Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

For the fiscal year ended December 31, 2025, the Company reported total revenue of $28.2 million, representing a 42.8% decrease compared to $49.3 million in fiscal 2024. This contraction was primarily driven by a material reduction in orders from U.S. Federal government agencies. While federal customers accounted for more than 60% of total revenue in 2023 and 30% in 2024, they represented less than 5% of total revenue in 2025. Management attributes this decline to a shift in federal executive priorities and the subsequent reversal of prior electrification initiatives. Additionally, the expiration of federal tax credits and other purchase incentives for electric vehicles has further constrained domestic demand for certain charging products. In response to these headwinds, the Company has realigned its sales and marketing infrastructure to target corporate, municipal, and international markets. These efforts have yielded a significant increase in sales to domestic and international commercial entities, as well as non-U.S. government agencies, which has partially mitigated the loss of U.S. Federal revenue. Despite the reduction in direct federal vehicle procurement, the Company continues to supply certain energy storage products to federal agencies via third-party relationships. While the Company believes that federal demand for transportation electrification infrastructure may resume in future cycles, we cannot provide assurance as to the timing or certainty of such a recovery. We remain focused on our diversified growth strategy and have implemented new marketing protocols to capture broader market share. Although our prospective customer pipeline has increased during the current period, the conversion of these opportunities into realized revenue remains subject to inherent market risks and timing uncertainties.

In 2025 the Company's strategically shifted its focus toward commercial customers by expanding its direct sales force and reseller network in response to a decline in federal revenue opportunities as a result of changes in U.S. government programs. Our non-government revenue grew from 38.2% of total revenue in 2024 to 72.0% in 2025, reflecting meaningful progress in our commercial diversification strategy, despite this shift, total revenue decreased by 42.8%. 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.

International customers comprised 42% of the revenues as of December 31, 2025 verses 25% for the year ended December 31, 2024 as a result of our continued integration of our Serbian acquisitions. Revenues derived from non-government commercial entities increased by 8% year-over-year and represent approximately 72% of total revenues in 2025.

For the twelve months ended, December 31, 2025, the Company's sales to federal government customers represented 4% of revenues versus 32% of revenues in 2024. State and local government customers represented approximately 24% of revenues versus 30% of total revenues in 2024, reflecting increased growth in our non-government customer base.

We continue to invest in sales personnel, marketing resources, and new product development, while also expanding our geographic footprint, with the goal of reducing reliance on large individual orders of our EV ARC™ product from federal agencies, while continuing to pursue those opportunities.

Order timing may continue to be uneven due to customer procurement processes, approval timelines and budget cycles; however, we believe that increased global EV adoption, continued expansion into international markets and the marketing of our new products will reduce the impact of variability in individual order timing on our overall business.

We have in place a Multiple Award Schedule Contract with the General Services Administration (GSA) that helps streamline purchases from Federal agencies and state and local governments. In addition, the General Services Administration (GSA) awarded Beam Global a federal blanket purchase agreement (BPA) in April 2022 which provides federal agencies a streamlined procurement process for procuring EV ARC™ systems. In Q2 2025, the contract was extended until October 31, 2030. Although this purchasing contract is not being regularly used by U.S. Federal government agencies, we have made sales to other non-Federal government entities in the U.S. using this contract vehicle and we believe that having this contract extended through 2030 and also having it made available to non-Federal government agencies has assisted us in closing sales in 2025 and will continue to assist in streamlining our selling processes in 2026. To the extent the federal government resumes procurement of electric vehicles and EV charging infrastructure, we believe this contract provides a streamlined and efficient channel to sell to the federal government, which operates the largest fleet in the world.

On November 12, 2025, the Company announced the was awarded a cooperative purchasing contract by Sourcewell, expanding its offerings to U.S. military, expanding its offerings to U.S. military, state and local government agencies, and higher education institutions across North America. Sourcewell combines the purchasing power of over 50,000 participating public agencies, offering hundreds of awarded supplier contracts across public sector and educational organizations to procure the Company's sustainable infrastructure and energy storage solutions through a ready-to-use, negotiated, Sourcewell-vetted contract, streamlining the public purchasing process.

With our acquisitions of Amiga and Telcom, we now have a facility in Europe that can manufacture and sell Beam Global products for the European market. Europe is the largest market in the world for EVs and is a strong proponent of clean energy. We believe there is a lot of potential for growth in this region. We also expect the EV market to continue to experience significant growth over the next decade which will require additional EV charging infrastructure. We believe our products are uniquely positioned to benefit from this growth. Our geographic expansion into Europe and our additional business development activities in the Middle East and Africa are, we believe, also providing opportunities for growth which are not dependent on, or impacted by, shifts in US government and zero emission vehicle strategies. The new products we have brought to market offer values which are also not dependent upon US federal government investment. The EU has mandated a transition to zero emission vehicles by 2035 and they are heavily focused on green and sustainable energy. An increase in electric vehicles adoptions will increase the demand for charging infrastructure. We believe that our sustainably energized EV ARC^TM and BeamSpot™ products can play a major role in the provision of EV charging infrastructure in Europe.

Our energy security business is also connected with the deployment of our EV charging infrastructure products and serves as an additional benefit to the value proposition of our charging products which, along with their integrated emergency power panels, can continue to operate, charge EVs, and deliver emergency power during utility grid failures. Our state-of-the-art storage batteries installed on our EV charging systems are immune to grid failures and provide another benefit for customers such as municipalities, counties, states, the federal government, hospitals, fire departments, large private enterprises with substantial facilities, and vehicle fleet operators. Drones, submersibles, recreational products and a host of micro mobility and EV 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.

We are in development on our newest patented products which include- BeamSpot™, BeamFlight™ and others, which we expect will continue to expand our product offerings leveraging the same proprietary technology as our current products and allow us to expand into new markets. Amiga, now Beam Europe, 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 streetlighting. They are working with our engineers in San Diego and Broadview to continually improve the engineering and development of our new BeamSpot™ product. We believe that BeamSpot™ may become our largest selling product when available for sale. BeamSpot™ is currently in the process of being installed and we received our first order for that product within two months of it being launched.

In addition, EV ARC™, BeamBike™, BeamWell™ and BeamPatrol™ products have fulfilled the requirements to receive the CE mark (Conformité Européenne), a mandatory symbol indicating that a product meets European Union (EU) health, safety and environmental protection requirements, allowing it to be freely traded within the European Economic Area (EEA).

The Company reported gross profit of $3.5 million for the year ended December 31, 2025, compared to $7.3 million for the year ended December 31, 2024. Gross margin was 12.5% in 2025 compared to 14.8% in 2024, representing a decline of 2.3 percentage points year-over-year. The decrease in gross margin was primarily attributable to lower sales volume, which resulted in reduced absorption of fixed overhead costs. Our unit economics continue to improve, even in the face of reduced volumes.

Gross profit included non-cash depreciation and intangible amortization of approximately $3.0 million in 2025 and $3.2 million in 2024. Excluding these non-cash items, adjusted gross margin improved to 23.0% in 2025 compared to 21.2% in 2024. We expect our costs of goods sold to continue to decline over time as we continue to implement lean manufacturing process improvements, engineering design changes and operational efficiencies, as well as recognizing synergies from our acquisitions. Many of the components and sub-assemblies integrated into our products are manufactured by third parties. This approach is consistent with our strategy to leverage the investments made by large, well-funded suppliers in improving performance and reducing costs of key components, which we integrate into our finished products. We continue to evaluate opportunities to outsource additional components and sub-assemblies where doing so may be cost-effective, which we believe could further reduce our manufacturing costs, improve gross margins, and significantly increase the potential production output from our factory. Furthermore, we believe we are seeing increase interest in our highly specialized energy storage products, which in many cases, result in revenues that come with higher gross profits. As these volumes increase, the impact of the higher gross margin percentages from these revenues should, we believe, have a positive impact on our overall gross profit. Order timing may continue to result in quarter-to-quarter variability in revenue over the long term, we expect revenue growth to be driven by expansion of our product offerings, increased geographic reach, and growth in demand for EV charging infrastructure, electrified transportation, and mobility energy storage and security and smart cities infrastructure products. We believe that increased demand, combined with our cost-reduction initiatives, will contribute to continued improvement in our gross margins over time. Beam Europe has the capability to perform certain manufacturing and operational activities that are currently outsourced in the U.S. In combination with a generally lower operating cost environment in Serbia, we believe this may allow us to produce certain products in Europe at a lower cost than in the U.S., even as we continue to pursue cost reductions in our U.S. operations.

Critical Accounting Estimates

The financial statements and related disclosures were prepared in accordance with U.S. generally accepted accounting principles which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, and we continually evaluate our assumptions and modify as needed. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

Valuation of Inventory and standard cost allocations. 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. 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. 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.

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. 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. If we determine that it is more likely than not that we will realize a deferred tax asset that currently has a valuation allowance, we will need to reverse the valuation allowance, reflecting an income tax benefit in our statements of operations at that time. This type of adjustment could result in a material adjustment to our financial statements.

Valuation of Share-Based Costs. We may issue share-based awards that include warrants, stock options, restricted stock awards, restricted stock units and performance stock units. We measure and recognize compensation expenses for all share-based payments based on an estimation of grant date fair value of our share-based awards. 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 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.

Results of Operations

Comparison of Results of Operations for Fiscal Years Ended December 31, 2025 and 2024

Revenues. For the year ended December 31, 2025, revenues decreased 43% to $28.2 million compared to $49.3 million for the year ended December 31, 2024. The decrease in revenues was primarily due to a complete cessation of any federal orders for our products and the reversal of incentives for the purchase of EVs in the U.S. by the federal government. During the year ended December 31, 2025, $1.1 million, or approximately 4% of total revenue was derived from sales to federal government customers and $6.8 million, or approximately 24% was derived from state and local government customers. We continue to invest in sales, marketing and government relations personnel, as well as related programs and resources, to increase awareness of the benefits and value of our products. The timing of orders may continue to be uneven due to customer approval processes and government budget cycles; however, we believe that as EV adoption increases and our energy storage and security and smart cities products are increasingly adopted, our business may become less impacted by variability in the timing of individual orders.

Gross Profit/(Loss). The Company reported gross profit of $3.5 million, a 12.5% gross margin for the year ended December 31, 2025, compared to $7.3 million, a 14.8% gross margin for the year ended December 31, 2024. The 2.3 percentage point year-over year decrease in gross margin was primarily attributable to lower sales volume, which resulted in reduced absorption of fixed overhead costs and non-cash depreciation and amortization. Gross profit included non-cash depreciation and amortization of approximately $3.0 million in 2025 and $3.2 million in 2024. The amortization of intangible assets relates to the AllCell acquisition. Because of our improving unit economics throughout 2025, and excluding these non-cash expenses, gross margin improved in 2025 1.8 percentage points to 23.0% from 2024, 21.2%. We expect that as revenue grows, the Company's ability to absorb fixed overhead costs will improve, which may have a positive impact on gross margins.

Operating Expenses and Impairment of Goodwill. Total operating expenses were $31.1 million for the year ended December 31, 2025, compared to $19.0 million for the year ended December 31, 2024. Operating expenses for 2025 included a non-cash goodwill impairment charge of $10.8 million. Excluding this impairment charge, operating expenses were approximately $20.3 million for 2025, compared to $19.0 million in the prior year. The Company believes the goodwill impairment reported during the three months ended March 31, 2025 is not a negative indicator of historic or current operating results and not a negative indicator of the future performance of our acquired entities or the Company in general have taken and continue to take significant steps to diversify our geographical reach and product offerings while focusing on strategic growth. The Company believes that the resulting non-cash charge has no impact on the Company's cash flows or available liquidity. During the three months ending March 31, 2025, the Company continued to experience a decline in its stock price resulting in the total market value of its common stock outstanding ("market capitalization") being less than the carrying value of the reporting unit. Management believes this decline in market value is due to a variety of factors, as further described below, but not the actual value of the acquired entities which included the goodwill which is being impaired. Considering the circumstances and indicators of potential impairment described above, Management performed an interim quantitative goodwill impairment test as of March 31, 2025. Management first considered whether any impairment was present for the Company's long-lived assets, concluding that no such impairments were present. The Company does not have any indefinite lived assets other than goodwill.

The Company concluded that the sustained stock price decline in the Company's common stock and its market capitalizations as of March 31, 2025 was a triggering event which required Management to perform a quantitative goodwill impairment test. Management determined the value of goodwill largely based on the Company's stock price and not on the activities or performance of the acquired entities. The results of the Company's test for impairment of goodwill as of March 31, 2025, utilizing recent trends in stock price over a reasonable period, created a condition in which the accounting rules determined that the fair value of goodwill fell below its book value. Based on the results of the goodwill impairment procedures, the Company recorded a $10.8 million goodwill impairment for the single reporting unit during the three months ended March 31, 2025.

Liquidity and Capital Resources

At December 31, 2025, we had cash of $1.0 million, compared to cash of $4.6 million at December 31, 2024. We have historically met our cash needs through a combination of debt and equity financing and more recently through gross profit contributions. Our cash requirements are generally for operating activities and acquisitions.

Our working capital balance at December 31, 2025 was $8.9 million. Working capital primarily consists of cash, inventory, accounts receivable, net of accounts payable, and accrued expenses. In general, we expect to convert each of these short-term assets into cash within 180 days which allows us to operate with a lower cash balance on any specific date.

Management believes the Company's present cash flow will enable it to meet its obligations for twelve months from the date of these financial statements. Management will continue to assess its operational needs and seek additional financing as needed to fund its operations.

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

		December 31,
		2025				2024
Cash provided by (used in):
Net cash used in operating activities		$	(10,482	)		$	(2,193	)
Net cash used in investing activities		$	(482	)		$	(4,054	)
Net cash provided by financing activities		$	7,467			$	1,203

For the year ended December 31, 2025, our cash used in operating activities was $10.5 million compared to $2.2 million for the year ended December 31, 2024. Cash used in operations included a $3.3 million decrease in accounts payable, $1.1 million decrease in noncurrent liabilities, $0.6 million decrease in deferred tax liabilities, a $0.3 million decrease in accrued expenses related to short term taxes payable, $0.5 million increase in accounts receivable, and $0.1 million increase in prepaid expenses and other current assets. In addition, cash provided by operations included $2.8 million decrease in inventory and $0.8 million increase in deferred revenue.

For the year ended December 31, 2025, cash used in investing activities was $0.5 million which included $0.4 million for the purchase of equipment to increase the throughput in our facilities and $0.1 million for the funding of patent costs. Cash used in investing activities in the year ended December 31, 2024, included $4.7 million cash for the acquisition of Amiga, net of cash acquired, $0.9 million for the purchase of equipment to increase the throughput in our facilities to meet the increased production levels and $0.1 million for spending on patents. For the year ended December 31, 2024, cash used in investing activities was $4.1 million which included $2.7 million cash for payment of deferred consideration in connection with the acquisition of Amiga, $0.8 million for the purchase of equipment to increase the throughput in our facilities and $0.5 million cash for the acquisition of Telcom, net of cash acquired.

For the year ended December 31, 2025, cash generated by our financing activities was $7.5 million which included $7.8 million proceeds from the sale of common stock under our at-the-market (ATM) facility. For the year ended December 31, 2024, cash generated by our financing activities was $1.2 million which included $0.8 million proceeds from public warrant exercises, and $0.5 million from the sale of stock under our committed equity facility offset by $0.2 million taxes paid related to net share settlement of equity awards.

Current assets decreased to $21.0 million at December 31, 2025 from $27.1 million at December 31, 2024, primarily due to a $2.5 million decrease in inventory and $3.6 million decrease in cash. Current liabilities decreased to $12.1 million at December 31, 2025 from $13.3 million at December 31, 2024, primarily due to a $3.0 million decrease in accounts payable, $0.2 million decrease in current operating lease liabilities, partially offset by an increase of $0.4 million in accrued expenses, $0.6 million in sales tax payable, and $1.0 million of current deferred revenue. As a result, our working capital decreased to $8.9 million at December 31, 2025 compared to $13.8 million at December 31, 2024.

The Company has continued to invest in sales and marketing initiatives intended to increase revenue and expand market awareness of its products. These efforts which were primarily focused on sales to federal and other government entities contributed to revenue growth of 144% from 2021 to 2022 and 206% from 2022 to 2023. Beginning in 2024 we started seeing a decline in revenue which we believe is primarily attributable to many of our customer targets starting to assume that there would be a change in the political administration and therefore a change in the federal government's appetite for renewable energy. These declines continued in 2024 and after. Although revenues decreased by 43% from 2024 to 2025, the Company believes that its continued investment in sales and marketing has strengthened its market presence and expanded its pipeline of prospective opportunities. As revenues increase, the Company expects fixed overhead costs to be spread across a greater number of units, which may reduce the per-unit cost of production. In addition, the Company has realized material cost reductions from operational synergies, particularly in steel and battery cell sourcing, and expects these improvements to continue. These cost reductions, together with ongoing engineering and manufacturing process improvements, are expected to support improvements in gross margin over time.

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

On March 22, 2023, the Company entered into a Supply Chain Line of Credit with OCI Limited ("OCI") for a five-year term, whereby OCI may provide a supply chain line of credit in the amount of up to $100 million based on the amounts of approved accounts receivable of the Company (the "Credit Facility"). In order to request a drawdown on the Credit Facility, the Company is required to submit a transaction request to OCI which sets forth the terms of the applicable account receivables, including but not limited to the name of the party responsible for the applicable account receivables (the "Obligor"), the terms of repayment and the amount of such receivables. The Company has no obligation to submit a drawdown request and OCI is not obligated to accept any drawdown request from the Company. In the event OCI accepts a drawdown request of the Company and upon satisfaction of certain conditions required by OCI to issue the drawdown, OCI will disburse funds to the Company for such drawdown in an amount equal to the full value of the applicable account receivables assigned to OCI minus any transaction expenses incurred by OCI and the full amount of interest to be incurred for such receivables over the term of the drawdown. The Company will pay interest on any drawdown at the Secured Overnight Financing Rate +300 basis points. Upon the disbursement of funds to the Company for a drawdown, the Company will assign all rights to such account receivables of the Obligor to OCI. The Company will act as collection agent on any account receivable assigned to OCI and agrees to establish a designated bank account for the purpose of collecting payment on any applicable account receivable that are assigned to OCI. In the event (i) the Company is in material breach of the Credit Facility, (ii) the Company or the Obligor is insolvent or is subject to reorganization or liquidation, or (iii) any dispute related to an agreement with an Obligor or non-payment by an Obligor, OCI has the right to exercise any contractual rights it may have against Obligor, increase the interest rate to the agreed upon default interest rate, and demand immediate repayment by the Company for the outstanding amounts owed under such account receivables. The Company has also agreed to indemnify OCI for any losses incurred by OCI in connection with the Credit Facility. Either party may terminate the Credit Facility at any time by providing fifteen (15) days prior written notice to the other party. To date, Beam Global has not drawn on this line of credit.

Management believes that evolution in the operations of the Company may allow it to execute its strategic plan and enable it to experience profitable growth in the future. This evolution is anticipated to include the following continual steps: addition of sales personnel and independent sales channels, reductions in direct costs due to engineering and manufacturing improvements, continued management of overhead costs, increased overhead absorption resulting from volume growth, process improvements and vendor negotiations leading to cost reductions, increased public awareness of the Company and its products, and the continued acceleration of average sales cycle opportunities. Management believes that these steps, if successful, may enable the Company to generate sufficient revenue to continue operations. There is no assurance, however, as to if or when the Company will be able to achieve those operating objectives.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors.