Beam Global

Previous wording

Beam Global develops, manufactures, and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, disaster preparedness and outdoor media.

Current wording

Beam Global develops, manufactures, and sells high-quality, renewably energized infrastructure products for electric vehicle charging infrastructure, energy storage, energy security, and disaster preparedness.

Previous wording

We believe our chief differentiators for our electric vehicle charging infrastructure products are:

Current wording

We believe our chief differentiators for our electric vehicle charging and energy security infrastructure products are:

Previous wording

With the acquisition of All Cell Technologies, LLC (“All Cell”) in March 2022, we now offer Beam AllCell™ energy storage technology with a highly flexible lithium-ion and/or lithium iron phosphate battery platform architecture. The battery design uses a proprietary phase change material which provides a low-cost thermal management solution and a unique safety mechanism to prevent propagation of thermal runaway. Our batteries are ideally suited for applications where energy density, safety and specialized enclosures require high power in small spaces. Drones, submersibles, medical and recreational products and a host of micro mobility products benefit from this technology. Beam is already using AllCell™ energy storage products in EV ARC™ products for EV charging and plans to incorporate this battery technology in our new product designs that are under development.

Current wording

With the acquisition of All Cell Technologies, LLC (“All Cell”) in March 2022, we now offer Beam AllCell™ energy storage technology with a highly flexible lithium-ion and/or lithium iron phosphate battery platform architecture. The battery design uses a proprietary phase change material which provides a low-cost and passive (does not require energy) thermal management solution and a unique safety mechanism to prevent propagation of thermal runaway. Our batteries are ideally suited for applications where energy density, safety and specialized enclosures require high power in small spaces. Drones, submersibles, medical and recreational products and a host of micro mobility products benefit from this technology. Beam is already using AllCell™ energy storage products in EV ARC™ products for EV charging and plans to incorporate this battery technology in our new product designs that are under development.

Previous wording

On October 20, 2023, Beam acquired Amiga DOO Kraljevo (“Amiga”), a business located in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration, including(i) infrastructure products for public lighting; (ii) infrastructure products for mobile telephone, networks and transmission lines; (iii) infrastructure products for tram, trolleybus, and railways; (iv) infrastructure products for contact networks, masts, portals and semi-portals for road and railway signaling; (v) large steel lattice structures for specific purposes (e.g., stadiums, factories, power plants, etc.); and (vi) distribution and command electrical cabinets. Amiga has engineering, product development and manufacturing capabilities which we believe are well suited to manufacture and sell Beam’s current and future products in the European market. As a large European manufacturer of streetlights, we believe Amiga is well positioned to assist in the development of the EV-Standard™ for both the European and US markets.

Current wording

On October 20, 2023, Beam acquired Amiga DOO Kraljevo (“Amiga”), a business located in Serbia and engaged in the manufacture and distribution of steel structures with electronic integration, including(i) infrastructure products for public lighting; (ii) infrastructure products for mobile telephone, networks and transmission lines; (iii) infrastructure products for tram, trolleybus, and railways; (iv) infrastructure products for contact networks, masts, portals and semi-portals for road and railway signaling; (v) large steel lattice structures for specific purposes (e.g., stadiums, factories, power plants, etc.); and (vi) distribution and command electrical cabinets. Amiga has engineering, product development and manufacturing capabilities which are well suited to manufacture and sell Beam’s current and future products in the European market. As a large European manufacturer of streetlights, Amiga is well positioned to assist in the development of the EV-Standard™ for both the European and US markets.

Previous wording

Our revenues for the first three months of 2024 were $14.6 million, a 12% increase over $13.0 million for the same quarter in 2023, primarily derived from delivery of EV ARC™ systems to federal, state and local governments. We have invested in sales and marketing resources over the past three plus years which has created increased demand for our EV ARC™ renewable chargers. For the period, we reported revenues of $1.4 million as a result of our acquisition of Amiga in October 2023. The Company believes there continues to be a high level of support for funding EV charging infrastructure from both government and commercial entities, including a number of federal grants available under the Inflation Reduction Act. In addition, certain of our commercial customers may benefit from the Federal Solar Investment Tax Credit and accelerated depreciation as allowed under Section 179 of IRS code which, we believe, provide a competitive advantage for our products over traditionally installed EV charging infrastructure which is not eligible for these incentives. Given these available incentives, we have invested in a federal lobbyist, a federal business development resource and a government relations employee, who have helped to identify opportunities on the federal side and have increased awareness of our product and outreach with federal agencies. In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. In the three months ended March 31, 2024, we recorded revenues of $12.2 million for federal customers, compared to $11.2 million for the same period in 2023. We expect to see uneven orders from quarter to quarter, especially with our federal customers, but over time we expect our revenues to grow.

Current wording

Our revenues for the first six months of 2024 were $29.4 million, a 5% decrease from $30.8 million for the first six months in 2023. We believe that the decrease in revenue is as a result of order timing, particularly from some of our larger federal customers rather than any fundamental reduction in demand for our products. Our pipeline of prospective customer orders has increased during the same period, although we cannot be sure of when, or if, those prospective orders will turn into actual sales. We have continued investment in our sales and marketing resources over the past three years which we believe has created increased demand for our EV ARC™ renewable charging infrastructure products during that time. The Company believes there continues to be a high level of support for funding EV charging infrastructure from both government and commercial entities, including a number of federal grants available under the Inflation Reduction Act. In addition, certain of our commercial customers may benefit from the Federal Solar Investment Tax Credit and accelerated depreciation as allowed under Section 179 of IRS code which, we believe, provide a competitive advantage for our products over traditionally installed EV charging infrastructure which is not eligible for these incentives. Given these available incentives, we have invested in a federal lobbyist, a federal business development resource and a government relations employee, who have helped to identify opportunities and increased awareness of our product and outreach with federal agencies. In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. In the six months ended June 30, 2024, we recorded revenues of $22.4 million for federal customers, compared to $26.5 million for the same period in 2023. We expect to see uneven orders from quarter to quarter, especially with our federal customers, but over time we expect our revenues to grow. Our commercial, non-government, revenues increased as a percentage of our revenues from 14% to 24% in the first six months of 2023 to the first six months of 2024.

Previous wording

We expect the electric vehicle market to continue to experience significant growth over the next decade which will in turn cause a requirement for additional EV charging infrastructure. We believe our products are positioned to benefit significantly from this growth.

Current wording

We expect the electric vehicle market to continue to experience significant growth over the next decade which will in turn increase demand for additional EV charging infrastructure. We believe our products are positioned to benefit significantly from this growth.

Previous wording

We believe the Company’s acquisition of the assets of All Cell, a battery technology company, will increase our new customer opportunities. As a result of the acquisition of All Cell, we believe Beam’s gross margin will continue to improve as a result of our storage technology solutions engineered by our team of engineers and scientists in Illinois. We now also have the ability to value engineer bespoke battery solutions for our products. Beam All-Cell™ batteries are ideally suited for applications where energy density, safety and bespoke enclosures require high power in small spaces. Drones, submersibles, recreational products and a host of micro mobility and electric vehicle products are already benefiting from our Beam All-Cell™ highly differentiated products. With the continued growth of untethered electrification, we believe there is opportunity for increased demand in these markets and others.

Current wording

We believe the Company’s acquisition of All Cell, a battery technology company, will increase our new customer opportunities. We now have the ability to value engineer bespoke battery solutions for our products. Beam All-Cell™ batteries are ideally suited for applications where energy density, safety and bespoke enclosures require high power in small spaces. Drones, submersibles, recreational products and a host of micro mobility and electric vehicle products are already benefiting from our Beam All-Cell™ highly differentiated products. With the continued growth of untethered electrification, we believe there is an opportunity for increased demand in these markets and others.

Previous wording

In October 2023, the Company acquired Amiga, an established manufacturer of specialized steel structures and equipment, producing street lights, communications and energy infrastructure whose manufacturing, engineering and sales teams service municipalities, states and commercial customers in 16 nations. The Company believes that the addition of Amiga will expand Beam’s presence into the European market and increase its production, engineering, sales and product development expertise. The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy. An increase in electric vehicles adoptions will increase the demand for charging infrastructure. We believe that our sustainably energized EV ARCTMand EV Standard™ products can play a major role in the provision of EV charging infrastructure in Europe. Amiga is already producing components for EV ARC™ systems in our factory in Kraljevo at the time of this filing.

Current wording

In October 2023, the Company acquired Amiga, an established manufacturer of specialized steel structures and equipment, producing streetlights, communications and energy infrastructure whose manufacturing, engineering and sales teams service municipalities, states and commercial customers in 16 nations. The addition of Amigahas expanded Beam’s presence into the European market and increase its production, engineering, sales and product development expertise. The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy. An increase in electric vehicles adoptions will increase the demand for charging infrastructure. We believe that our sustainably energized EV ARCTMand BeamSpot™ products can play a major role in the provision of EV charging infrastructure in Europe.

Previous wording

We are in development on our newest patented products - our EV Standard™ and UAV ARC™, which we expect will expand our product offerings leveraging the same proprietary technology as our current products and allow us to expand into new markets. Amiga is one of Europe’s largest manufacturers of streetlights and has a team of qualified structural, electrical and civil engineers who are experts in the field of development and deployment of street lighting. They are working with our engineers in San Diego and Chicago to finalize the engineering and product development on our new EV Standard™ product. We believe that EV Standard™ may become our largest selling product when available for sale.

Current wording

We are in development on our newest patented products - our BeamSpot™ and UAV ARC™, which we expect will expand our product offerings leveraging the same proprietary technology as our current products and allow us to expand into new markets. Amiga is one of Europe’s largest manufacturers of streetlights and has a team of qualified structural, electrical and civil engineers who are experts in the field of development and deployment of street lighting. They are working with our engineers in San Diego and Chicago to finalize the engineering and product development on our new BeamSpot™ product. We believe that BeamSpot™ may become our largest selling product when available for sale.

Previous wording

Our gross profit improved as a percentage of sales reporting a positive 10.2% gross margin in Q1 2024, up 10.1% from the gross profit reported in Q1 2023. Additionally, our cost of goods sold included non-cash intellectual property amortization of $0.2 million for the first three months of both 2024 and 2023, related to the acquisition of All Cell in 2022. Excluding this non-cash expense results in a gross profit of 11.4% for the three months ended March 31, 2024. We implemented engineering design changes to our EV ARCTM in Q4 2023 that resulted in cost reductions to our bill of materials. Our gross profit improvements were achieved in spite of ongoing inflation and the high costs of many of our components, including steel, that began during the Covid pandemic. We expect to see these costs continue to decrease over time. We are implementing lean manufacturing process improvements and making engineering changes to our product where we expect to benefit from cost reductions. Many of the components that we integrate into our products are manufactured by others. This is consistent with our strategy to take advantage of the investment by large and well-funded organizations in the improvement of various components and sub-assemblies which we integrate into our final product. We continue to identify components and sub-assemblies that may be more cost effective to outsource, which we believe may further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory. There is no guarantee that our growth will continue at this same pace and we expect that the receipt of orders may be inconsistent quarter over quarter. We expect that in the long-term, our revenues will continue to grow as we expect to see a significant increase in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing pressure on our products. The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will continue to see improvement in our gross margins during the year. Amiga has capabilities to perform several activities which we outsource in the US. We believe that in combination with a generally less expensive operating environment in Serbia, we will be able to produce our products in Europe less expensively than in the US, even as we continue to reduce our costs in the US.

Current wording

Our gross profit improved as a percentage of sales and was 15.9% in Q2 2024, up 13.1% from the gross profit reported in Q2 2023. Additionally, our cost of goods sold included non-cash intellectual property amortization of $0.2 million for the first three months of both 2024 and 2023, related to the acquisition of All Cell in 2022. Excluding this non-cash expense results in a gross profit of 17.1% for the three months ended June 30, 2024, up from 3.8% for the same period ending June 30, 2023. We implemented engineering design changes to our EV ARCTM in Q4 2023 that resulted in cost reductions to our bill of materials. Our gross profit improvements were achieved in spite of ongoing inflation and the high costs of many of our components, including steel, that began during the Covid pandemic. We expect to see these costs continue to decrease over time. We are implementing lean manufacturing process improvements and making engineering changes to our products which we expect to result in cost reductions. We have observed that we are able to manufacture certain elements of our products in Serbia and ship them to the U.S. less expensively than we can manufacture them in the U.S.; largely because we are better equipped in Serbia and as a result can self-perform certain processes which we outsource in the U.S. We anticipate further reductions in direct costs as a result of having our Serbian operations support our U.S. manufacturing. Many of the components that we integrate into our products are manufactured by others. This is consistent with our strategy to take advantage of the investment by large and well-funded organizations in the improvement, and reducing cost, of various components and sub-assemblies which we integrate into our final product. We continue to identify components and sub-assemblies that may be more cost effective to outsource, which we believe may further reduce our costs, increase our gross margins, and significantly increase the potential output from our factory. We expect that the receipt of orders may be inconsistent quarter over quarter, however, we expect that in the long-term, our revenues will continue to grow as we expect to see a significant increase in the demand for electric vehicle charging infrastructure and as such we do not anticipate significant pricing pressure on our products. The combination of this increase in demand for electric vehicle charging infrastructure and our revenues, and the cost cutting measures described above lead us to believe that we will continue to see improvement in our gross margins in the future. Beam Europe has capabilities to perform several activities which we outsource in the US. We believe that in combination with a generally less expensive operating environment in Serbia, we will be able to produce our products in Europe less expensively than in the US, even as we continue to reduce our costs in the US.

Previous wording

*Use of Estimates.*The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of intangible assets, valuation of contingent consideration liability, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Current wording

*Use of Estimates.*The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the allowance for certain expected credit losses (CECL), valuation of inventory and standard cost allocations, depreciable lives of property and equipment, valuation of intangible assets, valuation of contingent consideration liability, estimates of loss contingencies, estimates of the valuation of lease liabilities and the related right of use assets, valuation of share-based costs, and the valuation allowance on deferred tax assets.

Previous wording

*Revenues.*For the quarter ended March 31, 2024, our revenues increased 12% to $14.6 million compared to $13.0 million for the same period in 2023. Revenues to federal customers increased by $1.0 million in Q1 2024 compared to the quarter ended March 31, 2023. We also recorded revenues of $1.4 million as a result of our acquisition of Amiga in 2023. 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. 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.

Current wording

*Revenues.*For the quarter ended June 30, 2024, our revenues decreased 17% to $14.8 million compared to $17.8 million for the same period in 2023. Revenues to federal customers decreased by $5.1 million in Q2 2024 compared to the quarter ended June 30, 2023. We also recorded revenues of $2.8 million as a result of our acquisition of Amiga. We continue to invest in sales and marketing employees, resources and programs to raise awareness of the benefits and value of our products. The receipt of orders may continue to be uneven due to the timing of customer approvals or budget cycles, however, we believe that as EV adoption increases in concert with increased availability of infrastructure funding, our business will be less impacted by specific variations in order timing.

Previous wording

Gross Profit. For the quarter ended March 31, 2024, our gross profit was $1.5 million, or 10.2% of sales, compared to a gross profit of .04% of sales for the same period in 2023. As a percentage of sales, the margin improved by 10.1%, primarily because of cost reductions implemented in late 2023 as a result of design changes to the EV ARCTM as well as an increase in production levels in the current quarter compared to the prior year, which resulted in favorable fixed overhead absorption. Our gross profits included $0.2 million for non-cash intangible amortization. We began to see some improvements in the reduction of material costs in late 2023, which we believe should continue to improve. In addition, as our revenues continue to increase in 2024 and beyond, we expect our fixed overhead absorption to continue to improve. Our engineering and operations teams continue to identify further cost reductions and efficiencies which we believe will improve our gross margins in future quarters.

Current wording

Gross Profit. For the quarter ended June 30, 2024, our gross profit was $2.4 million, or 15.9% of sales, compared to a gross profit of 2.8% of sales for the same period in 2023. The margin improved by 13.1 percentage points, primarily because we have implemented cost improvements in late 2023 as a result of design changes to the EV ARCTM as well as operational improvements and positive margins generated from the acquisition of Amiga. Our gross profits included a negative impact of $0.3 million for non-cash depreciation and intangible amortization. Our gross profits net of non-cash items was 18.0%. We began to see some improvements in the reduction of material costs in late 2023, which we believe should continue to improve. Our engineering and operations teams continue to identify further cost reductions and efficiencies which, along with support from our Serbian facilities, we believe will improve our gross margins in future quarters.

Previous wording

At March 31, 2024, we had cash of $5.0 million, compared to cash of $10.4 million at December 31, 2023. We have historically met our cash needs through a combination of debt and equity financing. Our cash requirements are generally for operating activities.

Current wording

At June 30, 2024, we had cash of $8.7 million, compared to cash of $10.4 million at December 31, 2023. We have historically met our cash needs through a combination of debt and equity financing. Our cash requirements are generally for operating activities.

Previous wording

For the three months ended March 31, 2024, our cash used in operating activities was $3.0 million compared to $0.6 million for the three months ended March 31, 2023. Net loss of $3.0 million for the three months ended March 31, 2024 was adjusted by $1.1 million of non-cash expense items that included depreciation and amortization of $0.9 million, employee stock-based compensation expense of $0.6 million, offset by decreases of $0.3 million provision on credit losses and $0.1 million for a change in fair value of contingent consideration liabilities. Further, cash used in operations included a $3.9 million increase in accounts receivable due to the increase in revenues and the timing of customer payments. Cash generated from operations included a $1.0 million increase in accounts payable primarily for inventory, $1.1 million increase in accrued expenses, $0.4 million decrease in inventory, $0.3 million increase in deferred revenue and $0.2 million decrease in prepaid expenses and other current assets.

Current wording

For the six months ended June 30, 2024, our cash used in operating activities was $0.1 million compared to cash used of $5.1 million for the six months ended June 30, 2023. Net loss of $8.0 million for the six months ended June 30, 2024 was increased by $4.2 million of non-cash expense items that included depreciation and amortization of $1.9 million, employee stock-based compensation expense of $1.3 million, offset by decreases of $0.6 million provision on credit losses and $1.5 million for a change in fair value of contingent consideration liabilities. Cash used in operations included a $3.3 million decrease in accounts receivable as well as a $1.7 million decrease in accounts payable primarily for inventory, $0.3 million decrease in prepaid expenses and other current assets offset by $1.7 million increase in accrued expenses, $1.0 million increase in inventory, and $0.3 million increase in deferred revenue.

Previous wording

For the three months ended March 31, 2023, our cash used in operating activities was $0.6 million. Net loss of $4.1 million for the three months ended March 31, 2023 was increased by $0.9 million of non-cash expense items that included depreciation and amortization of $0.3 million, common stock issued for services for director compensation of $0.1 million and employee stock-based compensation expense of $0.5 million. Further, cash used in operations included a $2.4 million increase in accounts receivable due to the increase in revenues in the quarter, $0.3 million decrease in deferred revenue, and a $0.2 million increase in inventory. Cash used in operations included a $4.2 million increase in accounts payable primarily for inventory, $0.9 million increase in accrued expenses and a $0.4 million decrease in prepaid expenses and other current assets.

Current wording

For the six months ended June 30, 2023, our cash used in operating activities was $5.1 million compared to $7.4 million for the six months ended June 30, 2022. Net loss of $7.4 million for the six months ended June 30, 2023 was increased by $2.1 million of non-cash expense items that included depreciation and amortization of $0.7 million, common stock issued for services for director compensation of $0.2 million, employee stock-based compensation expense of $0.9 million, change in the fair value of contingent consideration liabilities of $0.3 million and $0.1 million of other for stock compensation for non-employees. Cash used in operations included a $6.0 million increase in accounts receivable due to the increase in revenues in the quarter and $0.4 million decrease in deferred revenue. Cash generated from operations included a $4.3 million increase in accounts payable primarily for inventory, $1.9 million increase in accrued expenses, and $0.3 million decrease in prepaid expenses and other current assets.

Previous wording

Cash used in investing activities in the three months ended March 31, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition and $0.1 million for the purchase of equipment compared to $0.3 million purchased in the same period in the prior year.

Current wording

Cash used in investing activities in the six months ended June 30, 2024 included $2.7 million reduction of deferred consideration for a cash payment for the Amiga acquisition and $0.2 million for the purchase of equipment compared to $0.5 million purchased in the same period in the prior year.

Previous wording

For the three months ended March 31, 2024, cash generated by our financing activities included $0.3 million for the exercise of warrants compared to $0.2 million in proceeds from the public offering issuance of common stock, net of offering expenses, and $0.1 million from the exercise of warrants for the same period in the prior year.

Current wording

For the six months ended June 30, 2024, cash generated by our financing activities included $0.8 million for the exercise of warrants and $0.5 million in proceeds from public offering issuance of common stock compared to $2.1 million in proceeds from the public offering issuance of common stock, net of offering expenses, and $0.1 million from the exercise of warrants for the same period in the prior year.

Previous wording

Current assets were $38.8 million on March 31, 2024, a decrease from $40.7 million at December 31, 2023, primarily due to decreases of $5.4 million in cash, $0.5 million in inventory, $0.2 million in prepaid expenses and other current assets offset by an increase of $4.2 million in accounts receivable. Current liabilities increased to $21.0 million at March 31, 2024 from $16.9 million at December 31, 2023, primarily due to a $1.0 million increase accounts payable and $1.1 million increase in accrued expenses. As a result, our working capital decreased to $17.8 million at March 31, 2024 compared to $23.8 million at December 31, 2023.

Current wording

Current assets were $36.3 million on June 30, 2024, a decrease of $4.4 million at December 31, 2023, primarily due to decreases of $3.3 million in accounts receivable, $1.6 million in cash, $0.3 million in prepaid expenses and other current assets, offset by an increase of $1.0 million in inventory. Current liabilities increased to $20.2 million at June 30, 2024 from $16.9 million at December 31, 2023, primarily due to a $1.7 million increase accrued expenses and $5.4 million increase in the fair value of contingent consideration liabilities. As a result, our working capital decreased to $16.0 million at June 30, 2024 compared to $23.8 million at December 31, 2023.

Previous wording

The Company has been focused on marketing and sales efforts to increase our revenues. Revenues increased annually by 45% from 2020 to 2021, 144% from 2021 to 2022, and 206% from 2022 to 2023 demonstrating that this investment has been successful. Improvements to gross profitability have been made despite the current inflationary period. As revenues increase, we expect to continue to see our fixed overhead costs spread over more units, which will reduce the cost per unit. Our engineering and operations teams have made several design changes and process improvements in our product development and manufacturing operations which has helped to increase labor efficiency and reduce material costs. In addition, the Company increased pricing in Q3 of 2023 for the first time to cover some of the inflationary cost increases, which we should benefit from as new orders are received and are shipped in future quarters.

Current wording

The Company has been focused on marketing and sales efforts to increase our revenues. Revenues increased annually by 45% from 2020 to 2021, 144% from 2021 to 2022, and 206% from 2022 to 2023 demonstrating that this investment has been successful. Improvements to gross profitability have been made despite the current inflationary period. As revenues increase, we expect to continue to see our fixed overhead costs spread over more units, which will reduce the cost per unit. Our engineering and operations teams have made several design changes and process improvements in our product development and manufacturing operations which has helped to increase labor efficiency and reduce material costs. In addition, the Company increased pricing in Q3 of 2023 for the first time to cover some of the inflationary cost increases, which we should benefit from as new orders are received and are shipped in future quarters. Our Serbian operations are also able to contribute to further cost reductions to produce our products both in Europe and the U.S.

Previous wording

The Company may be required to raise capital until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. In 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 the lesser of either two million shares or $30 million of our common stock over a period of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financing. The rest of which could potentially generate an additional $3.4 million of proceeds over the next 4.0 years, depending on the warrant holders’ ability and decision to exercise them. The proceeds from these offerings are expected to provide working capital to fund business operations and the development of new products. Management cannot currently predict when or if it will achieve positive cash flow. There is no guarantee that profitable operations will be achieved, or that additional capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business strategy. In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.

Current wording

The Company may be required to raise capital until it achieves positive cash flow from its business, which is predicated on increasing sales volumes and the continuation of production cost reduction measures. In 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 the lesser of either two million shares or $30 million of our common stock over a period of 24 months (see note 10 for further information.) In addition, we could pursue other equity or debt financing. The proceeds from these offerings are expected to provide working capital to fund business operations and the development of new products. Management cannot currently predict when or if it will achieve positive cash flow. There is no guarantee that profitable operations will be achieved, or that additional capital or debt financing will be available on a timely basis, on favorable terms, or at all, and such funding, if raised, may not be sufficient to meet our obligations or enable us to continue to implement our long-term business strategy. In addition, obtaining additional funding or entering into other strategic transactions could result in significant dilution to our stockholders.