobility solutions. Benzina Zero (which is Italian for zero gasoline) is Australia’s leading e-mobility brand offering a range of e-scooters, e-mopeds, e-bikes and e-motorcycles. Benzina Zero work with global fleet businesses across a number of industries including food delivery, postal delivery to eco-tourism, and boast a comprehensive dealer network Australia-wide. Benzina Zero have appointed distributors in Australia, Italy, United Kingdom, Ireland, Slovenia and Croatia and are also active in New Zealand, Hong Kong, Singapore, Philippines and Finland. We will bundle Benzina Zero e-mobility solutions with products BeamBike™, BeamWell™ and BeamSkoot™, and will introduce Benzina’s highly ruggedized products to Beam’s existing customers and prospects globally. This is another approach to increase our sales channels without adding overhead costs. Our energy security business is also connected with the deployment of our EV charging infrastructure products and serves as an additional benefit to the value proposition of 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. Our 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. 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. 27 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. Beam Europe (formerly 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. 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. In addition, EV ARC™, BeamBike™, BeamWell™ and BeamPatrol™ products have fulfilled the requirements to receive the CE mark (Conformité Européenne), a mandatory symbol indicating that a product meets European Union (EU) health, safety and environmental protection requirements, allowing it to be freely traded within the European Economic Area (EEA). The Company reported a positive gross profit of $0.5 million for the three months ended March 31, 2025, compared to $1.5 million gross profit in 2024. Our gross margin as a percentage of sales was 7.9% for the three months ended March 31, 2025. Additionally, for the three months ended March 31, 2025, 88.4% of ARC sales reflected our price increase implemented in 2023. Our gross profits included a negative impact of $1.0 million for non-cash depreciation and intangible amortization. Our gross margin net of non-cash items was 20.6%. We expect to see our costs of goods sold continue to decrease over time. We have continued to implement lean manufacturing process improvements and making engineering changes to our products which we expect to result in cost reductions. Many of the components that we integrate into our products are manufactured by others. We continue to identify components and sub-assemblies that may be more cost effective to produce in our Serbian facilities, which we believe may further reduce our costs, increase our gross margins, and significantly increase the potential output from our US-based factories. 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 global 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 U.S., even as we continue to reduce our costs in the U.S. 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. Significant estimates in our condensed consolidated financial statements include, but are not limited to, accounting for acquisitions and business combinations; initial valuation and subsequent impairment testing of goodwill, other intangible assets and long-lived assets; leases; fair value of financial instruments, income taxes; inventory; and commitments and contingencies. 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, 2024. Results of Operations Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024 Revenues. For the three months ended March 31, 2025, our revenues decreased 57% to $6.3 million compared to $14.6 million for 2024. During the three months ended March 31, 2025, $1.0 million, or 14% of product sales, were to Federal customers. State and Local governments customers accounted for $2.1 million, or 33% of revenues. We continue to invest in sales, marketing and government relation 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. 28 Gross Profit. The Company reported a positive gross profit of $0.5 million, a 7.9% gross margin for the three months ended March 31, 2025, compared to a gross profit of $1.5 million, a 10.2% gross margin in 2024. Additionally, 24.1% of ARC sales in 2024 reflected the price increase implemented in 2023 and 88.4% in the first three months ending March 31, 2025. The gross profit includes a non-cash negative impact of $0.2 million for amortization of intangible assets resulting from the All Cell acquisition. Without this non-cash expense, gross profit for 2025 would be $0.7 million, a 10.9% gross margin. Our engineering team has continued to implement design changes during 2024 which reduced the bill of materials for the EV ARC TM , improving the product margins throughout 2024. We expect the Company’s revenue to grow in the future and our fixed overhead absorption to continue to improve. Operating Expenses and Impairment of Goodwill. Total operating expenses were $16.0 million for the three months ended March 31, 2025, compared to $4.5 million in 2024. The 2025 operating expenses included a $10.8 million goodwill impairment and a $0.8 million increase due to European acquisitions. Based on the results of the Company’s goodwill impairment procedures, the Company recorded goodwill impairment for the single reporting unit during the three months ended March 31, 2025. The Company believes the goodwill impairment reported during the three months ended March 31, 2025 is not a negative indicator of historic or current operating results and not a negative indicator of future performance as the Company has taken significant steps to diversify its geographical reach and product offerings while focusing strategic growth. The Company believes that the resulting non-cash charge has no impact on the Company’s compliance with its cash flows or available liquidity. Liquidity and Capital Resources At March 31, 2025, we had cash of $2.5 million, compared to $5.0 million at March 31, 2024. We have historically met our cash needs through a combination of debt and equity financing and most recently through gross profit contribution. Our cash requirements are generally for operating activities and acquisitions. 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: March 31, 2025 2024 Cash provided by (used in): Net cash used in operating activities $ (1,760 ) $ (3,026 ) Net cash used in investing activities $ (70 ) $ (2,817 ) Net cash provided (used) by financing activities $ (15 ) $ 277 For the three months ended March 31, 2025, our cash used in operating activities was $1.8 million compared to $3.0 million for the three months ended March 31, 2024. Net loss of $15.5 million for the three months ended March 31, 2025 was decreased by $12.5 million of non-cash expense items that included $10.8 million for Goodwill impairment, $1.0 million for depreciation and amortization, $0.5 million for stock-based compensation and $0.2 million in provisions for credit losses. Cash used in operations also included a $0.7 million decrease in accounts payable, $0.7 million decrease in accounts receivable, $0.6 million decrease in inventory and $0.1 million decrease in accrued expenses offset by $0.2 million increase in accrued expenses related to short term taxes payable, $0.2 million increase in other long term liabilities and $0.2 million increase in deferred revenue. For the three months ended March 31, 2024, our cash used in operating activities was $3.0 million compared to $0.6 million for the three months ended March 31, 2023. Net loss of $3.0 million for the three months ended March 31, 2024 was adjusted by $1.1 million of non-cash expense items that included depreciation and amortization of $0.9 million, employee stock-based compensation expense of $0.6 million, offset by decreases of $0.3 million provision on credit losses and $0.1 million for a change in fair value of contingent consideration liabilities. Further, cash used in operations included a $3.9 million increase in accounts receivable due to the increase in revenues and the timing of customer payments. Cash generated from operations included a $1.0 million increase in accounts payable primarily for inventory, $1.1 million increase in accrued expenses, $0.4 million decrease in inventory, $0.3 million increase in deferred revenue and $0.2 million decrease in prepaid expenses and other current assets. Cash used in investing activities in the three months ended March 31, 2025 and March 31, 2024 was $0.1 million related to the purchases of equipment in both years. The three months ended March 31, 2024, included a $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition. 29 For the three months ended March 31, 2025, cash used by our financing activities was $15 thousand related to repayments of note payables related to auto leases compared to $25 thousand borrowings in the prior year. Additionally, for the three months ended March 31, 2024, cash generated by our financing activities included $0.3 million for the exercise of warrants net of offering expenses. Current assets decreased to $23.6 million at March 31, 2025 from $27.1 million at December 31, 2024, primarily due to a $2.1 million decrease in cash, $1.0 million decrease in accounts receivable, and $0.4 million decrease in Inventory. Current liabilities decreased $0.4 million at March 31, 2025 compared to December 31, 2024, primarily due to a $0.6 million decrease in accounts payable offset by $0.2 million increase in sales tax payable. As a result, our working capital decreased to $10.8 million at March 31, 2025 compared to $13.8 million at December 31, 2024. The Company has been focused on marketing and sales efforts to increase our revenues, and we believe those efforts have led to an increase in revenues by 144% from 2021 to 2022 and 206% from 2022 to 2023. Even though there was a decrease in revenues by 27% from 2023 to 2024, we believe our marketing and sales efforts have been impactful. The Company has improved its gross profit in 2024 and will continue to in 2025, and it is expected to improve in the future as a result of a price increases implemented late 2023 being almost fully recognized in 2025 and benefits from cost reductions from several design changes. As revenues increase, we expect to continue to see our fixed overhead costs spread over more units, which will reduce the cost per unit further. The Company continued to see material cost reductions as synergies are recognized, especially with steel and battery cells, and we expect this trend to continue. This combined with engineering and manufacturing improvements should result in increasing gross profit margin on the EV ARC™ in the future. The Company may be required to raise capital to fund its operations until it achieves positive cash flow, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. The Company 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. 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. 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 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 receivable 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. 30 On April 11, 2025, the Company entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc., pursuant to which the Company has the right, but not the obligation, to sell up to $8 million in shares of its common stock, subject to certain terms and conditions. Management believes that evolution in the operations of the Company may allow it to execute its strategic plan and enable it to experience profitable growth in the future. This evolution is anticipated to include the following continual steps: addition of sales personnel and independent sales channels, reductions in direct costs due to engineering and manufacturing improvements, continued management of overhead costs, increased overhead absorption resulting from volume growth, process improvements and vendor negotiations leading to cost reductions, increased public awareness of the Company and its products, and the continued acceleration of average sales cycle opportunities. Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue operations. There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives. 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