Good day. Welcome to the Beam Global Q2 2023 Financial Results and Corporate Update. All participants will be in a listen-only mode. Should you need any 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 touchtone phone. To withdraw a question, please press star then two. I would now like to turn the conference over to Kathy McDermott, CFO. Please go ahead. Thanks, Joe, and good afternoon. Thank you for participating in Beam Global's 2023 Q2 Conference Call. We appreciate you joining us today to hear an update on our business. Joining me is Desmond Wheatley, President, CEO, and Chairman of Beam. Desmond will be providing an update on recent activities at Beam, followed by a question and answer session. 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. 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 recently filed Form 10-K and other periodic reports filed with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, August 14, 2023. 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. After the market closed today, Beam Global issued a press release and our Form 10-Q, announcing fiscal 2023 Q2 and year-to-date financial results. As you will see, we had an excellent quarter, in fact, the best in our history, with material improvements across all financial metrics. Since you have the numbers in front of you, I will save you the time of rereading them to you. This press release and our Q2 Form 10-Q are available on our IR website and can also be accessed via SEC.gov. In addition, you will find a supplemental information deck on our IR website. With that, I will turn the call over to Desmond Wheatley. Thank you, Kathy, and thank you all for joining us today to hear this update on our operating activities for Q2 of 2023. Welcome, everybody. The Q2 of 2023 is now the 10th quarter in a row of growth at Beam Global. The Beam team has really knocked it out of the park for the past few quarters and especially this time. The production team produced and delivered over 200 EV ARCs this quarter. That's essentially the same as all the EV ARC systems produced and delivered in 2022, and 2022 was by far and away our best full year of production and deliveries up till this point. In other words, the Beam team is now on a cadence to produce and deliver as many or more EV ARCs in a quarter than we've produced in any full year prior to 2023. On the energy storage side of our business, we continue to produce more than 10 times more kWh of batteries than our Chicago-based team was producing before we acquired AllCell in March of 2022. Q2 energy storage revenues were higher than in any quarter since the acquisition. By the way, remember that we don't count internal use of batteries as revenue for that side of our business. This fantastic increase in production and deliveries has, of course, resulted in an equally fantastic increase in revenue. The $17.8 million in revenues we generated in Q2 represents a 379% increase over the same period prior year. Looking at the H1, we generated just over $31 million in revenues, which is about 312% increase over the full H1 of 2022. As I've already said, we're producing about 10 times more kWh of batteries than AllCell was before we acquired it, and we actually produced about six times more EV ARCs in the Q2 of 2022 than in the same period prior year. Our costs didn't increase at the same rate. We managed to squeeze all of this growth out of the same buildings, and while we're producing six and 10 times more product, we only increased our headcount by about 1.5 times. We increased our other overheads by even less. With the same footprint and around 1.5 times more people, we've gone from just over $7 million of revenue in the H1 of 2022 to almost $31 million in the H1 of 2023. This increase in production has come from a variety of different factors, and none of them were accidents. First of all, we're just better at what we do. The teams, both on the electric vehicle charging infrastructure product side and also on the energy storage side, have really gelled. I love walking through the factory and watching them. There's clearly muscle memory. Things are moving more smoothly, and people are getting a lot more done with a lot less effort. We put a great deal of time and effort into figuring out how we can do things more efficiently. The people are happy in their work, they know they're getting things done, working smarter, not harder, has made the factory environment safer, too. The other part of walking the factory floor, which I love, is observing how different it looks. We've invested in a lot of new tooling and fixturing, which makes us much more efficient while substantially reducing the opportunity for errors. EV ARCs are rolling through the factory now faster, more smoothly, more safely, and in far greater volumes. We're already producing more product now than many thought was possible when we first moved into this facility. The great news is, we still have a massive amount of opportunity for further improvements.... It takes a lot of work, a lot of consideration, some trial and error, and it's a process, not an event, but the team keeps doing it, and the evidence of the success of their efforts is clear to see in the numbers. I said we've invested in a lot of new tooling and fixturing, but as any of you who have looked at our use of cash will have observed, we've not committed significant amounts of capital to these improvements. The fact is, we've done most of the tooling and fixturing ourselves. We have a talented and well-trained team, and no one is more qualified to make decisions about how to improve our manufacturing processes than the people who are actually making the products themselves. I have a corner office with a view of our driveway and the ingress and egress points from the factory. I'm often pleasantly distracted by watching the trucks rolling in, loaded with steel, batteries, electronics, solar modules, and all the other components and materials which are integrated into our products. While on the other side, I watch the trucks rolling out with completed EV ARCs. The level of activity here is completely different than it was a few months ago, but here again, we know we can and will do so much more. They're also important because they contribute so meaningfully to our ability to control the cost inputs of our products. Last quarter, I told you that our engineering and operations teams had identified improvements in the way we make our products, which would result in significant reductions in our cost of goods sold, and as a result, significant improvements in our gross profits. I also told you that we believed that we were at or near the end of the hyperinflationary environment, which we've been tackling for the last couple of years. Finally, I told you that as we increase the volumes of products running through our factory, the impacts of our fixed overheads would lessen while our labor cost per unit would come down. As it happens, we've so far only benefited from the last of those areas of cost reduction. The engineering and manufacturing improvements that we've identified are just now starting to impact us halfway into this Q3, which is, I think, actually pretty much exactly what I said during my last quarterly report to you. We did not actually receive any cost reduction benefits in the quarter of a material nature from our improved engineering of the product. While it's true that we're no longer seeing dramatic increases in prices of components and commodities, we're yet to see any significant decreases, though we do anticipate that this will happen during the coming months and quarters. In fact, we have, for the first time in our history, hired a full-time purchasing manager to ensure that we're getting the most favorable pricing and the most efficient inventory leverage possible. In spite of not benefiting from these two areas of cost reduction, the Beam team was still able to improve our gross margins by over 12% when compared to the same period prior year. More or less, all of this margin improvement has come from increased overhead absorption and the increased efficiency in our labor, which I already described. Revenue per employee is actually about three times what it was just one year ago. We've now reported positive gross profits two quarters in a row, with the Q2 growth being 100 times greater than the first. If I'm honest, we could have done better. It's hard to grow at the pace that we're growing and to do so efficiently, efficiently without making errors. We're human. We made a couple of moves in the Q2, which, in hindsight, were not worth what we paid for them. That's going to happen from time to time, particularly as long as we're growing at this rate. What I'm encouraged by is the fact that the Beam team identified these errors and will not repeat them, so that the process, which has delivered a 12% improvement year-over-year in gross margin, continues. We get better. We identify errors, we fix them. We get more intelligent and efficient in the way we produce the product, and as a result of all this, is that even without the drastic changes or improvements, there's a sort of continual process of cost reduction, which results in further improved gross profits. You can rest assured that we will never consider that project complete. The good news is that the significant cost reductions the team identified in the Q2 are still ahead of us. We're implementing the first of those now and should see the full benefits of them at the beginning of the Q1 of 2024. I think that's pretty much exactly what I said during our last call. We've not just all benefited from operating leverage where our direct costs are concerned. Our Q2 operating expenses, while they have increased, are 44% less as a percent of revenue than they were this time last year. I think we're getting a lot of benefits from the various investments we've made. Clearly, increases like paying more sales commissions are a very good thing, but we're also adding more depth in management, finance, and crucially, for a growing company like ours, in human resources. We have a pretty simple rule at Beam Global, which is that if it doesn't make the product, make the product better, or sell the product, we don't invest in it. I'm confident that any increase in overhead spending, which is within our control, so I'm excluding costs like audit and the various other public company expenses that are outside of our control. Any increases which are within our control are adding value and setting us up for even more efficient and profitable growth. Remember that both our gross and net profit numbers include quite a lot of non-cash items, which do not truly reflect our spending, and you can find details of those in our filings. Speaking of cash, we're in great shape where that's concerned as well. With around $24 million in cash and over $37 million in working capital, which as you know, I believe is a better metric for a business like ours, we're in a great position to execute on our future business plans. In case we need further short-term liquidity for significant growth, we still have our as-yet-untapped $100 million line of credit, which is very competitively priced. Finally, we have no debt. 0 debt. Except I suppose I should mention that we're making payments on a couple of new trucks, which we've had to add because of the expansion and the number of EV ARCs that we now have to deliver. It's a good thing. I can tell you that from my point of view, the most important of the growth plans that we have is our expansion into Europe. There are about 405 million cars in Europe at the moment, compared to just under 300 million in the United States and just over 300 million in China. The European Union has announced a law banning all but zero emission vehicles 12 years from now in 2035. Europe, rather, is also very aggressive about tackling climate change and moving towards carbon neutrality in the next couple of decades. This means that they're very focused on integrating renewable energy sources into their energy mix. The fires in Greece this year, which are being tragically replicated in Hawaii at the moment, have sharpened European resolve to a zero carbon energy future while increasing their needs for rapidly deployed infrastructure products. At the same time, the war in Ukraine and the worsening relations with Russia, from which Europe used to buy much of its natural gas used to generate its electricity, has greatly increased the valid perception of energy insecurity felt across Europe. Oh, it's even harder to deploy grid-tied EV chargers in Europe than it is in the US When you put all that together, you see that they're going to need an awful lot of electric vehicle chargers deployed rapidly. They don't have enough electricity. What they do have is nowhere near as secure as it should be, they need to transition to sustainable, renewable energy, they need to do all of this in the next couple of decades. You sort of want to ask yourself, does anyone have a product that could solve all those challenges? Beam Global does, and it's a product with a great deal of credibility and over a decade of reliable service being used by customers like the US Army, the US Marine Corps, New York City, State of California, and many others, and a whole host of the best-known global corporations. You can perhaps see why a month ago or so, I was very excited to announce that we're entering into the process to acquire a company in Europe which will position us to manufacture and sell our products to the biggest, and what I think is the most exciting market in the world. Amiga DOO is a Serbian manufacturer of steel structures with integrated electronics. If you think about it, that's basically what our products are. It's one of the top manufacturers of smart street lamps in Europe. They've been in business since 1990, and they are profitable. They have 210 employees, of which around 30 are exactly the sort of engineers that we find challenging to recruit in the United States. By the way, those engineers cost less than a welder in California. They're great people. They're very well educated, they speak English, and they work hard. They have the facilities, the equipment, the experience, and the personnel required to make our EV ARC products, but they don't have our IP. If they did, it would take them very little learning and investment to start making EV ARCs. We intend to get them that IP as soon as the acquisition is complete. For the last 30 years, they've developed a fantastic reputation for selling quality products to exactly the same customer profile as we've had so much success with in the United States. They've sold streetlights, energy infrastructure, communications towers, and security infrastructure to cities, states, militaries, and corporations in 16 different nations, including the United States. In fact, if you're in Florida, it's not unlikely that you've walked under streetlights manufactured by our target, Amiga. Now, in my list of things that I'm most excited about for this company, right after expanding our business into Europe, comes developing the EV Standard product. Beam Global is in the process of acquiring one of the top engineering and manufacturing companies in Europe, which develops, manufactures, and sells streetlights. When you combine our intellectual property, our engineering teams, their engineering teams, and their ability to manufacture, you simply can't come up with a more exciting combination where EV Standard development and Beam Global growth is concerned. I've been spending a lot of time in Europe, and particularly in Serbia, with our new friends at Amiga. I'm increasingly impressed with their capabilities and their enthusiasm for joining with Beam in creating a sustainable EV charging infrastructure powerhouse that we intend to be unrivaled in the biggest electric vehicle market in the world. The benefits from this acquisition will not only impact our European goals. As I've already mentioned, we will absorb a highly qualified and talented engineering team, which has many capabilities that we seek for our US business. A perfect example of that is the fact that we've had the EV Standard patented since 2019, but have not yet produced it because our in-house engineering team has been so busy contributing to the phenomenal growth of our EV ARC product set. After we close this transaction, we'll be able to send engineering tasks to our team in Serbia at the end of any given day and have work product in our inboxes upon our return the following morning, thanks to the difference in time zones. I believe this will dramatically enhance our ability to make improvements to our existing products, as well as to continue to bring new and exciting innovations to the field of clean transportation. Beyond that, I think it's likely that at least in the beginning, we'll produce the EV Standard product in Serbia, even for the US market. First of all, our cost structure will be much lower in Serbia, because whereas we can only fit 2 EV ARCs into a 40-foot container, we should be able to stack many EV Standards into the same space, meaning that the cost of shipping will be much less impactful than they are with EV ARC. Much so, in fact, that I think it's likely that, at least in the beginning, as I say, it will make a lot more economic sense to manufacture all EV Standards in Serbia, whether they're deployed across Europe or shipped to the United States. I travel a lot in the United States and in Europe and the Middle East, I can tell you that everywhere I go, I've met with nothing but enthusiasm for EV ARC and nothing but impatience-... I cannot wait to start the selling of the EV ARC in Europe and to complete the development of EV Standard. Just letting some jets fly over here, folks. You, you if you all know, we're next to Miramar Airport, Marine Corps Air Station. Looks like that's that. Anyway, as I said, I think it's gonna make a lot more sense to manufacture all EV Standards in Serbia rather than deploy it across Europe or ship to the United States. I was going on to say that having traveled a lot in the United States and Europe, I've met a lot of enthusiasm for the EV ARC and nothing but impatience where the EV Standard is concerned. I can't wait to start selling both of them in Europe, and to complete the development of EV Standard and to start manufacturing it and selling it there and, of course, over here as well in the United States. I'm very confident with the way the due diligence process is going. We've engaged an excellent and highly professional team in Serbia to assist us in this process, both on the legal and business side. I'm very happy with the way the deal is structured, just as I was with the way we were able to execute on the AllCell transaction. This deal is different in that, unlike AllCell, which was an all-stock deal, this is a combination of stock and cash. I'm delighted that we were able to have such success with the offering we completed in June, with its minimal dilution, no warrants, and less than 9% debt size. That unusually clean structure and pricing, along with the incredible demand, the deal was heavily oversubscribed, was not only an excellent move for the future of Beam Global, but also a significant vote of confidence from Wall Street and the investment community in general. Yes, I'm very excited about this acquisition, our expansion into Europe, and our ability to accelerate the development of EV Standard and all the future innovative products which we intend to bring to market. To conclude, record revenues, record production and deliveries, record gross profits, and all of these metrics improving quarter after quarter. Record cash and working capital, and a very attractive tax structure. No debt and a clean balance sheet. The most exciting international expansion I've ever been involved with. The reality of bringing what might be our largest volume-selling product to market with a fantastic international team. The sales team's still bringing in the orders, the markets we're addressing are growing rapidly, and yet still at the earliest of stages. There were certainly other exciting things that happened in the quarter, but I think that for now, what I've shared with you is enough to demonstrate that it is, more than ever, a great time to be Beam Global. With that, I'll turn it back to the operator and gladly answer any questions that you may have. Thank you. Over to you, operator. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then two. At this time, we will take our first question, which will come from Craig Irwin with Roth MKM. Please go ahead. Hi, Craig. Good afternoon and, and hey, hey, Desmond. Thank, thank you for taking my questions. Congratulations is where I should start. I mean, another really solid quarter and lots of progress here. Thank you, Craig. Can you maybe, can you maybe update us on the savings per unit? The last quarter, you talked very specifically about $12,000 in savings per unit that you wanted to achieve. It sounded like you had a very clear plan. Can you maybe update us on what's been addressed at this point? You know, how this is likely to taper in over the next couple of quarters? You know, the larger items on that list, if you could maybe share with us what's been adjusted or what's been changed and what's likely to be changed, sort of, in the schedule over the next couple quarters. Yes. Okay. an excellent question and one that we give a great deal of thought to, as you can no doubt imagine here. The first thing to say to you is that nothing has changed. I'm still committed to that $12,000, so is the engineering and the operation teams. The second thing to point out is that as yet, at least in the numbers that we've announced in the Q2, we have not benefited in any meaningful way from that. We essentially still have that full $12,000 in the, in our future in terms of cost reduction. The, the, the, the, the gross profit generation in this quarter came purely for fixed, from fixed overhead absorption and increased efficiencies in our facility, along with we're, in general, doing a better job of buying from some of our vendors. We, we got some reduction in cost because of the higher volumes and again, the sort of plateauing, if not reducing, of the inflationary environment. As far as when we expect to get the, the remainder of the savings that we're looking at here, I am Everybody knows that I'm an optimistic and enthusiastic person, but I think even with my optimism and enthusiasm, it's realistic to suggest that by the beginning of the Q1 of 2024, we should have those changes integrated into the product and therefore be benefiting from the cost savings. Some of them, we're already starting to, to integrate now, halfway through this quarter. I, I expect the remainder of them to be integrated into the product in the Q4, subject to anything that's out of our control. That would mean that by Q1 of 2024, we'll get the full benefit of that cost reduction. As I said in my comments, we won't stop there. We, we think there's a lot of opportunity for other improvements, but those are just the sort of headline things right now that we, that we feel comfortable talking about. Excellent. So that's, that's a pretty quick execution plan, so I like that. The price increase you discussed previously, 8.25% on May 1st. You know, knowing the timing and the prior commitments and backlogs, you know, do you, do you think that it's possible that this helps us during the current quarter, or is it more likely, the December quarter where we start to see the benefit of this price increase lifting, lifting gross margins as well? Yep, a good one. Yes. Again, first thing to point out, no, no benefit from it at all in the numbers that we just announced, so that the gross improvement was not as a result of the price increase. Thank you for asking me about that. I probably should add it in my comments. I, I think, because of the level of backlog that we have, it's likely to be in beginning 2024 before we see any meaningful impact from that. It doesn't mean that a few units won't slip through. I, I'll tell you what happens. Sometimes we will get customers that have very urgent needs. For example, what's going on in Hawaii at the moment? I'm not telling you that we're doing anything in Hawaii, but I will tell you this, that if people called us from Hawaii and urgently wanted EV ARCs right now, we would go back to our existing backlog customers and ask them if it's okay if we slot a few in, and those would likely benefit from the cost increases. There are instances where we might slot product into the build queue, but it won't be meaningful until the Q1 of 2024. Yeah, understood. That, that makes sense. Last question, if I may. Your adjusted margin discussion is, is always very useful, just to understand how we are making real progress. Can, can you maybe share with us what the non-cash amortization for AllCell was in the quarter, and if there were any other one-time items that impacted the GAAP gross margins? Kathy, give me the amortization, please. Yeah, the amortization. Just bear with me for a second, Craig. We're just looking at it right now. I'm sorry, I don't have it on the tip of my tongue. No worries. I, I don't memorize those numbers either, myself. It's just useful. It's very important to, to understand. Agreed. Yeah. I'll tell you, Craig, do you have another question? If, if not, I'll move to the next one, and then- You know what? As soon as Kathy pulls those numbers up, I'll I'll, I'll throw them out. That, that, that works perfectly. Thanks again for taking my questions, and really congratulations on this impressive progress. Thanks, Craig. Always a pleasure. $200,000. $200,000 is what I'm hearing, by the way, in the quarter for amortization of intangible assets on, on AllCell. Fantastic. Thank you so much. Thank you. Our next question will come from Christopher Souther with B. Riley Securities. Please go ahead. Hi, Christopher- Hey, thanks, thanks for taking my question. Maybe get an update on the pipeline. Last year, the Q3 was big as far as order timing from the customers, and I just want to get any sense of the anticipated pace of order cadence in the H2, based on, you know, how customer conversations are going. You know, do you think we'll have similar visibility exiting in 2023 as we did to start this year? you know, as I've said before, I anticipate that we're gonna continue to see lumpiness in order cadence. The good news is that's not being transmitted into lumpiness in revenue growth because of the, because we are now more supply constrained than demand. Of course, we're catching up with that. Every quarter, this quarter, we've 33% increase in units produced over last quarter and, you know, hundreds of% over the prior year. I do anticipate that we will continue to see some lumpiness just because of the way the industry is developing at the moment. That's, by the way, one of the good arguments for diversifying our, our business and our, and our revenue sources, moving to Europe, doing all those other things. All of these are moves that we're taking that are not just about growth, but they're also just about creating a nice, stable, consistent growth model for the company. Pipeline is still very, very good, way more than backlog. And as you know, in the past, we've been quite conservative about our pipeline to backlog conversion ratios, and then we're, we nail it every time with backlog to revenue because we never lose an order, or not materially anyway. So the sales team, as I say, is still selling. They're, they're bringing in orders all the time. We have, we have stopped announcing all the smaller orders that we get because we feel that we've evolved beyond that. Some people are really upset about that. Some people like to see us announcing every purchase order that we get. Some people get equally upset when we announce them all. You can't make everybody happy, but we've, in general, stopped announcing these things. You can do the simple arithmetic. You can see we're still selling a lot, just because of the revenue versus current backlog. I remain very bullish about our ability to convert our pipeline into backlog in the future, as I said, I've said it before and I'll say it right now, again, we're still gonna see some lumpiness in that cadence. The key thing for us is to just maintain a steady growth and bring in all the opportunities that we can to support that. Okay. Well, that's, that's helpful. Maybe just on the, the European expansion, you know, if the acquisition closes in, you know, third or Q1 here, what would be, you think, the timeline to get to production for the EV ARC and start to see some sales of the EV ARC in Europe after the acquisition? You know, what do you think this does to potential timelines for, for the EV Standard product to be, you know, developed and ready for market here? I'm, I'm having to sort of pinch myself a little bit on this acquisition because you never want to fall in love with a deal, and I can assure you I won't, and it's not closed till it's closed. We're going through due diligence now. If we find things in due diligence that we don't like... By the way, I'm not anticipating that, but if we do find things that we don't like, we, we, we may change the deal or not even proceed with it. I'm not, at the moment, I'm not hearing any alarm bells. I'm not seeing any red flags at all. As I say, I have a very, very professional team, who's going through that due diligence process alongside us. With all of that said, I am still hopeful and planning to close within 2023 the acquisition in Europe. What I like about these guys so much is, and that they have everything that they need to make EV ARCs today. In fact, I just sat my team down, my management team down in the middle of this week and took them through a 25-minute walkthrough. I videoed walking through our 5 acres, half of it under roof, with all the equipment and materials and everything to make product in that market. I can tell you, there was a lot of excitement from the team here. None of them had been there yet, none of them had seen it as I have with my own eyes, so this was a great opportunity to get them up to speed. The fact is, they are qualified today to make EV ARCs. They don't have our IP, as I said, that's what makes them so attractive as an acquisition, because with our IP, they become a far, far more valuable entity. You know, at the moment, we're only planning on paying about 1x revenue for them. We're getting all the buildings and all the land and everything else, those buildings and that land have already appraised for about what we're paying for them. Never mind that. A little bit more, actually, if you include the equipment and all that sort of stuff. I'm sorry I'm beating around the bush a little bit, but to answer your question, they will be able to start making EV ARCs very soon after we acquire them. We may still send them some specialized electronic parts and things that we make in our facility that are, that are harder to take on, but they'll be able to do the lion's share of it very early on. As to how quickly we can sell them there, we're already, as you can imagine, you know, sort of testing the waters with that. I have been for a couple of years. I already have customer prospects over there who, as I say, are very enthusiastic about the product. It's different. Enthusiasm is different than a purchase order. Nobody knows that better than I do, but we're pretty good at turning enthusiasm into purchase orders. I don't want to put a date on when we'll start selling them there, but I don't think it will take a long time. As far as EV Standard is concerned, that will be job number one from an engineering point of view. We will commit a team immediately to the development of EV Standard. The great thing is, this is what these guys do. They design, engineer, and manufacture streetlights, and, and increasingly with, smart components integrated into solar panels, sensors, electronics, and all that sort of stuff. What we're going to be doing is just adding a bit more than what they're used to doing under our patent, which is good in the United States, Europe, and Asia for that product. I, it's gonna be job number one to get that thing up and running as soon as possible. Appreciate that. I'll, I'll hop in the queue. Thanks. Thank you. Our next question will come from Tate Sullivan with the Maxim Group. Please go ahead. Hello, Tate. Hello, great to see the gross profit margin at 3%, too. I mean, based on the level of efficiency it sounds you've reached, will you continue the, the cadence of production that you currently have, maybe build up inventory and, and maybe we'll see some fluctuation in the gross profit margin? Or how should we look at that? Again, you mentioned lumpy orders before. Yeah. At the moment, we do not intend to build up any inventory. At the, at the moment, we're building as fast as we. I mean, we're delivering as fast as we can build to, to customers. I, I, I said before, I'm very keen on the idea of, of pre-manufacturing certain components and sub-assemblies so that we can get better. We just, as a matter of fact, had another management meeting about this recently, which is how we can respond more quickly to these larger orders. So I think a lot of that will be about identifying complex parts of the product, which are often not the most expensive parts, and having those pre-manufactured. So we would have sort of width inventory, if you like, without having completed product inventory. That's planning right now. That's not what's happening at the moment. At the moment, we're-- everything that we're producing, we're shipping directly to customers, and we, we can foresee that continuing, certainly for the next couple of quarters. We do intend to get better. As far as the, the, the margin is concerned, as I said in my comments, I will never consider-- this is the Golden Gate Bridge. You know, you, you start painting at one end, you, you go to the other. As soon as you're finished, congratulations, start all over again. That's the instructions to the team here, engineering and operations and, and purchasing. Figure out how to get cost savings. When you, when you think you're finished, start all over again. We won't stop with that. As I said before, my goal is to get to 50% gross profit with this product, GAAP. I'm, I believe we can do it, and we're gonna make some significant steps in that direction. The 3% that we've picked up right now, remember, has not, has not come from any changes to the product. Those changes are still in front of us, and we should not lose that 3%. When we add the other cost savings, those will be accretive to those, those, those cost savings. $12,000 we've already mentioned, and then we get the 8.25% increase when the sales price increase starts to kick in as well. I, I think we're, you know. Look, life's hard. Business is tricky. As I said before, this is a process, not an event. We've got a very good team of very intelligent people who are working towards getting this thing better and better. I think we're gonna see some very encouraging improvements through the end of this year and into the Q1 of 2024. Thank you. Then on, on Amiga, you, you gave some comments about due diligence is going well. What, what are some of the main due diligence steps to close? Is it, is it doing your own audit of their financials, or, or what are some of the main, main steps to come, if you can? Yeah. I could tell you, without a doubt, that the, the biggest milestone, and I have not covered it, across it yet, although we anticipate that that will take place here, not too, too distant from now, is doing the environmental studies on the property. I mean, we're buying five acres over there. We're gonna own the land, we're gonna own the buildings. Remember, that will mean no rent burden. I mean, rent's a big piece of our cost overhead here. We won't be paying rent over there. Obviously, I didn't want to buy a piece of land and then discover after I'd bought it that we've got a $500 million remediation project because there's hazardous materials or something on the site. I'm having it screened right now. I'm hoping to get the results of that before too long. Yes, beyond that, we're, we are going through their financials. We are going through their contracts. We are meeting with their customers. We are doing market studies to see what the future looks like for them. We're, we're, we're validating everything that they've told us. I will say this, the company was founded by an engineer. He handed it to his son several years ago, who's also an engineer. This is a solutions-oriented guy. He's not a salesman, he's an engineer. I, you know, I would never dare use a word like trust or anything like that, but as far as M&A work's concerned, I've done a lot of it in the past, and as I said, I'm not feeling any alarm bells about this right now. I feel confident that the current owners and current management team don't think there's anything wrong, but that doesn't mean that we won't find something. That's why we're going through a very, very extensive due diligence process to make sure that we've uncovered the skeletons. There will be some. I don't mind uncovering skeletons. I just want to know where they are so that we can work with them and make sure that the top price and everything else is adjusted accordingly. Thank you. last for me- I, I want to just add on this. Yeah. If I may, one thing I'll just add on this. This is a business which cash flows, which has no debt, which does not use credit accounts. I mean, basically, they... It's a very tightly run, profitable business, and they're, they're spending a lot of money improving their facilities right now, and all of it has come out of cash flow. So they're, they're disciplined. They're not taking on any debt with the acquisition. We're, you know, we're... We're getting a team of people who have demonstrated for 30 years that they can build a business and sell in 16 nations. I, I like them. So far, I like them. Just last for me is I, I saw that Florida accounted for 20% of revenue in Q2. Have you, have you called out Florida, a large customer in Florida before? Or is it, some commercial clients as well? I mean, I think, I think a lot of it actually, it. This the concentration thing is always a little tricky for me, right? We, we often talk about concentration. For example, we'll say we've got concentrated in California. I mean, California is anywhere between the fourth and the eighth largest sovereign economic state in the world. We're concentrated here. It's like saying we're concentrated in a country. Same thing going on in Florida, because it wasn't that Florida was the customer. In that situation, we were delivering products to Veterans Administration I think largely. I'm just looking at Kathy for a nod or, or a head shake here. Miami-Dade County. I mean, it, it, it could hardly be any more diverse. It just happens that geographically, we were on the other side of the border with, with Florida. Which, by the way, is a great state for our products. There's plenty of sunshine there. Don't forget, we are wind rated to 160 miles an hour, have survived Category 5 hurricane force winds, and are flood proof to 9.5 feet. We're very well suited to that market. I don't think it's all that surprising that we had such a large number of sales there. Again, I, it's not as though they were all through one contract. I don't view that as concentration any more than I view the federal government as contra- as concentration. The US Army, the Marine Corps, Veterans Administration, the labs, whatever, they all have their own budgets, their own interests, their own, their own guidance. Losing one of them is no indication that we would lose all of them, just as winning one of them is no indication that we'd win all the others. Okay. Thank you, Desmond. Thanks, Tate. Our next question will come from Abhishek Sinha with Northland. Please go ahead. Hi, Abhishek. How are you? Yes, good quarter. Good quarter. This is Kailash on behalf of Abhishek Sinha. Just wanted to know about your European expansion and how you guys spoke about manufacturing there as well. Just want to know about your cost competitiveness with your product in Europe and how you're seeing that? Yeah. So the, the... I think that's a good news thing for us, because it's actually harder to deploy electric vehicle charging infrastructure in Europe than it is here. It's more expensive to dig trenches and go through the permitting and planning. There's a lot of, you know, I mean, as I've said before, Edinburgh, where I'm from, if you dig, sit down six inches in Edinburgh, you go back 300 years. You never know what you're going to encounter when you dig trenches and everything else like that. Having a product which can be deployed without construction, without electrical work, without any meaningful permitting or anything else like that, I believe going to be an even greater benefit for us, in the European market than it is here. Beyond that, the European market's much larger, and their needs are much more acute, as I've already mentioned. I mean, one thing that's nice about Serbia is it's literally just up the road from Greece. If you think about Greece, if any of you have been to Greece, it's a, it's a, it's a nation of islands, plentiful sunshine, and under, under used or, or under usable grid infrastructure, and it's going to be electrifying in the next couple of decades. Just that one nation alone, never mind all the fires and everything that they've had, our product is absolutely ideally suited for it. As far as cost competitiveness is concerned, of course, there's no competing product over there, so I don't know what to bear it against, except the cost of traditional infrastructure deployments. As I said, I think we'll be more competitive in Europe than we are in the United States, and we're not doing too badly here. Awesome. Just as a follow-up, just want to know, where you see the OpEx as a% of revenue in the next coming quarters? I, I think we still have a lot of operating leverage. We are going to add more people, there's no doubt about it. We, you know, we, we, we have to, right? You can't have the type of levels of growth that we have here and expect everybody just to somehow be able to absorb all of that. But we're very judicious about how we go about that. I mean, I, we do intend to make more sales investments, more government relations investments, because certainly a lot of expanding is going to be coming from both government side of things as well as corporate. We're seeing corporate spending coming back, and, and our, and our numbers prove that. On the European side of things, the good news is I've asked the management team over there if they think that we need to hire an EV infrastructure sales team, because, of course, that hasn't been what they've done in the past. They, they want to try and do it with their existing sales team, because if you think about it, they have all the relationships. They've already been selling street lights, street furniture, and other stuff to cities, to, to municipalities, to same thing, I apologize, but states and, and nations. The first thing we're gonna do is go back to their existing customer list and say, "We now have EV charging products, off-grid, renewably energized, made in Europe. Would that be interesting to you?" We've got this tremendous pool of customer opportunities with whom we have a great deal of credibility already because they're already buying the product from Amiga, what will be Beam Europe. We're just gonna go back to them and tell them about all new exciting product set. I mean, really, the way all of that works, I if we had to add more salespeople over there, we'll do it. It's very, very well aligned with what we're doing at the moment, which is part of the reason I'm so enthusiastic about it. Okay, thanks. Thank you, Abhishek. Our next question will come from Chris Pierce with Needham & Company. Please go ahead. Hi, Chris. Oh, hey, Desmond. Just one. You know, $18 million in revenue, give or take, and backlog down $18 million. I know you talked about pipeline to backlog. Can you kind of just refresh us, I guess I'd love to get some color on the pipeline and when that pipeline might convert to backlog. You talked about lapping in the Q3 last year. Somebody asked about it. Was there any one-timers in the Q3 of last year? Was there anything that drove government agencies or your customers to kind of purchase in the Q3 of last year, or was it just you guys kind of knocking down doors? Just want to get a sense of what you're kind of competing against. Yeah. I think you said $18 million in revenue and backlog came down $18 million. I want to be absolutely clear, that did not happen. We, our backlog didn't come down anywhere near as much as our revenue went up, That's because we have been selling during the quarter. We have been converting pipeline into backlog during the quarter, the, the reduction in, in backlog is not commensurate with the, with the increase in, in our revenues. To answer your other part of your question, yes, we had some very significant large orders at the end of the Q3 of last year, federal government orders, That's not a coincidence. The federal budget year ends September 30th, we do see more activity at that time of the year than, than, than other times of the year. Although, I actually think some of that might, might diminish in the coming quarters, just because of the urgency amongst the federal government to get EV charging deployed. Two or 3 weeks ago, I was in Washington, D.C., met with the Department of Transportation, Department of Energy, met with representatives from the White House and several senators and congressmen. I can tell you that all of the, the, the focus right now on electrification is about getting infrastructure in the ground. We're very well known. Our product solutions are very well known. As I say, the White House already knows about us. I, I think some of that, that, you know, the, the September 30th thing might become less important, moving forward. It certainly was significant last year, but I'm not gonna guess right now on, on the, you know, on what pipeline to backlog conversion we'll get, this year. Except to say that historically, we've had a very good record of converting pipeline to backlog. I think it was over 70% last year, or more than that, actually. It was more than that. I think we converted, we converted something like we started the year with an $80 million pipeline and converted 76 of it to backlog in the year. That's pretty much unheard of in any business, but, but, it's a, it's a good goal for us to keep going after. Okay, perfect. I appreciate the detail. Thank you. Thanks. Our next question will come from James Mikulik, a private investor. Please go ahead. Hello, James. Yes. Hi, Desmond. Congratulations on a good quarter on the strategic move into Europe. Couple of questions. Sure. First one on the backlog. Looks like you've got about a two-month backlog based on the Q2 production rate. Are you still planning on increasing your production rate going into the Q3? just, just to... Not, not to be combative, James, but I think you mean a two quarter run rate based on our, on our, on our. Yeah, Q2. Yeah. three, yeah. Are you still contemplating increasing the production rate? As I, as I said, at the moment, we are still supply constrained, so we still have customers who would like us to be getting the product to them faster than we're getting it to them. We're gonna continue to do what we've done all along, which is be sober in our approach to that. You know, there, there were people who asked me last year: "Why don't you just convert all of that backlog to revenue right now and, and everybody will get really excited?" We could have done that. We could have thrown money at it, we could have thrown human beings at it and everything else. We would not have done it as efficiently. We wouldn't have got the, the long-term fundamental gains from that. You will see us continue to execute on the backlog in the best and most profitable way that we can. It's not realistic to expect that we're gonna continue to have quarter-over-quarter% growth increases like we have. If not, if no other reason, simply because the previous quarter numbers are so much higher than they used to be. It's hard to have those types of multiples on top of them, but also, I don't believe, sustainable. We're not planning on cutting back or doing anything else right now. We're planning on continuing to do what we do, which is take a sober approach to growing the business in a safe and sustainable way. That, that, there's no imminent plans to increase the production rate over the Q2? Well, we're still, we're still increasing the production rates. I didn't say we weren't, we're not gonna do it. I just said I, it's not... Increasing the production rates is more of a in response to customer requirements than it is just some sort of goal that we have. We, we still expect that there's going to be a tremendous amount of growth in front of us, and so being able to produce more product faster is, of course, very important to us. Okay. second question related to the backlog and the price increase. Any resistance on new orders from customers? Are you bound on some of the larger government contracts that you have by the old pricing? ... Those are two very good questions. So far, we have not received any pushback from customers. As I mentioned, when we first announced this price increase, believe me, there was a lot of hair tugging, especially on my part. I was really disinclined to do that because I think it's so important to grow our place in the market. The reason I ended up doing it after... we review the same thing every quarter, and have done for a long time, for years, in fact, what, you know, what, what should we be doing with pricing? It wasn't until the sales team could just look me in the eye and say, "We will see no negative impact as a result of this price increase, because people's urgency is such that they want the product and not even worried about that part of it." So far, I have to say, that they're, that nobody's making liars of them. I think, I think, especially with the amount of inflation... Remember, we've increased our prices by much less than our vendors have increased their prices to us. We can very easily justify these, these price increases. The reason we've done it less than, than the amount that the vendors have increased the prices to us, to us, is because I still feel that so much opportunity rests in our ability to just get better at what we're doing. That has been demonstrated and will continue to be demonstrated. As far as your question about the cost of the, the larger government contract, yes, when we have a contract with larger government, it's priced. We're not only able to arbitrarily just sort of increase prices whenever we want to. However, there is a process to do that, and we have gone through and are going through that process to adjust our major government contracts so that moving forward, they will be reflective of the new price. Again, I doubt that any of that will be in any way material impactful to, to us, before the Q1 of 2024. Two specific questions on the due diligence process in Europe. I'm not sure about Serbia versus Western Europe, but do they have a similar social structure, especially for the management group, so that, if you have to lay somebody off for a downturn, there's usually a pretty significant liability that you would be purchasing? Is that, could you give us some clarity on that? Yes. One of the things I really like about Serbia is that it's not as yet in the European Union. All indications are that it will be in 2030, but as yet, it is not in the European Union. However, it has the right to trade as though it is. Tariff-free trading in Europe, but without any of the compliance that comes along with being a European Union member state. I think we've got a little, a little honeymoon period ahead of us of some six or so years, where that will be the case. Nevertheless, you are right to point out that it is not as easy as it's supposed to be, and I underline supposed to be, in the United States, particularly in California. California is a state where we're, as an employer, we're supposed to have the right to, to, you know, to terminate somebody's employment without, without much ado about anything. Of course, that, the reality is quite different. Those, those, that, what, what you're pointing to will exist. However, the other side of that coin is that the cost basis for what we pay people is so much lower over there. As I mentioned in my, my comments, fully qualified and very excellent engineers making less money than, than a welder in California. The price that we might have to pay, you know, covering somebody for two or three months after they're laid off or whatever, will be more than off, in my opinion, certainly much more than offset by the very much less that we will be paying them in the first place. Okay. We just had an issue with it, was the legacy cost, if you ever had to terminate for any reason, three times the cost in the US, so I didn't... That's a liability it looks like you'd be purchasing if it's an outright just plain purchase and sale. Next question. Yeah. On the due diligence, the environmental due diligence, are you starting out with a phase I, or are you gonna start out with a little bit more significant environmental review, pulling core samples, that kind of thing? We're doing samples. That can get fairly expensive, especially if you're buying anything, but obviously that... No, James, it's not, James, it's, it's not going to. We've already got a quote from the, from the team, and again, it goes back to the things that things are just much less expensive in Serbia, than they are here. Okay, thank you very much. Thank you very much. Our next question will come from Noel Parks with Tuohy Brothers Investment Research. Please go ahead. Hello, Noel. Hi, good afternoon. Just had a couple questions. I was wondering if you could talk a little bit about, as far as the new order pace, can you give a feel for maybe what the breakout is between new customers versus repeat orders? I'm just curious at the moment, which customer type or vertical is most aggressive in terms of, well, I guess in terms of what, you're seeing today with the deployments from, you know, past transactions and, and now in terms of new orders? Any particular trends you're seeing? Yeah. Actually, a lot of new customers, although some of them might be coming through these existing contracts that we have in place. As I mentioned to you before, this goes back to this concentration thing. You know, for example, last year, the State of California issued a new contract to us. In a way, it was a bit like replacing an old one, but they're not allowed to do that. It was a new competitively let contract. One of the things that they did was they made that available to any other governmental entity across the United States of America. Oh, right. As a result, we have seen that. The GSA did the same thing. The government, the General Services Administration, the federal level, has made their contract available to any governmental entity that cites in disaster preparedness as one reason for buying our product. Of course, our product is very well suited to that because we continue to charge vehicles during blackouts, and we have the emergency power, and we're flood-proof and hurricane-proof and all that. Take that back, we're not hurricane-proof. Proofed up to 160 mile an hour winds, but survive 100 hurricane winds. We have had a lot of new customers, but often they've come through existing contract vehicles. That doesn't, that's simply because our sales team is good at steering them to those contract vehicles. It's a very good idea for us. If somebody comes along, they, they can either go through a lengthy process of doing an RFP or something like that. Our sales team saying, "Hey, why do that? Just buy it through the California contract or buy through the GSA contract, if you can." We've had quite a lot of instances of that. I think, again, as I said, we've, we've, we've continued to see a pickup of, of, commercial customers. It was, we were very government-heavy there for a while during the, during the, the, the COVID period, but we've seen a continued pick up in commercial customers. Otherwise, across the board, federal, state, municipal, from the government side and across the board on commercial customers and, and, and quite a lot of new customers, but also quite a lot of, continued, customers. I would say a healthy mix. Great. Just a question about Amiga. As far as their particular revenue mix, do they have a higher service cost component? I wonder if that has any advantages for you if sort of degree in which they, they have a sort of larger service organization, sort of like a, you know, servicing their legacy equipment out there. You, you mean from a recurring revenue point of view? Yes, exactly. Yeah. Yeah, so they, they do get recurring revenue from service, although it has to be said, it's minimal. They have a, they have a pretty good service organization, but again, much like us, much of what they're making does not require a lot of service. That's not been a major area of focus for them. I'll tell you one area of shift that, that will be... That they were already focusing on prior to my becoming interested in them, and I'm gonna continue to enthusiastically pursue this. Previously in their history, they've done some very large projects. I mean, for example, they built a stadium, a sporting stadium in Africa. Incredible project, logistically and everything else, from the ground up. That's fun, fun to do, and it's, you know, and everything else, but it's not the business we want to be in. We do not want to be doing construction projects. We don't want, we want to be doing product, not projects. As I say, you know, serendipitously, they had already made that decision themselves. Although their revenue numbers are very high from those things, incredibly risky, the margins are generally not that, that great. They're much better just sitting in their factory and pumping out products. That's what we want them to do moving forward. Then we will, you know, go after recurring revenue, in a whole host of different ways. I mean, the streetlight product, it's not impossible that we, we offer that as a service at some point in the future. By the way, I'm not suggesting we have plans, in, in, in the works to do that right now, but I've had that discussion with the management team over there. Just it would be fantastic, particularly to the point that streetlights are renewably energized, where we could offer something like that as a service, because, of course, we wouldn't have a utility bill to recapture. There are lots of opportunities there, but at the moment, it's mostly making products and selling it. Okay, great. That's all for me. Thank you. I think we're coming up here on time, operator. Happy to take another one if there is one, otherwise, I think we, we, we should wrap up. This concludes our question and answer session. I'd like to turn the conference back over to Desmond Wheatley for any closing remarks. Good. Thank you, operator. Again, thank you, everybody, for listening and, and also, for the, for the excellent questions. I mean, I can't do better than just the recap that I gave. Fantastic growth in revenues, strong balance sheet, still have an incredibly attractive capital structure. Just look at how few shares outstanding we have and how low our flow is. Great support from the, from the, from Wall Street, a great thumbs up and, and, and vote of confidence from Wall Street, and then this, this expansion into Europe. You know, as I mentioned earlier, I've spent a lot of time in Europe and in the Middle East over the last months. All the growth that you've seen take place at, at, at Beam Global has been taking place without my active input. I'm very proud of the team. They've done a fantastic job. If any of you are worried about me riding a motorcycle, what they've demonstrated is that they can grow this business without me being around, which is just fantastic. I intend to go out and aggressively grow us in every way that I can and let them continue to do the great work they're doing. Thank you all for being involved, and look forward for more great stuff from us, because we're only just getting started. It's a great time to be Beam Global. The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.