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What changed in Beam Global's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Beam Global's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+283 added−293 removedSource: 10-K (2024-04-16) vs 10-K (2023-03-31)

Top changes in Beam Global's 2023 10-K

283 paragraphs added · 293 removed · 181 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

93 edited+26 added−34 removed38 unchanged
Biggest changeA picture of Beam Global’s products was used to illustrate the front cover of that manual. · California approved a plan for nearly $2.9 billion in funding for 90,000 new electric vehicle chargers in the state in December 2022 through its California Energy Commission. · The Federal Highway Administration (FHWA) of the US Department of Transportation published a final rule on February 29, 2023 establishing regulations setting minimum standards and requirements for projects funded under the NEVI Program which will be effective March 30, 2023 through its California Energy Commission. · The U.S.
Biggest changeBeam Global’s products were pictured on the front cover of that manual. · In December 2022, the California Energy Commission approved a $2.9 billion investment plan to fund approximately 90,000 new electric vehicle chargers in the state. 9 · The U.S.
Our Electric Vehicle (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, too 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.
Our Electric Vehicle (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.
Beam’s renewable energy infrastructure products and proprietary technology solutions target four markets that are experiencing significant growth with annual global spending in the billions of dollars. · electric vehicle charging infrastructure; · energy storage solutions; · energy security and disaster preparedness; and · outdoor media advertising. 2 The Company focuses on creating high-quality renewable energy products that are rapidly deployable, have diverse use cases and are attractively designed.
Beam’s renewable energy infrastructure products and proprietary technology solutions target four markets that are experiencing significant growth with annual global spending in the billions of dollars. · electric vehicle charging infrastructure; · energy storage solutions; · energy security and disaster preparedness; · outdoor media advertising. 2 The Company focuses on creating high-quality renewable energy products that are rapidly deployable, have diverse use cases and are attractively designed.
In addition, General Motors has committed to only offer zero-emissions vehicles by 2035 and six major automakers including Ford, Mercedes-Benz, Volvo and 3 others, along with 30 nations, signed a pledge to eliminate sales of new gas and diesel-powered cars by 2035 in leading markets.
General Motors has committed to only offer zero-emissions vehicles by 2035 and six major automakers including Ford, Mercedes-Benz, Volvo and 3 others, along with 30 nations, signed a pledge to eliminate sales of new gas and diesel-powered cars by 2035 in leading markets.
Energy Storage Solutions The global lithium-ion battery market size is projected to grow from USD 41.1 billion in 2021 to USD 116.6 billion by 2030; and it is expected to grow at a compound annual growth rate (CAGR) of 12.3% from 2021 to 2030 according to MarketsandMarkets Analysis.
Energy Storage Solutions According to MarketsandMarkets Analysis, the global lithium-ion battery market size is projected to grow from $41.1 billion in 2021 to $116.6 billion by 2030; and it is expected to grow at a compound annual growth rate (CAGR) of 12.3% from 2021 to 2030.
The cost and complexity to deploy our products will not increase and in fact, we believe that, like any other manufacturing company, our costs will decrease while our efficiency and deployment velocity increases. · We believe that the utility grid lacks sufficient capacity to replace oil as transportation fuel.
The cost and complexity to deploy our products will not increase and in fact, we believe that, like any other manufacturing company, our costs will decrease while our efficiency and deployment velocity increases. o We believe that the utility grid lacks sufficient capacity to replace oil as transportation fuel.
There have been kinetic and cyber attacks on the grid and the U.S. government has evidence of intrusions by nefarious nation state actors. A recent Wall Street Journal article reported that attacks on the US power grid rose 71% in 2022 over 2021.
There have been kinetic and cyber-attacks on the grid and the U.S. government has evidence of intrusions by nefarious nation state actors. A Wall Street Journal article reported that attacks on the US power grid rose 71% in 2022 over 2021.
Most of the temporary employees are retained through a temporary employment agency to maximize our flexibility and to reduce the risks and costs associated with permanent employees. We believe our employee relations to be good. None of our employees are represented by a labor union or collective bargaining agreement. 13
Most of the temporary employees are retained through a temporary employment agency to maximize our flexibility and to reduce the risks and costs associated with permanent employees. We believe our employee relations to be good. None of our employees are represented by a labor union or collective bargaining agreement.
Our energy storage products create high performance energy storage solutions used in EV charging, electric vehicles, micro mobility, aviation, medical devices, robotics, stationary storage and maritime applications. We believe that we are unique in the EV charging industry in that we use our own proprietary energy storage solutions in our EV ARC™ units.
Our energy storage products create high performance energy storage solutions used in EV charging, electric vehicles, micro mobility, aviation, medical devices, robotics, stationary storage, and maritime applications. We believe that we are unique in the EV charging industry in that we use our own proprietary energy storage solutions in our EV ARC™ and EV Standard™ units.
We have been heavily investing more in marketing materials and videos, and we have engaged a public relations firm to educate the market. Beam uses research to identify potential customers, as well as contacts established through trade show events and in-bound calls.
We have been investing more in marketing materials and videos, and we have engaged a public relations firm to educate the market. Beam uses research to identify potential customers, as well as contacts established through trade show events and in-bound calls.
Our clean-technology products are designed to replace a complicated, expensive, time consuming and risk prone process with an easy, low total cost of ownership, robust and reliable product.
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.
Our current contracts with California, Florida, New York City, and the Federal government through our General Services Administration (GSA) Multiple Award Schedule Contract should ideally position us to take advantage of what we believe will be a significant increase for the requirements of robust and sustainable EV charging infrastructure. The Biden administration has stressed increased commitment to: 1.
We believe that our current contracts with California, Florida, New York City, and the Federal government through our General Services Administration (GSA) Multiple Award Schedule Contract ideally position us to take advantage of what we believe will be a significant increase for the requirements of robust and sustainable EV charging infrastructure. The Biden administration has stressed increased commitment to: 1.
American made products 2. Clean Energy 3. Energy Security 4. Electrified transportation 5. Transportation infrastructure We believe that our products are ideally suited to fulfill all of these requirements.
American made products 2. Clean Energy 3. Energy Security 4. Electrified transportation 5. Transportation infrastructure We believe that our products are ideally suited to fulfill all these requirements.
State and local governments focusing on the transportation industry and the electrification of fleet vehicles to reduce carbon emissions. Many of these factors have been important since the early days of EV adoption. Government tail winds are stronger than ever with many nations and states announcing the outright banning of gasoline and diesel vehicle sales during the next two decades.
State and local governments focusing on the transportation industry and the electrification of fleet vehicles to reduce carbon emissions. Many of these factors have been important since the early days of EV adoption. Government tail winds are stronger than ever with many nations and states announcing the outright ban on gasoline and diesel vehicle sales during the next two decades.
Products and Technologies Electric vehicle charging infrastructure All of our infrastructure products currently incorporate the same underlying technology with a built-in renewable energy source in the form of attached solar panels and/or a light wind generator, along with battery storage which enables our products to generate and store all of their own electricity while operating without connecting to the utility grid.
Products and Technologies Electric vehicle charging infrastructure. Our clean energy infrastructure products currently incorporate the same underlying technology with a built-in renewable energy source in the form of attached solar panels and/or a light wind generator, along with battery storage, which enables our products to generate and store their own electricity while operating without connecting to the utility grid.
We believe our Solar Tree® product to be the only single column, sun tracking, solar support structure with integrated energy storage, EV charging and media platforms available today. The design of our Solar Tree® systems are ideal for charging electric buses, electric heavy-duty vehicles, electric agricultural equipment, public transportation and electric vehicles used in the construction industry.
We believe our Solar Tree® product to be the only single column, sun tracking, solar support structure with integrated energy storage, EV charging and media platforms available today. The design of our Solar Tree® systems is ideal for charging electric buses, electric heavy-duty vehicles, electric agricultural equipment, public transportation, and electric vehicles used in the construction industry.
(Nasdaq: ISUN) offers an off-grid charging solution using solar power to charge batteries, but their product is not transportable, does not have solar tracking, does not fit in a standard parking space and requires permitting, construction and electrical work for its installation. · EV Sheltron uses 20ft shipping containers with batteries inside, solar panels on the roof and an EV charger bolted to the outside.
(Nasdaq: ISUN) offers an off grid charging solution using solar power to charge batteries, but their product is not transportable, does not have solar tracking, does not fit in a standard parking space and requires permitting, construction and electrical work for its installation. · EV Sheltron uses 20-foot shipping containers with batteries inside, solar panels on the roof and an EV charger bolted to the outside.
Our EV ARC™ and Solar Tree™ products replace the infrastructure required to support EV chargers, not the chargers themselves. Our ability to make commodity battery cells safer, longer lived and more energy efficient is, we believe, a significant differentiator as we move to an increasingly electrified and untethered world.
Our EV ARC™ and Solar Tree™ products replace the infrastructure required to support EV chargers, not the chargers themselves. 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.
Our products also create significant reductions in greenhouse gas and CO2 emissions which, we believe, is a further inducement to encourage corporations to sponsor our network as they may benefit from the carbon offsets generated by a network of EV ARC™ systems. · SolarTree® Products – This patented product is used for larger scale solar powered EV charging applications.
Our products also create significant reductions in greenhouse gas and CO2 emissions which, we believe, is a further inducement to encourage corporations to sponsor our network as they may benefit from the carbon offsets generated by a network of EV ARC™ systems. · SolarTree® Products – These patented products are used for larger scale solar powered EV charging applications.
Sales and Marketing Beam utilizes a combination of an in-house sales team and outside consultants and sells through a direct sales and marketing channel, pairing customers with our sales specialists, or Clean Mobility Experts, to ensure their needs are met. 8 Our sales process is heavily focused on educating prospective customers about our products.
Sales and Marketing Beam utilizes a combination of an in-house sales team and outside consultants, pairing customers with our sales specialists, or Clean Mobility Experts, to ensure their needs are met. 8 Our sales process is heavily focused on educating prospective customers about our products.
Energy Security and Disaster Preparedness Power outages cost the United States up to $200 billion per year according to the United States Department of Energy.
Energy Security and Disaster Preparedness Power outages cost the United States up to $150 billion per year according to the United States Department of Energy.
Because EV ARC™ systems are highly visible, we believe that they are an ideal platform for sponsored deployments wherein networks of EV ARC™ systems are deployed and owned by us and monetized through sponsorship and naming-rights agreements with corporate sponsors who are eager to have their brands associated with renewable, clean-energy by sponsoring a city-wide sponsorship of free EV charging through what we refer to as the “Driving on Sunshine” network.
Because EV ARC™ systems are highly visible, we believe that they are an ideal platform for sponsored deployments wherein networks of EV ARC™ systems are deployed and owned by us and monetized through sponsorship and naming-rights agreements with corporate sponsors who are eager to have their brands associated with renewable, clean-energy by sponsoring a city-wide sponsorship of free EV charging through what we refer to as our Drive on Sunshine™ network.
Another example of an entity which is providing free or discounted EV charging infrastructure is Electrify America, the EV charging provider is required to spend approximately $2 billion on EV charging infrastructure ($800 million in California) to satisfy the requirements of a settlement with the U.S. government.
Electrify America is another example of an entity which is providing free or discounted EV charging infrastructure is Electrify America is required to spend approximately $2 billion by the end of 2026 on EV charging infrastructure ($800 million in California) to satisfy the requirements of a settlement with the U.S. government.
We also believe that our Solar Tree® products which may be optimized for branding can create a visually appealing platform for the delivery of a sponsor’s brand with a less onerous planning and entitlement process than that experienced with traditional signage. The National Electric Vehicle Infrastructure program (NEVI) requires 600kW of DC fast charging every 50 miles on US highways.
We also believe that our Solar Tree® products which may be optimized for branding can create a visually appealing platform for the delivery of a sponsor’s brand with a less onerous planning and entitlement process than that experienced with traditional signage. 4 The National Electric Vehicle Infrastructure program (NEVI) requires states to provide at least 600kW of DC fast charging on every 50 miles on US highways.
Our strategic growth plan includes: · Engaging government relations experts to educate decision makers on the value of our “Made in America” products. · Increase marketing efforts to educate potential customers. · Expanding our geographic footprint and customer base. · Increasing our gross margins by increasing production volumes, improving operating efficiencies and reducing the cost of materials and production. · Increase leverage of outsourcing as our manufacturing process scales. · Expand our recurring revenue business. · Educate potential customers regarding federal and other government grants, investment tax credits, and other incentives available to our customers. · Capture market share of the electrified personal and public transportation space, which is at a nascent phase. · Continue to expand our Outdoor Media Business unit. · Continue to develop and innovate new products and building a strong IP portfolio.
Our strategic growth plan includes: · Engaging government relations experts to educate decision makers on the value of our “Made in America” products. · Increase marketing efforts to educate potential customers. · Expanding our geographic footprint and customer base, especially in Europe, the world’s largest automative market. · Increasing our gross margins by increasing production volumes, improving operating efficiencies and reducing the cost of materials and production. · Increase leverage of outsourcing as our manufacturing process scales. · Expand our recurring revenue business. · Educate potential customers regarding federal and other government grants, investment tax credits, and other incentives available to our customers. · Capture market share of the electrified personal and public transportation space, which is at a nascent phase. · Continue to develop and innovate new products and build a strong IP portfolio.
We also believe that as the easiest (low hanging fruit) locations for grid-tied chargers are used up, the process of deploying traditionally installed and powered grid-tied EV chargers will become more expensive and time consuming. At the same time, we believe that we will continue to reduce the costs to produce our products and become faster at deploying them.
We also believe that as the easiest (low hanging fruit) locations for grid-tied chargers are established, the process of deploying traditionally installed and powered grid-tied EV chargers will become more expensive and time consuming. At the same time, we believe that we will continue to reduce the costs of producing our products and become faster at deploying them.
High concentration of EV drivers and a cultural desire to be good stewards of the environment. · Technological Factors . Regions with good insolation, expensive energy costs, and poor or degraded air quality, and a lack of capacity or expensive upgrade requirements for their utility grid. · Consumer Products.
High concentration of EV drivers and a cultural desire to be good stewards of the environment. · Technological Factors . We believe our products are ideal for regions with good insolation, expensive energy costs, and poor or degraded air quality, and a lack of capacity or expensive upgrade requirements for their utility grid. · Consumer Products.
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 sufficient electrical capacity to provide for the significant increase demand brought by EVs, without having to go through expensive, time consuming and risky utility grid expansion (adding power stations, transmission lines and distribution infrastructure like substations); and · our ability to continuously create new and patentable inventions which are marketable and a complex integration of our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition.
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 EVs, 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 extensive geographic footprint in North America and Europe, and existing customer base and contracts.
We intend to deploy our “Driving on Sunshine” network in highly populated areas where we will deliver free EV charging while monetizing the network of EV ARC™ systems through corporate sponsorship programs.
We intend to deploy our Drive on Sunshine™ network in highly populated areas where we will deliver free EV charging while monetizing the network of EV ARC™ systems through corporate sponsorship programs.
We believe that the U.S. and global utility grids lack sufficient capacity to supply enough electricity to all the new EVs and other electrical devices which are becoming increasingly available to consumers, especially considering the number of national and state governments that have announced future bans on the sale of gasoline and diesel vehicles, as early as 2025 in Norway, and 2030 in Germany, with most bans being put in place no later than 2040.
We believe that the U.S. and global utility grids lack sufficient capacity to supply enough electricity to all the new EVs, AI, data centers, electrified industry and other electrical devices which are becoming increasingly available to consumers and business, especially considering the number of national and state governments that have announced future bans on the sale of gasoline and diesel vehicles, as early as 2025 in Norway, and 2035 in Europe, with most bans being put in place no later than 2040.
Our EV ARC™ and Solar Tree® currently provide, and our EV Standard™ will provide, locally generated and stored electricity and are a highly robust and secure source of power to EVs. We are engaged with government officials at every level to increase awareness of our products and the benefits they can bring to energy security.
Our EV ARC™ and Solar Tree® currently provide, and our EV-Standard™ will provide, locally generated and stored electricity. We are engaged with government officials at every level to increase awareness of our products and the benefits they can bring to energy security.
Federal Government, including the Department of Homeland Security, United States Marine Corps, and many other federal agencies, the State of California, which is a conglomeration of California state agencies and municipalities, and the City of New York.
Army, Department of Veterans Affairs, Department of Homeland Security, United States Marine Corps, and many other federal agencies, the State of California, which is a conglomeration of California state agencies and municipalities, and the City of New York.
We do not compete with EV charging companies; rather, we enable such companies by providing 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 utilities.
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.
The facility houses our corporate operations, sales, design, engineering and product manufacturing. In 2022, we were staffed for one shift, five days a week and believe that at that level we can produce approximately 260 EV ARC™ units per year.
The facility houses our corporate operations, sales, design, engineering and product manufacturing. In 2022, we were staffed for one shift, five days a week and produce approximately 260 EV ARC™ units.
We do not view utilities as long-term competition and instead view them as a significant opportunity as they increasingly add off grid solutions to their energy mix. Where energy security is concerned, we consider the competition from companies that produce generators and combined solar and storage solutions.
We do not view utilities as competition and instead view them as a significant opportunity as they increasingly add off grid solutions to their energy mix. 11 Where energy security is concerned, we compete with companies that produce generators and combined solar and storage solutions.
Research reports indicate that the EV infrastructure market is expected to reach $222 Billion by 2030 which is a 31% compound annual growth rate (CAGR) between 2023 – 2030. California approved a plan for nearly $2.9 billion in funding for 90,000 new electric vehicle chargers in the state in December 2022 through its California Energy Commission.
Research reports indicate that the EV infrastructure market is expected to reach $224.8 Billion by 2032 which is a 27.5% compound annual growth rate (CAGR) between 2024 – 2032. In December 2022, the California Energy Commission approved a plan for nearly $2.9 billion in funding for 90,000 new electric vehicle chargers in the state.
We also support our customers by identifying grants and the federal grant process to reduce the cost of their purchase. Our products may be eligible for various tax and other incentives which can significantly reduce the out-of-pocket expense paid by a customer for our products.
We also support our customers by identifying grants and the federal grant process to reduce the cost of their purchase. Our products may be eligible for various taxes and other incentives, which can significantly reduce the out-of-pocket expense paid by our customer. Examples of these incentives include: · Federal Solar Investment Tax Credit (ITC) (Section 48 of the tax code).
As unit sales continue to increase, we anticipate that we will be able to spread our fixed overhead costs over more units, reducing the cost per unit. Customer Concentration During 2022, 62% of our revenue was attributable to federal, state and local governments, compared to 87% in 2021.
As unit sales continue to increase, we anticipate that we will be able to spread our fixed overhead costs over more units, which, along with our other cost controlling efforts will reduce the cost per unit. Customer Concentration During 2023, 80% of our revenue was attributable to federal, state, and local governments, compared to 63% in 2022.
Our unique ability to deliver 25% more driving miles to an EV from an off-grid solar installation is, we believe, a significant differentiator. o Our ability to continuously improve our product’s energy production while reducing costs means that while the grid-tied competition is stuck at a theoretical maximum amount of energy that can be delivered at a given location, our products have continued to deliver more power without costing more. o Beam offers a product that delivers DC fast charging solely from solar generation, which we have not seen in the market to date. 12 Manufacturing We are headquartered in San Diego, California in a leased building of approximately 53,000 square feet professionally equipped to handle the significant growth possibilities we believe are in front of us.
Our unique ability to deliver up to 25% more driving miles to an EV from an off-grid solar installation is, we believe, a significant differentiator. o Over time, we have continued to make improvements to our product which increases our product’s energy production while reducing product costs, whereas the grid-tied competition is stuck at a theoretical maximum amount of energy that can be delivered at a given location. 12 Manufacturing We are headquartered in San Diego, California in a leased building of approximately 53,000 square feet professionally equipped to handle the significant growth possibilities we believe are in front of us.
ITEM 1. BUSINESS. Overview Beam is a clean-technology innovation company based in San Diego, California. We develop, manufacture and sell high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media advertising.
ITEM 1. BUSINESS. Overview Beam is a clean-technology innovation company headquartered in San Diego, California with factories in San Diego, Chicago and Kraljevo, Serbia in Europe. We develop, manufacture, and sell high-quality, renewably energized products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness, street lighting, telecommunications, and energy infrastructure.
Some of the federal and state funding programs include: · A federal infrastructure bill passed in November 2021 designated $7.5 billion for the deployment of 500,000 EV charging stations across the US, $5.0 billion of which will be made available under the new National Electric Vehicle Infrastructure (NEVI) Formula Program which is allocated to state transportation departments and an additional $2.5 billion is available in grant opportunities to help connect rural and marginalized communities to electric vehicles.
In addition, President Biden has made several commitments to the funding of clean energy and EV charging at the federal level and we believe, if re-elected in 2024, the current administration will continue incentives for these products an example of some of the federal and state funding programs include: · A federal infrastructure bill passed in November 2021 designated $7.5 billion for the deployment of 500,000 EV charging stations across the US, $5.0 billion of which will be made available under the new National Electric Vehicle Infrastructure (NEVI) Formula Program which is allocated annually to state transportation departments and an additional $2.5 billion is available in grant opportunities to help connect rural and marginalized communities to electric vehicles.
We do compete with a number of companies which are involved in the design, construction and installation of fixed grid-connected EV charging stations that depend on the utility grid for a source of power, and on the construction and civil and electrical engineering services for the installation of traditional infrastructure.
We do compete with several companies which are involved in the design, construction and installation of fixed grid-connected EV charging stations that depend on the utility grid for a source of power, and on the construction and civil and electrical engineering services for the installation of traditional infrastructure. 10 Competition in the solar renewable energy and EV charging industries is intense, and competition is fragmented among a wide variety of entities.
Furthermore, 23% of our revenue was attributable to the state agencies and municipalities in the State of California, compared to 55% in 2021. Backlog Our backlog at December 31, 2022 was $59.3 million, of which $58.8 million is deliverable within twelve months. Our backlog at December 31, 2021 was $4.1 million, of which $3.9 million is deliverable within twelve months.
Furthermore, 14% of our revenue was attributable to the state agencies and municipalities in the State of California, compared to 29% in 2022. Backlog Our backlog on December 31, 2023, was $21.7 million. Our backlog on December 31, 2022, was $59.3 million, of which $58.8 million is deliverable within twelve months.
The California Contract permits California state and local government agencies, including cities, counties, special districts, California State universities, University of California systems, K-12 school districts, and community colleges, to purchase EV ARCs™, ARC Mobility™ Trailers, and related accessories from us.
Our contract with the California Department of General Services (the “California Contract”) permits California state and local government agencies, including cities, counties, special districts, California State universities, University of California systems, K-12 school districts, and community colleges, to purchase EV ARCs™, ARC Mobility™ Trailers, and our EV ARC™ DC Fast Charging Electric Vehicle Autonomous Renewable Charger and related accessories from us.
Beam’s products are powered by renewable sources. As a result, there is no charge for on-going energy to power vehicles because our products do not generate a utility bill. o Ability to operate during blackouts and brownouts.
These grid-tied projects can take six months to two years to complete. o Lower total cost of ownership. Beam’s products are powered by renewable sources. As a result, there is no charge for on-going energy to power vehicles because our products do not generate a utility bill. o Ability to operate during blackouts and brownouts.
The sale of our products often have long sales cycles due to the large capital expense and sophisticated nature of our products though we have observed a reduction in the length of certain sales cycles along with an increase in the number of units ordered recently.
The sale of our products can often have long sales cycles due to the capital expense, budgeting cycles, and the sophisticated nature of our products, though we have also increasingly observed shorter sales cycles along with an increase in the number of units ordered in recent years.
Two feet of the container will encroach on the drive aisle which is generally not a good idea and often illegal because drive aisles can also serve as fire lanes. o Container does not have BeamTrak™, our patented sun tracking and as such cannot get the same energy density which means less electricity to deliver to EVs. o Containers can be considered unsightly and many property owners may not want them in their parking lots even without the above points being made.
Two feet of the container will encroach on the drive aisle which is generally not a good idea and often illegal because drive aisles can also serve as fire lanes. o Shipping containers do not have BeamTrak™, our patented sun tracking product and cannot get the same energy density which means less electricity to deliver to EVs. o Shipping containers can be considered unsightly, and many property owners may not want them in their parking lots. · Paired Power offers a “pop-up” solar canopy but we do not believe that it fits inside a legal sized parking space without reducing available parking.
There are no utility bills to pay and there is generally no disruptive planning or required permits from the utility or local governments. Current grid-tied EV chargers are often placed in locations where a suitable circuit is most easily accessed and cheapest to install, rather than in the most convenient and desirable locations for EV drivers.
Current grid-tied EV chargers are often placed in locations where a suitable circuit is most easily accessed and cheapest to install, rather than in the most convenient and desirable locations for EV drivers.
Reported backlog represents firm purchase orders or contracts received by customers for deliveries scheduled in the future. Government Regulation Businesses in general are subject to extensive regulation at the federal, state, and local level.
Reported backlog represents firm purchase orders or contracts received by customers for deliveries scheduled in the future. Government Regulation Businesses in general are subject to extensive regulation at the federal, state, and local level. We are subject to extensive government regulation relating to employment, health, safety, working conditions, labor relations, and the environment during the conduct of our business.
In order for our customers to take advantage of available tax and other governmental incentives associated with the installation of solar power production facilities, and the production and use or sale of solar power, they must comply with the applicable regulatory terms and conditions.
In the event that our customers elect to connect our products to the utility grid, they must comply with the applicable rules and regulations of the relevant state public utility agencies. or our customers to take advantage of available tax and other governmental incentives associated with the installation of solar power production facilities, and the production and use or sale of solar power, they must comply with the applicable regulatory terms and conditions.
One objective is to sell advertising space on our products to a company, with the proceeds being used to fund the delivery of EV ARC™ systems.
Outdoor Media Advertising The Company believes there is opportunity in the outdoor advertising space to place outdoor advertising content on Beam’s infrastructure products. The objective is to sell advertising space on our products to a company, with the proceeds being used to fund the delivery of EV ARC™ systems.
We are able to provide EV charging to locations in many cases in less time than it would take them to pull permits for grid-tied solutions. · Scalability.
As EV adoption increases the requirement for EV charging infrastructure becomes more acute and more urgent. We are able to provide EV charging to locations in many cases in less time than it would take to pull permits for grid-tied solutions. · Scalability.
Changes to new government regulations may have a material adverse impact on our business, operating results, and financial condition. Employees As of the date of this report, we have 131 employees, of which 30 are temporary employees.
There may also be government regulations that could impact us as we begin to sell into the European market. Changes to new government regulations may have a material adverse impact on our business, operating results, and financial condition. 13 Employees As of the date of this report, we have 323 employees, of which 25 are temporary employees.
This compares with requiring an entire ecosystem involving the design, engineering, permitting and constructing of civil projects which requires engaging a company, or group of companies, including architects, civil engineers, electrical engineers, zoning specialists, consultants, general contractors, electrical contractors, and EVSE vendors. These grid-tied projects can take six months to two years to complete. o Lower total cost of ownership.
This compares favorably with grid-tied alternatives which involve an entire ecosystem for the design, engineering, permitting, and constructing of civil projects which requires engaging a company, or group of companies, including architects, civil engineers, electrical engineers, zoning specialists, consultants, general contractors, electrical contractors, and EVSE vendors.
They can deploy almost as fast as we can and operate off grid but there are several clear disadvantages: 10 o Containers render a parking space unusable. Our products do not do that and that strength is protected by one of our patents. Most jurisdictions have a minimum number of parking spaces required for the use on the property.
They can deploy almost as fast as we can, and operate off grid, but there are several clear disadvantages: o Containers render a parking space unusable. Our products do not reduce available parking space which is an aspect of our product that is protected by one of our patents.
Even those grid-tied solutions that have back up battery integration rely on the grid to charge their batteries. During prolonged grid failures, those systems fail while Beam products continue to operate. o Because a grid connection is not required, Beam’s EV ARC™ can be located anywhere, including remote locations that are hard to connect to a grid.
During prolonged grid failures, those systems fail while Beam products will continue to operate. o Because a grid connection is not required, Beam’s EV ARC™ can be located anywhere, including prime locations in the front of buildings or remote locations that are hard to connect to a grid.
All of our products are currently designed, developed and manufactured in one or other of these facilities. We have been able to reduce our costs and improve our quality by performing fabrication in-house. This also provides a good environment for improving the manufacturing process as well as for the development of new products.
We have been able to reduce our costs and improve our quality by performing fabrication in-house. This also provides a good environment for improving the manufacturing process, as well as for the development of new products. Many of our suppliers are local, which allows for shorter lead times and lower transportation costs.
EV ARC™ products can charge between one and six EVs simultaneously and a single unit can provide EV charging to as many as 12 parking spaces. Because the EV ARC™ systems are solar powered, they are not disrupted during grid interruptions such as black-outs or brown-outs which is becoming increasingly important as more transportation relies on electricity for fuel.
Because the EV ARC™ systems are solar powered, they are not disrupted during grid interruptions such as black-outs or brown-outs which is becoming increasingly important as more transportation relies on electricity for fuel.
We currently have seven utility customers and anticipate that that number will grow as more utilities become engaged in EV charging and also in deploying distributed generation resources to enhance grid stability. Our product is unique in that we are a complete solution for EV charging infrastructure requirements.
We also do not compete with utilities who use our product as another tool to provide electricity, primarily for EV charging to their customers. We currently have seven utility customers and anticipate that that number will grow as more utilities become engaged in EV charging and in deploying distributed generation resources to enhance grid stability.
Our product provides both a renewable energy source, and EV charging capability in a rapidly deployed and highly scalable construction-free format.
Our product is unique in that we are a complete solution for EV charging infrastructure requirements. Our product provides both a renewable energy source, and EV charging capability in a rapidly deployable and highly scalable construction-free format.
They are typically electrical and general contracting companies as well as some larger project management firms such as Black and Veatch, Bechtel, CH2M Hill and AECOM. Companies such as ChargePoint (NYSE: CHPT) and Blink (NASDAQ: BLNK) offer EV charging services and hardware but not, typically, installation.
They are typically electrical and general contracting companies as well as some larger project management firms such as Black and Veatch, Bechtel, CH2M Hill and AECOM.
We believe that the consumer will adopt EVs faster than many experts are predicting and that as a result, the requirement for growth in EV charging infrastructure will be more urgent than is currently forecasted or contemplated.
GM has launched an electric Hummer which has 1000HP (compared to the gasoline version with 300HP) with a similar acceleration rate as the F150. 7 We believe that consumers will adopt EVs faster than many experts are predicting and that as a result, the requirement for growth in EV charging infrastructure will be more urgent than is currently forecasted or contemplated.
We also provide energy storage technologies that make commodity battery cells safer, longer lasting and more energy efficient and our battery management systems (BMS) and associated packaging make batteries safe and usable in a variety of mobility, energy-security and stationary applications. Our charging products are rapidly deployed without the need for construction or electrical work.
Our battery management systems (BMS), 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 17 nations globally. Our charging products are rapidly deployed without the need for construction or electrical work.
Our products provide utilities with another tool 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 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. We also provide energy storage technologies that make commodity battery cells safer, longer lasting and more energy efficient.
The EV-Standard™ is currently in development and will use an existing streetlamp’s foundation and grid connection. Combining solar, wind-power and the streetlamp grid connection into on-board batteries which are stored in the EV Standard’s column, the product will deliver meaningful Level II EV charging at “curbside” or “on street”.
Combining solar, wind-power and the streetlamp grid connection with on-board batteries which are stored in the EV Standard’s column, the product will deliver meaningful Level II EV charging at “curbside” or “on street” locations. The EV Standard™ design combines a tracking solar panel, wind energy and utility-generated electricity from the existing streetlamp grid connection in a bank of integrated batteries.
Since 1981, the F150 has been the most popular vehicle in the US and the top selling pickup truck for forty-two years in a row. The electric version of the F150 has the same towing and payload capacity and will be able to accelerate from 0 to 60 mph in under four seconds.
The electric version of the F150 has the same towing and payload capacity and will be able to accelerate from 0 to 60 mph in under four seconds.
In the U.S., California, Oregon and the State of Washington have announced bans starting in 2035, less than seven years from now. In addition, automotive manufacturers have started production of electric vehicles which are more consistent with traditional car models that have been popular with U.S. consumers. Ford is selling an all-electric F150 pickup truck which launched in 2022.
Automotive manufacturers have started production of electric vehicles which are more consistent with traditional car models that have been popular with U.S. consumers. Ford is selling an all-electric F150 pickup truck launched in 2022. Since 1981, the F150 has been the most popular vehicle in the US and the top selling pickup truck for forty-three years in a row.
We also do not believe that it can withstand the same environmental conditions such as wind and seismic that our EV ARC™ product can.
We also do not believe that it can withstand the same environmental conditions such as wind and seismic that our EV ARC™ product can. It also must be assembled by on-site personnel in contrast to our EV ARC™’s rapid assembly-free unfolding deployment.
Major Customer Contracts In 2022 and 2021, we had two major customer contracts, the State of California and the General Services Administration (GSA) Multiple Award Schedule (MAS) that accounted for a substantial portion of our revenue. Contract with the California Department of General Services .
Major Customer Contracts In 2023 and 2022, we had two major customer contracts, the State of California and the General Services Administration (GSA) Multiple Award Schedule (MAS) that accounted for 77% and 60% of revenues for the years ended December 31, 2023 and 2022, respectively.
We are subject to extensive government regulation relating to employment, health, safety, working conditions, labor relations, and the environment in the course of the conduct of our business. In order for our customers to enable the installation of some of our products, they can be required to obtain permits from local and other governmental agencies.
In order for our customers to enable the installation of some of our products, they can be required to obtain permits from local and other governmental agencies.
Department of Transportation’s new Charging and Fueling Infrastructure (CFI) Discretionary Grant Program, established by the Bipartisan Infrastructure Law, will provide $2.5 billion over five years to a wide range of applicants, including cities, counties, local governments, and tribes.
Department of Transportation’s Charging and Fueling Infrastructure (CFI) Discretionary Grant Program, established by the Bipartisan Infrastructure Law, provides $2.5 billion over five years to a wide range of applicants, including cities, counties, local governments, and tribes to strategically deploy EV charging and other alternative vehicle-fueling infrastructure projects in publicly accessible locations in urban and rural communities, as well as along designated Alternative Fuel Corridors (AFCs).
As a result of our recent acquisition of All Cell in 2022, we also lease an 18,000 sq/ft facility in Broadview, Illinois where we produce our energy storage products for our own products and also for a variety of other customers who need energy storage solutions.
We also lease a 37,800 square foot facility in Broadview, Illinois where we produce our energy storage products for our own products and for a variety of other customers who need energy storage solutions. We intend to produce EV Standard™ products in this facility as well.
Competition in the solar renewable energy and EV charging industries is intense, and competition is fragmented among a wide variety of entities. Companies such as Schneider, Eaton, Enel X, and Bosch manufacture EV charging units but do not offer charging services. There are many companies which offer installation services for the EV charging market.
Companies such as Schneider, Eaton, Enel X, and Bosch manufacture EV charging units but do not offer charging services. Companies such as ChargePoint (NYSE: CHPT) and Blink (NASDAQ: BLNK) offer EV charging services and hardware but not, typically, installation. There are many companies which offer installation services for the EV charging market.
We believe that our products have a global appeal and that we are only at a very early stage in t he development of our sector. We believe that our strategic growth plan will enable us to increase our user base and revenues while increasing profitability.
We believe that our strategic growth plan will enable us to increase our user base and revenues while increasing profitability.
Many of our suppliers are local which allows for shorter lead times and lower transportation costs. The EV ARC™ product family requires no field installation work and is typically delivered to the customer site by us or by a third-party transportation company for a fee.
The EV ARC™ product family requires no field installation work and is typically delivered to the customer site by us or by a third-party transportation company for a fee. We sell our Solar Tree® products as an engineered kit of parts to be installed by third parties employed by the buyer of the Solar Tree® kit.
It does not need a grid connection and therefore needs no trenching, switch gear, or transformer upgrades. Because there is no foundation, trench or electrical infrastructure, the EV ARC™ typically does not require a building or any other kind of permit, and it is easily transportable if a different location is desired.
Because there is no foundation, trench or electrical infrastructure, the EV ARC™ typically does not require a building or any other kind of permit, and it is easily transportable if a different location is desired. EV ARC™ products support Level I, Level II and DC Fast Charging (requiring 4 interconnected units) and can charge between one and six EVs simultaneously.
Our ability to deploy EV charging infrastructure with a fixed cost in environments with difficult, time consuming permitting and regulatory requirements and high construction and electrical costs. · Speed to deploy. As EV adoption increases the requirement for EV charging infrastructure becomes more acute and more urgent.
We believe this provides a strong growth opportunity for Beam’s products. The factors below have been considered in determining favorable markets for our products: · Economic Factors . Our ability to deploy EV charging infrastructure with a fixed cost in environments with difficult, time consuming permitting and regulatory requirements and high construction and electrical costs. · Speed to deploy.
This contract simplifies the federal procurement process and ensures best pricing. We sold 96 EV ARCs™ through this contract totaling $7.9 million in 2022. Competitors We do not compete with EV charging companies or utilities. In fact, we support the major EV charging product and service providers by factory integrating their products onto ours prior to deployment.
Competitors We do not compete with EV charging companies or utilities. In fact, we support the major EV charging product and service providers by factory integrating their products onto ours, prior to deployment. We have deployed ChargePoint, Blink, Enel, Electrify America and many other quality charging brands.
These segments can further be broken down into increasingly granular segments as different market opportunities are identified. 6 Beam’s largest customers include the U.S.
Strategy Target Markets Beam’s target markets consist of several broad segments: state, municipal and federal governments and agencies, auto manufacturers, corporations, energy utility companies, universities, retail, hospitality, and international markets. These segments can further be broken down into increasingly granular segments as different market opportunities are identified. 6 Beam’s largest customers include the U.S. Federal Government, including the U.S.
EV ARC™ systems do not need to be connected to the grid and as such, can be placed anywhere, making them a rapidly deployable and highly scalable solution for EV charging infrastructure deployed where it is wanted and needed rather than where it is cheapest and easiest to connect to the utility grid.
EV ARC™ systems do not need to be connected to the grid and as such, can be placed anywhere, making them a rapidly deployable and highly scalable solution for EV charging infrastructure. We received a patent in 2024 for a version of the EV ARC™ which, when fully developed, will be able to provide wireless charging to suitably equipped EVs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to attract, train and retain highly qualified personnel, the quality of our services may decline and we may not successfully execute our growth strategies. Our success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including technical personnel.
Biggest changeOur future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. 19 If we are unable to attract, train and retain highly qualified personnel, the quality of our services may decline and we may not successfully execute our growth strategies.
Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include: · perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs; · the limited range over which EVs may be driven on a single battery charge and concerns about running out of power without access to sufficient charging infrastructure; 14 · improvements in the fuel economy of the internal combustion engine; · the environmental consciousness of consumers; · volatility in the cost of oil and gasoline; · consumers’ perceptions of the dependency of the U.S. on oil from unstable or hostile countries and the impact of international conflicts; · government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; · access to charging stations and consumers’ perceptions about convenience and cost to charge an EV; and · the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles.
Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include: · perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs; · the limited range over which EVs may be driven on a single battery charge and concerns about running out of power without access to sufficient charging infrastructure; · improvements in the fuel economy of the internal combustion engine; · the environmental consciousness of consumers; · volatility in the cost of oil and gasoline; · consumers’ perceptions of the dependency of the U.S. on oil from unstable or hostile countries and the impact of international conflicts; · government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; · access to charging stations and consumers’ perceptions about convenience and cost to charge an EV; and · the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles.
The public market trading price of our common stock is likely to be highly volatile, may decline, and could fluctuate widely in response to various factors, many of which are beyond our control, including the following: · changes in our industry; · competitive pricing pressures; · our ability to obtain working capital financing; · additions or departures of key personnel; · limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; · sales of our common stock privately or in the public market, by us or by other shareholders; · our ability to execute our business plan; · operating results that fall below expectations; · loss of any strategic relationship; · adverse regulatory developments; · adverse economic and other external factors; · additional dilution of ownership because of the issuance of new securities by us, and period-to-period fluctuations in our financial condition or operating results.
The public market trading price of our common stock is likely to be highly volatile, may decline, and could fluctuate widely in response to various factors, many of which are beyond our control, including the following: · changes in our industry; · competitive pricing pressures; · our ability to obtain working capital financing; · additions or departures of key personnel; · limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; · sales of our common stock privately or in the public market, by us or by other shareholders; · our ability to execute our business plan; · operating results that fall below expectations; 23 · loss of any strategic relationship; · adverse regulatory developments; · adverse economic and other external factors; · additional dilution of ownership because of the issuance of new securities by us, and period-to-period fluctuations in our financial condition or operating results.
In such instances, except for our grid-connected products, the EV charger would have to recharge through solar energy replenishment or other direct outside charge before EV charging could resume. 16 Developments in alternative technologies or improvements in distributed solar energy generation may have a material adverse effect on demand for our offerings.
In such instances, except for our grid-connected products, the EV charger would have to recharge through solar energy replenishment or other direct outside charge before EV charging could resume. Developments in alternative technologies or improvements in distributed solar energy generation may have a material adverse effect on demand for our offerings.
The existence of anticipated sales, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. 22
The existence of anticipated sales, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
This is why we have focused on the development of autonomous infrastructure products which do not require construction for their deployment. The success of our product offering may in some instances require the availability of locations provided by municipalities or private owners of real estate.
This is why we have focused on the development of autonomous infrastructure products which do not require construction for their deployment. 21 The success of our product offering may in some instances require the availability of locations provided by municipalities or private owners of real estate.
We may be able to secure supply from another source and incorporate it in our design, but it would require modifications which could impact product deliveries. For these components, we maintain adequate supply to mitigate any supply risk. 18 We have experienced technological changes in our industry.
We may be able to secure supply from another source and incorporate it in our design, but it would require modifications which could impact product deliveries. For these components, we maintain adequate supply to mitigate any supply risk. We have experienced technological changes in our industry.
There is no assurance that our equipment will remain competitive in the market in the future, causing possible customer complaints and claims, and the loss of sales in the future. Our Company depends on key suppliers . The Company sources its materials and components from a wide variety of vendors.
There is no assurance that our equipment will remain competitive in the market in the future, causing possible customer complaints and claims, and the loss of sales in the future. 20 Our Company depends on key suppliers . The Company sources its materials and components from a wide variety of vendors.
However, we can give no assurance that such measures will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future. 21 Our stock price may be volatile.
However, we can give no assurance that such measures will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future. Our stock price may be volatile.
Any new regulations or policies pertaining to our products may result in significant additional expenses to us, which could cause a significant reduction in demand for our solar power products. In high demand locations, the use of our products could exhaust their electricity supply on particular days, even with our storage batteries.
Any new regulations or policies pertaining to our products may result in significant additional expenses to us, which could cause a significant reduction in demand for our solar power products. In high demand locations, the use of our products could exhaust its electricity supply on particular days, even with our storage batteries.
If we fail to compete successfully, our business would suffer and we may lose or be unable to gain market share and our business and results of operations would be adversely affected. 15 A significant portion of our revenue is derived from our core product category.
If we fail to compete successfully, our business would suffer and we may lose or be unable to gain market share and our business and results of operations would be adversely affected. 17 A significant portion of our revenue is derived from our core product category.
As part of our business strategy, we intend to make acquisitions to add complementary companies, products or technologies, such as our recent acquisition of All Cell. Our acquisitions may not achieve our goals, and we may not realize benefits from acquisitions.
As part of our business strategy, we intend to make acquisitions to add complementary companies, products or technologies, such as our recent acquisitions of All Cell and Amiga. Our acquisitions may not achieve our goals, and we may not realize benefits from acquisitions.
While we now have energy storage products following our acquisition of AllCell Technologies, Inc. in 2022 and we offer our Solar Tree product and we intend to bring our EV Standard™ product to market, no assurance can be given that our EV ARC™ sales will continue to have market acceptance or that they will continue to grow in the future.
While we now have energy storage products following our acquisition of All Cell Technologies, Inc. in 2022, and we offer our Solar Tree product and we intend to bring our EV-Standard™ product to market, no assurance can be given that our EV ARC™ sales will continue to have market acceptance or that they will continue to grow in the future.
We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our securities. We would expect to finance any future acquisitions through a combination of additional issuances of equity, corporate indebtedness or cash from operations.
We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our securities. We would expect to finance any future acquisitions through a one or a combination of equity, debt or cash from operations.
We cannot assure that any of our efforts will prove successful or that we will not continue to incur operating losses. We may need to raise additional capital or financing to continue to execute and expand our business. Our net proceeds from a public offering in 2020 helped to fund our operations for recent years.
We cannot ensure that any of our efforts will prove successful or that we will not continue to incur operating losses. We may need to raise additional capital or financing to continue to execute and expand our business. Our net proceeds from public offerings in 2020 and 2023 helped to fund our operations for recent years.
Non-cash expenses including depreciation, amortization, non-cash compensation and contingent consideration included in the above losses are $9.2 million and $1.3 million for fiscal years ended December 31, 2022 and December 31, 2021, respectively. Further, as of December 31, 2022, we had an accumulated deficit of $77.3 million.
Non-cash expenses including depreciation, amortization, non-cash compensation and contingent consideration included in the above losses are $4.3 million and $9.2 million for fiscal years ended December 31, 2023 and December 31, 2022, respectively. Further, as of December 31, 2023, we had an accumulated deficit of $93.4 million.
We maintain substantially all of our cash and cash equivalents in accounts with U.S. banks and financial institutions, including Silicon Valley Bank ("SVB"), and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions.
We maintain substantially all of our cash and cash equivalents in accounts with U.S. banks and financial institutions, including Bank of America and Silicon Valley Bank as a division of First Citizens Bank ("SVB"), and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions.
Our common stock is listed on the Nasdaq Capital Market. If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements and the minimum bid price requirement, Nasdaq may take steps to delist our common stock.
If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements and the minimum bid price requirement, Nasdaq may take steps to delist our common stock.
In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.
In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. 22 We have identified a material weakness in our internal controls over financial reporting.
We currently do not have effective manufacturing or purchasing systems in place to track inventory and purchasing transactions or a perpetual inventory system. The Company performs manual processes during the year to track and control our inventory and purchases.
We have not previously had effective manufacturing or purchasing systems in place to track inventory and purchasing transactions or a perpetual inventory system. The Company previously performed manual processes during the year to track and control our inventory and purchases.
For our fiscal years ended December 31, 2022 and December 31, 2021, we experienced net losses of $19.7 million and $6.6 million, respectively, including cash and noncash expenses under generally accepted accounting principles).
For our fiscal years ended December 31, 2023 and December 31, 2022, we experienced net losses of $16.1 million and $19.7 million, respectively, including cash and non-cash expenses under generally accepted accounting principles.
We have identified a material weakness in our internal controls over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
In particular, we may incur liability if one or more of our other products are deemed to have caused a personal injury. Should uninsured losses occur, they would have a material adverse effect on our operating results, financial condition, and business performance. We may face litigation in the future.
In particular, we may incur liability if one or more of our other products are deemed to have caused a personal injury. Should uninsured losses occur, they would have a material adverse effect on our operating results, financial condition, and business performance. Cyber-attacks or other breaches of information technology security could adversely impact our business and operations.
Competition in our market may intensify in the future. Competitors may develop products that may ultimately have costs similar to, or lower than, our projected costs.
Our competitors often have greater market recognition and substantially greater resources than we do. Competition in our market may intensify in the future. Competitors may develop products that may ultimately have costs similar to, or lower than, our projected costs.
As a condition of granting necessary permits, regulators could make demands that increase our customers’ expected costs of construction and operations, in which case they may delay or cancel delivery of certain sub-sets of our products.
To install Beam’s Solar Tree® products, our customers may be required to obtain and comply with a number of permitting requirements. As a condition of granting necessary permits, regulators could make demands that increase our customers’ expected costs of construction and operations, in which case they may delay or cancel delivery of certain sub-sets of our products.
Compliance with new and existing environmental laws and rules could significantly increase construction and start-up costs for our customers, deterring customers from purchasing a small sub-set of our products and services. To install Beam’s Solar Tree® products, our customers may be required to obtain and comply with a number of permitting requirements.
Compliance with new and existing environmental laws and rules is required. Compliance with new and existing environmental laws and rules could significantly increase construction and start-up costs for our customers, deterring customers from purchasing a small sub-set of our products and services.
Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our results of operations and liquidity. 20 Risks Relating to our Organization and our Common Stock Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common shares and our ability to access the capital markets.
Risks Relating to our Organization and our Common Stock Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common shares and our ability to access the capital markets. Our common stock is listed on the Nasdaq Capital Market.
While these processes provide good results in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact our ability to submit timely reporting.
While these processes provide good results in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact our ability to submit timely reporting. We implemented a new accounting system in Q4 2023 which will automate these functions which we believe will alleviate the material weakness in the future.
Any failure by us to adopt new or enhanced technologies or processes, or to react to changes in existing technologies, could result in product obsolescence, the loss of competitiveness of our products, decreased revenue and a loss of market share to competitors.
Any failure by us to adopt new or enhanced technologies or processes, or to react to changes in existing technologies, could result in product obsolescence, the loss of competitiveness of our products, decreased revenue and a loss of market share to competitors. 18 Defects or performance problems in our products could result in loss of customers, reputational damage, and decreased revenue, and we may face warranty, indemnity, and product liability claims arising from defective products.
In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Our acquisition strategy could require significant management attention, disrupt our business and harm our business, revenue and financial results.
In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.
However, there is no guarantee that we can raise capital using this vehicle at terms that are acceptable to the Company if we need to fund investment in our business or if it takes longer than expected to achieve positive cashflow.
However, there is no guarantee that we can raise capital at terms that are acceptable to the Company if we need to fund investment in our business or if it takes longer than expected to achieve positive cashflow. We may be required to pursue sources of additional capital through various means, including sale and leasing arrangements, and debt financing.
Competition in the solar renewable energy and EV charging industries is intense, and competition is fragmented among a wide variety of entities. We operate in a highly competitive environment that is characterized by price fluctuations and rapid technological change. Our competitors often have greater market recognition and substantially greater resources than we do.
Our challenge is to market our products to ensure that potential customers in this industry are aware of our product offering. Competition in the solar renewable energy and EV charging industries is intense, and competition is fragmented among a wide variety of entities. We operate in a highly competitive environment that is characterized by price fluctuations and rapid technological change.
Our growth is highly dependent upon the adoption of electric vehicles (“EV”), and we are subject to a risk of any reduced demand for EVs. If the market for EVs does not gain broad market acceptance or develops more slowly than we expect, our business, prospects, financial condition and operating results may be harmed.
If the market for EVs does not gain broad market acceptance or develops more slowly than we expect, our business, prospects, financial condition and operating results may be harmed.
Errors, defects, or poor performance can arise due to design flaws, defects in raw materials or components or manufacturing difficulties, which can affect both the quality and the yield of the product.
Although our products meet our stringent quality requirements, they may contain undetected errors or defects, especially when first introduced or when new generations are released. Errors, defects, or poor performance can arise due to design flaws, defects in raw materials or components or manufacturing difficulties, which can affect both the quality and the yield of the product.
If we are unable to protect our rights to our intellectual property or if such property infringes on the rights of others, our business could be materially adversely affected. 17 The success of our business depends on the continuing contributions of Desmond Wheatley and other key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel.
The success of our business depends on the continuing contributions of Desmond Wheatley and other key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel. We rely heavily on the services of Desmond Wheatley, our chairman and chief executive officer, as well as other management personnel.
We are not aware of other companies that provide a similar infrastructure product that we do, utilizing solar energy to power EV charging in a transportable product. However, we compete with traditional grid-tied charging stations. Our challenge is to market our products to ensure that potential customers in this industry are aware of our product offering.
Some companies are beginning to offer similar products that provide a similar infrastructure product that we do, utilizing solar energy to power EV charging in a transportable product, but currently they do not provide all of the features and advantages that we offer, and which are patent protected. However, we compete with traditional grid-tied charging stations.
The contract with the State of California can be used by a diverse group of state and local agencies within the state or across the country for the purchase of our products. The receipt of orders under this contract has been irregular and can create fluctuation in our revenues.
In addition, we were awarded several federal contracts in 2022, that may not be repeated in the future. The contract with the State of California can be used by a diverse group of state and local agencies within the state or across the country for the purchase of our products.
Our revenues are concentrated in a small number of customers and they may decrease significantly if we were to lose one of these customers .
If the amount of capital we can raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly. Our revenues are concentrated in a small number of customers and our revenue may decrease significantly if we were to lose one of these customers .
We rely heavily on the services of Desmond Wheatley, our chairman and chief executive officer, as well as other management personnel. The Compensation Committee has structured a long-term compensation plan to retain key employees, however, loss of the services of any such individuals would adversely impact our operations.
The Compensation Committee has structured a long-term compensation plan to retain key employees, however, loss of the services of any such individuals would adversely impact our operations. In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors.
In addition, there is no obligation for this customer to purchase any additional units, or to renew the contract when it expires. The State of California contract will expire on June 23, 2025. Our revenue growth depends on consumers’ willingness to adopt electric vehicles.
The State of California contract will expire on June 23, 2025. 14 Our revenue growth depends on consumers’ willingness to adopt electric vehicles. Our growth is highly dependent upon the adoption of electric vehicles (“EV”).
The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business. We are exposed to various possible claims and hazards relating to our business, and our insurance may not fully protect us.
We are exposed to various possible claims and hazards relating to our business, and our insurance may not fully protect us.
Removed
On September 2, 2022, we entered into a Common Stock Purchase Agreement with B. Riley, under which the Company has the right, in its sole discretion, to sell to B.
Added
We have a few large customers including the U.S. Army and the Department of Veterans Affairs that generated 38% and 16%, respectively, of revenues in 2023. The loss of or a significant decline in sales to any of these customers could adversely affect our business, results of operations, and financial condition.
Removed
Riley up to $30.0 million, or a maximum of 2.0 million shares of the Company’s common stock at 97% of the volume weighted average price (“VWAP”) of the Company’s common stock.
Added
The receipt of orders under this contract has been irregular and can create fluctuation in our revenues. In addition, there is no obligation for this customer to purchase any additional units, or to renew the contract when it expires.
Removed
We may be required to pursue sources of additional capital through various means, including sale and leasing arrangements, and debt or equity financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.
Added
Our acquisition strategy could require significant management attention, disrupt our business and harm our business, revenue and financial results. 15 We may fail to realize all of the anticipated benefits of the acquisition of Amiga or those benefits may take longer to realize than expected and our business, financial condition and results of operation could be materially and adversely affected.
Removed
We have a few large customers including the State of California’s Department of General Services and the City of New York that generated 16% and 6%, respectively, of revenues in 2022 and 38% and 2%, respectively, of revenues in 2021. In addition, we were awarded several federal contracts in 2022, that may not be repeated in the future.
Added
We may also encounter significant difficulties in integrating Amiga with Beam and its operations. Our ability to realize the anticipated benefits of the acquisition of Amiga will depend, in part, on our ability to integrate Amiga, which may be a complex, costly, and time-consuming process.
Removed
We are dependent on a limited number of suppliers for our battery cells, and in the current market, there is a risk that these suppliers will not be able to provide cells at prices and volumes acceptable to us, which could have an adverse effect on our business.
Added
We will be required to devote significant management attention and resources to integrate the business practices and operations of the acquired business. The integration process may disrupt our business and, if implemented ineffectively, could restrict the realization of the full expected benefits.
Removed
We source battery cells from a few suppliers, but the demand for cells and for lithium has increased over the past year with the increase in electrification and the growing demand for electric vehicles.
Added
In addition, the integration of the acquired business may result in material unanticipated issues, expenses, liabilities, competitive responses, and diversion of management’s attention.
Removed
It is possible that our suppliers will not have adequate supply to cover our demand, or the price of the cells will increase due to shortages, impacting our ability to ship units and/or cause the price of our products to increase.
Added
The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the acquisition could cause an interruption of, or a loss of momentum in, our operations and could materially and adversely affect our business, financial condition and results of operations.
Removed
While we believe that we will be able to establish additional supplier relationships for our battery cells, we may be unable to do so in the short term or at all at prices, quality or costs that are favorable to us. We face intense competition, and many of our competitors have substantially greater resources than we do.
Added
Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected benefits and diversion of management’s time and energy, which could adversely affect our business, financial condition and results of operations and result in us becoming subject to litigation.
Removed
Defects or performance problems in our products could result in loss of customers, reputational damage, and decreased revenue, and we may face warranty, indemnity, and product liability claims arising from defective products. Although our products meet our stringent quality requirements, they may contain undetected errors or defects, especially when first introduced or when new generations are released.
Added
In addition, even if the acquisition were to be integrated successfully, the anticipated benefits of the acquisition may not be realized within the anticipated time frame, or at all. We may not be able to maintain the results of operations or operating efficiency that we and the acquired business have achieved or might achieve separately.
Removed
In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors. Our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel.
Added
Further, additional unanticipated costs may be incurred in the integration process as a result of risks currently unknown to us. All these factors could cause reductions in our earnings per share, decrease or delay any accretive or other beneficial effect of the acquisition and negatively impact the price of our common stock.
Removed
Our business strategy may depend on the widespread adoption of solar power and EV charging technology. The market for solar power products is emerging and rapidly evolving, and its future success is uncertain.
Added
Amiga is a private Serbian company that has not been subject to an audit by an accounting firm under U.S. GAAP standards and has not previously been subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC or other corporate governance requirements. Amiga is a private Serbian company.
Removed
If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we could be unable to generate enough revenues to achieve and sustain profitability and positive cash flow.
Added
Prior to our acquisition of Amiga, Amiga had not had its financial statements reviewed or audited by an accounting firm under U.S. GAAP standards and has not been subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or other corporate governance requirements to which public reporting companies may be subject.
Removed
The factors influencing the widespread adoption of solar power technology include but are not limited to: · cost-effectiveness and efficiency of solar power technologies as compared with conventional and non-solar alternative energy technologies; · performance and reliability of solar power products as compared with conventional and non-solar alternative energy products; · fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels; · continued deregulation of the electric power industry and broader energy industry; and · availability of governmental subsidies and incentives. 19 Compliance with new and existing environmental laws and rules is required.
Added
As a result, we are required to implement the appropriate internal control processes and procedures over Amiga’s financial accounting and reporting. We may incur significant legal, accounting, and other expenses in efforts to ensure that Amiga meets these requirements.
Removed
We are implementing new systems beginning in January 2023 with scheduled completion by the end of Q2 to automate these functions which we believe will alleviate the material weakness in 2023.
Added
Implementing the controls and procedures at Amiga that are required to comply with the various applicable laws and regulations may place a significant burden on our management and internal resources. The diversion of management’s attention and any difficulties encountered in such an implementation could adversely affect our business, financial condition and operating results.
Added
Our inability to successfully integrate Amiga’s operations could adversely affect our operations; potential need for additional financing. Our acquisition of Amiga requires our and Amiga’s significant attention and resources, which could reduce the likelihood of achievement of other corporate goals. Both we and Amiga have experienced significant operating losses.
Added
As a result, we may need additional financing to help fund our business and satisfy our obligations, which will require additional management time to address. There is no assurance that we will realize the benefits of the acquisition of Amiga that we hope will be achieved.
Added
As a result of the acquisition of Amiga, Beam expects to generate an increasing portion of its revenue internationally in the future and may become subject to various additional risks relating to its international activities, which could adversely affect its business, operating results and financial condition. 16 Beam has limited experience operating internationally and engaging in international business involves a number of difficulties and risks, including: · the challenges associated with building local brand awareness, obtaining local key opinion leader support and clinical support, implementing reimbursement strategies and building local marketing and sales teams; · required compliance with foreign regulatory requirements and laws, including regulations and laws; · trade relations among the United States and those foreign countries in which Beam’s future customers, distributors, manufacturers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries; · difficulties and costs of staffing and managing foreign operations; · difficulties protecting, procuring or enforcing intellectual property rights internationally; · required compliance with anti-bribery laws, such as the U.S.
Added
Foreign Corrupt Practices Act, data privacy requirements, labor laws and anti-competition regulations; · laws and business practices that may favor local companies; · longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; · political and economic instability; and · potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers.
Added
In the event that Beam dedicates significant resources to its international operations and is unable to manage these risks effectively, Beam’s business, operating results and financial condition may be adversely affected. We are subject to foreign currency exchange rate and other related risks.
Added
With the acquisition of Amiga, we are subject to foreign currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenues.
Added
In addition, since our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates, especially the Euro and the Serbian Dinar, between the U.S. dollar and other currencies will impact our results of operations, financial condition, and cash flows. We also face risks arising from the imposition of foreign exchange controls and currency devaluations.
Added
Foreign exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing control. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation.
Added
We face intense competition, and many of our competitors have substantially greater resources than we do.
Added
If we are unable to protect our rights to our intellectual property or if such property infringes on the rights of others, our business could be materially adversely affected.
Added
Our success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including technical personnel. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Chicago, Illinois office consisting of 15,582 square feet of office and warehouse space is located at 2600 S. 25 th Avenue, Suite Z, Broadview, Illinois, 60155 with lease term through August 31 st , 2023. We are in the process of locating a new facility.
Biggest changeOur Chicago, Illinois office consists of 37,800 square feet of office and warehouse space and is located at 2600 S. 25 th Avenue, Suite Z, Broadview, Illinois, 60155 with a lease term through January 31, 2029.
Added
We own a 45,033 square meter office and manufacturing facility on 6 acres of land at 1G Aerodromska Street in Kraljevo, Serbia and we lease a small business office in Belgrade, Serbia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of December 31, 2022, and the date of this report, the Company is not involved in any material litigation matters.
Biggest changeITEM 3. LEGAL PROCEEDINGS. The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time. As of December 31, 2023, and the date of this report, the Company is not involved in any material litigation matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the NASDAQ Capital Market under the symbol “BEEM.” On March 23, 2023, there were approximately 196 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the NASDAQ Capital Market under the symbol “BEEM.” On April 9, 2024, there were approximately 204 of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+44 added−64 removed13 unchanged
Biggest changeThe 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 see significant improvement in our gross margins in the near future.
Biggest changeThe combination of the 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 see significant improvement in our gross profit margins in the near future. 28 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.
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. Gross Loss.
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. Gross Profit/(Loss).
The electronics are elevated to the underside of the 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. - Solar Tree® DCFC – Off-grid, renewably energized and rapidly deployed, patented 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 50kW DC fast charger. - EV-Standard TM – patent issued on December 31, 2019 and currently under development.
The electronics are elevated to the underside of the 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. - Solar Tree® DCFC – Off-grid, renewably energized and rapidly deployed, patented 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 50kW DC fast charger. - EVStandard TM – patent issued on December 31, 2019, and currently under development.
Our energy security business is 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 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW: Beam develops, manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media advertising.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Beam develops, manufactures and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media advertising.
We continue to invest in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our products, which is reflected in the strong year over year sales growth in the quarter.
We continue to invest in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our products, which is reflected in the strong year over year sales growth.
A lamp standard, EV charging and emergency power product which uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging. - UAV ARC™ - patent issued on November 24, 2020 and still under development.
A lamp standard, EV charging and emergency power product which uses an existing streetlamp’s foundation and a combination of solar, wind, grid connection and onboard energy storage to provide curbside charging. - 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. 24 In addition, 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 lithium iron phosphate battery platform architecture.
An off grid, renewably energized and rapidly deployed product and network used to charge aerial drone (UAV) fleets. 26 With the acquisition of All Cell Technologies, LLC (“All Cell”) in March 2022, we offer Beam AllCell™ energy storage technology with a highly flexible lithium-ion and lithium iron phosphate battery platform architecture.
In addition, there is increased support for funding EV charging infrastructure on the state and federal level, as well as a number of federal grants available in addition to the 30% Federal Solar Investment Tax Credit and Rule 179 accelerated depreciation which provide a strong financial incentive for many of our target commercial customers.
In addition, there continues to be support for funding EV charging infrastructure on the state and federal level, as well as a number of federal grants available in addition to the 30% Federal Solar Investment Tax Credit and Rule 179 accelerated depreciation which provide a strong financial incentive for many of our target commercial customers.
This evolution is anticipated to include the following continual steps: addition of sales personnel and independent sales channels, 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.
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.
We believe our chief differentiators for our electric vehicle charging 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 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 inventions which are marketable and a complex integration of our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition.
We believe our chief differentiators for our electric vehicle charging 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 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 products which are marketable and are a complex integration of our proprietary technology and parts, and other commonly available engineered components, which create a further barrier to entry for our competition. 27 Beam’s revenues increased from $22.0 million in 2022 to $67.4 million in 2023.
We expect the electric vehicle market to continue to experience significant growth over the next decade as evidenced by 61 new electric vehicles that were launched in 2022 which will require additional EV charging infrastructure.
We also expect the electric vehicle market to continue to experience significant growth over the next decade as evidenced by 61 new electric vehicles that were launched in 2022 which will require additional EV charging infrastructure. We believe our products are uniquely positioned to benefit from this growth.
In September 2022, the Company entered into a Common Stock Purchase Agreement with B. Riley under which the Company has the right to sell up to $30.0 million shares of its common stock over a period of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financings.
Currently, the Company has the right to sell up to $30.0 million or two million shares of its common stock over a period of 24 months (see note 12 for further information) to B. Riley pursuant to a Common Stock Purchase Agreement entered in September 2022. Otherwise, we could pursue other equity or debt financing.
Our revenues increased from $9.0 million in 2021 to $22.0 million in 2022 we believe as a result of the ongoing maturation of the electric vehicle ecosystem, increased urgency for charging infrastructure as more EVs are adopted, an increased understanding of the challenges facing the installation and operation of utility grid-tied chargers and due to an increased investment in sales and marketing resources over the past two years.
We believe this was the result of the ongoing maturation of the electric vehicle ecosystem, increased urgency for charging infrastructure as more EVs are adopted, an increased understanding of the challenges facing the installation and operation of utility grid-tied chargers and due to our increased investment in sales and marketing resources over the past two years which has increased awareness of our products.
This should result in increasing gross profits on the EV ARC ™ and Solar Tree® products in the future. 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.
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 determination of the amount of share-based compensation expense for our performance stock units requires the use of certain estimates and assumptions that affect the amount of share-based compensation expense recognized in our consolidated statements of operations.
The RSU and RSAs fair value is based on the market price of our common stock on the date of grant. The determination of the amount of share-based compensation expense for our performance stock units requires the use of certain estimates and assumptions that affect the amount of share-based compensation expense recognized in our consolidated statements of operations.
Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the table below: December 31, 2,022 2021 Cash provided by (used in): Net cash used in operating activities $ (18,114 ) $ (6,408 ) Net cash used in investing activities $ (1,812 ) $ (582 ) Net cash (used in) provided by financing activities $ (342 ) $ 2,236 For the year ended December 31, 2022, our cash used in operating activities was $18.1 million compared to $6.4 million for the year ended December 31, 2021.
Our cash requirements are generally for operating activities and acquisitions. 30 Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the table below: December 31, 2023 2022 Cash provided by (used in): Net cash used in operating activities $ (13,307 ) $ (18,114 ) Net cash used in investing activities $ (5,708 ) $ (1,812 ) Net cash (used in) provided by financing activities $ 27,717 $ (342 ) For the year ended December 31, 2023, our cash used in operating activities was $13.3 million compared to $18.1 million for the year ended December 31, 2022.
Our operating activities resulted in cash used in operations of $6.4 million for the year ended December 31, 2021.
For the year ended December 31, 2022, our cash used in operating activities was $18.1 million compared to $6.4 million for the year ended December 31, 2021.
As a result, our working capital decreased to $6.8 million at December 31, 2022 compared to $24.6 million at December 31, 2021. The Company has been focused on marketing and sales efforts to increase our revenues. Revenues increased by 45% from 2020 to 2021 and 144% from 2021 to 2022, demonstrating that this investment has been successful.
As a result, our working capital increased to $23.8 million at December 31, 2023 compared to $6.8 million at December 31, 2022. 31 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.
This resulted in several large federal orders in 2022, including a $29.4 million order through Techflow, Inc. for the US Army (IMCOM), a $11.7 million order for the General Services Administration for the Department of Veterans Affairs, and several other orders for the Department of Homeland Security, US Navy Facilities, US Marine Corps, and others.
During the year ended December 31, 2023, 64% of product sales were to Federal customers, a 569% increase over the prior year, primarily due to several large orders received in late 2022, including a $29.4 million order through Techflow, Inc. for the US Army (IMCOM), an $11.7 million order for the General Services Administration for the Department of Veterans Affairs, and several other orders for the Department of Homeland Security, US Navy Facilities, US Marine Corps, and others.
For the year ended December 31, 2022, our revenues increased 144% to $22.0 million compared to $9.0 million for 2021. Revenues to federal customers increased by $4.5 million.
For the year ended December 31, 2023, our revenues increased 206% to $67.4 million compared to $22.0 million for 2022.
In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement (BPA) which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. We have also invested in our federal business channel by adding a federal lobbyist, a federal business development resource and a government relations employee.
In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement (BPA) which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. We have also continued to invest in our federal business channel which has helped us to identify federal opportunities and increased awareness of our product and outreach with federal agencies.
We have begun development on our newest patented products - our EV Standard™ and UAV ARC™, which we expect will expand our product offerings with the same proprietary technology as our current products and allow us to expand into new markets. Several contributing factors resulted in reporting a gross loss in both 2022 and 2021.
We continue development of our EV Standard™ and UAV ARC™, which we expect will expand our product offerings with the same proprietary technology as our current products and allow us to expand into new markets.
Current liabilities increased to $13.2 million at December 31, 2022 from $3.0 million at December 31, 2021, primarily due to the recording of $6.8 million current portion of contingent consideration, a $1.3 million increase in accounts payable for purchases of inventory to support the increased sales forecast, $1.0 million increase in current deferred revenue and a $1.0 million increase in accrued expenses.
Current liabilities increased to $16.9 million at December 31, 2023 from $13.2 million at December 31, 2022, primarily due to a $6.9 million increase in accounts payable, $2.7 million deferred consideration, current for a cash payment owed for the Amiga acquisition and $1.0 million increase in accrued expenses, partially offset by a decrease of $6.8 million for contingent consideration, due to payment of the 2022 earnout for All Cell in 2023.
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.
Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue operations.
Total operating expenses were $18.0 million for the year ended December 31, 2022, compared to $5.6 million in the prior year, primarily due to a $5.5 million change in fair value of contingent consideration related to the All Cell acquisition.
Total operating expenses were $17.5 million for the year ended December 31, 2023, compared to $18.0 million in the prior year.
Riley”) under which the Company has the right, but not the obligation, to sell up to $30.0 million shares or a maximum of 2.0 million shares of its common stock over a period of 24 months in its sole discretion. 32 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.
There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives. 32 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.
As a result of our acquisition of All Cell in March 2022, we generated revenues of $5.2 million from sales of our solid, state-of-the-art energy storage product. In late 2020, we entered into 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, as a result of our acquisition of Amiga in October 2023, we reported revenues of $3.4 million for the period from October 20, 2023 through December 31, 2023. 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.
To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows and estimates made by management.
The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets assumed, such excess is allocated to goodwill.
Cash provided by operations included a decrease in prepaid expenses and other current assets of $0.1 million, an increase in accounts payable of $0.8 million due to inventory purchases, $0.3 million increase in accrued expenses primarily due to compensation related accruals at the end of the year and $0.1 million for an increase in deferred revenue.
Cash provided by operations included a $1.3 million increase in accounts payable primarily for inventory and $0.9 million increase in accrued expenses.
Inventory costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products being manufactured, and finished goods. Included in these costs are direct labor and certain manufacturing overhead costs associated with normal capacity in the manufacturing process.
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method of accounting. Inventory costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products being manufactured, and finished goods.
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.
We expect the increase in demand for electric vehicle charging infrastructure to continue and as such we do not anticipate any negative impact on our price increase. We expect to get a full-year benefit from the design changes implemented in 2023, which should also increase our 2024 gross profit.
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 4, 2022, the Company completed an acquisition of the assets of All Cell Technologies, LLC (“All Cell”), a leader in energy storage solutions.
Furthermore, there are outstanding warrants to purchase 610,745 shares of our Common Stock at December 31, 2023, of which 410,745 will expire in April 2024. 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.
Share-based compensation expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards. The fair value of our restricted stock and performance stock units is based on the market price of our common stock on the date of grant.
The fair value of stock options and the warrants are calculated using a black-scholes model which requires input of interest rates, stock volatility, stock prices, etc. Share-based compensation expense is then recognized based on an allocation of the fair value on a straight-line basis over the requisite service periods of the awards.
The maximum aggregate number of shares of Common Stock that the Company will issue to All Cell for the Closing Consideration and Earnout Consideration will not exceed 1.8 million shares. 31 Management believes that evolution in the operations of the Company may allow it to execute on its strategic plan and enable it to experience profitable growth in the future.
This will provide a growth opportunity for Beam to sell its products in the European market through Amiga’s extensive customer base. 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.
Net loss of $6.6 million for the year ended December 31, 2021 was increased by $1.3 million of non-cash expense items that included depreciation and amortization of $0.1 million, common stock issued for services for director compensation of $0.7 million and non-cash compensation expense related to the grant of stock options of $0.4 million primarily due to an increase in the stock price in the year ended December 31, 2021.
Net loss of $16.1 million for the year ended December 31, 2023 was increased by $4.3 million of non-cash expense items that included $2.7 million for Stock-based compensation, $1.9 million for depreciation and amortization and $0.2 million for change in fair value of contingent consideration liabilities pertaining to the true-up of the 2022 earnout payment for All Cell, offset by a $0.5 million decrease in provision on credit losses pertaining to Amiga.
At each reported period, we reassess the probability of the achievement of corporate performance goals to estimate the amount of shares to be released. Any increase or decrease in share-based compensation expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of adjustment.
For performance RSUs, at each reported period, we reassess the probability of the achievement of corporate performance goals to estimate the number of shares to be recorded as a liability.
We also acquired a battery manufacturer, All Cell in March 2022, which should significantly reduce the cost of the batteries in our units. In addition, as we expect the Company to grow in 2023 and beyond, we expect our fixed overhead absorption to continue to improve. Operating Expenses.
Additionally, we expect to get a full-year benefit from the design changes and material cost reductions that began in late 2023 which should improve our 2024 gross profit margin. In addition, as we expect the Company to grow in the future, we expect our fixed overhead absorption to continue to improve. Operating Expenses.
While the Company has still not earned a gross profit on its sale of products, gross profit has improved even during an inflationary period, and as revenues increase, we expect to see our fixed overhead costs spread over more units, which will reduce the cost per unit.
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 started to see some material cost reductions in the latter part of 2023, especially with steel and battery cells, and we expect this trend to continue.
In 2022, a 52-unit EV ARC™ purchase was made under our contract with the State of California to provide sustainable EV charging and emergency power for 12 state government agencies in California. In 2022, we also received an order for $5.3 million from New York City to deliver EV ARCs TM throughout the city.
State and Local governments accounted for 16% of revenues and included a $5.3 million order from New York City to deliver EV ARCs TM throughout the city. Revenues from our energy storage products were $8.5 million in 2023, a 63% increase over 2022 revenues.
For the year ended December 31, 2022, our gross loss was $1.7 million, or 8% of sales, compared to $1.0 million, or 11% of sales in the prior year.
The Company reported a positive gross profit of $1.2 million for the year ended December 31, 2023, compared to a $1.7 million gross loss in 2022. As a percentage of sales, the margin improved by nine percentage points. The gross profit includes a non-cash negative impact of $0.8 million for amortization of intangible assets resulting from the All Cell acquisition.
We continually review the components and sub-assemblies which we manufacture or assemble in-house for which we intend to seek outsourced contracted manufacturing expertise. We believe that outsourcing certain components and sub-assemblies will further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory.
We continually review the components and sub-assemblies which we manufacture or assemble in-house to determine if costs can be reduced further if we outsource, and we are constantly looking for cost reductions on our purchased parts.
We have historically met our cash needs through a combination of debt and equity financings. Our cash requirements are generally for operating activities.
Liquidity and Capital Resources At December 31, 2023, we had cash of $10.4 million, compared to cash of $1.7 million at December 31, 2022. We have historically met our cash needs through a combination of debt and equity financings and more recently through gross profit contributions.
Subsequent changes to the fair value of contingent consideration liability are recognized in operating expenses in the statement of operations. Contingent consideration liability related to the acquisition consists of commercial milestone payments and are valued using a Monte Carlo simulation. The fair value of commercial milestone payments reflects management’s estimates of discount rates and probability of achieving certain milestones.
Contingent consideration liability is estimated using a Monte Carlo simulation model to determine the probability of achieving certain milestones. There are a number of estimated inputs required to perform the fair value calculations including future expected revenues, expenses, capital expenditures, discount rates, market values of assets, etc.
Removed
During the year ended December 31, 2022, product sales were generated from a wide variety of markets, including state and local government agencies, federal customers, commercial businesses, colleges and utilities.
Added
On October 20, 2023, we acquired Amiga DOO Kraljevo (“Amiga”) a business located in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration, such as streetlights, cell towers, and ski lift towers.
Removed
These resources have helped to identify opportunities on the federal side and are increasing awareness of our product and outreach with federal agencies. They are also able to support language in legislature to increase opportunities for federal contracts or federal grants and other funding.
Added
In addition to their current products, Amiga has engineering, product development and manufacturing capabilities which we believe are well suited to manufacture and sell Beam’s current products in the European market.
Removed
We believe our products are uniquely positioned to benefit from this growth. 25 We continued to made progress in finding a sponsor for our outdoor media advertising business during 2022, working with The Superlative Group, an industry leading consultant engaged in the selling of corporate sponsorships and have identified several potential corporate sponsors for a global naming rights agreement to our network of EV ARC™ systems.
Added
Also, Amiga is one of Europe’s leading manufacturers of streetlights and Beam believes it is well positioned to develop and manufacture Beam’s patented EV Standard™ for sale in both Europe and the U.S. We believe this provides Beam with a growth opportunity to sell its products in the European market through Amiga’s extensive customer base.
Removed
Superlative is compensated only when they are successful in securing a sponsor for our Driving on Sunshine network. This business model can be replicated in other cities throughout the country.
Added
State and Local governments accounted for 16% of revenues driven by a $5.3 million order from New York City to deliver EV ARCs TM throughout the city. Revenues from our energy storage products were $8.5 million in 2023, a 63% increase over 2022 revenues.
Removed
We currently have a fixed overhead structure and facility that is underutilized but will support our expected growth over the next several years.
Added
Strength in federal orders continued with a new order announced in January 2024 from the U.S. Army Corps of Engineers, Army Material Command (AMC) for $7.4 million. With our acquisition of Amiga in October 2023, we now have a facility in Europe that can manufacture and sell Beam products for the European market.
Removed
As our revenues continue to increase, and we increase our production volumes, we will continue to increase our fixed overhead absorption which reduces our fixed overhead cost allocation per unit, as well as benefit from improved labor efficiencies and utilization and cost improvements by negotiating volume purchase discounts.
Added
Europe is the largest market in the world for electric vehicles and is a strong proponent of clean energy. We believe there is a lot of potential for growth in this region.
Removed
We are also implementing lean manufacturing process improvements and making engineering changes to our product which we believe will result in further cost reductions. Many of the components that we integrate into our products are manufactured by others.
Added
Beam Europe’s team of engineers is integrated with Beam’s U.S. based team which Beam believes will provide a valuable enhancement and acceleration of product development cycles. The Company reported a positive gross profit of $1.2 million for 2023, compared to a $1.7 million gross loss in 2022.
Removed
This is consistent with our strategy to take advantage of the investment by large and well-funded organizations in the improvement of various components and sub-assemblies which we integrate into our final product.
Added
The gross profit benefited from increased volume resulting in increased fixed overhead absorption, partially offset by an increase in fixed overhead spending (including indirect headcount, service support, depreciation for capital to increase capacity, etc.).
Removed
We experienced cost increases on many of our components during 2021 and 2022, most notably our steel cost, which were brought on by supply chain issues resulting from plant closures and staffing shortages during the Covid-19 pandemic.
Added
We realized labor efficiencies because of the higher volume being produced, but this was partially offset by a higher labor rate due to the use of temporary agencies to meet our delivery requirements. Material costs increased during the Covid-19 pandemic, but we have seen some reduction in costs in the second half of 2023 for certain steel components and cells.
Removed
In late 2022, we started to see these increases flatten out and some are starting to decrease, and we expect to see a reduction in the cost of our bill of materials.
Added
Our engineering team has implemented some design changes during 2023 which reduced the bill of materials for the EV ARC TM , improving our product margins especially in Q4 2023. This was partially offset by $0.1 million increase in warranty cost and $0.5 million increase in scrap due to a favorable adjustment in 2022.
Removed
Batteries are the highest cost contributor to our bill of materials, but with the March 2022 purchase of AllCell Technologies, LLC, a lithium-ion battery manufacturer, we expect those costs to be significantly reduced. We have design changes to our EV ARC TM planned for 2023 that will reduce component costs and streamline the manufacturing process which will reduce the cost.
Added
We implemented a price increase on our EV ARC TM which we began to quote in 2023 and we should begin to benefit from in 2024, after our proposals convert to orders and are delivered to our customers.
Removed
Critical Accounting Policies Please refer to Note 1 in the financial statements for further information on the Company’s critical accounting policies which are summarized as follows: 26 Business Combination. The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.
Added
Increased volumes will also continue to provide favorable fixed overhead absorption in the future.
Removed
The Company records the net assets and results of operations of an acquired entity from the acquisition date. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Contingent consideration liability is recognized at the estimated fair value on the acquisition date.
Added
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. Business Combination.
Removed
Changes in the fair value of contingent consideration subsequent to the acquisition date are recognized in operating expense in our consolidated statements of operations. Inventory. Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method of accounting.
Added
The fair value for contingent consideration is reviewed each quarter after the original valuation to determine if revised estimates are necessary. It is often very difficult to obtain information to help in the estimation process, depending on the sophistication of the acquired company or market data on this company’s products. Valuation of Inventory and standard cost allocations.
Removed
The Company regularly reviews inventory components and quantities on hand and performs annual physical inventory counts. Impairment of Long-lived Assets.
Added
Included in these costs are direct labor and certain manufacturing overhead costs associated with normal capacity in the manufacturing process. During 2023, the Company applied labor and overhead based on a standard costing model that required a number of assumptions to determine an optimal labor and overhead allocation which requires an estimate of total shipments and forecasted spending.
Removed
The Company accounts for long-lived assets in accordance with the provisions of Accounting Standards Codification (“ASC”) 360-10-35-15 “Impairment or Disposal of Long-Lived Assets,” which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Added
In addition, a review of inventory is required to estimate whether specific reserve estimates are needed for warranty or for excess or obsolete inventory. Changes in demand can significantly impact our amount of excess inventory or inventory shortages. Availability of product and unusually long lead times that were not anticipated could impact our production.
Removed
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.
Added
Valuation Allowance on Deferred Income Taxes . The Company ensures that taxes are computed in accordance with ASC 740 and the appropriate valuation allowance is recorded. Management estimates the percentage change in pre-tax book loss/income and makes projections of future taxable loss/income in order to perform this assessment.
Removed
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Revenue Recognition.
Added
We have recorded a valuation allowance to reduce our net deferred tax assets to zero, primarily due to historical net operating losses (“NOLs”) and uncertainty of generating future taxable income.

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