Q3 2022 Beam Global Earnings Call

[music].

Operator: Good day and welcome to the Beam Global Third Quarter 2022 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode.  Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two.

All participants will be in a listen only mode.

Should you need assistance please.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two.

To withdraw your question, please press star then two.

I would now like to turn the conference over to Kathy McDermott, CFO. Please go ahead.

Kathy McDermott: Thank you, Betsy. Good afternoon and thank you for participating in Beam Global's conference call for the third quarter of 2022. We appreciate you joining us today to hear an update of our business.

We appreciate you joining us today to hear an update of our business join.

Kathy McDermott: Joining me is Desmond Wheatley, President, CEO and Chairman of Beam. Desmond will be providing an update on recent activities at Beam followed by a question-and-answer session.

It doesn't it won't be providing an update on recent activities that being followed by a question and answer session.

Kathy McDermott: But first, I'd like to communicate to you that during this call, management will be making forward-looking statements, including statements that address Beam's expectations for future performance or operational results.

Kathy McDermott: Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about those risks, please refer to the risk factors described in Beam's most recently filed Form 10-K and other periodic reports filed with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, November 10, 2022.

Is accurate only as of today November 10th 2022.

Kathy McDermott: Except as required by law, Beam disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Next, I'd like to provide an overview of our financial results for Beam's third quarter ended September 30, 2022.

I'd like to provide an overview of our financial results for being third quarter ended September 32022.

Kathy McDermott: Revenues for the third fiscal quarter of 2022 set a new record for the company of $6.6 million, a 227% increase over $2 million reported in Q3 of 2021. Revenues for the first three quarters of 2022 were $14.1 million, a 156% increase over $5.5 million reported for the same period of 2021.

Revenues for the first three quarters of 2022 or $14 1 million, a 156% increase over $5 5 million reported for the same period of 2021.

Kathy McDermott: The increase in revenue was driven primarily by increased sales to federal customers, primarily for national laboratories, for enterprise customers, for workplace charging, as employees are returning to the office and for fleet vehicles and revenue for our battery business that was acquired in March 2022. Revenues to state agencies, primarily California, has also been strong on a year-to-date basis.

For enterprise customers for workplace charging as employees are returning to the office and for fleet vehicles.

And revenue for our battery business that was acquired in March 2022.

The state agencies, primarily California has also been strong on a year to date basis.

Kathy McDermott: We've been investing in sales and marketing over the past three years, and specifically targeting federal in the past two years, based on available federal funding for EV charging infrastructure. This has proven to be very successful as Desmond will discuss shortly.

Proven to be very successful at Satsuma will discuss shortly.

Kathy McDermott: Gross loss in the quarter ended September 30, 2022 was $0.3 million or 5% of sales compared to $0.2 million or 10% of sales in Q3 2021. Gross loss for the first three quarters of 2022 was $1 million or 7% of sales compared to $0.6 million or 11% of sales in the same period of 2021.

Gross loss for the first three quarters of 2022 was 1 million or 7% of sales compared to <unk> 6 million or 11% of sales in the same period of 2021.

Kathy McDermott: The gross loss improved by 5 percentage points in the third quarter and year-to-date compared to the prior year as a result of the increased production volume, resulting in favorable fixed overhead absorption and improved labor efficiencies and utilization.

Kathy McDermott: These savings were partially offset by higher material costs for steel and other components due to supply chain shortages and other inflationary pressures. Operating expenses were $6.5 million for Q3, 2022 compared to $1.5 million for Q2 2021.

Supply chain shortages and other inflationary pressures.

Operating expenses were $6.5 million for Q3, 2022 compared to $1.5 million for Q2 2021.

Kathy McDermott: For the first nine months of 2022, we reported $10.9 million for operating expenses compared to $4 million for the same period in 2021. The increases were primarily due to a non-cash $3.7 million increase in the fair value of contingent consideration year-to-date related to the All Cell acquisition, as well as increased operating expenses related to the All Cell business.

The increases were primarily due to a noncash $3 7 million increase in the fair value of contingent consideration year to date related to the Alltel acquisition as well as increased operating expenses related to the wholesale business.

Kathy McDermott: The net loss was $6.8 million or $0.67 per share for the third quarter of 2022 compared to $1.7 million or $0.19 per share the third quarter of 2021. The net loss was $11.9 million or $1.21 per share for the first three quarters of 2022 compared to $4.6 million or $0.52 per share for the same period of 2021.

One 6 million or <unk> 52 per share for the same period of 'twenty one.

Kathy McDermott: At September 30, 2022, we had cash of $4.7 million compared to $21.9 million at December 31, 2021. The cash decrease was primarily due to an increase in inventory as needed to support our revenue forecasts, prepayments to vendors to secure battery cells for production, as well as the net loss.

Cash decrease was primarily due to an increase in inventory as needed to support our revenue forecast.

Payments to vendors to secure battery cells for production as well as the net loss.

Kathy McDermott: Our working capital decreased from $24.6 million at December 31, 2021 to $12.8 million at September 30, 2022. The decrease in working capital includes a $4.9 million increase in current liabilities for the change in fair value of non-cash contingent consideration related to the All Cell acquisition.

The decrease in working capital includes a $4.9 million increase in current liabilities for the change in fair value of non-cash contingent consideration related to the All Cell acquisition.

Kathy McDermott: And based on that, I will now turn it over to Desmond Wheatley for business update. 

Yeah.

Desmond Wheatley: Well, thank you for that, Kathy. And thank you to all of you for tuning in here today. In the 10 years since I first got a concept going of EV ARC on a whiteboard, I have never once doubted that Beam Global would one day become a fantastically successful company. A very good reason as I talk to you today to feel absolutely vindicated in that belief. I know that not everyone has shared my certainty over the years, and that's clearly evidenced by the still very high short interest in our stock.

Thank you to all of you for tuning in today.

And the 10 years since I first spoke concept going off on a whiteboard.

I've never one dosage that being global would one day become a fantastically successful company.

A very good reason as I talk to you today to feel absolutely vindicated monopolies.

I know that not everyone assured myself nuts.

And that is clearly evidenced by the still very high short interest in our stock.

Desmond Wheatley: I've heard the arguments against us, but I've never accepted them. Now, those arguments must surely be dead.

No those arguments must surely be judge.

Desmond Wheatley: During the last three months, we've sold more EV ARC systems than we've sold during our entire 10 years in existence. Let me say that again. We now have more contracted backlog to deliver in the next 12 months than all the units we've produced since the invention of EV ARC. And all of those sales came in during the last three months.

Say that again.

We now have more contracted backlog to deliver in the next 12 months.

All the units we produced since the invention of the deal.

All of those sales came in during the last three months.

Desmond Wheatley: Our investments in sales, marketing and government relations, combined with a dramatic improvement in the market conditions for our products, by which I mean a significant increase in the urgency and volume of EV charging requirements for both government and enterprise customers, has resulted in an order of magnitude increase in both size and acceleration of our orders over the last three months.

This resulted in an order of magnitude increase for both size and acceleration of our orders over the last three months.

Desmond Wheatley: For example, since the end of September, we have sold a single order of 367 EV ARC systems for the US Army through our new and very well positioned partner, TechFlow, Inc. 140 EV ARC systems to the Veterans Administration, 71 EV ARC systems for the City of New York - that's their seventh largest order to date, by the way - 32 EV ARC systems for the Department of Homeland Security. Also in backlog is about 68 other EV ARC systems from various government and enterprise customers across the US.

We have sold a single order of 364, seven <unk> system for the U S Army to a new and very well position for Jack <unk>.

140, <unk> systems to the Veterans administration.

70, <unk> systems for the city of New York.

Seventh largest order to date.

32, <unk> system for the department of Homeland Security.

Also in backlog of about 68, although edr systems for various government and enterprise customers across the U S.

Desmond Wheatley: Backlog is, of course, a constantly changing number because even as I talk to you now, EV ARC systems are being delivered to customers, while still more are being added to our pipeline.

Desmond Wheatley: And we're adding backlog at our battery division too. As of today, that number is around $6.7 million. The total value of all these sales is about $62.2 million. And all of it, with perhaps some immaterial exceptions, is to be deployed within the next 12 months.

The total value of all these sales is about $62 $2 million and all of it with perhaps some immaterial exceptions. This should be deployed within the next 12 months.

Desmond Wheatley: Our sales team is not stopping. Nor is the demand we're addressing. I view these sales as simply the tip of an iceberg that we've been steaming towards for the last decade. But unlike the famous ship, we will not flounder. This iceberg means nothing but opportunity for us.

Nor has the demand we are addressing.

The view these sales is simply the tip of an iceberg that we'd been steaming towards for the last decade.

But unlike the famous ship, we will not find this.

This iceberg, nothing but opportunity for us.

Desmond Wheatley: Governments and enterprises alike are just now starting to wake up to the enormous task of providing a whole new fueling infrastructure. We have the fastest deployed, most scalable and lowest total cost of ownership infrastructure solution that we know of in the world. And these recent orders demonstrate that we're being recognized for that in a way that we have never been before.

Fueling infrastructure.

We have the fastest deployed most scalable and lowest total cost of ownership infrastructure solution that we know in the world.

These recent orders demonstrate that we're being recognized for that in a way that we have never been before.

Desmond Wheatley: The makeup of these orders is illuminating as well. I pointed out in the past that prior to COVID, as much as 50% of our revenues were derived from sales to non-governmental entities. Of course, during COVID, there was a significant reduction in the deployment of workplace EV charging and our revenues from non-governmental entities evaporated almost entirely.

I pointed out in the past the prior to Covid as much as 50% of our revenues were derived from sales to non governmental entities.

Jewelry Covid there was a significant reduction in the deployment of workplace EV charging, but our revenues from non governmental entities evaporates you'd almost entirely.

Desmond Wheatley: Even with the loss of this opportunity, we did not experience a reduction in revenues. In fact, they continued to grow as we replace enterprise opportunities with those coming from the government.

Desmond Wheatley: Over the last several months, we've noticed a return to non-governmental spending on our products. In 2021, government revenues accounted for about 84% of our total, whereas in 2022 that number got to 58%, the remainder coming from non-governmental sources.

In 2021 government revenues accounted for about 84% of our total whereas in 2022 that number got to 58% the remainder coming from non governmental sources.

Desmond Wheatley: Remember these are percentages taken from a rapidly growing pie, showing that actually our enterprise revenues in terms of absolute dollars have increased dramatically. It's certainly not at the expense of the equally significant growth in government revenues.

Desmond Wheatley: Another part of the mythology about Beam Global is that all of our revenues are derived from California sales. California is of course, the largest and most vibrant EV market in the United States, and so it's not surprising that we've sold a significant amount of our product here.

California is of course, the largest and most vibrant markets in United States and so it's not surprising that we sold a significant amount of our product here.

Desmond Wheatley: We've had a contract in place with California Department of General services after all since 2016.

Desmond Wheatley: However, we are by no means reliant upon California for our existence. And again, this is illustrated when you look at a comparison between 2021 and 2022, in which California sales dropped from 56% to 34% of the total, while our actual revenues continue to increase.

California sales dropped from 56% to 34% of the total while our actual revenues continue to increase.

Desmond Wheatley: I bring this up because it's really important to point out that not only are we growing our revenues dramatically, but we're also diversifying the opportunities from which they're derived. The EV charging infrastructure market is a giant opportunity. And we're extending our sales tentacles across its massive and diverse landscape.

The EV charging infrastructure market is a giant opportunity and we're extending our sales tentacles across its massive and diverse landscape.

Desmond Wheatley: The battery business we acquired is also addressing a very large and rapidly growing opportunity. And we've diversified revenue generation in that part of the business as well.

Desmond Wheatley: We're currently selling our unique battery solutions to companies that provide drones, medical devices, EVs, materials rehandling equipment, personal watercraft, robots, and of course, EV charging products, and not just our own.

Desmond Wheatley: Of course, getting all these sales doesn't amount to a hill of beans if we can't deliver on them. To demonstrate that we can and also highlight the sort of growth we've already executed upon, you need only look at the last several quarters and years that we've reported.

To demonstrate that we can and also highlight the sofa growth we've already executed upon you need only look at the last several quarters and years that we've reported.

Desmond Wheatley: In 2020, we did about $6 million in revenue. In 2021, we did over $9 million. And in the first three quarters of this year, we've already generated $14.1 million. And that was before all these very large orders came in.

In 2021, we did over 90 days.

And in the first three quarters of this year, we've already generated $14 1 million and that was before all of these very large orders came out.

Desmond Wheatley: Revenue in Q3 of 2022 was 337% of the same period prior year and 178% of the prior quarter. We're clearly on an accelerating growth curve. And while $62.2 million in the next 12 months is a massive increase over what we've ever done, it's simply a continuation of the accelerated growth which I often communicated to you I expected to happen.

We are clearly on an accelerating growth curve.

$62 2 million in the next 12 months is a massive increase but what we've ever done.

A continuation of the accelerated growth, which I've often communicated to you I expect it to happen.

Desmond Wheatley: Over the last year or so, I've been telling my operations teams that we were a single signature away from a very large order or orders. I've said in the past that I'm often aggressive about when things will happen, but rarely wrong about whether they will happen. The ops team has proved certain of that, and now so do you. We got those signatures, and now have these very large orders to deliver, just as I said we would.

I've said in the past that I'm often aggressive about when things will happen, but rarely wrong about whether they will happen. The ops team has proved certain of that, and now so do you.

Desmond Wheatley: The ops team has proved certain of that, and now so do you.

And now sort of you.

Desmond Wheatley: We got those signatures, and now have these very large orders to deliver, just as I said we would.

I'll now have these very large orders to deliver just as I said, we would.

Desmond Wheatley: But the reason I've repeatedly made that comment to the ops team is that I wanted them to be ready for the success when it comes. And as a result, we've made continuing efforts to improve our efficiencies and our throughput capabilities.

Desmond Wheatley: You get the evidence of that in our gross profitability, which has actually improved even in spite of the hyperinflationary conditions that we've experienced during the last two years.

Desmond Wheatley: We've seen about a 27% increase in our bill of material costs since the beginning of COVID. And yet at the same time, we've improved our gross profitability as a percentage of our revenues with each passing quarter.

Desmond Wheatley: In the quarter we're reporting today, you'll notice a 5% improvement in gross profitability year-to-date. In spite of the hyperinflationary environment, which has been so impactful to the cost of raw materials, components and transportation of our products, we've continued to reduce our cost per unit.

In spite of the Hyperinflationary environment, which has been so impactful to the cost of raw materials components and transportation of our products. We've continued to reduce our cost per unit.

Desmond Wheatley: That improvement in gross profitability can only have come from increased efficiencies. Said another way, we're getting better and faster at producing our products every day.

Said, another way, we're getting better and faster producing our products every day.

Desmond Wheatley: These improvements are important because they're essential milestones on our path to gross and net profitability, but also because they create an environment from which we can successfully execute on the very dramatic growth, which we're experiencing today, and expect to continue to experience for many years to come.

Desmond Wheatley: Our engineering teams are working ceaselessly to find ways to improve the product and make it easier, less expensive and faster to produce. Our operations teams are optimizing our factory layout, making investments in fixtures and machinery and increasing our headcount with qualified personnel to take on the exciting challenge of this growth towards which we've all worked for the last decade.

Our operations teams are optimizing our factory layout, making investments in fixtures and machinery and increasing our headcount with qualified personnel to take on the exciting challenge of this growth towards which we've all worked for the last decade.

Desmond Wheatley: We will continue to make judicious and disciplined investments in our facilities in San Diego and Chicago, so they can efficiently and cost effectively execute on our growing order backlog.

Desmond Wheatley: For example, in Chicago, we've invested in automation of battery cell sleeving, welding, CNC driven manufacturing of bespoke battery configurations. And from Q2 to Q3 of this year, we do have a 38% increase in kilowatt hours of storage shipped as a result of our improvements in investments.

Desmond Wheatley: Discussing investments is good cue to talk about our cash position, which I think sometimes is misunderstood. When looking at only the cash line on our balance sheet, one might be forgiven for coming to the conclusion that we burned through cash at an alarming rate this year. However, just a few more minutes of analysis, and you will uncover a far different and much more accurate story.

When looking at only the cash line on our balance sheet, one might be forgiven for coming to the conclusion that we burn cash at an alarming rate this year.

However, just a few more minutes of analysis, and you will uncover a far different and much more accurate story.

Desmond Wheatley: We have leveraged our balance sheet this year. I believe to be a wise and disciplined manner. So that we can be ready for the significant opportunities with noninvasive. We've increased our inventory of items, which we believe to be at risk from potential supply chain hurdles lots. Battery cells are an excellent example of this.

I believe to be a wise and disciplined manner. So that we can be ready for the significant opportunities with noninvasive.

We've increased our inventory of items, which we believe to be at risk from potential supply chain hurdles lots.

Battery cells are an excellent example of this.

Desmond Wheatley: There's a great deal of demand for battery cells. And while I'm very confident that, in the future, supply will meet that demand, we are at present navigating a course in which access to battery cells in the ever increasing quantities we require might have presented a risk to our business.

We are at present navigating a course of which access the battery cells and ever increasing quantities, we require might've presented a risk to our business.

Desmond Wheatley: In anticipation of this eventuality, we've committed capital to increasing our inventory on hand and also to prepaying vendors to ensure an adequate supply through the next 12 months or so.

Desmond Wheatley: We also have historically high numbers of WIP, or work-in-progress EV ARC systems, largely as a result of accelerating production in anticipation of final signatures on some of the large orders we've received during the last month or so. We knew they were coming. But like all good things, they took time.

We knew they were coming but like all good things they took time.

Desmond Wheatley: Working capital is actually a much more useful metric to analyze when considering our cash and cash equivalent status. But even working capital has been skewed in a somewhat misleading manner, potentially, by the impact of the inclusion of a non-cash contingent consideration resulting from the excellent performance of our newly acquired battery company in Chicago.

<unk> by the impact of the inclusion of the noncash contingent consideration, resulting from the excellent performance of our newly acquired battery company in Chicago.

Desmond Wheatley: Because they're executing and exceeding the revenue and backlog requirements of the earn-out provisions, which are built into the asset purchase agreement, we've had to revisit the original valuation and recognize that the assets we bought are worth more than we originally reported.

Desmond Wheatley: There's nothing unusual in the sort of evolution of valuation. In fact, it's standard practice as the ongoing evolution of an acquired entity is assessed quarter by quarter.

First quarter by quarter.

Desmond Wheatley: You might be more used to seeing acquired entities writing down goodwill as the realities of the business fail to live up to the high expectations at the time of acquisition. But in this case, we are doing completely the opposite.

Desmond Wheatley: As a result of this excellent execution, we anticipate that we will, in fact, make the first of the non-cash earn-out payments which are tied to performance post acquisition.

<unk> payments, which are tied to performance post acquisition.

Desmond Wheatley: Well negotiated earn-out payments are surely some of the most satisfying liabilities an acquirer can accept because it's proof certain that the acquired entity is meeting or exceeding the performance we expected at the time of acquisition.

Desmond Wheatley: Nevertheless, there is no cash-in while there is no cash impact on these payments. They are expensed and therefore have an impact on P&L and they also show up on our balance sheet and negatively impact working capital.

Desmond Wheatley: The contingent consideration in question is just under $5 million. Adjusting our working capital for this gets us from the $12 million that we have accurately reported according to GAAP to something over $17 million from a non-GAAP, but nevertheless important day to day management point of view.

Desmond Wheatley: Adjusting our working capital for this gets us from the $12 million that we have accurately reported according to GAAP to something over $17 million from a non-GAAP, but nevertheless important day to day management point of view.

Desmond Wheatley: Remembering that we'll convert the $12 million an inventory that we're currently carrying over the next 180 days with perhaps a few insignificant exceptions. It's, as far as I'm concerned, as good to us as cash because we don't run out of money before we do that.

As far as I'm concerned as good to US is cash because we don't run out of money before we do that.

Desmond Wheatley: So to return to the balance sheet and our cash position, you can see that, as of December 31, 2021, we had approximately $24 million. Today, we have cash in inventory amounting to approximately $17 million.

Today, we have cash and inventory amounting to approximately $17 million.

Desmond Wheatley: So, while we've use cash in the manner as I just described, we have not burned cash at anywhere near the same rate.

Desmond Wheatley: In fact, doing the simple arithmetic, you can see that we burned around $7 million in nine months, or just over $2 million a quarter, continuing our fastidious discipline where spending money is concerned.

Desmond Wheatley: And don't forget that, during that time, we had the cost associated with the acquisition and integration of the battery company we bought in March of this year.

Desmond Wheatley: Anyway, taking that $2 million a quarter and dividing it into the approximately $17 million we have in cash and inventory combined shows you that, properly managed, we could continue to operate for another two years or so without needing to raise capital.

Desmond Wheatley: Not needing to raise capital doesn't mean that I would not raise capital were the situation to arise, in which it was clearly the right thing to do for our investors.

Desmond Wheatley:  I will continue to be guided by the discipline that has allowed me to appropriately capitalize this company across the years, which is that I never do anything unless I believe it is in the best interest of our shareholders. Never.

Never.

Desmond Wheatley: As we move into 2023, it's our plan to reduce the number of work in progress EV ARC systems we have on hand and also to reduce the amount of inventory we carry, particularly when viewed as a percentage of the overall business we're doing.

Desmond Wheatley: The very dramatic increase in throughput at our factory, which we would require to deliver the new level of production, being good with our sales, will direct us towards a return to just-in-time production, something we were successful at in lower volumes of earlier times.

We were successful at and lower volumes of earlier times.

Desmond Wheatley: Same time, we anticipate a reduction in the supply chain bottlenecks which have driven us to leverage our balance sheet in the defensive ways we have over the last 12 to 18 months.

Desmond Wheatley: A significant increase in volume of components and raw materials, which we were acquiring from our vendors, should allow us to negotiate for reduced pricing and improved payment terms.

Desmond Wheatley: Both of these have an advantageous impact on our cash requirements at any given time. Additionally, the larger customers to whom we'll be delivering product this year generally have an excellent history of timely payments, at least where we're concerned. The combination of these factors will, I believe, enable an environment in which we will be successful.

Additionally, the larger customers because it will be delivering product. This year generally have an excellent history of timely payments at least where we're concerned.

The combination of these factors will I believe enable an environment in which we will be successful.

Desmond Wheatley: Just as I've been telling you for a long time that I believe we win large orders for our products, so too have I've been telling you that increased sales volumes and throughput at our factory facilities are the key to achieving profitability.

Desmond Wheatley: We are delivering on the first part of that statement, and I'm very confident that we will deliver equally on the second part – profitability. You will note that we improved year-to-date net profitability by 25% when excluding the non-cash contingent consideration for the earn-out payment I already discussed.

Desmond Wheatley: You will note that we improved year-to-date net profitability by 25% when excluding the non-cash contingent consideration for the earn-out payment I already discussed.

Desmond Wheatley: Moving from 124 EV ARC systems we produced in 2021 to the several hundreds that we will produce in 2023 will clearly have a very significant impact on the fixed overhead allocations to cost per unit.

Desmond Wheatley: It's quite simple. Our fixed overhead costs, while they will increase, will increase at nowhere near the rates of our revenues. This will be a significant contributor to a reduction in our cost of goods sold.

This will be a significant contributor to the reduction in our cost of goods sold.

Desmond Wheatley: Same time, these increased volumes will, as I've already stated, allow us to negotiate better pricing with our vendors, further reducing our COGS.

Desmond Wheatley: And while for the last several months, indeed couple of years have delivered inflationary pressures not seen in four decades, all indications that we're now receiving from our vendors and from our own research going to a plateauing of cost increases leading to the beginning of cost reductions as we move into 2023.

Desmond Wheatley: Just looking at steel alone, which is the second highest cost contributor to our product, we've absorbed cost increases for some sections, which are nearly 6x greater than what we were paying in 2019.

we've absorbed cost increases for some sections, which are nearly 6x greater than what we were paying in 2019.

Desmond Wheatley: Nothing in the macro economical supply chain environment suggests that these sorts of very high prices will continue into the future. On the contrary, just looking at iron ore prices, we can see that commodity is trading for less than half today what it was factoring just six months ago.

Desmond Wheatley: Many people, and I'm one of them, believe that if we're not already in a recession, we're heading towards one. That would normally be very bad news for growing business. But actually, where we're concerned, it's almost certainly the opposite.

I'm one of them.

Believe that if we're not already in a recession, we're heading towards one.

That would normally be battery died used for growing business, but actually where we're concerned it's almost certainly the opposite.

Desmond Wheatley: None of our contracted backlog and almost none of our expanding pipeline will be impacted in any way by a recession. At the same time, the availability of human resources, commodities, components and materials will increase, while the costs for those things should come down.

At the same time, the availability of human resources commodities components and materials will increase while the cost for those things should come down.

Desmond Wheatley: This is especially true where transportation is concerned. And transportation is a significant cost input to our business model. Taking all of these things together, I believe that what you're going to see is a dramatic and accelerating growth in our top line, accompanied by improved efficiency and execution and a reduction of costs in almost everything we pay for. Put simply, profitability at the gross line and then at the net line.

Taking all these things together I believe that what youre going to see is a dramatic and accelerating growth in our top line.

Accompanied by improved efficiency in execution and a reduction of costs in almost everything we pay for. Put simply profitability at the gross line and then at the net line.

Put simply profitability at the gross line and then at the net line.

Desmond Wheatley: We're certainly going to be very, very busy in the coming days, months and years. But that will not prevent us from continuing to exploit the other opportunities that we've already nurtured or those new ones which we seek out in the future.

Desmond Wheatley: We will continue to develop new products, which we've already patented, like our EV Standard and our UAV ARC, we will also continue to develop and patent new products as we encounter demand from the market for ever improving solutions. We have demonstrated that we can identify those opportunities before anyone else and provide marketable solutions for them.

We will also continue to develop new products as we encounter demands from the market forever improving solutions.

We have demonstrated that we can identify those opportunities before anyone else and provide marketable solutions for them.

Desmond Wheatley: In September, I spent a month in Europe and the Levant, seeking and advancing opportunities to expand our business to the largest EV market in the world where internal combustion engine vehicles will be banned in a little over 12 years from now.

Desmond Wheatley: At the end of this month, I returned to Europe to continue those efforts and I will also travel to the Middle East, where we intend to expand our business in both that and the nascent African market.

That.

The nascent African markets.

Desmond Wheatley: I remain acquisitive and will continue to seek out opportunities to make acquisitions where those transactions deliver value for our shareholders and conform to our strategic plan.

Desmond Wheatley: Lastly, I continue to work with Superlative on the sponsored Driving on Sunshine Network opportunities. Like the large orders I previously promised and have now delivered, I'm confident that, at some point, we will make a success of that opportunity as well. Although as I've often said, while I'm very enthusiastic about that opportunity, it's never been vital to our success. I think the orders we've been announced today demonstrate that wholeheartedly.

Like the large orders I previously promised and have now delivered I'm confident that at some point, we will make a success of that opportunity as well, although as I've, often said, while im very enthusiastic about that opportunity, it's never been vital to our success.

The orders, we've announced to date demonstrate that wholeheartedly.

Desmond Wheatley: Took about 10 years to get the Saturn V rocket of Apollo 11 from the whiteboard to the launch pad. And it's taken a similar amount of time for us to take the EV ARC from the whiteboard to the point where we're ready to blast into tremendous success. 

It has taken a similar amount of time for us to take the <unk> from the whiteboard to the point, where we're ready to blast into tremendous success.

Desmond Wheatley: We delivered a lot of systems and generated a fair bit of revenue during that time. But nothing that we've done over the last 10 years can compare to what we're going to do in the next 10 months, and 10 years, and all the years after that.

Desmond Wheatley: So, to borrow Alan Shepard's words from an earlier mission that delivered the first American into space, let's light this candle. I'll now return the call to the operator and take questions.

I'll now return the call to the operator and take questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your Touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

To ask a question, you may press star then one on your Touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

If you are using a speakerphone, please pick up your handset before pressing the keys.

If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Operator: The first question today comes from Tyler DiMatteo with BTIG. Please go ahead.

Multiple speakers: [Desmond Wheatley] Hey Tyler. [Tyler DiMatteo] Hi everyone. Thanks for taking the question.

Tyler DiMatteo: So Desmond, I want to come back to the prepayments on the battery cells, would you be able to provide a little more color here on how you're thinking about sourcing battery cells, realizing as you alluded to demand right now is extremely high. Just kind of wanted to get a better sense of how you're thinking about it and kind of your approach.

And kind of your approach.

Desmond Wheatley: Yeah. Tyler, it's been a nail biter. There's no question about it, especially a year ago, it was a bit of a nail biter. Before I acquired the company that we bought in Chicago, we were looking at the very real potential that we might actually run out of batteries this year. And of course, as all of our products have energy storage on board integrated into them, no batteries means no products.

These new products.

Desmond Wheatley: So the first thing was, it was absolutely the right thing to do on so many levels as evidenced by the increasing value of the acquisition to make the acquisition. I  couldn't be happier about it. And we paid right for it, no cash and got a fantastic valuation.

Desmond Wheatley: I  couldn't be happier about it. And we paid right for it, no cash and got a fantastic valuation.

<unk> got a fantastic valuation.

Desmond Wheatley: That said, the seller will make a lot of money too because they hold our equity. And I'm confident we're going to really push that.

Desmond Wheatley: But to your specific question about the cells, yes, we have strategically leveraged our balance sheet to ensure that we have access to the cells that we need for the foreseeable future.

Yes, we have we have strategically balanced early.

While the leveraged our balance sheet to ensure that we have access to the cells that we need for the foreseeable future.

Desmond Wheatley: We've also strengthened, developed and further developed our relationship with the vendors, particularly in Korea -- South Korea, where the majority of our cells come from. And in fact, I just had the CEO of the company from whom we buy those cells in our offices here in San Diego - two or three months ago, it was in our offices in Chicago -

The CEO of the company from whom we guide ourselves in our offices here in San Diego, two or three months ago within our offices in Chicago.

Desmond Wheatley: They have become very, very convinced that this EV charging infrastructure product that we make is going to be very important to the future of electric vehicles. In fact, they want to present EV ARC and our other products in the Asian market for us.

Vincent that this EV charging infrastructure product that we make it's going to be very important for the future of electric vehicles.

They want to present <unk> into our other products in the Asian market for us.

Desmond Wheatley: Now why that's important is because what I've been able to point out to them is that, while they're producing all these markets for electric vehicles, if there's no charging infrastructure, there'd be no electric vehicle sales. So, at the end of the day, they cannot preclude us from –- in order only to supply the electric vehicle manufacturers. They accept that argument. So combination of our using our balance sheet and also articulating them are an important role in the growth of EV charging infrastructure, which is essential to the growth of EVs and therefore to the growth of sales of cells into those EVs has, I think, put us in a position where it's certainly not one of the things that's keeping me awake at night at the moment.

And order only to supply their electric vehicle manufacturers. They accept the argument so combination of using our balance sheet and are also and also.

Particularly kingdom, our important role in the growth of EV charging infrastructure, which is essential for the growth of <unk> and therefore, the growth of sales of sales into those Evs has I think put us in a position where.

It's certainly not one of the things that's keeping you awake at night at the moment.

Tyler DiMatteo: Okay great. And then what I wanted to also follow up on is, I look at the backlog here and kind of the value of the contracts and realizing demand, as you alluded to, is strong across the EV charging ecosystem due to all the policy incentives and so forth coming through. Just -- can you speak to kind of the customer appetite, because it looks as if, like, the pricing associated with some of these contracts is you're getting a little bit of a nice benefit there. Just trying to get a sense of customer appetite further across the different segments here, if you wouldn't mind, please.

Charging ecosystem due to all the policy incentives so forthcoming through.

Could you speak to kind of the customer appetite because it looks like the pricing associated with some of these contracts is you're getting a little bit of a nice benefit there just trying to get a sense of the customer appetite further across the different segments. If you wouldn't mind. Please.

Desmond Wheatley: As I said, in my comments, this is the tip of the tip of the tip of the iceberg. I mean, these numbers are big to us right now. But they are absolutely nothing in comparison to the demand that's coming down the pipe, and I can't go into detail about the conversations we're having. But I can tell you that nobody is saying to us, oh, this is it. The completely opposite conversations are taking place.

These numbers are big to us right now, but they are absolutely nothing in comparison to the Nevada, the demand thats coming down the pipe and I can't go into detail about the conversations we're having but I can tell you that nobody is saying to us Oh. This is it.

The completely opposite conversations are taking place so.

Desmond Wheatley: I mean -- look, the federal government has 675,000 vehicles in its fleet. The light duty fleet has to be electric by 2027. And then the entire fleet by 2035. 

Desmond Wheatley: They are currently the largest consumer of diesel and gasoline in the world, soon to become the largest consumer of electric vehicle charging infrastructure in the world. And it has to happen really, really quickly. 2027 is just nothing, it's a couple of blinks away where infrastructure is concerned.

Nothing it's a couple of blinks away where infrastructure is concerned.

Desmond Wheatley: It's getting harder and more expensive and more complex to deploy grid tied infrastructure. We're getting better and faster and less complex to make our products. So I've never said that we will be the only solution. And we should not be. But we're going to be a very important player in this. And again, these orders, right now, as wonderful as they are for us right now. I don't believe that they're anything other than the beginning of a much larger wave that's coming.

To make our products. So I've never said that we will be the only solution and we should not be but we're going to be a very important player in this.

And again these orders right now as wonderful as they are for US right now I don't believe that they are anything other than the beginning of <unk>.

Much larger wave that's coming.

Tyler DiMatteo: Okay, great. Thank you, Desmond. I really appreciate the time. I'll turn it back to the queue. Thank you. 

Thank you Tyler.

Multiple speakers: [Desmond Wheatley] Thank you Tyler. [Operator] The next question comes from Tate Sullivan with Maxim Group. Please go ahead.

Multiple speakers: [Desmond Wheatley] Hello Tate. [Tate Sullivan] Hello. 

Tate Sullivan: Great news on all the orders. And executing on that backlog, you gave great detail on the level of inventory you're looking at. And starting there, are you going to target a specific level of inventory as a percent of that large backlog number? I mean, it sounds like you can manage through it, but how are you looking at managing that inventory level, please?

And starting there I mean.

Are you going to target a specific level of inventory as a percent of that large backlog number.

I mean, it sounds like you can manage through it but how are you looking at managing our inventory level. Please.

Desmond Wheatley: Look, I want my vendors to warehouse and capitalize the inventory that I need to make my products. So, the latest I can get it and the latest I can pay for it, the better I like it.

I want my vendors to warehouse and capitalize the inventory that I need to make my products. So the latest I can get it and the latest I can pay for it the better I like it.

Desmond Wheatley: In an ideal world, of course, we're pushing our vendors out to the point where we're getting paid by our customers before we're paying them. That is not an opportunity that we will always be able to leverage. But we'll keep pushing for as we become more and more powerful. This is just a balance of power thing. The more we do, the more we buy, the more power we have to get better pricing and better terms.

Not an opportunity that we will always be able to leverage, but we will keep pushing for as we become more and more powerful. This is just the balance of power thing the more we do the more we buy the more power, we have to get better pricing and better terms.

Desmond Wheatley: But I'm going to have a busy factory. The good news is I've got factories, I mentioned in my comments, we do 30 times the volume that I did in 2021. So I've got plenty of room for expansion here. But we now have to be efficient in the use of space and in the use of cash. And so, that means really working our vendors very hard to have them inventory, warehouse, and capitalize the products that we need. We'll be, as I said, moving back to as close to just-in-time as we can.

I'm going to have a busy factory. The good news is I've got factory as I mentioned in my comments, we do 30 times the volume that I did in 2021, so I've got plenty of room for expansion here, but we don't have to be efficient in the use of space and in the use of cash and so that means really working our vendors very honored to have them inventory.

Our house and capitalize the products that we need we will be doing will be as I said moving back to its close to a just in time as we can defer.

Desmond Wheatley: The difference is, of course, just-in-time used to mean a few products. Now, it's just going to be a constant cycle of trucks rolling in and out of the property moving product. And it's already starting to look a bit like that. I have my ops manager actually said to me this morning, God, it's terrible you've got a corner office because I get to see everything that comes on the box and everything gets off it. And of course, I've got a comment about all of it. But I can tell you there's an increase, just a dramatic increase in the flow of vehicles coming into the property and leaving the property right now. It's very encouraging, but it's going to get a whole lot busier.

Just a dramatic increase in the flow of vehicles coming into the property and leaving the property right now is very encouraging but it is going to get a lot busier.

Multiple speakers: [Tate Sullivan] Thanks. And can you provide -- I'm looking at TechFlow press release about how they're managing the EV infrastructure rollout for some of the military branches. Is this a partnership with TechFlow? Or did they select you from multiple vendors? Can you give more detail on your arrangement with TechFlow, please? [Desmond Wheatley] The good news, Tate, is that when somebody wants a transportable, but permanent EV charging infrastructure product that is entirely renewably energized, sits in a parking space but doesn't remove parking space, tracks and follows the assignment, has all the other attributes of our product, there just aren't a lot of people out there that can compete with us. Now other vendors did try to compete, but the fact is they're showing up with a container solutions and all the other things like that that just don't meet specifications or there's something else, some other aspects of what they offer which is not right.

You from multiple vendors can you give more detail on your arrangement with textbooks at the good news is that when somebody wants a transportable, but permanent EV charging infrastructure product is entirely renewable energized sits in the Barclays space, but it doesn't remove parking space.

And Paul was a sign and as all the other attributes of our product there just aren't a lot of people out there that can compete with US no. Other vendors did tried to compete but the fact is they're showing up with the container solutions and all the other things like that that just don't meet specifications or theres something else. Some other aspects of what they offer which is not right.

Desmond Wheatley: It's not an accident that we've spent 10 years developing by far the best and unique and well patented product for this industry and TechFlow recognized that.

And tech will recognize that.

Desmond Wheatley: By the way, I am thrilled to bits to be working with them. If you take a look at those guys, we're very good at making EV ARCs and getting them in our customers parking spaces, they are very good at interfacing with the federal government. They do all sorts of wonderful things. In fact, all of us sort of rely on them one way or another, from day to day, particularly as we travel.

We're very good at making <unk> and getting them into our customers' pockets basis. They are very good are interfacing with the federal government. They do all sorts of wonderful things in fact, all of us sort of rely on them one way or another.

Day to day, particularly if we travel.

Desmond Wheatley: So they're just a great partner to have. We're working very well with them. And we're looking forward to doing a whole lot more with them in the future.

Tate Sullivan: Thank you, Desmond.

Desmond Wheatley: Thank you, Tate

Operator: The next question comes from Craig Irwin with ROTH Capital Partners.  Please go ahead.

Desmond Wheatley: Hi Craig, how are you?

Craig Irwin: Hey, I'm very good, very good. Congratulations on just a very successful couple months in there. It's really impressive how things have -- 

Thank you Glenn. No.

No.

Craig Irwin: So, I wanted to ask a little bit about the implications of volume and what this is going to do for margins. Right? So you've been planning for margin improvement for a while. And the vertical integration with battery manufacturing has been a key part of that. How's this tremendous backlog and the fact that you're going to be operating at pretty good capacity utilization, how does this impact the margin outlook as we look down the runway in the next couple quarters?

<unk> been planning for margin improvement for awhile.

And the vertical integration with battery manufacturing has been a key part of that.

How does this.

How is this tremendous backlog.

And the fact that you are going to be operating at a pretty good capacity utilization. How does this impact the margin outlook because as we look down the runway over the next couple of quarters.

Yes, so I.

Desmond Wheatley: So, I think there's two aspects to that. The first one is just the fixed overhead burden that we have to share amongst a number of products that we put out. Clearly, that's going to be dramatically impacted. Obviously, we've got a facility here that can produce 4,000 units a year. And last year, 124 units carried all the cost burden for that.

The.

The fixed.

Overhead burden.

We have to share amongst a number of products that we put out clearly that is going to be dramatically impacts obviously, you've got we've got a facility here that can produce 4000 units a year and last year 124 units carried all the cost burden for that next year several hundred swill.

Desmond Wheatley: Next year, several hundreds will. 600 or 700 will carry that. So that clearly is going to divide that overhead burden and dramatically reduce it.

Desmond Wheatley: At the same time, we just are getting a lot more efficient at doing that. That means less taxing, less labor involvement in each of the products, and so on. And so, we get more leverage from that as well. And then, I think the other – the two other major contributors are going to be we're not easy to deal with as a vendor. We're great, we pay on time, and we'll buy a lot of stuff from you, but we better be getting the best pricing. We're going to keep pushing for better and better pricing and better and better terms all the time. So I anticipate that significant reductions in costs for the things that we're paying just because of our volume increases. But also, as I said in my remarks, I believe that we will also be favored by the economic environment that we're moving into in the moment. I think we're going to see the end of the supply chain constraints and hyperinflation. In fact, we're already seeing that being replaced by far better access to components. I've read some of the other public filings from some of the other automotive companies saying the same things.

Keep pushing for better and better pricing and better and better terms. All the time. So we will I anticipate significant reductions in cost for the things that we're paying just because of our volume increases, but also as I said in my remarks, I believe that we will also be favored by the economic environment that we're moving into it at the moment I think we're going to see the end of this sort of stuff.

Supply chain constraints and the hyperinflation in fact, we're already seeing not being replaced by.

Far better access to components I've read some of the other public filings from some of the other automotive companies seeing the same things.

Desmond Wheatley: The supply chain is opening up for them right now. And we are already seeing either cost reductions right now or indications that cost reduction will start in the first quarter of next year. So, you're going to get a combination of perfect storm of all of those things at a time when we're moving into the highest volume that we've done yet. We can still do four times more through this factory facility. But all of that will go to the gross profitability, which of course eventually leads to net profitability. And just to put that in context, again to go back to my remarks, 27% increase in BoM costs. And by the way, we're very BoM heavy. Most of our costs are in BoM, not labor.

We are already seeing that.

Either cost reductions right now or indications that cost reduction due to start in the first four of next year. So you're going to have a combination of a perfect storm of all of those things at a time when we're moving into the highest volume that we've done yet we can still do four times more through this factory facility.

And but all of that will go to.

Gross profitability, which of course eventually leads to net profitability and just to put that in context again to go back to my remarks, 27% increase in bond calls, but we were very boom heavy most of our costs are embalmed not labor.

Desmond Wheatley: 27% increase in BoM costs, and yet a 5% increase in gross profitability. So that means we absorbed all the increase in the costs and still improved by 5%, our gross profitability. I believe we'll get back to the BoM costs and continue to increase our efficiencies. And so, you can add all those numbers together, that tells you where we get to gross. And at the moment, my back of the napkin – I've got to say, don't quote me on this, of course, you're going to quote me on it - but back of the napkin, the combination of those things is enough to get us to cash flow.

Back of the napkin I'm going to say don't quote me on that of course, you're going to quote me on it but back of the napkin.

The combination of those things is enough to get us to cash flow.

Craig Irwin: Excellent. Excellent. So my second question I wanted to ask is about what you feel the bigger impact on success has been with these government and municipal customers? Is it more the fact that you can deliver these very quickly and that they're transportable to new sites if plans change or priorities change throughout the year on seasonality of certain use of parks and other areas? Or is it more the fact that there's the avoided cost of infrastructure that they don't have to go and procure changes to the utility and power footprint and bring in substantial capacity to allow EV charging in the locations they want to serve?

What do you feel the bigger impact on success has been with these these government.

And municipal customers so.

Is it more the fact that you can deliver these very quickly and.

They're they're transportable to new site claims change or.

Priorities change throughout the year on seasonality of certain certain use of parks and other other areas or is it more of the.

<unk> avoided cost of infrastructure that they don't have to.

Go and procure changes to the utility and power footprint and bring in substantial capacity to allow EV charging in the locations they want a sheriff.

Desmond Wheatley: So there are not many people out here that understand this industry better than you do, Craig, and you've just answered your own question. It's all of the above.

Desmond Wheatley: The things that I have been saying for the last decade have not changed. Check any of the statements I've made, check any of the presentations I've put together over the last decade. Now for the first eight years, everyone who listened to me rolled their eyes and smirked, and oh, here's comes the mad Scotsman again with his stories about, it takes too long and it's too expensive to install grid tied charging, the grid is vulnerable, the grid doesn't have enough capacity and all these other things. They all used to roll their eyes. Now, they're saying the same things. I suppose flattery is the highest form of – or rather, imitation is the highest form of flattery. But the answer to your question is speed to deploy is huge.

Vulnerable the grid doesn't have enough capacity.

And all these other things they've always used to roll their eyes, no theyre seeing the same things I suppose flattery is the highest form of our era.

Other imitation is the highest form of flattery, but the answer to your question is speeds to deploy is huge.

Desmond Wheatley: There's a huge amount of urgency right now. You've got all these people who are actually getting vehicles, either because in the enterprise environments, the employees are signed to drive to work in Mach-Es and F150s and Rivians and all the other fantastic products that are out there. And so, the corporate environment having to add EV charging at a faster lick than they ever have done before. And then of course, all the government entities who are taking title to electric vehicles who don't have charging infrastructure and only now just discovering how very long and risky it is to dig all the trenches, go through the permitting, environmental impact studies and everything else like that. Then there's avoided cost of construction, electric work, you're absolutely right about that. Certainly there are inexpensive ways to deploy EV chargers, but once you put those one or two in, and now you need 10 or 15 more, now you're out trenching your parking lot, doing switchgear upgrades and electrical upgrades and everything else like that, we all of a sudden start to look like a bargain really quickly. And then finally, particularly for our fleet operators, it's about resiliency. 

Vehicles, we don't have charging infrastructure and only now just discovering how very long and risky as to dig all the trenches go through the permitting environmental impact studies and everything else like that then there's avoided cost of construction electric work Youre absolutely right about that certainly there are inexpensive ways to deploy EV charges, but once you put those one or two and I know you need 10 or 15 more.

No youre right.

Trenching your parking lot doing switch gear upgrades and electrical upgrades or anything else like that we all of a sudden you start with like a bargain really quickly and then finally, particularly for our fleet operators, it's about Brazil.

Resiliency.

Desmond Wheatley: People are understanding that and waking up to the fact that electricity is fuel. And if you have a blackout or a brownout or something goes wrong, something else goes wrong with the grid like a hurricane or whatever else comes along, you are grounded. You have no fuel. Our products continue to operate during those environments. So if you look at people like Army, Marine Corps and all the others that we are deploying for right now, they can't afford to ground their vehicles. New York City can't afford to growing their vehicles during a blackout or a brownout. Nor can I as an individual, nor can you. But specifically these fleet operators. So it's everything that we've been selling and talking about the last decade, everything that we've developed into our product to address is becoming a reality. It's just coming home right now at a rate that we've never seen before and it's only going to accelerate.

The growing their vehicles, New York city kind of afford to growing their vehicles during a blackout or o'brien, nor can I as an individual nor can you, but specifically these fleet operators. So it's everything that we've been selling and talking about the last decade everything that we've developed into a product to address is becoming a reality, it's just coming home right now.

At a rate that we've never seen before and it's only going to accelerate.

Craig Irwin: Understood, understood. If I could sneak another one in to the question. So, a few years ago, you put a tremendous amount of effort into developing potential sponsored deployments. Now that we've seen the GSA funding capabilities sort of drive government adoption, this has to catch the attention of those major consumer brands that – we were in conversation with you a few years ago. I know you've probably haven't had a lot of spare time in the last couple of months. But what do you think about the potential for the success you've been having to reignite the opportunity to explore that and for that to maybe take some shape a little bit further than where it got to a few years ago?

So the question was.

So a few years ago, you put a tremendous amount of effort into developing potential sponsored deployments now that we've seen me.

<unk> funding.

Capability sort of drive government adoption.

This has to catch the pension.

Of those major consumer brands.

We're in conversation with you a few years ago I know you probably haven't had a lot of spare time in the last couple of months.

But where do you think about the potential for the.

The success, you've been having to reignite.

The opportunity to explore that.

For that to maybe take some some shape.

A little bit further than where it got to a few years ago.

Desmond Wheatley: I have a very talented sales team and Superlative, the company that I'm working with to sell the sponsorship, and again, they're doing that performance based. They don't get paid. They're going after this because – although they're the preeminent experts in the space, they believe heavily -- or not although –- because they are the preeminent experts in the space, they believe heavily that this is going to be a giant win one day.

Superlative the company that I'm working with to sell the sponsorship and again, they're doing that performance base. They don't get paid there going up this because although they are the preeminent experts in the space. They believe heavily we're not all the <unk>.

They are the preeminent experts in this space. They believe heavily that this is going to be a giant when one day.

Desmond Wheatley: But the truth is, the point you made is exactly right. Talented sales teams, talented Superlative. The fact is nothing sells EV ARCs like EV ARCs. When people see them, when people use them, when people get around them, they want them. And I absolutely believe that the volumes that we're doing now and that the credibility that we're getting from that and just the visibility of the product across the United States and, I hope, soon internationally, will certainly help us. And as I said in my comments, I'm often a little optimistic about how quickly things will get done because I'm a very impatient person, but I'm really wrong about whether or not they get done.

Talented sales team is talented superlative decided nothing sells <unk> like <unk> when people see them when people use them, we can people get around them they want them.

Absolutely believe that the volumes that we're doing now.

The credibility that we are getting from that and the just.

Just the visibility of the product across the United States and I Hope soon internationally will certainly help us and as I said in my comments.

Yes.

It's been a little optimistic about how quickly things will get done because I'm, a very impatient person, but rarely wrong about whether or not they get done.

Desmond Wheatley: And I don't believe that this sponsorship thing will be one of them will be wrong about. I just think it's going to have taken a lot longer than we wanted to. But when we get it, it will be a humdinger.

Craig Irwin: Excellent. Well congratulations on the progress. I'm going to go hop back in the queue and look forward to catching up with you soon. Thank you.

Desmond Wheatley: Thanks, Craig. I hope to see you next week.

Operator: The next question comes from Christopher Souther with B. Riley. Please go ahead. 

Go ahead, Chris.

Multiple speakers: [Desmond Wheatley] Hi Chris. [Christopher Souther] Hey, how's it going? Thanks for taking my question here and congrats on the great progress.

Christopher Souther: Maybe just -- if you could start with a breakdown of the battery versus charging business in the quarter and within the charging piece, the government revenue versus the enterprise, given you called out an uptick in the enterprise. So, we can see from the orders here that you're doing a great job on the government side for sure, but wanted to get a sense of what you're seeing with more of the corporate customers kind of returning, especially given recessionary worries and all that stuff.

battery versus charging business in the quarter and within the charging piece, the government revenue versus the enterprise, given you called out an uptick in the enterprise. So, we can see from the orders here that you're doing a great job on the government side for sure, but wanted to get a sense So what you're seeing with more corporate customers kind of returning, especially given recessionary worries and all that stuff?

and within the charging piece, the government revenue versus the enterprise, given you called out an uptick in the enterprise. So, we can see from the orders here that you're doing a great job on the government side for sure, but wanted to get a sense So what you're seeing with more corporate customers kind of returning, especially given recessionary worries and all that stuff?

And within the charging piece.

the government revenue versus the enterprise, given you called out an uptick in the enterprise. So, we can see from the orders here that you're doing a great job on the government side for sure, but wanted to get a sense So what you're seeing with more corporate customers kind of returning, especially given recessionary worries and all that stuff?

We are doing a great job on the government side for sure but wanted to get a sense of what youre seeing with more of the corporate customers kind of returning.

Especially given recessionary worries and all that stuff.

Desmond Wheatley: So the battery revenue was about a fifth of the – or actually better than a fifth of the total revenues that we that we did in the quarter, which is really great. There's nothing like buying a company and have it start doing better than we initially anticipated to do. And as I say, no good deed goes unpunished, especially on Wall Street. The thing is performing better than it was. So we've got to take this non-cash hit because we're going to make the earn-out payments, which I've said from day one, I'm very much looking forward to making those earn-out payments because it means we didn't buy a dud. And we did not buy a dud. They're doing better and better every day. And we're helping with that process.

Sure. So the battery revenue was about fifth of the of the.

So the battery revenue was about fifth of the of the.

Actually better than a fifth of the total revenues that we that we did in the quarter, which is really great I mean, theres nothing like buying a company and have it start doing better than we than we even than we initially anticipated to do and as I say that's no. Good deed goes unpunished right, especially on Wall Street, we the things performing better than it was are we going to take this noncash.

Because we're going to earn out payments, which which I've said from day, one and very much looking forward to making those earn out payments because it means we didn't buy a duck and we did not buy a doctor or they're doing better and better every day, and we're helping with that with that process.

Desmond Wheatley: And then as far as the enterprise sales are concerned versus government, look, I think I mentioned enterprise sales have come back with some drama, frankly. And I anticipated that. Obviously, during COVID, there was a tremendous lull in the deployment of workplace charging, which had been a big contributor to our prior revenues.

I think I mentioned enterprise sales have come back.

Some drama frankly.

Anticipated I mean, obviously during COVID-19 there was a tremendous lull in that.

And the deployment of workplace charging which had been a big contributor to our revenues.

Desmond Wheatley: But it's come back with a vengeance now. And I don't think we're going to see a time when enterprise deployments are the same as government deployments for the next couple of years, just because of the massive opportunities that we're seeing from government. But at the same time, it's not going away and we're continuing to address on it. And it's growing again for us rapidly, now exceeding what it was prior to COVID.

I don't think we're going to see a time when when enterprise deployments are the same as government deployment. So the next couple of years, just because of the massive opportunities that we're seeing from government, but at the same time.

Not going away and we're continuing to address on it and its growing again for us rapidly exceeding what it was prior to Covid.

Christopher Souther: Got it. That's very helpful. And then given the order book visibility, you're likely going to be scaling up manufacturing pretty nicely. And you've talked about having a lot of capacity. But are there any challenges you foresee in the near term as far as some of the components or adding labor? And then maybe just to put a pin on the gross margin kind of breakeven point? Is there like a targeted revenue run rate that we should see that flip to positive, given the balance of inflationary versus the improvements you've been making, the trajectory and the scale, that All Cell benefit?

That's very helpful and then.

Given the order book visibility.

Is it going to be scaling up manufacturing pretty nicely you've talked about having a lot of capacity, but are there any challenges you foresee in the near term as far as some of the component or adding labor.

And then maybe just to put a pin on the gross margin kind of a breakeven point.

Is there like a targeted the revenue run rate that we should we should see that flip to positive given that the balance of inflationary versus yes.

Since you've been making the trajectory.

Scale.

That also benefit.

Desmond Wheatley: Challenges? Of course, there are. We're ramping up very dramatically right now. Yeah, and human resources -– I've got to tell you, yesterday morning I had what was probably one of the most inspiring meetings I've ever had at this company. I had my engineering, ops, battery teams and everybody together in the same room.

Sure.

Ramping up very dramatically right now, yeah, and human resources I got to tell you yesterday morning, I had what was probably one of the most inspiring meetings I've ever had at this company I had my engineering ops battery teams and everybody together in the same room.

Desmond Wheatley: And we were essentially just looking at all of the things that could get in our way. And the energy in the room was magnificent. I've got a lot of very bright, very talented people working for the company now. And they've identified hurdles, and they've got solutions for those hurdles, too. We are going to have to hire some more people. But the great news is we don't have to hire anywhere near as many more people as we are going to grow the business. That's leverage that we get from that. We're going to have to work very hard to get the commodities and components and everything else that we need. Because while supply chain environments is repairing, it's by no means fixed or like it was prior to COVID. So we're still having to work a lot harder to get all of that stuff done. So we're going to have to work really, really hard. Ops manager just walked past the CFO's office yesterday and said, I guess I'm going to tell my wife, I won't see her for Christmas. He lives here. He lives in this town.

The energy and the rumors magnificent.

Very bright very talented people working for the company now.

And.

They've identified hurdles and they've got solutions for those hurdles food, we are going to have to hire some more people, but the great news, we don't have to hire anywhere near as many more people as we are going to grow the business that leverage that we get from that we're going to have to work very hard to get the commodities and components and everything else that we need because <unk>.

Why chain environments.

Repairing its by no means fixed or like it was prior to Covid. So we're still under work a little harder to get all of that stuff down. So that we're going to have to work really really hard.

Ox manager just walk process CFO .

Yesterday and said.

I guess I'm going to tell my wife, I won't say it for Christmas the lives here at lithium that's done you know so.

Desmond Wheatley: It's going to be tough. But look, we've been through worse than this before. And again, the growth rates that we've demonstrated over the last quarters and years, although not quite on the same level, it's the same discipline. And so, we'll keep moving towards that. From a gross profitability point of view, we're not very far away from it now, and that's again in the current environment that we're operating in, the increase in volume and the recessionary impact on the vendors with the stuff that we have coming to – but again, we're not going to be impacted on the top line point of view by recession. All of those things will help us.

And so we'll keep moving towards that from gross profitability point of view.

We're not very far away from it.

And that's again in the current environment that we're operating in the increase in volume.

The recessionary impact.

On the vendor with the stuff that we have.

Coming to the game, we're not going to be impacted from a top line point of view by recession.

All of those things will help us.

Desmond Wheatley: I'm not worried about profitability. That is something that we will definitely get our arms around. And I'm talking about even at the bottom line. But the challenges? Yeah, no shit. It's going to be challenging.

Something that we will definitely get our arms around.

And I'm talking about even at the bottom line.

But the challenge this year.

Yeah, no <expletive>, it's going to be challenging.

Desmond Wheatley: But, again, we've been preparing for this for 10 years, and particularly for the last couple of years because I've had this on my horizon. None of this has come as a surprise to me. Somebody sent me a very kind text earlier on saying, how fantastic this was and I wrote back and thank you very much, but it's just business as usual for me. None of this has come as a surprise to me. I've been expecting this. I've been anticipating it. So has the team been. That does not mean it will be easy, but they're up to the challenge and they'll get it done.

Somebody sent me a very tiny text earlier on things like Fantastic. This wasn't I wrote back in thank you very much business as usual for me. None of this has come as a surprise to me.

Are you expecting this had been anticipating it. So is the team that does not mean it will be easy, but there are up to the challenge and they'll get it done.

Christopher Souther: Got it. That's helpful. I'll hop back in the queue. Thanks.

Desmond Wheatley: Thank you.

Operator: The next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

Desmond Wheatley: Hi, Noel.

Noel Parks: Hi, good afternoon.

Desmond Wheatley: How are you?

Noel Parks: Good, good. Just a few things. One question, speaking of sort of high class problems to have is, at this point, as the manufacturing capabilities are ramped up, but you still have the backlog in the pipeline, can you talk about the allocation of product? How you prioritize who it goes to - delivery? I don't know if there are contractual limitations on who you have to service first or just it's more informal, just having to do with past relationships, anything on that would be great.

Just a few things.

One question, speaking of sort of high class problems to have is, at this point, as the manufacturing capabilities are ramped up, but you still have the backlog in the pipeline, can you talk about the allocation of product? How you prioritize who it goes to - delivery? I don't know if there are contractual limitations on who you have to service first or just it's more informal, just having to do with past relationships, anything on that would be great.

Sort of a high class problems to have.

At this point.

The manufacturing capabilities our ramp.

But you still have the backlog and the pipeline.

Can you talk about the allocation of.

Product.

How do you prioritize who it goes to delivery I don't know if there are contractual.

Limitations on who you have to service first or just.

It's more informal just haven't.

With past relationships anything on that would be great.

Desmond Wheatley: That's an insightful question, I'd have to say and the answer is you're right on all fronts. Yes, there are certain contractual obligations that we have to meet and, of course, we're going to prioritize those. Yes, we also have relationships that we need to work through and everything else. And so, as we ramp up, we have a deployment schedule put in place to make sure that we're able to meet the contractual obligations. And then, it's a matter of injecting things into the process, which will keep the rest of our relationships happy and understanding of what's going on. But that's really interesting, as I say, insightful question, because everybody wants it right now.

We need to work through and everything else and so.

As we ramp up we have a deployment schedule put in place to make sure that we're able to meet our contractual obligations and then it's a matter of injecting things into the process, which will keep the rest of our relationships and understanding of what's going on.

Desmond Wheatley: But that's really interesting, as I say, insightful question, because everybody wants it right now.

That's a really really interesting as I say insightful question, because everybody wants it right now.

And Brian .

Desmond Wheatley: And here's the good news, though, Noah. Any of our customers, even if they have to wait for our product, will still get it before they could put a shovel in the ground to start digging the trenches after they've gone through permitting and environmental impact and planning and engineering and everything else like that to put the grid tied stuff in the ground. So, even for those who are upset, and I get it, they're going to have to wait longer than they wanted to. We're still faster and still more dynamic. 

Any of our customers, even if they have to wait for our product we will still get it before they can put a shovel in the ground to start digging trenches after they're going through permitting and environmental impact and planning and engineering and everything else like that to put a grid type stuff in the ground. So even for those who are upset and I get it that theyre going to wait longer than the than they wanted to.

We're still faster and still more dynamic. 

Desmond Wheatley: And of course, as I said in my comments, one of the things to think about where these numbers are concerned, $62 plus million dollars in contracted orders today to be delivered over the next 12 months -- not next year, over the next 12 months.

And contracted orders to date to be delivered over the next 12 months not next year over the next 12 months.

Desmond Wheatley: As I said in my comments, the sales team hasn't stopped working. We have not told our sales team to stop going out looking for more opportunities, wait for a little while, let's catch up, at all. They are continuing to go after these things. And we will aggressively scale up to take all the new opportunities that come in. Yesterday, in the ops meeting, there was a discussion about second shift.

We're still working single shift five days a week right now. We can go to second shift, we can go to seven days a week, we can go to half shifts, we can go to three shifts a day. And I do plan to bring my –- expand my battery manufacturing business from Chicago into San Diego, that will make us a lot more efficient because we won't be shipping the batteries from Chicago to San Diego. We'll make them where we are. 

Desmond Wheatley: And similarly, the next step will be to expand our charging products business into the Chicago area and grow that. We're going to need to grow Chicago anyway. We're already going to run out of space there, just for the battery side of the business. And by the way, that's one other thing I do want to make sure it's clear to everybody. One of things that's really exciting about this is that the Chicago team now is producing the batteries for our products. Taking a while. We had some hiccups and some engineering things to go over because it's very specific how it has to work and everything. And even though we've used that product before, we've improved it dramatically. But they're also growing the core business. The earn-out payments are not coming from anything they do for our internal consumption. None of the demand that we're putting on them to produce batteries for our products results in a dime of earn-out payment. They only get paid on expanding the other business, the drones, the watercraft, the materials rehandling and everything else like that. So that's a very important part of this. I'm not letting my foot off the accelerator pedal for any piece of this business right now. And everyone here knows that. And that's the mandate moving forward.

The basket for our products taken a while we had some hiccups and some engineering things that go over because it's very specific as to work and everything and even though we've used the product before we've improved that dramatically but there.

We're also growing the core business the earn out payments are not coming from anything they do for our internal consumption none of that none of the demand that we're putting on them to produce batteries for other products resulted in a doubling of earn out payment. They only get paid on the expanding the other business the drones for watercraft the materials handling.

And everything else like that so that's a very important part of this I'm not letting my throw off the.

The accelerator pedal any piece of this business right now and everyone here knows that.

That's the mandate moving forward.

Noel Parks: Great. Thanks. And then you mentioned a little while ago that you were meeting with a South Korean battery vendor. And that company, if I understood right, wants to present the EV ARC in Asia. And I thought that was really interesting. I'm wondering, a partnership like that, is that something envisioned to be just acting as a distribution partner or are at the opposite end, something where they would get involved in a JV or have some other sort of equity interest in making that happen?

Great. Thanks, and then you mentioned.

A little while ago that.

You were meeting with a south Korean battery vendor.

And that that company, if I understood right wants to present, the <unk> in Asia and I thought that was.

Really interesting I'm wondering a partnership like that is that something.

Envision with Egypt, acting as a distribution partner or.

At the opposite and something where they would get involved in in a JV or some other sort of equity interest in making that happen.

Desmond Wheatley: That's a chapter in our book which is yet to be written. But there's two things I think that are really very important about this. The first one is it gives you a very, very clear indication of the fact that they have grasped the importance of our role in this industry. They could easily have said to us why the hell would we ship you cells? Everything that we make, we can sell to Rivian and to everybody else and why would we ship you guys cells, right?

But there's two things I think there are really very important about this the <unk>.

First one is it gives you a very very clear indication of the fact that they have grasped the importance of our role in this in this industry. They could easily just wanted to help with the chip yourselves, where everything that we make we can sell to Arabian into everybody else. If why would you ship you guys cells right.

Desmond Wheatley: They have understood the fact that without charging infrastructure, there's no EV industry. And beyond that, without rapidly deployed and highly scalable and grid independent charging infrastructure, there isn't charging infrastructure. They have grasped that. They've understood that. They've been to our factory. They've toured the factory. They've seen the product in use in the field. And they're recognizing that there's just as good an opportunity for over there as there is over here.

Industry and.

One that without rapidly deployed and highly scalable and grid independent charging infrastructure, there isn't charging infrastructure. They have grasped that they've understood that they've been to our factory. They toured the factors ive seen the product and use in the field and they are recognizing that there is just as good an opportunity for over there over here and so for me too.

Desmond Wheatley: And so for me, taking things one step at a time, I'm very happy to know that I've now got them locked into this comprehension of our important role in the value chain. The next step will be converting that into some mechanism to monetize that, not just through securing our supply chain, but through selling more of our products in another very important part of the world to us. And I can tell you that Asia is the sort of part of the world -– it's weird the way I look at things.

Just through securing our supply chain, but through selling more of our products and another very important part of the world to us and I can tell you that Asia is the soft part of the world. It's weird the way I look at things.

Desmond Wheatley: In the United States, where one can count on rule of law and contract and everything else like that, doing things on your own makes a lot of sense. In Europe, it does too, for the same reasons. In Middle East and Asia and places like that, having a strong partner probably makes a whole lot of sense. And so, that's probably the philosophy that we'll take into those markets.

One can count on rule of law and contract and everything else that they're doing things on your own and makes a lot of sense in Europe . It does two for the same reasons and middle East and Asia places like that having a strong partner probably makes a whole lot of sense and so that's probably the philosophy that we'll take into those markets.

Noel Parks: Okay, great. Thanks, a lot.

Desmond Wheatley: Thank you, Noel.

Operator: As a reminder, if you would like to ask a question, please press star then one to be joined into the question queue.

Operator: The next question comes from Stephen Wagner with Integrity Wealth Advisors. Please go ahead.

Desmond Wheatley: Hello Steve. How have you been?

Stephen Wagner: Oh, I'm fantastic. Even more fantastic after having the privilege and honor of listening to this conference call. It's been amazing. And I have no doubt the next one will be even more.

Stephen Wagner: Hey, sometimes it's good to have a crazy Scotsman on your side. So, we absolutely love the hard work that your whole team is doing. Most of my questions have been answered. I did want to follow up on the enterprise side. I get the fact that the business from obviously governments are going to far, in a way outweigh as they should over the next couple of years. But I am curious as to the increased interest based on the last press release that you put out, the 72% increase, what kinds of enterprises are contacting you? Are you able to talk about that?

We absolutely love the hard work that you guys are your whole team.

Is doing but most of my questions have been answered I did want to follow up on the enterprise side, I mean, I get the fact that.

The business from the obviously governments are going to.

Far in a way outweigh as they should over the next couple of years, but I am curious as to the increased interest.

Based on the last press release, you put out the 72% increase.

What kinds of enterprises are contacting you are you able to talk about that.

Desmond Wheatley: Yeah, in loose terms, I can. A lot of them, frankly, we have to ask them permission to use their names and stuff like that. So we have to say the most drone company or whatever that you've never heard of, right.

Stephen Wagner: Yeah. Got it.

Desmond Wheatley: But anyway, the simple fact of the matter is, workplace charging is going to be absolutely essential. I just wrote an article recently about this idea of people thinking that everyone's going to charge at home, which is nonsense. Yesterday, 80% of EV drivers charged at home because they're like me, affluent, single family residents, plenty of electric circuits to charge vehicle. But that doesn't describe the general population. Most people don't live in places where they'll be able to charge even one vehicle, far less than the 2.3 vehicles that the average American home owns at home. So, they'd have to charge somewhere else. And that means work. And we're really seeing that now. 

the simple fact of the matter is, workplace charging is going to be absolutely essential. I just wrote an article recently about this idea of people thinking that everyone's going to charge at home, which is nonsense. Yesterday, 80% of EV drivers charged at home because they're like me, affluent, single family residents, plenty of electric circuits to charge vehicle. But that doesn't describe the general population. Most people don't live in places where they'll be able to charge even one vehicle, far less than the 2.3 vehicles that the average American home owns at home. So, they'd have to charge somewhere else. And that means work. And we're really seeing that now. 

workplace charging is going to be absolutely essential. I just wrote an article recently about this idea of people thinking that everyone's going to charge at home, which is nonsense. Yesterday, 80% of EV drivers charged at home because they're like me, affluent, single family residents, plenty of electric circuits to charge vehicle. But that doesn't describe the general population. Most people don't live in places where they'll be able to charge even one vehicle, far less than the 2.3 vehicles that the average American home owns at home. So, they'd have to charge somewhere else. And that means work. And we're really seeing that now. 

people thinking that everyone's going to charge at home, which is nonsense. Yesterday, 80% of EV drivers charged at home because they're like me, affluent, single family residents, plenty of electric circuits to charge vehicle. But that doesn't describe the general population. Most people don't live in places where they'll be able to charge even one vehicle, far less than the 2.3 vehicles that the average American home owns at home. So, they'd have to charge somewhere else. And that means work. And we're really seeing that now. 

Loans at home and when Theyre going to show up somewhere else and that means work and we're really seeing that.

Desmond Wheatley: Now that all these models are coming out that Americans want to own - pickup trucks, SUVs and larger cars - and with gas prices where they are and what Mr. Putin is doing and everything else, we've seen a dramatic increase in consumer adoption. They go to work, they need to charge it. So that's a big piece of it. Workplace charging is definitely a very big piece of it. But there are other types of enterprise or non-governmental stuff that we're doing as well, providing charging for other types of either fleet vehicles or other types of applications that are not just workplace charging. We're just seeing growth across the board with all of it. And of course, we are.

Seeing a dramatic increase in consumer adoption. They go to work they need to charge them. So that's a big piece of it workplace charging is definitely a very big piece of it but there are other types of enterprise on nongovernmental stuff that we're doing as well providing charging for other types of either either fleet vehicles or other types of applications.

Not just workplace shorting, where you're seeing growth across the board with all of it and of course, we are.

Desmond Wheatley: This is still very much in its nascency. This is very much at the very beginning of something that's going to be absolutely enormous. What we've demonstrated that we can stick through the tough times and then produce something that people really want. And now we're, like I said, let's light the candle.

Now, we're like I said, let's light the candle.

Stephen Wagner: Yeah, I appreciate that. And as I mentioned, most of my questions have been asked and answered by other analysts on the call. But I did have one final kind of comment/question that I'd like to talk about a little bit. And that is, in your preamble, you referenced the short sellers and the 20% short position. And you talk about arguments that they've had against the name that they're now dead. Obviously, I couldn't agree more. I've never been able to understand the position. Everybody has a right to invest the way that they choose. But I would be curious, what has been the argument for shorting your stock? It just seems like, even your company as a concept is a difficult thing to short, let alone the fundamentals that are supporting the business right now today, and quite frankly, that have been over the last 8, 10, 12 months. I'd love to hear your take on that. 

As I mentioned most of my questions have been asked and answered by other analysts on the call, but I did have one final comment.

Comment question that I'd like to talk about a little bit and that is in your preamble you referenced the short sellers in the 20% short position.

And you talked about arguments that they've had against the name.

They are now dead I mean, obviously I couldnt agree more I've never been able to understand the position everybody has a right to invest the way that they choose.

But I would be curious what has been the argument for shorting your stock I mean, it just seems like.

Yes.

Even even even your company as a concept.

Is a difficult thing to short let alone the fundamentals that are supporting the business right now today and quite frankly that have been over the last 810 12 months I'd love to hear your take on that.

Yes.

Desmond Wheatley: Yeah, let's, first of all, throw out all the people who are shorting our stock without any thesis at all, right? And there's plenty of that going on. People look at us – if they were an EV charging stock, we start with Beam and we've got four letters in our ticker, the short blinks, so they short us or something else. Right? There's no thesis there or thought going on. It's herd mentality. 

Mentality, so, let's just kind of a low end person and.

Desmond Wheatley: And then let's go to the next group here. There's really only three legs to the three legged stool of the short thesis, right? Either we're going to go bankrupt and fail entirely. Or we're going to do a massive destructive dilutive financing. Or we're going to fail to execute. I'm going to tell you right now, and of course, this is my opinion, I have to say that, but I'm going to tell you right now, I will not deliver on any of those three legs to the stool. I'm clearly going to execute.

Or we're going to do a massive destructive dilutive financing.

Or fail to execute I'm going to tell you right now and of course. This is my opinion I have to say that but I'm going to tell you right now I will not deliver on any of those three legs to the stool I'm clearly going to execute.

Desmond Wheatley: I'm certainly not going to go bankrupt. And I'm certainly not going to do a massive destructive and dilutive financing. Right? And I have to quantify that because the lawyers will tell me I have to say I believe. So, I'm saying I believe that those are the things. So, basically, I have nothing to offer the shorters except blood and tears. And if you're listening to me and you're shorting this call right now, I'm coming for you.

Other things so basically I have nothing to offer the short term.

That blood and tears and if you are listening to me in.

This call right now I'm coming for you.

Stephen Wagner: [laughter] Love it. I usually feel sorry for people that lose money in the market, but not these folks. Thank you so much.

Thanks.

Desmond Wheatley: Steve, I'll tell you -- let me just say this. I believe that shorting is an essential part of a healthy market. When people actually discover something wrong with a company--. But when it's nefarious or ignorant, then I've got no sympathy, and I look forward to taking money out of their pockets.

Cover something wrong with the company, that's robotics over the household or somebody else, but when it's in their various ignorant.

I've got no empathy and.

Look forward to taking money out of their pockets.

Stephen Wagner: You got that right. You and me both. Well look, have a fantastic afternoon. We'll be in touch soon. Take care.

Desmond Wheatley: Thank you.

Operator: Our last question today comes from Cliff Weinstein who is a private investor. Please go ahead.

Desmond Wheatley: Hello, Cliff. How are you?

Cliff Weinstein: Hey. Good, Desmond. Like the last caller, most of my -- all my questions were answered. So I just wanted to say, I've been following this company since you you did your uplift and I just want to applaud you and your team, many of whom I've met on my trips to San Diego and salt of the earth bunch you got there. And just kudos to an incredible transformational quarter and landing nearly $60 million in orders in the past 90 days. I'm proud to be a shareholder. It's probably one of the best calls I've listened to in the past 20 years. So great work, keep it up. And I agree with the shorts. They should be scrambling right now. But Wall Street will wake up and investors will see what you're doing here. And just great job all around and give my best to the team over there. 

Good there's been like the last.

most of my -- all my questions were answered.

So I just wanted to say, I've been following this company since you you did your uplift and I just want to applaud you and your team, many of whom I've met on my trips to San Diego and salt of the earth bunch you got there. And just kudos to an incredible transformational quarter and landing nearly $60 million in orders in the past 90 days. I'm proud to be a shareholder. It's probably one of the best calls I've listened to in the past 20 years. So great work, keep it up. And I agree with the shorts. They should be scrambling right now. But Wall Street will wake up and investors will see what you're doing here. And just great job all around and give my best to the team over there. 

you did your uplift and I just want to applaud you and your team, many of whom I've met on my trips to San Diego and salt of the earth bunch you got there. And just kudos to an incredible transformational quarter and landing nearly $60 million in orders in the past 90 days. I'm proud to be a shareholder. It's probably one of the best calls I've listened to in the past 20 years. So great work, keep it up. And I agree with the shorts. They should be scrambling right now. But Wall Street will wake up and investors will see what you're doing here. And just great job all around and give my best to the team over there. 

you and your team, many of whom I've met on my trips to San Diego and salt of the earth bunch you got there. And just kudos to an incredible transformational quarter and landing nearly $60 million in orders in the past 90 days. I'm proud to be a shareholder. It's probably one of the best calls I've listened to in the past 20 years. So great work, keep it up. And I agree with the shorts. They should be scrambling right now. But Wall Street will wake up and investors will see what you're doing here. And just great job all around and give my best to the team over there. 

I'm proud to be a shareholder it's probably one of the best calls I've listened to in the past 20 years. So great work keep it up and I agree with the shorts they should be scrambling right now but. Wall Street will wake up and investors will see what you're doing here and not just great job all around and give my best to the team over there.

Wall Street will wake up and investors will see what you're doing here and not just great job all around and give my best to the team over there.

Desmond Wheatley: I'll do that. And by the way, Cliff, it means a great deal to me coming from you. Thank you.

Cliff Weinstein: Thanks, guys. Bye-bye. 

Yeah. Yes.

Yes.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Desmond Wheatley for any closing remarks.

Desmond Wheatley: Well, again, thank you all for your interest and for the supportive comments and insightful questions. Very insightful questions. Look, it's been -- always everything that's worth doing is difficult. And if you have a good idea and you stick to the strategy and you just keep executing, eventually, you're going to be rewarded. We are moving into that period now. With your support and with the support of our team, I'm very appreciative. So thank you very much. And we've all got to get back to work now because God knows we're busy.

Supportive comments and the insightful questions very insightful questions.

Look.

It's been a it's always everything that's worth doing is difficult.

And if you have a good idea and you stick to the strategy and you just keep executing eventually youre going to be rewarded and we are moving into that period now.

With your support them with export of our team Im very appreciative. So thank you very much.

And we've all got to get back to work not because God knows we're busy.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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