Q1 2024 Beam Global Earnings Call

Hello, and welcome to the beans level first quarter 'twenty 'twenty four operating results conference call.

Operator: Hello and welcome to the Beam Global First Quarter 2024 Operating Results Conference Call. All participants will be in listen-only mode.

Speaker Change: All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Star T zero.

Operator: 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 your telephone keypad. To withdraw from the queue, you may press star, then two. As a reminder, this conference is being recorded. I would now like to hand the call to Lisa Potok, Chief Financial Officer. Please go ahead.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: To withdraw from the queue you May press Star then two.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: I would now like to hand, the call to Lisa <unk> Chief Financial Officer. Please go ahead.

Speaker Change: Hi.

Lisa A. Potok: Hi, good afternoon, and thank you for participating in Beam Global's first quarter 2024 operating results conference call. We appreciate you joining us today to hear an update on our business. Joining me today is Desmond Wheatley, President, CEO, and Chairman of BEAM. Desmond will be providing an update on recent activities at BEAM, followed by our question and answer session.

Speaker Change: Good afternoon, and thank you for participating and being global first quarter 2024 operating results conference call.

Speaker Change: Appreciate you joining us today to hear an update on our business.

Speaker Change: Joining me is Desmond lately, President CEO and chairman upbeat.

Speaker Change: It doesn't then we'll be providing an update on recent activities are being followed by a question and answer session.

Desmond Wheatley: But first I'd like to communicate to you that during this call management will be making forward looking statements, including statements that address beams expectation for future performance or operational results.

Lisa A. Potok: 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. Such forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in BEAM's most recent filed Form 10-K and other periodic reports filed with the SEC.

Speaker Change: We're looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

Speaker Change: For more information about these risks please refer to the risk factors described in <unk>. Most recently filed Form 10-K, and other periodic reports filed with the SEC.

Lisa A. Potok: The content of this call contains time-sensitive information that is accurate only as of today, May 21, 2024, 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.

Speaker Change: The content of this call contains time sensitive information that is accurate only as of today may 21st have twenty-four except as required by law being disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.

Lisa A. Potok: Next, I would like to provide an overview of our financial results for the first quarter of 24. We had record first quarter revenues of $14.6 million, increasing 12% over the same period in 2023. The first quarter increase can be attributed to an increase in our federal sales. However, the timing of our orders overall may continue to be uneven due to the timing of our customer approvals and their budget cycle. We have begun the process of production of our EV arcs in our Serbian facility and expect to deliver our first sale to the Ministry of Defense in quarter two.

Speaker Change: Next I would like to provide an overview of our financial results of the first quarter of 'twenty four.

Speaker Change: We had record first quarter revenues are $14 6 million, increasing 12% over the same period in 'twenty three.

Speaker Change: First quarter increase can be attributed to an increase in our federal sales.

Speaker Change: We have our orders overall may continue to be uneven due to the timing of our customer approvals and their budget cycle.

Speaker Change: We have begun the process of production of R. E D Archs and our Serbian facility and expect to deliver our first sale to the ministry of defense in quarter two.

Speaker Change: We generated gross profit with a gross margin of 10, 2% the highest margin ever see.

Lisa A. Potok: We generated gross profit with a gross margin of 10.2%, the highest margin ever. The improvement in gross margin is primarily because of those cost reductions that we implemented in late 2023 as a result of our engineering improvements to the EVR. Our gross profits do include $1.2 million for non-cash and tangible amortization, which negatively impacts our profits. Operating expenses for Q1 of 24 were $4.5 million, or 31% of revenue, compared to $3.8 million, or 30% of revenue for the same quarter in 23. The 0.7 million increase is mostly attributable to a 0.4 million increase in consultant costs related to the integration of our new ERP accounting software, as well as for our sales and marketing, government relations, and engineering design support.

Speaker Change: The improvement in gross margin is primarily because of those cost reductions that we implemented in late 2023.

Speaker Change: As a result of our engineering improvements to the E V arc.

Speaker Change: Our gross profit still include a point 2 million were noncash intangible amortization, which negatively impacts our profit.

Speaker Change: Our operating expenses for Q1 of 24 was $4 5 million or 31% of revenue.

Speaker Change: <unk> to $3 8 million or 30% of revenue for the same quarter in 'twenty three.

Speaker Change: <unk> 7 million increase is mostly attributable to a point 4 million increase in consulting costs related to the integration of our new ERP accounting software.

Speaker Change: Well as our sales and marketing government relations and engineering design support.

Lisa A. Potok: We have $0.3 million for operating expenses pertaining to our Beam Europe operation. As far as net loss is concerned, it was $3 million, or 21% of revenue for the first quarter of 2004 compared to $3.8 million, or 29% of revenue for the same period in 2003, an improvement of 8% year over year. The first quarter net loss included non-cash expense items such as depreciation, intellectual property amortization, and non-cash compensation expenses. Unknown Speaker, 1 million, in 24 and 0.9 million in 23.

Speaker Change: We have <unk> 3 million for operating expenses pertaining to our being Europe operation.

Speaker Change: As far our net loss was 3 million or 21% of revenue for the first quarter of 'twenty four.

Speaker Change: Compared to $3 8 million or 29% of revenue for the same period in 'twenty three.

Speaker Change: An improvement of 8% year over year.

Speaker Change: The first quarter net loss included noncash expense items, such as depreciation intellectual property amortization and noncash compensation.

Speaker Change: $1 million.

Speaker Change: In 'twenty, four and <unk> 9 million and 23.

Speaker Change: 24 net loss, excluding these noncash items was $1 9 million or 13% of revenue.

Lisa A. Potok: Twenty-four net loss excluding these non-cash items was $1.9 million, or 13% of revenue. Our cash balance on March of 24 was $5 million, compared to $10.4 million on December 23. The cash decrease was primarily due to cash payments for the acquisition of Amiga of $2.7 million, as well as operating cash used to increase inventory. Accounts receivable March 24 grew $4 million, which all the way to $20 million. Of this, $10.7 million of this balance is due from three customers.

Speaker Change: Our cash balance on March 24, with $5 million compared to $10 4 million at December of 'twenty three the.

Speaker Change: The cash decrease was primarily due to cash payments for the acquisition of Omega.

Speaker Change: Of $2 7 million as well as operating cash use to increase inventory.

Speaker Change: Accounts receivable at March 24 grew $4 million, which all the way to $20 million, which of the $10 7 million of this balance is due from three customers.

Speaker Change: Our working capital decreased from $23 8 million to $17 8 million from December 23 to March of 'twenty four and this is mainly due to the accrual of our contingent consideration for the Omega transaction of $4 3 million, we're moving that to current liabilities as of March of 'twenty.

Before versus non current liability at December of 'twenty three.

Speaker Change: Contingent consideration is a non cash earn out based on revenue target.

Speaker Change: Payment is all in the company's common stock.

Speaker Change: I will now turn the call over to Dublin to provide a business update.

Lisa A. Potok: Our working capital decreased from $23.8 million to $17.8 million from December 23 to March 24, and this is mainly due to the accrual of our contingent consideration for the OMEGA transaction of $4.3 million. We're moving that to current liabilities as of March 24 versus non-current liabilities at December 23. This contingent consideration is a non-cash earn out based on revenue targets. The payment is all in the company's common stock. I will now turn the call over to Desmond to provide a business update.

Dublin: Okay. Thank you Lisa and thanks, everybody for joining beam Global's fourth quarter earnings call.

Desmond Wheatley: Okay, thank you, Lisa, and thanks, everybody, for joining Beam Global's first quarter earnings call. I'm actually speaking to you today from Abu Dhabi, where I'm spending a week working on growing our business in the Middle Eastern region.

Dublin: I'm actually speaking to you today from Abu Dhabi, where I'm spending a week working on growing our business in the middle Eastern region.

Desmond Wheatley: There's a great deal of opportunity here, and our recent expansion into Europe has enabled us to start taking advantage of opportunities on a far greater scale than anything we've previously been able to do. My comments will be relatively short because, of course, we've just recently had our earnings call for the full year of 2023 and the 10K, during which we did a fairly comprehensive update on the business and the various opportunities in front of us.

Speaker Change: Great deal of opportunity here.

Speaker Change: Our recent expansion into Europe has enabled us to start taking advantage of opportunities on a far greater scale than anything we've previously been able to address.

Speaker Change: My comments will be relatively short because of course, we've just recently had our earnings call for the whole year of 2023.

Speaker Change: T during which we did a fairly comprehensive update of the business and the various opportunities in front of us.

Desmond Wheatley: Nevertheless, things are happening very quickly at Beam Global, so beyond simply updating you on the numbers, I'll be talking to you about a couple of exciting opportunities in front of us, as well as outlining some highlights from the first quarter. Before coming to the Middle East, I spent a week in our Serbian facilities catching up on our operational expansion there, as well as meeting with existing and prospective customers. It was a very productive week.

Speaker Change: Nevertheless, things are happening very quickly being global so beyond simply updating you on the numbers I'll be talking to you about a couple of exciting opportunities in front of us as well as outlining some highlights from the first quarter.

Speaker Change: Before coming to the Middle East I spent a week in our Serbian facilities touching upon our operational expansion, there as well as meeting with existing and prospective customers.

Speaker Change: It's a very productive week.

Desmond Wheatley: I'm thrilled by the progress we've made in Europe and equally excited by the opportunities which we have in front of us over here. Aside from the quality and very high level of business development meetings I attended, thanks to the efforts of our European management team, the greatest impression came from seeing rows of completed EV arc systems waiting to be delivered to customers, and also from seeing sections of the EV standard product waiting to be assembled into the first prototypes of that product, which, as you all know, I believe, has the potential to be our biggest seller.

Speaker Change: I'm thrilled by the progress we've made in Europe, and equally excited by the opportunities, which we have in front of us over here.

Speaker Change: Besides from the quality and very high level of business development meetings I've attended thanks to the efforts of our European management team.

Speaker Change: Greatest impression came through seeing Rosa completed Edr systems waiting to be delivered to customers and also on seating sections of the EV standard product, where you seem to be assembled into the first prototypes of that quarter.

Speaker Change: As you all know I believe has the potential to be our biggest seller.

Speaker Change: So no I'm doing this earnings call in the middle of the night from Abu Dhabi reporting on a company, whose opportunities are almost unrecognizable be greater than they were more when I did the first quarter earnings call in 2023.

Desmond Wheatley: So now I'm doing this earnings call in the middle of the night from Abu Dhabi, reporting on a company whose opportunities are almost unrecognizably greater than they were when I did the first quarter earnings call in 2023. The first quarter of 2024 was yet another record quarter for us, in which we produced revenues that were about 12% greater than during the same period in the prior year. And more importantly, our gross profit showed the most noticeable improvement in our history.

Speaker Change: The first quarter of 2024 was yet another record quarter for us in which we produce revenues, which were about 12% greater than during the same period in the prior year, but more importantly, which are gross profit showed the most remote to improvement in our history.

Desmond Wheatley: Our net loss narrowed, and we exited the quarter with a healthy cash and working capital position. In the first quarter of 2024, we also added some excellent talent to our management team, particularly on the operations side, a move which we're confident will assist us in producing more product less expensively and further enhancing our gross profits. We continue to sell our products to excellent customers, both in the United States and in Europe, and we saw a significant increase in the percentage of commercial business we do. Not at the expense of our government business, but in addition to it.

Speaker Change: Our net loss narrowed and we exited the quarter with a healthy cash and working capital position.

Speaker Change: In the first quarter of 2024, we also added some excellent talent to our management team, particularly on the operation side, our move which we're confident will assist us in producing more product less expensive Blake and further enhancing our gross brokerage.

Speaker Change: We continue to sell our products to excellent customers, both in the United States and in Europe.

Speaker Change: So a significant increase in the percentage of commercial business, we do not at the expense of our government business, but in addition to it.

Speaker Change: Product development continue to pace with important new patents issued to us on both the battery and EV charging infrastructure sides of our business.

Desmond Wheatley: Product development continues at pace with important new patents issued to us on both the battery and EV charging infrastructure sides of our business. We made significant progress on our EV standard product and excitingly, the first stages of product development on a brand new product which we hope to bring to market before the end of this year. Returning to the numbers, our revenue for the first quarter of 2024 was $14.6 million, which is one and a half million, or a 12% increase over the first quarter of 2023.

Speaker Change: We made significant progress on our standard products and Excitingly. The first stages of product development on a brand new product, which we hope to bring to market before the end of this year.

Speaker Change: Returning to the numbers our revenue for the first quarter of 2020 core was $14 6 million, which is one in a million or a 12% increase over the first quarter in 2023.

Desmond Wheatley: The highest revenue for any first quarter in our history. The great majority of that revenue came from EV art deliveries, as has been typical in previous quarters, but we did get interesting contributions from our European business and also from our batteries. The first quarter has often been our slowest, and that's particularly true of our European operations, where historically their revenue and gross profit numbers have been fairly modest in the first quarter but have grown throughout the remainder of the year.

Speaker Change: Hi, its revenues for any first quarter in our history.

Speaker Change: The great majority of that revenue came from EMEA at deliveries as has been typical over previous quarters, but we did get interesting contributions from our European business and also from our batteries.

Speaker Change: The fourth quarter has often been our slowest and thats, particularly true of our European operations, where historically their revenue and gross profit numbers have been fairly modest in the first quarter would have grown throughout the remainder of the year.

Speaker Change: But the really big Big News from Q1 of 2020 core is on the gross profit line.

Desmond Wheatley: But the really big news from Q1 of 2024 is in gross profit. During this quarter, we generated more gross profit than in any quarter in our history, and the improvement quarter over quarter and year over year far outstripped any such improvement previously. This gross profit improvement has come about as a result of the engineering and operational improvements which I've described to you in previous quarters. This is a perfect example of us doing what we tell you we're going to do and of the team executing meaningful improvements which have a profound impact on our financial results.

Speaker Change: During this quarter, we generated more gross profit than in any quarter in our history and the improvement quarter over quarter and year over year far outstripped any such improvement previously.

Speaker Change: This gross profit improvement has come about as a result of the engineering and operational improvements, which I've described to you in previous quarters.

Speaker Change: This is a perfect example of US doing what we tell you we're going to do and if the team executing on meaningful improvements, which have a profound impact on our financial results.

Desmond Wheatley: There's still work to do, and I anticipate a continuation of improvements as the design enhancements, value engineering, and operational improvements are increasingly recognized in coming quarters. As many of you will remember, we've also instituted a price increase for the first time in our history of about eight and a quarter percent on our base model.

Speaker Change: There's still work to do and I anticipate a continuation of improvement just the design enhancements value engineering and operational improvements are increasingly recognized in coming quarters.

Speaker Change: As many of you will remember we've also instituted a price increase for the first time in our history of about 8.25% on our base model.

Desmond Wheatley: It's very important to point out that this price increase had no material impact on our gross profit improvements during Q1 because more than 96% of the units which we delivered to customers in that quarter were sold prior to the price increase taking effect and therefore at the old reduced sales price. To be clear, the majority of gross profit increases have come entirely from engineering and operational improvements, not increased prices. So far, that is.

Speaker Change: That's very important to point out that this price increase had no material impact on our gross profit improvements during Q1, because more than 96% of the units, which did link which we deliver to customers in that quarter were sold prior to the price increases taking effect and therefore, the old reduced sales price.

Speaker Change: To be clear the majority of gross profit increased as come entirely from engineering and operational improvements not increasing the price so far.

Speaker Change: Nevertheless, 96% of the units were sold prior to the price increase which of course means that 4% of them did in fact have the 8.25% additional revenue on the base price of the Navy yard.

Desmond Wheatley: Nevertheless, 96% of the units were sold prior to the price increase, which of course means that 4% of them did in fact have the 8.25% additional revenue on the base price of an EVR. That's an indication that we're moving into a period where our backlog, which was generated prior to the price increase, is starting to be exhausted. And we're moving into new backlog now, which will benefit from that price increase. There are a lot of moving parts, but some pretty basic arithmetic shows you that the combination of gross profit, which we generated in the first quarter without the benefit of the price increase, when added to the increased revenue as a result of the price increase, should get us close to around 20% gross profit.

Speaker Change: That's an indication that we're moving into a period, where our backlog which was generated prior to the price increase is starting to be exhausted and we're moving into new backlog now which will benefit from that price increase.

Speaker Change: There are a lot of moving parts, but some pretty basic arithmetic shows you that the combination of gross profit, which we generated in the first quarter without the benefit of the price increase when added to the increased revenue as a result of the price increase should get us closer to around 20% gross profit and as I say, we've got further improvements to make.

Speaker Change: While the percentage improvement in gross corporate is significant it's also important to look at the absolute dollars.

Desmond Wheatley: And as I said, we've got further improvements yet to make. While the percentage improvement in gross profit is significant, it's also important to look at the absolute dollars. We reported a net loss of $3 million in Q1, but in fact, the cash impact was far lower than that. Fully 1.1 million of our net loss was non-cash, meaning that our actual cash loss for the first quarter was less than 2 million, 1.9 to be exact.

Speaker Change: We reported a net loss of 3 million for Q1, but in fact, the cash impact was far lower than that fully $1 1 million of our net loss was noncash, meaning our actual cash loss for the first quarter was less than 2 million one nine to be exact.

Desmond Wheatley: Again, doing some simple arithmetic, you can see that with 10% gross margin, we reported $1.5 million of gross profit, but that actually included some negative impacts from non-cash items as well. In fact, our gross profit net of non-cash items was closer to 1.8 million.

Speaker Change: Again doing some simple arithmetic, you can see that with 10% gross margin.

Speaker Change: We reported one and a half million dollars or gross profit, but that actually included some negative impacts from noncash items as well.

Speaker Change: In fact, our gross profit net of noncash items was closer to 1.8 million we.

Desmond Wheatley: We need about another $1.9 million to get to cash flow in an otherwise similar quarter. That's not a giant leap, and in fact, a combination of the price increase and the continued improvements to our gross margins should put us on an easy to understand trajectory to cash flow. This is our dominant area of focus.

Speaker Change: We need about another $1 9 million to get to cash flow in an otherwise similar quarter.

Speaker Change: A giant leap and in fact, the combination of the price increase and the continued improvements to our gross margins through puts us on an easy to understand trajectory to cash flow.

This is our dominant area of focus and as I said during the full year of 23 earnings call, we're really going to be concentrating on efficiency and gross profitability. This year, because achieving positive cash flow is arguably one of the most important metrics for any business and particularly an innovator and a brand new industry.

Desmond Wheatley: And as I said during the full year 23 earnings call, we're really going to be concentrating on efficiency and gross profitability this year because achieving positive cash flow is arguably one of the most important metrics for any business, and particularly for an innovator in a brand new industry. By the way, while we're speaking about gross profitability, as I already mentioned, our European operations legacy business is typically slower in the first quarter than during any other period of the year.

Speaker Change: Yes.

Speaker Change: But anyway, what we're speaking about gross profitability as I've already mentioned, our European operations legacy business is typically slower in the first quarter than during any other period of the year.

Desmond Wheatley: This is not terribly surprising as they've been producing street lights, communication towers, energy infrastructure, and other street furniture which needs to be deployed in environments which are better suited to those types of deployments during the summer and autumn months than they are in winter, particularly January and February.

Speaker Change: This is not terribly surprising as they've been producing streetlights communication towers energy infrastructure, and other street furniture, which needs to be deployed in environments, which are better suited towards those types of deployments during the summer and autumn months than they are in winter, particularly January and February.

Speaker Change: Being Europe's legacy revenues generally pick up in the second and third quarter and historically they've had a marked improvement in gross profitability during those periods as well, which should further contribute to our company wide profitability profile improvement.

Desmond Wheatley: Beam Europe's legacy revenues generally pick up in the second and third quarters, and historically, they've had a marked improvement in gross profitability during those periods as well, which should further contribute to our company-wide profitability profile improvement. One last point on Beam Europe and cash is how that transaction is affecting our working capital. Because we're a very simple company, working capital is generally an excellent proxy for cash, because we convert almost everything in working capital that isn't cash into cash so quickly. AR, Inventory, Work in Progress, etc.

One last point on being Europe, and cash is how did that transaction is affecting our working capital.

Speaker Change: Because we're a very simple company working capital is generally an excellent proxy for cash because we can run almost everything in working capital that isn't cash into cash so quickly.

Speaker Change: Our inventory work in progress et cetera.

But this period, there's a misleading contributor to our decline in working capital and it has to do with the acquisition of Omega or beam Europe is it an iris.

Desmond Wheatley: In this period, there's been a misleading contributor to our decline in working capital, and it has to do with the acquisition of Amiga, or Beam Europe as it now is. Part of that transaction, and a very good transaction it was, don't forget, we got the land, the buildings, and the purchase price. By the way, it's so nice when I visit there; I don't have to think about lease payments.

Speaker Change: Part of that transaction.

Desmond Wheatley: Instead, think about the wonderful growth opportunities that we have. And we don't have to ask a landlord's permission because the land and the buildings are on our balance sheet. But anyway, back to my point, a big part of that transaction are the earn-out payments for 2024 and 2025. We have set some pretty high bars for the very excellent Beam Europe management team to hit. And if they do that, they get earn out payments.

Speaker Change: A very good transaction. It was don't forget we've got the land the buildings and the purchase price by the way. It's so nice when I visit there I don't have to think about lease payments and stay to think about the wonderful growth opportunities that we have and we don't have to ask the landlord's permission because the land and the buildings are on our balance sheet, but anyway back to my point, a big part of that transaction.

Speaker Change: Are the earn out payments for 2024 and 2025.

Speaker Change: We set some pretty high bars for the very excellent management team to hit and if they do that they can earn out payments I love crossing deals like that because it keeps everybody is concentrating on our joint success.

Desmond Wheatley: I love crafting deals like that because it keeps everybody concentrating on our joint success. Their note payments are non-cash and entirely stock-based. Nevertheless, because we believe that they will hit their targets, those not those are not those are not payments have become current liabilities for 2024. And as a result, we've taken a 4.3 million non-cash impact on our working capital balance. So if you're looking at our working capital and you see it coming down by 6 million in the period from 1231 to 331, be absolutely clear that 4.3 million of that is non-cash.

Speaker Change: There were no payments are noncash and entirely stock based.

Nevertheless, because we believe that they will hit their targets. Those are no. Those are not those earn out payments have become current liabilities for 2024 and as a result, we've taken a $4 3 million noncash impact to our working capital balance.

Speaker Change: So if you're looking our working capital and you see it coming down by $6 million in the period from 12 31 to 331 be absolutely clear that $4 3 million of that is non cash contingent consideration based upon our assumption that beam Europe will hit the earn outs, which again are stock only.

Desmond Wheatley: It's a contingent consideration based upon our assumption that Beam Europe will hit its earnouts, which again, are stock only. One contributor to our belief that they'll hit their targets is the very good news that Beam Europe's legacy business sales, purchase orders, I mean, are up by about 30% this year over typical years. We should benefit from that in the coming quarters as well. We'll also benefit from the fact that we've leveraged our balance sheet to allow our European operations to do something that they could never do before they became part of Beam Global, and that is, create inventory for future periods. Previously, Beam Europe was an entirely cash-based operation with no debt and without even credit facilities with its vendors.

Speaker Change: One contributor to our belief that they will hit their targets as the very good news the beam your legacy business sales purchase orders, let me are up by about 30% this year difficult years.

Speaker Change: Benefit from that in the coming quarters as well.

Speaker Change: We will also benefit from the fact that we've leveraged our balance sheet to allow our European operations to do something that they could never do before they became part of being global and that is create inventory for future periods.

Speaker Change: Previously being here it was an entirely cash based operation with no debt and without even credit facilities with their vendors.

Desmond Wheatley: As a result, during periods of slow sales, like the first quarter, they produce very little product, and yet they carry the overhead of their team members and facilities just the same. When sales picked up later in the year, they'd have to rapidly buy materials and rush to complete the products, often resulting in lower efficiency and increased costs due to contributions like overtime. One of the first changes we instituted post-acquisition was to use our cash to create stocks of inventory of the most commonly acquired products that Beam Europe makes and sells.

Speaker Change: As a result during periods of slow sales like the first quarter and they produce very little product yet they touted the overhead of their team members and facilities just the same.

Speaker Change: When sales picked up later in the year, we'd have to rapidly biomaterials and rush to complete the products, often resulting in lower efficiency and increased costs due to contributions like overtime.

Speaker Change: One of the first changes we instituted post acquisition was to use our cash to create stocks of inventory of the most commonly acquired products that makes it sells.

Desmond Wheatley: This has allowed us to keep the team working at a steady cadence and fully engaged during periods when they would otherwise be idle. All this has also allowed us to create an inventory which would enable faster delivery to customers when orders pick up in the second and third quarters. So we'll get the combined impact of lower costs to produce the product and more rapid delivery to expected customers. It's been an excellent and strategic use of Beam Global's balance sheet.

Speaker Change: This has allowed us to keep the team working a steady cadence and fully engaged during periods when they would otherwise be idle.

Speaker Change: So all of those also allowed us to create an inventory, which would enable faster delivery to customers. When the orders do pick up in the second and third quarters. So we will get the combined impact of lower cost to produce the products and more rapid delivery to expected customers.

Speaker Change: It's been an excellent and strategic use of being global's balance sheet and wireless resulted in a reduction in our cash position, which I may I know makes some people nervous if they don't look at the combination of cash and inventory. It's been absolutely the right thing to do and it will pay dividends in terms of increased revenue and improved gross profitability as the year progresses, and we get all that.

Desmond Wheatley: And while it's resulted in a reduction in our cash position, which I know makes some people nervous if they don't look at the combination of cash and inventory, it's been absolutely the right thing to do, and it will pay dividends in terms of increased revenue and improved gross profitability as the year progresses and we get all the cash back. Speaking of cash, we ended the quarter with $5 million in the bank, having made the second of two cash payments to Amiga, which, if you remember, are combined with already completed equity payments.

Speaker Change: Cash back.

Speaker Change: Speaking of cash we ended the quarter with $5 million in the bank, having made the second of two cash payments to Omega, which if you remember our combined with already completed equity payments.

Speaker Change: We also built up our inventory as I've, just described and ship sufficient product at the end of the quarter top of about $20 million in accounts receivable.

Desmond Wheatley: We also built up our inventory, as I've just described, and shipped sufficient product at the end of the quarter to have about 20 million in accounts receivable. Of those 20 million, about half are due to us from three of our largest and most reliable customers. We're not worried about collecting from them or from any of the others.

Speaker Change: All of those 20 million about half are due to us from three of our largest and most reliable customers. We're not worried about collecting from them or from any of the others and fights I anticipate quite a most of this money any day now which will of course have a profound impact on our cash balance and are very close to the way.

Desmond Wheatley: In fact, I anticipate collecting most of this money any day now, which will, of course, have a profound impact on our cash balance in a very positive way. So our cash position is healthy, and our rapidly improving gross profits are moving us towards a position where our cash position becomes far less of an existential issue. Because, as I mentioned earlier, we're on a clear and easy to understand path to cash flow.

So our cash position is healthy and our rapidly improving gross profits are moving us towards a position where our cash position becomes far less of a mix of central issue because as I mentioned earlier, we're on a clear and easy to understand path to cash flow.

Speaker Change: Yeah.

Speaker Change: Our operating expenses were only marginally higher than they were in the first quarter of 2023, even though we had some considerable unusual expenditures.

Desmond Wheatley: Our operating expenses were only marginally higher than they were in the first quarter of 2023, even though we had some considerable unusual expenditures. Of course, we've added an overhead operation in Beam Europe, but it, like our American operation, is very lean. And while we have a massive increase in opportunity, we have a very modest increase in our operating costs as a result of that opportunity. The most significant increase in operating costs came as a result of our integration of a new ERP.

Of course, we've added an overhead operation and be in Europe, but it liked our American operation is very lean.

Speaker Change: We have a massive increase in opportunity we have a very modest increase in our operating cost as a result of the opportunity.

Speaker Change: The most significant increase in our operating costs came as a result of our integration of a new ERP.

Desmond Wheatley: This integration was a significant milestone for the company. It'll make us far more efficient with the tangible result of further contributions to improve profitability and an ability to turn orders faster, more efficiently, and with less waste. If you remove these extraordinary items, we actually trimmed our operational expenses, even in the face of top-line growth and the further expansion of the business.

Speaker Change: This integration is a significant milestone for the company.

Speaker Change: It will make us far more efficient with the tangible result of further contributions to improve profitability and an ability to turn orders faster more efficiently and with less waste.

Speaker Change: If you remove these extraordinary items, we actually trimmed our operational expenses, even in the face of topline growth and the further expansion of the business.

Speaker Change: Sales activity is picking up again with our pipeline increasing to about 160 million today and backlog at 331 of around $20 million.

Desmond Wheatley: Sales activity is picking up again, with our pipeline increasing to about 160 million today and our backlog at 331 of around 20 million. During the first quarter, we announced new orders from the U.S. Army, from the Department of Homeland Security, from the Federal Railroad Administration, from National Parks, and from many other federal entities. Several of these purchase orders were multi-million dollar orders, the most notable of which was a $7.4 million order from the U.S. Army, which adds to the previous $30 million purchase order we received in 2022.

Speaker Change: During the first quarter, we announce new orders from the U S Army from the Department of Homeland Security from the Federal Railroad administration from National Parks for many other federal entities.

Speaker Change: Several of these purchase orders were multimillion dollar orders. The most notable of which notable of which was a $7 4 million dollar order from the U S Army, which adds to the previous 30 million dollar purchase order we received in.

Speaker Change: In 2022.

Speaker Change: We continue to receive orders from other state and municipal entities I'm always talking about budget uncertainty and the impact of the election year, our sales and pipeline are still robust on the government side of the business.

Desmond Wheatley: We continue to receive orders from other state and municipal entities, and while there's talk about budget uncertainty and the impact of the election year, our sales and pipeline are still robust on the government side of the business. Also, encouragingly, during the first quarter, we saw a significant increase in commercial orders, about 300% actually, which has come about as a result of our efforts to continue to diversify our revenue opportunities across the broadest possible base of customers.

Speaker Change #100: Also encouragingly during the first quarter, we saw a significant increase in commercial orders about 300% actually which have come about as a result of our efforts to continue to diversify our revenue opportunities across the broadest possible base of customers.

Speaker Change #101: Probably the most exciting selling activity in the first quarter, though was being issued a government contract from the United Kingdom Crown commercial services.

Desmond Wheatley: Probably the most exciting selling activity in the first quarter, though, was being issued a government contract from the United Kingdom Crown Commercial Services. Several aspects of this are exciting. First and foremost, it's our first large government contract in Europe, and it's very similar to our federal GSA contract in that it enables the British government to buy our products without going through any further cumbersome processes.

Speaker Change #102: Several aspects of this very exciting first and foremost that's our first large government contract in Europe, and it's very similar to our federal GSA contract and that enables the British government to buy our products without going through any further cumbersome processes.

Desmond Wheatley: Secondly, and this is really where the rubber meets the road, it resulted almost immediately in a large order from the British Army for EBR products for their overseas bases. This was our first million-dollar order in Europe, marking a major milestone for the acquisition and growth there, just a few short months after we closed on that transaction. As I've said before, it took us about five years to get our first million-dollar order in the United States, and less than five months to do the same thing in Europe.

Speaker Change #102: Secondly, and this is really where the rubber meets the road. It resulted almost immediately in a large order from the British Army <unk> products for the overseas basis.

Speaker Change #102: This was our first million dollar order in Europe, marking a major milestone for the acquisition and growth there.

Speaker Change #102: Just a few short months after we close on that transaction.

Speaker Change #103: As I've said before it took us about five years to get our first million dollar order in the United States less than five months to do the same thing in Europe.

Desmond Wheatley: This is an indication of the rapid evolution in the EV charting space, but also, probably more importantly for us, it's a strong indication of the validity of the European market and our investment and moving into that, the world's largest market for our products, at a time when we're increasingly recognized as an important player in the infrastructure space, and others. We're also working on a couple of the largest opportunities we've ever worked on.

Speaker Change #104: This is an indication of.

Speaker Change #105: The rapid evolution in the EV charging space, but also probably more importantly for us it's a strong indication of the validity of the European market and our investments are moving into that the world's largest market for our products at a time when we are increasingly recognized as an important player in the infrastructure space.

Speaker Change #105: We're also actually working on a couple of the largest opportunities we've ever worked on and interestingly both of them have been enabled by our acquisitions, they're not inked yet, but the level of serious interest in our offerings from equally serious players is very encouraging.

Desmond Wheatley: And interestingly, both of them have been enabled by our acquisitions. They're not inked yet, but the level of serious interest in our offerings from equally serious players is very encouraging. You may have read about our recent utility-scale battery storage seminar, which we conducted in Belgrade during the first quarter.

Speaker Change #106: You may have read about our recent utility scale battery storage seminar, which we conducted in Belgrade during the first quarter.

Desmond Wheatley: It was attended by 40 or 50 regional leaders from energy and government, and the follow-up and level of interest we've received has exceeded my expectations, including some active opportunities which we're working on right now. This is the perfect combination of the expertise and capabilities which we acquired with the All-Cell transaction and the relationships and new market opportunities which we acquired with the Amiga transaction, both combined with Beam Global's innovation and product engineering prowess.

Speaker Change #107: It was attended by 40 or 50 regional leaders from energy and government and the follow up on level of interest. We've received has exceeded my expectations, including some practical opportunities, which we're working on right now.

Speaker Change #108: This is the perfect combination of the expertise and capabilities, which we acquired with the wholesale transaction and the relationships and new market opportunities, which we acquired with the Omega transaction, both combined with being global is innovation and product engineering prowess.

Speaker Change #109: As I started the call by saying I've just spent a week in Serbia with being Europe, and now in Abu Dhabi, presenting a rapidly deployed EV charging.

Desmond Wheatley: As I started the call by saying, I've just spent a week in Serbia with Beam Europe and now in Abu Dhabi presenting rapidly deployed EV charging and Energy Security Products. The level of enthusiasm and serious interest that we're getting from major players is also very encouraging.

Speaker Change #110: And energy security products.

Speaker Change #111: The level of enthusiasm and serious interest that we're getting from major players is also very encouraging.

Desmond Wheatley: We're playing in a much larger arena, the stakes are much higher, and we've done a fantastic job of positioning ourselves to be able to take advantage of opportunities, large and small, in the most active regions in the world for products like ours. Several of the opportunities that we're working on now are larger than anything that we've ever done before, and I believe that we're well positioned to continue to attract more of that sort of attention in the near future.

Speaker Change #111: We're playing in a much larger arena. The stakes are much higher and we've done a fantastic job of positioning ourselves to be able to take advantage of opportunities large and small and the most active regions in the world for products like ours.

Speaker Change #111: Several of the opportunities that we're working on now are larger than anything that we've ever done before and I believe that we're well positioned to continue to attract more of that sort of attention in the near future.

Speaker Change #112: It was really very gratifying to see completed E V ox waiting to be placed in containers to be shipped to our customers from our European facilities and it was also very gratifying to see more components of our brand new EV standard product completed and waiting shipment to Chicago, where the beam team will integrate our proprietary batteries.

Desmond Wheatley: It was really very gratifying to see completed EV arcs waiting to be placed in containers to be shipped to our customers from our European facilities. And it was also very gratifying to see more components of our brand new EV standard product completed and waiting shipment to Chicago, where the beam team will integrate our proprietary batteries, electronics, windmills, and solar components, which will complete them so that they're ready for demonstration at the beginning of the second half of 2024.

Speaker Change #113: Electronics, windmills and solar components, which will complete those so they're ready for demonstration at the beginning of the second half of 2024.

Speaker Change #114: Everyone on the sales teams in San Diego, Chicago, and Serbia as excited about demonstrating he responded to their customers and prospects.

Desmond Wheatley: Everyone on the sales teams in San Diego, Chicago, and Serbia is excited about demonstrating EV standard to their customers and prospects. There have been some costs associated with these activities, and we used some cash to enable them. Was it worth it?

Speaker Change #115: There'll be some costs associated with these activities and we used some cash to enable them was it worth it without question.

Desmond Wheatley: Without question, one other interesting sales development in Europe is that we're working to add sales channels to our internal existing sales team. We met with two very good and highly qualified candidates while I was in Serbia, and I'm very much looking forward to advancing our relationship with these quality groups. They will act as a significant force multiplier with local presence in markets which we believe offer significant opportunities. And because they're paid for performance and success, they'll not add to our SG&A and operating costs.

Speaker Change #116: One other interesting sales development in Europe as it were working to add sales channels through our internal existing sales team. We met with two very good and highly qualified candidates, while I was in Serbia and I'm very much looking forward to advancing our relationship with these quality groups.

Speaker Change #117: They will act as a significant force multiplier with local presence in markets, which we believe offer significant opportunities and because of their pay for performance. Some success they'll know adds to our SG&A and operating costs.

Desmond Wheatley: It makes a great deal of sense for us to do this in Europe, because it's both a vast and somewhat dislocated market. But I can tell you that once we've got this model successfully integrated into our European operations, we intend to roll it out in the US as well. Those sales channels, combined with our new products, new markets, and improved ability to execute, are all contributing to our being able to fish in a much larger pond, and I believe that this is going to put us in a position for continued and sustained growth.

Speaker Change #118: It makes a great deal of sense for us to do this in Europe, because it's fast and somewhat dislocated market, but I can tell you that once we built this model successfully integrated into our European operations, we intend to roll out in the U S as well.

Speaker Change #119: Those sales channels combined with our new products, new markets and improved ability to execute are all contributing to our being able to fish in a much larger pond and I believe it is going to put us in a position for continued and sustained growth.

Speaker Change #120: So to sum up we generated record first quarter revenue, we had by far the highest gross profit in our history.

Desmond Wheatley: So to sum up, we generated record first quarter revenue; we had by far the highest gross profit in our history; and we executed on the engineering and operational improvements we promised. We managed our cash and used it to increase sales and improve gross profits. We continue to win patents and develop new products. We've made tremendous strides in integrating our European acquisition, and we're working on the largest and most exciting opportunities we've ever had.

Speaker Change #120: We executed on the engineering and operational improvements, we promise, we managed our cash and use it to increase sales and improved gross profits. We continue to win patents and develop new products. We've made tremendous strides in integrating our European acquisition and we're working on the largest and most exciting opportunities we have ever had.

Speaker Change #121: For the remainder of 2024, we will remain doggedly focused on efficiency and improving gross profitability above all other goals with the ultimate goal of cash flow being our primary objective.

Desmond Wheatley: For the remainder of 2024, we will remain doggedly focused on efficiency and improving gross profitability above all other goals, with the ultimate goal of cash flow being our primary objective. I've never felt better about the global beam team, and I believe that even in the face of market uncertainty and chatter about weakness in EV sales and whatever Elon Musk's latest move has been, we will continue to operate with discipline and attain our goals.

Speaker Change #122: I've never felt better about the book the global beam team and I believe that even in the face of market uncertainty and chapter about weakness in EV sales in whatever Elon Musk latest move has been that we will continue to operate with discipline and attain our goals.

Speaker Change #123: Thank you for your attention and I'll now hand, it back to the operator and take whatever questions you have for me. Please.

Desmond Wheatley: Thank you for your attention, and I'll now hand it back to the operator and take whatever questions you have for me. Please do limit yourself to one question and one follow-up because I want to make sure that everybody has a chance to ask their questions.

Please do limit yourself to one question and one follow up because I want to make sure that everybody has a chance to have their questions answered.

Speaker Change #123: Operator.

Speaker Change #124: Thank you very much as a reminder to join the queue. You May Press Star then one if youre using a speakerphone. Please pick up your handset before pressing the keys.

Operator: Thank you very much. As a reminder, to join the queue, you may press star, then one. If you're using a speakerphone, please pick up your handset before pressing the Today's first question comes from Sameer Joshi with H.C. Wainwright. Please go ahead. Thanks for doing this late night from there.

Speaker Change #124: Today's first question comes from Sameer Joshi with H C. Wainwright. Please go ahead.

Speaker Change #124: Hi.

Lisa: Lisa How're you.

Speaker Change #126: Thanks for doing this the late night from there.

Speaker Change #127: The question I have is.

Sameer Joshi: The question I have is about the backlog and the pipeline. How does it, what does it comprise of geographically and also between all-cell EVR and Amiga? And then for the pipeline, what do you consider a pipeline? Are these requests or proposals that you have applied for, have you sent your proposals, or how do you define that?

Speaker Change #128: The backlog and the pipeline.

Speaker Change #129: How does it.

Speaker Change #130: What is it.

Speaker Change #131: What does that comprise of geographically.

Speaker Change #131: And also between <unk> and <unk>.

Speaker Change #132: And I mean, you've got and then for the pipeline.

Speaker Change #133: What do you consider pipeline at these requests for proposals that you have.

Speaker Change #134: Uplight send their proposals or how would you define that.

Speaker Change #134: Yeah. So.

Desmond Wheatley: Yeah, so the backlog is still, the majority of the backlog is still comprised of the Beam Global EV charting infrastructure products. So the what you would consider to be more traditional Beam products, backlogged contribution from Beam Europe was about 3 million at 331.

Speaker Change #135: Backlog is still the majority of the backlog is still comprised of the beam global.

Speaker Change #136: EV charging infrastructure products so the.

Speaker Change #136: What you would consider to be more of a traditional beam.

Speaker Change #136: <unk>.

Backlog contribution from being Europe was about $3 million at 331.

Desmond Wheatley: And they're going to be less of a backlog intensive business anyway, because as I mentioned before, historically, they've always made and delivered product as they contracted. So they have some sort of longstanding relationships with existing customers who come back to them and order stuff over and over again, but it doesn't really stay in backlog very long because it's generally produced and shipped off to the customer before too long. As far as the question about the pipeline is concerned, we're quite strict about what a pipeline is.

And they're going to be less of a backlog intensive business anyway, because as I mentioned before historically, they've always made and deliberate product isolated contracted yet.

Speaker Change #137: Have some long standing relationships with.

Speaker Change #138: With existing customers, we come back to them in order stuff over and over again, but it doesn't really stay in backlog for very long because generally produced and shipped off to the customer before too long.

Speaker Change #138: Sure.

Speaker Change #139: As far as the question about the.

Speaker Change #140: Pipeline is concerned we're quite strict about what pipeline is.

Desmond Wheatley: Basically, this is, in order to qualify to be in our pipeline, you need to be a customer who understands the product, has a budget for the product, and has a pipeline to backlog conversion ratio. What we have less confidence over is when they'll do that. And I can tell you that historically, we've had some customers who told us with absolute certainty that they were going to give us a purchase order at such and such a date, and it was quite a bit later than we expected for various internal reasons on their own part.

Speaker Change #141: Basically this is in order to qualify to be in our pipeline do you need to be a customer who understands the product as budget for the product.

Speaker Change #142: Is qualified to make the buying decision and has given us the impression.

Speaker Change #143: As indicated to us that you are moving towards a purchase order. So in other words. These are not just people who have expressed an interest in the.

Speaker Change #143: Passing interest in our products. So I think we're cool or anything like that these are active operated customers with budget with authority, who have expressed an interest in moving towards a purchase order.

Speaker Change #143: We have a pretty high.

Speaker Change #143: Pipeline to backlog conversion ratio.

Speaker Change #143: In other words.

Speaker Change #143: The actual needs of those customers, who expressed an interest in the product in a budget et cetera.

Speaker Change #143: Historically, a high proportion of them.

Speaker Change #143: A higher proportion that I've ever seen in any other business have moved to backlog.

Speaker Change #144: And so we have a pretty high degree of confidence that they will do that not all of them of course, but we have a pretty high degree of confidence a large percentage of them will do that we have less confidence over is when they'll do that and I can tell you that historically.

Speaker Change #145: We've had some customers who've told us that with absolute certainty, they're going to give us a purchase order at such and such a date and it's been quite a bit later than we expected for various internal reasons on their own parks.

Desmond Wheatley: And the other side of that coin, which unfortunately doesn't happen as often, is we've had customers who've hit us with purchase orders much faster than we expected. But in general, the pipeline is, I think, a good number and fairly conservative, although it's weighted, obviously, all the way from somewhat low percentages all the way up to some that are close to near certainty.

Speaker Change #146: And the other side's about coin, which unfortunately doesn't happen as often.

Speaker Change #147: We've had customers who pay us with purchase orders much faster than we expected.

Speaker Change #148: But in general the pipeline is I think a good number in a fairly conservative all those weighted obviously all the way from somewhat low percentages, all the way up to <unk>.

Speaker Change #149: Some that are close to a near certainty.

Speaker Change #150: Understood Thanks for that color.

Sameer Joshi: Understood. Thanks for that. And just one more.

Speaker Change #151: Just one more.

Speaker Change #152: The contribution from Amiga I'm guessing.

Speaker Change #153: I think I heard you say you're expecting 30%.

Desmond Wheatley: The contribution from Amiga. I think I heard you say you are expecting a 30% increase in purchase orders or have experienced a 30% increase in year-over-year purchase orders. And if we consider that Amiga probably did around 10-ish million last year, should we expect it to do around 30% over that amount this year?

Speaker Change #154: And budgets have experience, 30% increase in year over year purchase order.

Speaker Change #155: And if we consider that I mean, you've got probably.

Speaker Change #156: I don't punish million last year should we.

Speaker Change #156: Around 30% over that amount.

Speaker Change #156: Let's see.

Speaker Change #157: Well what I can.

Desmond Wheatley: Well, what I can certainly say is two things. First of all, yes, their actual purchase orders received year to date are up about 30% over their historical norm in the past because, of course, in the past, they were essentially constrained by their cash flows. So it's a very positive move that's been very impactful. The acquisition has been very impactful for them in a really positive way. I'm delighted by that.

Speaker Change #158: What I can certainly say two things.

Speaker Change #158: First of all.

Speaker Change #159: Yes, the actual purchase orders received year to date are up about 30% over their historical norm.

Speaker Change #159: And there's a lot of contributors to that I mentioned, a couple of them during the call some of them as some of it has to do with the way we're using our balance sheet. Some of it has to do with that.

Speaker Change #160: Just increased confidence in them as a result of being part of the.

Speaker Change #161: The U S and NASDAQ traded company and then also that we've been able to allow them to enable them to go out and sell more aggressively.

Take on more than they would have.

Speaker Change #161: In the past because of course in the past they were essentially constrained by their cash flows.

Speaker Change #162: So it's.

Speaker Change #162: It's a very positive move outs. So that's been very impactful acquisition has been very impactful for them in a really positive way.

Desmond Wheatley: That doesn't necessarily tie in a straight line to a 30% increase in year-over-year revenues because these are just the purchase orders that they've received year-to-date are up 30% over last year. However, the other metric that is very important to note, and I might have sounded like I was belaboring this during my comments, because I really want people to understand this, was that we have this contingent consideration, that $4.3 million, which again is entirely non-cash, please underline that, that will be made in shares of Beam Global stock.

Speaker Change #163: I'm delighted by that.

Speaker Change #164: That doesn't necessarily tie in a straight line to a 30% increase year over year revenues. Because these are just the purchase orders received year to date are up 30% over historical however, the other metric that is very important to note.

Speaker Change #165: I might have sounded like I was belaboring. This during the during my comments because I really want people to understand is was that we have this contingent consideration.

Speaker Change #166: $4 3 million of.

Speaker Change #166: Which again is entirely non cash is underlying that.

Speaker Change #166: That will be made in the in the shares.

Speaker Change #167: Shares have been global stock.

Desmond Wheatley: And again, this is exactly how I like to do these types of deals. We got them for a relatively modest initial consideration, particularly in light of the fact that, as I said, we got the buildings and land and everything else as part of that transaction. the new product sets that Beam Global is bringing into that market. While we continue to grow their legacy business, you can feel fairly confident that it's going to happen, because, of course, we've already done a million EV arc sales there.

Speaker Change #168: This is exactly how I like to do these types of deals we've gotten great relatively modest initial consideration, particularly in light of the fact that as I say, we got the buildings and land and everything else as part of that transaction, but they are.

Speaker Change #169: And are positioned to do very well with their earn out payments.

Speaker Change #169: In equity so they're sort of doubly.

Speaker Change #170: Encourage to pull on the rope the way we want them to.

Speaker Change #170: Because a they do well with these earn outs and be the our notes come in equity and being global so everything about that encourages them to support the company.

Speaker Change #171: I want to stress, we don't need to encourage them in that way. These are I'm very very happy with the beam Europe management team, they're very very.

Speaker Change #172: Tuesday, asking about growing the business.

Speaker Change #173: Well, we have these motivations in place they're kind of icing on the cake because it is a highly motivated team who is really working hard to grow their business with us have been very happy about that but to go back to your question.

Speaker Change #174: Fact that we have that contingent consideration and places a strong indication that we think that theyre going to hit their earn outs and their earn outs are pretty aggressive.

Speaker Change #175: They had to get to about.

Speaker Change #175: 135% actually of what they did prior year to hit there.

Speaker Change #175: 24, and in 2025, they have to to get to 135% of that again so.

Speaker Change #175: Yes.

Speaker Change #176: We're signaling that we believe that they're going to hit those earn outs and do everything we can to help them do that and I hope I'm, a very large percentage of it and in fact I'm confident in a very large percentage of it will come from selling the new product sets that are being global is bringing into that market.

Desmond Wheatley: So they're clearly off to a good start with an increase in sales, and then the additional revenues coming from the EV arc sales that we already know are in the bag. We're going to start delivering them at the end of this month.

Speaker Change #176: While we continue to grow their legacy business.

Speaker Change #177: You can feel fairly called but not going to happen because of course, we've already done a million.

Speaker Change #178: And <unk> sales there.

So they are clearly off to a good start with an increase in sales.

Speaker Change #178: And then the additional revenues coming from the <unk> sales that we already know are in the bag I'm going to start delivering them.

Speaker Change #179: At the end of this month.

Sameer Joshi: We expect a lot more will come from that this year too. As I said, I'm looking forward to them making their earn-outs. Earn-out reliability is the best liability that an acquiring CEO can have. It's far better than writing down your acquisitions, which is not something we do. We pay that on our earn-outs.

Speaker Change #180: But we expect that more will come from that this year too and as I say I'm looking forward to them hitting their earn outs.

Speaker Change #181: Reliability is the best liability and acquiring CEO can have as far better than writing down your.

Speaker Change #182: Acquisitions, which is not something we do we paid out on all of our lives.

Yeah, no I agree with that.

Desmond Wheatley: Yeah, no, I agree with that. Thanks for that color, and good luck. Thank you very much. Thank you. The next question is from Tate Sullivan with Maxim Group. Please go ahead. All right, thank you, Desmond.

Speaker Change #183: Thanks for that color and good luck.

Speaker Change #184: Thank you very much.

Speaker Change #184: Thank you. The next question is from Tate Sullivan with Maxim Group. Please go ahead.

Operator: Thank you. The next question is from Tate Sullivan with Maxim Group. Please go ahead. Hiya Tate. Thank you, Desmond. Hiya, good.

Tate H. Sullivan: Alright. Thank you hi, good that'd be great to hear from you and I think you just said actually that you are starting to deliver your first European EV arcs at the end of this month and it sounds like was there any.

Speaker Change #186: Just men or inefficiencies at the beginning of making the Edr earthquake.

Speaker Change #186: Okay.

Tate H. Sullivan: Yeah, I mean, I actually saw the units. Yeah, I saw the units. They're getting ready to get loaded into shipping containers and head out here at the end of this month. In fact, just to give you more detail than perhaps you want, we're just waiting for the EBSC from the vendor, the actual charger itself.

Speaker Change #186: Yes.

Speaker Change #187: You saw the units.

Speaker Change #187: So I saw the units.

Speaker Change #187: They are getting ready to get loaded into.

Speaker Change #188: Shipping containers.

Speaker Change #189: And head out here.

Speaker Change #189: At the end of this month.

Just to give you more detail than perhaps you won't we're just.

Speaker Change #190: Waiting for the EIC from this from the vendor of the actual charter itself as soon as we get those will we will install those and they will go they laid off to their customer.

Desmond Wheatley: As soon as we get those, we'll install them, and they'll head off to their customers. Was there any inefficiency? Yes.

Speaker Change #191: Was there any efficient inefficiencies yes.

Desmond Wheatley: You know, it's nowhere near as efficient as it's going to get at the beginning, but these are the first units they've made, but the quality is very, very good. And, you know, the end product's excellent. And I'm thrilled to bits, frankly, that it's happened as quickly as it has happened. And I think there are a couple of things that are really important to point out there.

Speaker Change #192: There is nowhere near as efficient as it is going to get.

Speaker Change #193: In the beginning it was it a FERC units they've made.

Speaker Change #194: But the quality is very very good.

Speaker Change #194: Yes.

Speaker Change #195: The end products excellent.

Speaker Change #196: I'm thrilled to bits frankly, it's happened as quickly as it has happened.

Speaker Change #197: There's a couple of things are really important to point out there.

Speaker Change #198: We self performed in Europe, some really significant tasks that we have.

Desmond Wheatley: We self-performed in Europe some really significant tasks that we have always done through outsourcing in the United States, really expensive, significant tasks that we've been outsourcing in the United States. So the economics, taking out the inefficiencies because these are the first ones that we've done, and you're right to point that out, but beyond that, what we're seeing is that the economics for producing EV arcs in our Serbian facilities are far superior to the economics of doing it in the United States.

Speaker Change #199: <unk> always done through outsourcing in the United States really expensive significant tasks that.

Speaker Change #199: We have been.

Speaker Change #200: Sourcing United States, So the economics.

Speaker Change #200: Neither the inefficiencies because either across ones that we've done and you're right to point that out but beyond that what we're seeing is that the economics for producing <unk> in our.

Speaker Change #201: Our Serbian facilities are far superior to the economics of doing it in the United States and remember all the gross profit improvement, we just announced has come from our U S operations.

Desmond Wheatley: And remember, all the gross profit improvement we've just announced has come from our US operations. We didn't see any benefit from the Serbian operations yet, first of all, because we haven't even recognized the revenue from them. We will obviously do that obviously when we deliver, but I'm anticipating that those inefficiencies will be reduced rapidly. Again, it's a very motivated team with a great history of producing a lot of stuff inexpensively and with a lot of efficiency.

Speaker Change #201: We haven't we didn't see any any benefit from that from the <unk>.

Speaker Change #201: Serbian.

Speaker Change #202: Yes first of all because we recognize the revenue on them.

Speaker Change #203: And we'll do that obviously, when we deliver but I'm anticipating that those inefficiencies are reduced rapidly.

Again, it's a very motivated team with a great history of producing a lot of stuff inexpensive land and with a lot of efficiency.

Desmond Wheatley: And then because of these economic improvements, because of the largely due to the sell performance of some really expensive outsourced tasks in the US, I'm hoping for a much better gross profile, which is based on my US assumptions. So Europe should only make that better. So yes, a little bit of inefficiency in the beginning, but a great product, very well made, very good quality, and, as I say, clear opportunities for much better economics. Moving forward.

Speaker Change #204: And then because of these economics improvements because of the largely due to the self performance.

Speaker Change #205: Some really expensive outsourced house in the U S.

Speaker Change #206: Hoping for a much better growth profile.

Speaker Change #206: The gross profit profile.

Speaker Change #207: European operations than in the U S. While we will continue to improve that in the U S. The company wide.

Speaker Change #208: So that will be which we should get better gross profitability from those units that we produce in our Serbian facility isn't ship all over Europe.

Speaker Change #208: And further afield than we do with the ones that we make in the U S.

Speaker Change #209: Yes, as I said as I said that the what.

Speaker Change #210: Move to cash flow that I described in my earlier comments was based on my U S assumptions, but you can only make that better.

Speaker Change #210: So I guess, a little bit of inefficiency in the beginning.

Speaker Change #210: Great Great products, very well made very good quality.

Speaker Change #211: As I say clear.

Speaker Change #212: Opportunities for much better economics.

Speaker Change #213: Moving forward.

Daphne: Thank you Daphne.

Ted: Thank you Ted.

Speaker Change #216: Thank you. The next question comes from Chris <unk> with Needham <unk> Company. Please go ahead.

Operator: Thank you. The next question comes from Chris Pierce with Needham & Company. Please go ahead.

Christopher Alan Pierce: Unknown Speaker 08. On gross margins, from here, is it as simple as the more EV arcs you sell, the higher your gross margins go, because you're absorbing fixed costs on top of the price increase that you have, or are there further engineering kind of... Efficiencies that you can drive out as far as San Diego production?

Speaker Change #217: Good evening I couldn't how are you.

Speaker Change #218: Great on gross margin from here is it as simple as the more easier to sell the higher your aggression I can't go because youre absorbing fixed costs on top of the price increase that you have or are there further engineering.

Speaker Change #219: Efficiencies that you can drive out as far as the San Diego production.

Speaker Change #219: Both.

Desmond Wheatley: Definitely both. There's no question the more we produce, the better we get from a gross profit point of view because of fixed overhead allocations and absorption. And it's not just that, the more of them we produce, the more stuff we buy, the better deals we get, the better deals we get. And that's another reason the European expansion has been helpful because a lot of the stuff that we're buying will be common in both markets, coming from common vendors.

Speaker Change #219: Both.

There's no question that more reproduce the Bachelor we get from them from a gross profit point of view because of.

Speaker Change #220: Thanks overhead allocations absorption.

Speaker Change #221: And it's not it's more than that the motive them, we produce the more stock we buy the batch of buying we get better purchasing we get and Thats. Another reason to European response has been helpful. Because a lot of the stuff that we're buying will be common in both markets coming from common vendors.

Desmond Wheatley: But yes, there are still further improvements that we can make that we've yet to recognize. And we're going to, as I said, ruthlessly go after that. This year, for us, is really going to be much more about getting more efficient and reducing our cogs. I mean, we've always had a laser focus on operating costs. As everybody's aware, we're an extremely lean company.

But it's but yes, there are still further improvements that we can make that we've got to recognize.

Speaker Change #222: And we're going to as I said ruthlessly go after that this year for us is really going to be much more about it.

Speaker Change #222: More efficient.

Speaker Change #223: Reducing our Cogs.

Speaker Change #224: We've always had a laser focus on operating costs.

Speaker Change #225: He is aware were an extremely lean company.

Speaker Change #226: Uh huh.

Speaker Change #226: The operating side of things, but Cogs, we're gonna be laser focused on continuing to reduce those but not the expense of quality.

Speaker Change #227: So you'll get it youre going to get further gross profit improvement contribution from both things more the more we make the <unk>.

Speaker Change #228: More of that overhead allocations absorbed.

Speaker Change #229: But also part of their engineering announcements.

Christopher Alan Pierce: Okay, what can you share about the EV Standard Margin Profile or the strategy there? Is that going to be some sort of... I don't want to use the term loss leader, but it's a new product that you're introducing to the market, and it's a new manufacturing product. You're talking about the second half of this year, and demoing it. Like, what's the right way to think about the margin trajectory of that product versus the margin trajectory of the EBR?

Speaker Change #230: Okay, and what can you share about the <unk> standard margin profile or the strategy there is that going to be some sort of.

Speaker Change #231: You know I don't want to use the term lastly, it over it's a new product that you're introducing to the market and it's a new manufacturing product you were talking about the second half of this year.

Speaker Change #231: Like what's the right way to think about the margin trajectory of that product versus.

Speaker Change #232: The trajectory of the idiosyncratic.

Speaker Change #233: Yes, definitely do not intend for it to be a loss leader.

Speaker Change #234: However, there is no question that the earliest units that we make will be the most expensive that we ever make.

Speaker Change #235: And frankly, where these first units that were producing right now the betas.

Speaker Change #236: That we're going to use to demonstrate the product, which will be I will make our first sales, it's very attractive very striking looking product.

Speaker Change #236: I gotta be account wait to make it public.

<unk> seen it myself.

Desmond Wheatley: But we've already identified, as you might expect, areas where we can be much more efficient in the future models that we make. But no, I'm pretty confident that the first ones we sell will come with good unit economics. And then we'll rapidly do value engineering on the product and widen the gap between our revenue and our costs. I expect that we will actually generate more gross revenue from the EV standard product in the future than from any other product in our lineup that we have to date.

Speaker Change #237: But we've already identified.

Speaker Change #237: As you might expect we've already identified areas, where we can be much more efficient in the future models that we make.

But.

Speaker Change #237:

Speaker Change #238: I'm pretty confident that the first one is we sell well we'll come out with good unit economics.

Speaker Change #238: And then we will.

Speaker Change #238: Rapidly.

Speaker Change #238: Value engineering on the product.

Speaker Change #238: Widen the gap between our.

Speaker Change #239: Revenue in the amount of costs.

Speaker Change #240: Alright, then we will actually generate more gross from <unk>.

E V center product in the future than from any other product in our lineup that we have to date.

Desmond Wheatley: Because I do think it will be a higher volume product, but the sales of it are going to be more complex. Because unlike the EV arc, it's not something that you can just drop off in an hour and walk away from it, and it's ready to operate.

Speaker Change #241: Because I do think it will be a high volume product.

Speaker Change #242: The sales are going to be more complex because unlike the <unk>, it's not something that you can just drop off in an hour.

Speaker Change #242: Walk away from it and it's ready to operate and I think that will probably mean that we will do less of this sort of onesie twosies type sales with EDI standards I think it's more likely to be deployed.

Desmond Wheatley: And I think that will probably mean that we'll do less of the sort of onesie-twosie type sales with the EV standard. I think it's more likely to be deployed in almost a network fashion. Although there are still good opportunities, shopping malls, airports, and other places like that for some smaller volume stuff, I do think that when we're talking about municipal type deployments, it will come in larger volumes, and the sales cycles will be longer.

Speaker Change #242: And.

Speaker Change #242: Almost in a network fashion.

Although there are still good opportunities.

Speaker Change #242: Shopping malls airports and other places like that for some for some smaller volume stuff, but I do think that you know when we're talking about municipal type deployments that will come in large volumes and the sales cycles will be longer.

Desmond Wheatley: But at the end of the day, while the sales cycles might be longer, the volume, I believe, will be larger. And again, I think that's going to be an area that we're going to be able to squeeze a lot of gross profitability out of.

Speaker Change #243: But at the end of the day.

Speaker Change #243: While the sales cycles might be along with the volume should we I believe will be larger and again I think that's going to be an area that we're gonna be able to squeeze a lot gross profitability.

Desmond Wheatley: Do you envision a distribution model like a sales partner channel model, or do you envision a direct sales model?

Speaker Change #244: Do you do you envision a distribution model that the sales part of the channel model or do you envision direct sales direct sales model.

Speaker Change #245: Certainly direct in the beginning but as I mentioned in my comments, we are actively pursuing touche very well qualified channels in Europe, right now and that's a model, which I'm very much in favor of we've been hesitant to do that in the United States.

Desmond Wheatley: Certainly, direct in the beginning, but as I mentioned in my comments, we are actively pursuing two very well-qualified channels in Europe right now. And that's a model that I'm very much in favor of.

Desmond Wheatley: We've been a bit hesitant to do that in the United States previously for a whole host of reasons. We just weren't really ready for it. And, you know, it's just materials wise and history wise and the ability to just shift the selling process to outsiders. We weren't really ready for it.

Speaker Change #245: Previously for a whole host of reasons, we just weren't really ready for it.

Speaker Change #245: I get.

Speaker Change #246: But from a just a materials wise in history why isn't.

Speaker Change #247: Ability to just shift the selling process just outside her so we weren't really ready for it but we've got some very motivated partners.

Desmond Wheatley: But we've got some very motivated partners that we're in the process of negotiating with in Europe right now. One group is actually a group that I've been speaking to for a couple of years already. And then another one is a partner that we picked up as a result of our acquisition of Omega, which has now been in Europe.

Speaker Change #248: That were that were in the process of negotiating with in Europe right now.

Speaker Change #248: One group tax as a group I've been speaking to for a couple of years already and then another one.

Speaker Change #249: Part of that we've picked up as if it's all of our acquisition of <unk>.

Speaker Change #250: The Amiga, which would be in Europe.

Desmond Wheatley: And that's going to, I think, be profoundly impactful for us, because obviously, we've had a limited number of salespeople that have sold our product up until now. This forced multiplication ought to get a lot more people talking about it, a much broader audience. And we know people like it when they understand it, so getting it in front of more people is clearly going to be a good thing for us, particularly in light of the fact that, as I said, it will be performance-based.

Speaker Change #250: And that's.

Speaker Change #251: That's going to I think be profoundly impactful for us because obviously, we've had a limited number of salespeople selling a product until now this force multiplication ought to get a lot more people talking about a much broader audience and we know people like it when they understand it so getting it in front of more people is clearly going to be a good thing for us, particularly.

Speaker Change #251: In light of the fact that.

Speaker Change #251: As I said it'll be performance based and we won't be adding to.

Desmond Wheatley: We won't be adding to our costs, to our operating costs as a result of this, because they'll get paid when they sell. And yes, I intend to do that with the EV standard as well as with the EV arc and our other products.

Speaker Change #251: Our costs.

Speaker Change #251: Our operating costs as a result of this because they'll get paid when they sell.

Speaker Change #252: And yes, I intend to do that with a television standard as well as with the E V arcing or other products.

Speaker Change #253: Okay, and just lastly for me on the $4 3 million non cash that you've mentioned a couple of times is the right way to think about that is 50% of the division is at the end of this year and 50% next year or like what's the right way, it's about the timing of those shares that you're issuing to our shareholders.

Christopher Alan Pierce: And just lastly, for me, on the $4.3 million in non-cash that you mentioned a couple of times, is the right way to think about that as 50% of the dilution is at the end of this year and 50% next year, or what's the right way about the timing of those shares that you're issuing to the Amiga shareholders for the Amiga company?

Shareholder.

Speaker Change #252: Okay.

Speaker Change #254: Yeah, and listen I apologize for Belaboring. This point, but we do end up with an awful lot of questions about cash offer and obviously these calls and I seem to spend a great deal of time, explaining to people things that are noncash and cycle.

Desmond Wheatley: Yeah, and listen, I apologize for belaboring this point, but we do end up with an awful lot of questions about cash after these calls.

Speaker Change #254: So my apologies to those of you who grasp that very quickly. This is I'm speaking to those of you who don't.

Speaker Change #254: But.

Speaker Change #254: No. This is the.

Speaker Change #254:

Speaker Change #254: $4 3 million that you read about it as a current liability. So therefore, we believe it's going to be impactful in the next 12 months and that's why and as Lisa made in her comments said in her comments, we had moved it into current liabilities within this year because we believe that this is a this.

Speaker Change #255: This is an impact which could take place as a result of the pain of 'twenty 'twenty four earn outs 2025 will be another matter again.

Lisa: And again, it kind of strongly enough I want them to hit their earn outs if they hit their earn outs just because we've had really significant growth.

Desmond Wheatley: And I seem to spend a great deal of time explaining things that are non-cash impactful. So my apologies to those of you who grasped that very quickly. This is I'm speaking to those of you who don't. But no, in those markets, and I'm going to do everything I can to make them successful in doing that, because if they're successful, it means we're successful, and vice versa. Okay.

Lisa: Those markets and I'm going to do everything I can to maintenance successful to do that because if they're successful. It means we were successful and vice versa.

Christopher Alan Pierce: Okay, same page. I appreciate the color. Thank you.

Lisa: Okay.

Speaker Change #257: I appreciate the color. Thank you.

Chris: Thank you Chris.

Chris: Thank you. The next question comes from Craig Irwin with Roth Capital. Please go ahead.

Operator: Thank you. The next question comes from Craig Irwin with Roth Capital. Please go ahead.

Craig Irwin: Oh great.

Craig Irwin: Hello, Craig. Hey, this is Andrew on behalf of Craig.

Speaker Change #259: This is Andrew on for Craig and before I get started here, it's kind of ironic I saw my first day E arc and the wild in Manhattan today. So.

Andrew: And before I get started here, it's kind of ironic that I saw my first EV ARC in the wild in Manhattan today. So maybe a good sign. A good view, I guess. Well, welcome to the club.

Speaker Change #259: A good sign.

Speaker Change #260: And welcome to the club.

Speaker Change #260: Thank you.

Desmond Wheatley: A lot has been covered here. I think just one more thing I want to touch on in Europe. Looks like you've had some really good early progress in the U.K., and I just wanted to see if you could talk about the opportunities there and maybe other specific geographies or countries in the EU that you're excited about.

Speaker Change #260: It's been covered here.

Speaker Change #262: Just one more thing I want to touch on on Europe. It looks like you've had some some really good early progress in the U K and there just wanted to see if you could talk about the opportunities there and maybe other specific geographies or countries in Europe that.

Speaker Change #261: That you're excited about.

Speaker Change #263: Yeah. So the first element absolutely clear is that while I'm thrilled to bits that the U K Ministry of Defence.

Desmond Wheatley: Yeah, so the first thing I want to make absolutely clear is that while I'm thrilled to bits that the UK Ministry of Defense has acquired our product, I'm thrilled to bits that we have a contract with the British government now, which is like our GSA contract with the federal government. And I'm thrilled to bits that the British Army is going to be using our products on their overseas bases. It has nothing to do with my country of national origin.

Speaker Change #264: Is it has acquired a product I'm thrilled to bits that we have a contract with the British government now, which is like our GSA contract with the federal government and I'm thrilled to bits of British Army is going to be using our products and their overseas basis. It has nothing to do with my country of National origin. We didn't we didn't win this because I'm British we want.

Desmond Wheatley: We didn't win this because I'm British. We won it actually through the merits of the product; the UK Ministry of Defense and the British Army heard about the product because they know that the US Army is using it. And you know, they have very similar needs, so it's a great win for us. I think I believe it's just the beginning of what we're going to do with them. There isn't any other contender, except in a few very, very niche cases where hydrogen will play a role.

Speaker Change #264: It actually.

Speaker Change #264: But through the merits of the products that the UK Ministry of defense in the British Army heard about the product because they know that the U S Army is using it.

Speaker Change #264: And.

Speaker Change #265: They have very similar needs.

Speaker Change #265: So it's a it is a.

Speaker Change #266: A great win for us.

Speaker Change #266: I believe it's just the beginning of what we're gonna do with them.

Speaker Change #267: They they just like all other European countries and just like the U S. Federal government for that matter have pretty stringent mandates on moving to zero emission vehicles, and then pretty short Timeframes. In fact, I think the U K government's very similar to the federal government and that by 2027 there.

Speaker Change #268: Light duty vehicles, known tactical light duty vehicles across the government has to be zero emission vehicles, which essentially means electric there wasn't any other contender.

Speaker Change #268: And a few very very niche cases, who are hydrogen will play a role.

Speaker Change #268: So it's it's a it's a I think it's a great car stat for us.

Speaker Change #268: Okay.

Desmond Wheatley: So I think it's a great first step for us. And oddly enough, we're not deploying in the UK. We're deploying on overseas bases for them. With this product, I do think the EV standard will be a very good solution, which is a streetlight product will be a very good solution for the UK. And, in fact, for all, you know, northern European countries. In fact, that was a big

Speaker Change #269: Oddly enough, we're not deploying in the U K, we're deploying in the overseas basis for them with this quarter I do think the EV standard will be a very good solution I wish the streetlight product will be a very good solution for the U K and in fact for all of them.

Speaker Change #270: Northern European countries.

Speaker Change #270: Countries, but that was a big.

Desmond Wheatley: A big sort of background for the development of the EV center product was that I think it's a very good fit for northern European vertical cities, you know, because we have the introduction of light wind now as well as solar, but also because its profile fits in environments where you don't have large surface parking lots, which we have in the US, but you don't really see them in most cities over in Europe. As far as geographical areas of Europe are concerned, Spain and Portugal, the Mediterranean countries, definitely.

Speaker Change #270: Big sort of background for development of the E. V Center product was that I think it's a very good fit for northern European vertical cities.

Speaker Change #270: Because we have the introduction of light wind in Iowa, as well to generate electricity as well as solar but also because its profile fits into environments, where you don't have large surface parking lots, which we have in the U S. But you don't really see them in most cities over in Europe.

Speaker Change #270: As far as geographical areas of Europe are concerned.

Speaker Change #271: Spain, and Portugal, the Mediterranean countries definitely.

Desmond Wheatley: And then the Balkan region has been very fruitful for us in terms of opportunities. As I mentioned, we did the utility battery seminar. Utility Scale Battery Seminar here in the first quarter brought Dr. Saeed Al-Halaj, who is the, have to be accompanied by large-scale utility scale battery storage, and that's an area of expertise that we have, and it's going to be a new area of business for us, but we're going after it, and the projects are very meaningful in terms of revenue. Very meaningful So, as I said, the response to that seminar was better than I expected, and we're actively engaged in it. Not inked. It has to be said, not inked.

Speaker Change #271: And then the Balkan region has been very.

Fruitful for us in terms of opportunities as I mentioned, we did the utility battery seminar.

Speaker Change #271: Utility scale battery seminar here in the first quarter brought doctor side, a large who were C.

Speaker Change #271: Our chief battery scientists he was the former founder and CEO of all cell technologies that we acquired when we brought him over here and we did a presentation to as I said 40, or 50 leaders from the energy and government space in the Balkans under need is very acute care. They have a rule, which says if any do any large scale.

Speaker Change #271: Solar or wind or renewables deployments those now has to be accompanied by large scale.

Speaker Change #272: Utility scale battery storage and so that's an area of expertise that we have in.

Speaker Change #273: It's gonna be a new area of business for us, but we're going after it and the projects are.

Speaker Change #274: Very meaningful in terms of revenue very meaningful.

Speaker Change #274: So as I said, we believe the response to that seminar was better than I expected.

Speaker Change #274: We're actively engaged.

Desmond Wheatley: And as I tell the sales team all the time, until there's ink, it stinks. But, you know, I've also been doing this sort of stuff for long enough to know that when you get the level of interest that we've got, something tends to drop, the EV charging and energy storage solutions that we're going to be able to bring to this market. And not just this market. I'm not in Abu Dhabi because I like the weather here.

Speaker Change #274: Not inked there has to be said not inked and as I tell our sales team all the time until the zinc it stinks, but but.

Speaker Change #275: I'm also been doing this or suffer long enough to know that when you get the level of interest that we've got.

Speaker Change #275: Something tends to drop.

Speaker Change #275: So feel really good about that so.

Speaker Change #275: Europe in general is a very large opportunity for us that's why we came over here.

Speaker Change #275: It's fantastic that we were able to buy a company that cash flow.

Speaker Change #275: So already profitable fantastic, we've been able to put some great assets on our balance sheet.

Speaker Change #275:

Speaker Change #275: Fantastic, we've been able to have such an impact on them already just by freeing them up to do more business, but the real win here without a doubt is gonna be the EV charging and.

Speaker Change #275: Energy storage solutions that we're gonna be able to bring to this market.

Speaker Change #275: And not just this market.

Dobey because I like the weather here.

Desmond Wheatley: There is a massive opportunity in the Middle East as well, and a great deal of money is being spent here on sustainability projects. And I mean, just look up projects like Neom, look at Masdar Energy; there's massive amounts of money being spent here on stuff that, and our products are very, very well suited to this market as well. And, frankly, that's a gateway to Africa. When I said on the call that I'm speaking to you today as a CEO of a company that has a much larger arena, and a much larger opportunity set in front of us, these are not idle words. It's a fact.

Speaker Change #275: There's a there's a massive opportunity in the middle east as well.

Speaker Change #275: Great deal the money's being spent here on sustainability.

Speaker Change #275: Sustainability projects.

Speaker Change #275: I mean, just look up projects like Neil I'm looking Nazar energy.

Speaker Change #275: Yes.

Speaker Change #275: But most of the money being spent here on stuff that our products are very very well suited for this market as well.

Speaker Change #275: And then frankly, that's a gateway to Africa. So.

Speaker Change #275: When I said in the call that I'm speaking to you today as a CEO of a company that's it.

Speaker Change #275: As a much larger arena much larger opportunity set in front of us.

Or no idle works, it's a fact.

Speaker Change #276: Alright, well, thank you for the color and congrats on the strong margin progress I'll hop back into queue.

Andrew: All right, well, thanks for the color and congrats on the strong margin progress. I'll hop back into queue. We appreciate it.

Speaker Change #277: Really appreciate it.

Speaker Change #278: Thank you. The next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

Operator: Thank you. The next question comes from Noel Parks with Thule Brothers. Please go ahead. Oh no.

Speaker Change #279: Oh no.

Speaker Change #279: Hi.

Noel Augustus Parks: Hi Desmond, good to talk to you. Just a couple things. You've touched on it a bit, but the meetings with potential customers that you had in Serbia, I wonder if you could just characterize the customers a little bit more and their priorities.

Speaker Change #280: Good to talk to you.

Noel Augustus Parks: Just a couple of things you you've touched on it a bit but the the meetings with them.

Speaker Change #282: Potential customers that you had in <unk> in Serbia I Wonder if you could just characterize the customers a little bit more in their priorities.

Speaker Change #283: Yeah. So.

Speaker Change #284: They go into too much detail it wasn't just Serbia, but yeah. There's certainly was from that from that base of operations.

Speaker Change #284: The customers are very like that.

Speaker Change #284: The profile with whom we've had a great deal of success in the United States.

Speaker Change #284: So there.

Speaker Change #284: People, who are in control environments, where there is a lot of parking lot.

Speaker Change #284: A lot of people with vehicles for one reason or another.

Speaker Change #284: Of course, there's a great deal of pressure in Europe to move towards electrification of transportation because the Europeans have pasta law.

Desmond Wheatley: Outlawing the sale of all but zero emission vehicles in 11 years from now. That's obviously a massive undertaking to move from internal combustion engine vehicles to zero emission vehicles, which again means electric vehicles. There isn't an option, not a serious option.

Speaker Change #284: Willing to sale at all but zero emission vehicles.

Speaker Change #285: 11 years from now.

Speaker Change #285: I'd say, obviously a massive undertaking.

Speaker Change #286: To move from internal combustion engine vehicles to zero emission vehicles, which again means electric vehicles, there isn't an auction no serious auction.

Desmond Wheatley: In just 11 years, a massive amount of infrastructure is going to be required, and people over here, I shouldn't say over here because I'm not over here, I'm further south right now, but people in that part of the world are under just the same sort of pressure as we are in the United States. Same considerations, lack of capacity, difficulty in connecting to circuits, not enough electricity on the grid for electrification of transportation, risk from blackouts, risk from foreign sources of fuel to make electricity, even more complicated to dig up the streets and go through the permitting and all those things, and then interconnection, with utility interconnection, even more complicated than it often is in the United States.

Speaker Change #286: Just 11 years, a massive amount of infrastructure is going to be required and people over here.

Speaker Change #287: You can see over here because I'm not over here.

Speaker Change #287: Sorry, it's right now, but the people in that part of the World are under just the same sort of pressures as we are in the United States same same considerations lack of capacity difficulty in connecting to circuits.

Speaker Change #288: Electricity on the grid for electrification of transportation risks from blackouts risk from foreign sources of fuel to make electricity.

Speaker Change #288: Even more complicated to dig up the streets and go through the permitting and all of those things and an interim interconnection with utility interconnection, even more complicated than often is in the United States. So they've all got the same considerations exactly with the customer profiles that we've been dealing with in the United States.

Desmond Wheatley: So they've all got the same considerations exactly as the customer profiles that we've been dealing with in the United States, and it's quite exciting to see the relief on their faces when they find out that there's an option, and particularly an option that's going to be produced in the market. This is also the same with our battery side of the business; our ability to be an American company but produce locally in the Balkans is definitely a great benefit for us.

Speaker Change #288: And it's it's it's quite confusing to see the relief on their faces when they find out that there's an option.

Speaker Change #289: And particularly in auction, that's going to be produced and market.

Speaker Change #290: This is also the same with our battery the voucher side of the business our ability to be an American company, but thats producing locally and the Balkans.

Speaker Change #291: Definitely a great I agree.

Speaker Change #291: Benefit for Us and one other thing I'd just point out on that.

Desmond Wheatley: And one other thing I just want to point out that, before I came over to Europe, I was in Washington, D.C., and one of the many meetings I had in Washington, D.C., was with the IDFC, which is the International Development Finance Corporation, which is an arm of the federal government that provides low-cost and long-term financing for projects which the U.S. believes are in their interest, typically being for developing markets historically. But one thing that's interesting is that sustainable energy projects in the Balkans are within their remit, and so I was able to leave that meeting with an assurance from them that we have very large sums of money available to us at low interest rates and long terms to finance these types of projects, large utility-scale battery projects, for example, in the Balkans.

Speaker Change #292: Before I came over to Europe, I was in Washington D C and one of the many meetings I had in Washington D. C was with the idea of see whats an interim International Development Finance Corporation, which is hey, I don't know the federal government, which provides.

Desmond Wheatley: So one thing that I didn't touch on in my comments is that we still have our credit facility available to us, and that's very inexpensively priced, SOFR plus 300 basis points, which is certainly not as cheap as it was when I negotiated, but that's still there, untapped, $100 million. We haven't used it, but it's there for these types of projects and that sort of stuff. But now we also have IDFC funds for markets where those are not going to work and develop Western European nations or anything like that, but certainly in places like the Balkans, where it's a sustainable energy project or any African-type project or anything like that, very large sums of money to finance these projects over long terms as well, which is just another tool in our toolbox.

Speaker Change #292: Low cost long term financing for projects, which are the U S believes it is in their interests are typically being for developing markets historically.

Speaker Change #292: But one thing that's interesting is that.

Speaker Change #292: Sustainable energy projects in the Balkans is within the arena and so I was able to leave that meeting with an assurance from them that it works very large sums of money available to us low interest rates and long terms to finance. These types of projects large utility scale battery projects for example in the Balkans.

Speaker Change #292: So one thing I didn't touch on in my comments is we still have our credit facility.

Speaker Change #292: Payable to us that's very inexpensive.

We priced the Saka plus 300 basis points, we should certainly not as cheap as it was when I negotiated but thats still there untapped $100 million you haven't.

Speaker Change #292: Use it but it's there for these types of.

Speaker Change #292: Projects and that shows up but now we also have I D. S C funds.

Speaker Change #292: And for markets, where those are all going to work and develop your western European nations or anything like that but certainly in places like the bulk of them, it's a sustainable energy project or.

Speaker Change #292: Any African type of project or anything like that very large sums of money to finance. These projects over long terms as well, which is just another tool in our toolbox.

Speaker Change #293: Oh terrific. So so then I guess the thing I'm trying to get a feel for is that there is the natural appeal of the of the E arc and the problems. It solves and and then that continues on with on the <unk> standard so omni because its existing customer base. It's just the same people who.

Desmond Wheatley: Terrific. So, I guess the thing I'm trying to get a feel for is that there is the natural appeal of the EV arc and the problems it solves, and then that continues on with the EV standard. So Amiga's existing customer base, it's just the same people who were customers for their infrastructure are the ones who are now going to come over and look at the EV arcs? Is that sort of translated directly as a kind of, you can see converting those? Okay, I can do it.

Speaker Change #293: Who where customers for their infrastructure.

Speaker Change #293: The ones, who are now going to come over and look at the E. V. Rx is is that sort of does that translate directly as a kind of <unk>.

Speaker Change #294: Hurting those okay.

Noel Augustus Parks: I can state to you categorically that I met with existing Amiga customers for whom Amiga had produced street lights and other types of furniture and presented the new products and I met with very enthusiastic response and that was absolutely part of our strategy when we acquired the company. As I've said before, I listed probably 25 bullet points of qualifications that I was looking for in an international acquisition, and Amiga had an awful lot of them, and one of them was definitely that they had credibility and had sold to customers who were of similar profile, if not exactly the same profile, which is the case with Amiga, as those with whom we've had success in the U.S., and so, yes, existing customers reintroducing these new products, not reintroducing, introducing these new products to them and meeting with a great deal of success as a result.

I can I can state to try to go directly.

Speaker Change #295: Met with existing music customers, who for whom a meager.

Speaker Change #295: <unk>.

Speaker Change #295: <unk> Street lights, and other types of furniture.

Speaker Change #296: <unk> presented the new products and I met with very enthusiastic response and that was absolutely part of our strategy when we acquired the company.

Speaker Change #296: As I've said before Elisa, probably twenty-five bullet points of qualifications I was looking for an international acquisition right.

Speaker Change #296: We got an awful lot of them and one of them was definitely that they they had.

Speaker Change #296: Credibility and it sold to customers who are a similar profile.

Speaker Change #296: Not exactly the same profile, which is it gives you the Amiga as those with whom we've had success in the U S. So yes existing customers reintroducing these new product not reentry introducing these new products and meeting with a great deal of success is a result of it.

Speaker Change #297: Great to hear thanks.

Desmond Wheatley: Great to hear. Thanks. Thank you. We're getting close on time here, so I think we have time for one or two more.

Thank you.

Speaker Change #298: We're getting close on time here. So I think we've time for one or two more.

Speaker Change #298: Okay. The next question comes from Christopher Souther with B Riley. Please go ahead.

Operator: Okay, the next question comes from Christopher Souther with B. Reilly. Please go ahead.

Christopher Curran Souther: Hey, thanks for taking my question here. Um, uh, maybe just on the margin profile around Amiga and, um, you know, if you can kind of talk through whether, you know, that is accretive throughout the year as, you know, that ramps up seasonally, and some of the other businesses, uh, presumably start to ramp up as well.

Chris: Hi, Chris Hey, Thanks for taking my question here.

Christopher Curran Souther: Maybe just on the margin profile around meager and.

Speaker Change #300: If you could kind of talk through whether that is accretive throughout the year.

Speaker Change #300: As that ramps up seasonally and some of the other businesses.

Speaker Change #301: Great start to ramp up as well.

Desmond Wheatley: Yeah, that's a really good question because the Amiga's first quarter, on the legacy business we're talking about here, their first quarter margins, their gross margins are typically not good because of the things I pointed out to you, there's generally a slow time selling for them, and so we didn't benefit significantly from that in the first quarter. Again, I keep coming back to this gross margin improvement that you've seen has really come from the things that we promised that we would do towards the end of last year and into the first quarter of this year. And we have done them. We're not finished, but we've clearly done a lot of it.

Speaker Change #302: Yeah, that's a good.

Speaker Change #303: Good question, because the amicus first quarter on the legacy business, we're talking about here.

Speaker Change #304: First of all in margins or gross margins are typically not been good but because of the things that I pointed out to either generally a slow time selling for them.

Speaker Change #304: And so.

Speaker Change #304: We didn't benefit significantly from that in the first quarter again, I keep coming back to them.

This gross margin improvement that you've seen has really come from the things that we promised that we would do in the.

Speaker Change #304: Towards the end of last year and into the first quarter this year and we've done them.

Speaker Change #304: We're not finished but we clearly have done a lot of it.

Speaker Change #304: Sure.

Speaker Change #305: But the good news with the with the Amiga legacy businesses as we move into second third and fourth quarters, which is about where they will see the volumes rise and with that we should see the margin improvement and then beyond that because of what we've done with our balance sheet, because we've enabled them to produce product during those because those are slow periods.

Desmond Wheatley: But yeah, the good news with the Amiga legacy business is that as we move into the segment's third and fourth quarters, we'll see the volumes rise. And with that, we should see margin improvement. And then beyond that, because of what we've done with our balance sheet, because we've enabled them to produce product during those slow periods, that means that they produce product with a lower cost profile more efficiently. And so when we do get into the selling of those things, we should see a further improvement in gross profitability, even over and above what they would just normally do as they move into higher volume periods in the year.

Speaker Change #305: That means that they produce product with a lower cost profile.

Speaker Change #305: More efficiently and so when we do get into the selling of those things. We should we should see a further improvement in gross profitability, even over and above what they would normally do as they move into higher volume periods in the year and then finally.

Desmond Wheatley: And then finally, I think the biggest part of this is going to be from the fact that, again, I'm very bullish about our ability to sell the new EV charging infrastructure and energy storage products. And because the economics are better in those markets, we should have a further improvement in gross profitability there as well. So, all in all, I'm feeling pretty sanguine about gross profit contribution from what was Amiga and is now Beam Europe.

Speaker Change #305: I think the biggest part of this is going to be from the fact that again I'm, sorry bullish about our ability to sell the the new.

Speaker Change #305: EV charging infrastructure and energy storage products and because the economics are better in those markets. We should have a further improvement in gross gross profitability there as well so all in all of them I'm feeling pretty sanguine about our gross profit contribution from from what wasn't median is notably in Europe.

Desmond Wheatley: Excellent, and then maybe just a follow-up here on the EV standard product. Obviously, I think you've talked in the past about Amiga selling street lights, so I'm just curious, you know, sales strategy wise, can you kind of walk through the plan as you develop the final product, and I'm curious whether you think there's going to be more traction initially in Europe or in the US for that product. Yeah, so we will definitely be going.

Speaker Change #306: Excellent and then maybe just a follow up here on.

The standard product, obviously, I think you've talked in the past about Amiga selling streetlights. So I'm just curious.

Speaker Change #307: Sales strategy why can you kind of walk through the plan.

Speaker Change #308: <unk> developed the final product and I'm curious, whether you think there's going to be more traction initially in Europe or in the U S for that product. Thanks.

Speaker Change #308: Yes.

Desmond Wheatley: Yeah, so we will definitely be going back to the customers that buy streetlights in general. Because, of course, one of my ideas, one of my plans is that, in the future, we're going to be dealing with customers who buy streetlights and saying, hey, every x number of streetlights, you should have an EV standard. So you know, because you're going to need the charging infrastructure on the street, I don't know what x is in some markets, every fifth, and in others, it might be every 50th. I just don't know what every x is.

Speaker Change #309: So we will definitely be going back to the customers that buy street lights in general because of course, one of my one of my ideas. One of my plans is that in the future. We're gonna be dealing with customers, who buy street licensing Hey every X number of Streetlights you should have an E V standard. So you because you're going to need the charging infrastructure on street I Dunno acts.

Speaker Change #309: In some markets and re FIS and some it might be every 50 years I just don't know what every X is but we'll go back to those existing customers and say that certainly look at this.

Desmond Wheatley: But we'll go back to those existing customers and say that certainly look at this; this is a streetlight product. I mean, you know, if you're looking for streetlights, here's a streetlight that just does a whole lot more for you than that. Similarly, we will also be going back to all of our existing customers who bought EV arcs from us and saying, hey, we've got this other thing, which might be a good fit for you and other types of deployments that you want to do. And, and, you know, that's a kind of a direct sales thing. And then we'll be putting the EV standard into these new channels' hands as well and showing that to them.

Speaker Change #309: It is a streetlight product I mean, you know if youre looking for street lights industry like that just does a whole lot more for you than that similarly, we will also be going back to all of our existing customers, who bought E. B ARX from us and saying Hey, we've got this other thing which might be a good fit for you and other types of deployments that you want to do.

Speaker Change #310: Uh huh.

Speaker Change #309: And.

Speaker Change #309: That's a kind of a direct sales team and then we'll be putting that you'd be standard entered into these new channels hands as well I'm.

Desmond Wheatley: And honestly, I think one of the things I learned from this trip is that there is an appetite for both products. And we may end up, in fact, I think it's very likely that we'll end up selling EV arcs and EV standards to certain customers, depending on, you know, where they're placed and what the use case is for. Chris, I hope that answers your question and that gets us two minutes over time here. Operator, are we looking for questions? I think we need to wrap it up. I'll take another one if there's one there. But otherwise, it might be a good time to wrap things up.

Speaker Change #309: I'm showing that to them.

Honestly I think one of the things I learned from this from this trip as there is appetite for both products and we may end up.

Speaker Change #309: I think it's very likely that we'll end up selling <unk> and EV standards to certain customers.

Speaker Change #309: Depending on where they are placed and what the use cases for them.

Speaker Change #309: Chris.

Speaker Change #311: I hope that answer your question and that is going to assess it.

Speaker Change #312: Two minutes over time here.

Speaker Change #313: Operator, I'll be looking for questions I think we need to wrap up.

Speaker Change #313: I'll take another one if there's one there, but otherwise it might be a good time to wrap.

Operator: There are no further questions in the queue at this time.

Speaker Change #314: There are no further questions in the queue at this time.

Speaker Change #314: Okay, excellent well I'm appreciative of that because I need to.

Desmond Wheatley: Okay, excellent. Well, I'm appreciative of that because I need to get some sleep here because I've got a long day ahead of me tomorrow again, but I'm very grateful for everybody for listening in and for your continued attention and support of the company. I'm very grateful to the Beam team, to Lisa and our team for getting the financials together and getting us piled on time again, and I feel very enthusiastic. It's a great time to be at Beam Global, and I'm looking forward to the rest of this year. So, thank you all.

Speaker Change #314: <unk> got some shy here because they got a long day ahead of me Tomorrow again, but I'm very grateful for everybody for listening in and for your continued attention and support of the company I'm very grateful to the beam team to Lisa and her team are getting the financials together and getting us filed on time again.

Speaker Change #315: I feel very enthusiastic with great time to be being global and I'm looking forward to the rest of this year. So thank you all.

The conference has now concluded. Thank you for your participation you may now disconnect your lines.

Operator: The conference is now concluded. Thank you for your participation. You may now disconnect your lines.

Speaker Change #315: [music].