Good day and welcome to the Beam Global Year-end 2021 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Kathy McDermott. Please go ahead.

Thank you. Good afternoon and thank you for participating in today's fiscal 2021 conference call. We appreciate your support and interest in Beam Global and for taking the time to join our call. Joining me today is Desmond Wheatley, President, CEO and Chairman of Beam. Desmond will be sharing his thoughts and observations about our fiscal 2021 results and his perspective on the business. 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. 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 periodic report on Form 10-K that will be filed tomorrow, March 31, 2021, our most recent 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, March 30, 2022. 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. I'd now like to take you through financial results for the 2021 fiscal year ended December 31, 2021. Beam Global reported record revenues in fiscal 2021 of $9,001,751 compared to $6,210,350 in fiscal 2020, an increase of 45%. In the fourth quarter of 2021, the company generated revenues of $3,487,649, a 56% increase over $2,200,706 in the fourth quarter of 2020. The company invested in sales and marketing resources during the past two years by increasing the sales team, adding consultants and investing in marketing. We're delivering more higher unit orders. the largest of which was a 52-unit order for the State of…

Thank you, Kathy and thanks, everybody, for tuning in and for your support. Listen, before I get started here, I just want to remind all of you that we are in the flight path of the Marine Corps Air Station Miramar. So far, nothing's flown overhead since we started this call but it's going to happen for sure. And when that does happen, there's going to be a tremendous roaring noise because, I mean, we're literally a mile away from the base and they fly right over our offices. That's the way we keep the rent down here. But at any rate, just be aware of that. If that happens, I may even have to stop talking because it's so loud but I'll pick up right where I left off. Just don't be surprised and please don't concern yourself for me. 2021 was a year in which Beam Global broke record after record after record. And the various records which we book find almost every area of our business. Let's start with deliveries and revenues. In the second quarter of 2021, we delivered a record number of EV ARC systems, up 109% over the same period prior year. In the third quarter, we set another record for deliveries and revenues with deliveries increasing over 123%. Q4 was time for another record for deliveries and revenue with a 45% increase in system deliveries over 2020. Not surprisingly, all these record quarters contributed to the biggest year of system deliveries and revenues in our history. By the time the year was over, we had manufactured 124 EV ARC systems, delivered 119 and generated revenues of over $9 million. This compares to 69 systems in 2020 with revenues of just over $6 million, amounting to a 45% year-over-year increase in revenue. In Q4…

[Operator Instructions] And the first question will come from Noel Parks with Tuohy Brothers Investment Research.

Just a couple of things I wanted to touch on. I was wondering, thinking about some of the nuts and bolts of allocation of the federal money that's on the way. I'm just curious, similar to the procurement contract that you have in California -- that's in place in California that makes purchasing easier for state and municipal agencies. In other states in the country, are you seeing right now more of that urgency as far as, for example, state incentives where purchasers are kind of anxious to get their orders in? Or I'm wondering if you're seeing a little bit more of a standing back and waiting and see as different -- see how -- are waiting to see how the infrastructure bill funds are going to be distributed and what sort of allocation all get?

Yes. So I think stand back and wait and see is pretty good description of what we witnessed for the first 10 years of our being involved in this business. I've often said we were a little too early to the party but now we have very good seats. The fact is we have a contract in place with the state of California, state of Florida, state of Massachusetts. But most importantly, probably most germane to this conversation, we have a GSA contract in place with the federal government. And by the way, our GSA contract is quite different than most GSA contracts which are only available to federal entities. Our GSA contract is also available to any governmental entity so long as they have a disaster preparedness or emergency requirement. And of course, our product fulfills disaster preparedness and emergency power requirements. And so that's another way of saying that anybody who is in a hurry to get this done and is looking for funding doesn't even need to get a contract in place with us. They can just use the federal contract. State of California has also made their contract available to other state and governmental entities too should they want to use it. So those are excellent vehicles for us and we're seeing a lot of increased activity through it. I do -- to the core of your question, I do believe that there's still a little bit of waiting to see how some of these federal funds are under going to spent, the $5 billion on the highways and the $2.1 billion in rural and disadvantaged communities in particular. Again, we've done an awful lot there and are very well placed to do that. But at the same time, all we are seeing right now is an increase in interest and urgency around EV charging infrastructure. It's just amazing how different things are today than they were a year ago and certainly two years ago. As I mentioned in my comments, the orders that we're getting are bigger, initial orders and they're moving through our sales process faster. And that is not because we're more charming than we used to be. It's because the people need the product and they need it quickly. So I think you can see a combination of things. But yes, as I also said, federal spending is a bit like a battleship. Takes a bit of time to get it up to speed but goodness knows when it gets up to speed, it's hard to stop.

Great. And I was wondering, as you look at the year ahead as far as your internal R&D, I'm just curious, can you talk about maybe what some of the priorities are? I guess I was particularly curious about on the software side and whether this is going to be a big year in terms of, for example, new releases or if it's going to be more sort of a blocking and tackling sort of maintenance basic enhancements kind of the year?

Yes. So first of all, R&D basically serves sales and marketing as its customer and that's our philosophy. So we don't invest in R&D because we think it's fun or interesting. We only invest in things that we believe will have a significant opportunity within the market to be -- to monetize. That's the same as our philosophy around investing in patents -- yes. So -- but you have raised a very interesting point which is this software thing. And the answer is, yes, you will see us concentrating more heavily on software and firmware this year. But you will also see us continuing to concentrate on hardware. The EV standards are very high priority for us to get out this year as we believe it will be one of the biggest, if not the biggest numerical seller that we have. But we're going to make all of our products more intelligent, more data rich, more sensor-rich and more manipulatable. And you're going to see that have a tremendous impact on their capabilities in the market. In fact, one of the things that's important about us is because we are a technology company because we produce new and proprietary technologies, we are able to accelerate our capabilities in a way that just connecting to the grid simply can't. That's fairly finite. You can't speed up digging a trench or concrete takes a certain amount of time to dry. But our products will get better and better and more and more intelligent. You will see investment in that this year. And then on the energy storage side of our business, you should also expect to see us continue to invest heavily in that space as well. But again, always as -- with sales and marketing as a client. So it will be driven with profitability at the core, not science.

The next question will come from Tyler DiMateo [ph] with BTIG.

I was just wondering if we could dive a little bit deeper into the AllCell acquisition there. I know you briefly said gives you access to new customers and markets. Can you kind of talk about the overlap there in terms of the customer base and the differentiation and just compare them, if you don't mind, please?

No, I'd be delighted to do. I've been involved in a lot of M&A activity throughout my professional career. And I got to tell you that this is the clearest and most obvious strategically beneficial acquisition I've ever been involved with. The simple fact of the matter is, it's a great fit for us in terms of reducing costs, bringing in revenue, bringing in gross profits, nothing else. But to get to your question, yes, they have been selling energy storage solutions to customers which are very similar to the customers that we've been selling charging solutions to over the last many years. They've been selling energy storage to electric vehicles, to micromobility, to drones, to submersibles, to aircraft. We've been selling EV charging to electric vehicles, to electric bicycles or motorcycles to -- and our products are being used to power drones and aircraft. So it's a -- we've been basically firing at many similar targets but always separately. As I look at their existing customer list and they look at ours, there are tremendous opportunities. In fact, every conversation I have with anybody now who's looking for EV charging for whatever new fantastic vehicle or contraction that they're considering, the first that goes to my mind is, good God, you're consumer of batteries. Surely, you need batteries which are safer, more energy dense and longer life and lower cost and that's precisely what we provide. So great for us. And then from their point of view, of course, so many of their customers, they have electric devices of one sort or another. The greatest challenge for them is to get charging infrastructure in place. And that's what we're terribly good at faster and more scalable than anybody else. So cross-selling is often one of these things that's sold with acquisitions. And frankly, as an investor and as a guy who's done a fair amount of M&A., I pretty much -- with a pinch of salt most of the time I see it. Sounds great but does it really -- how often does it really happen? In this case, I genuinely believe that it's a significant opportunity. But it's only -- believe me, it was not a driving force behind doing the deal. We would not have done the deal if it wasn't going to make us more profitable, add more revenue, make us stickier, harder to compete with than everything else. Cross-selling is not even icing on the cake. It's little bubbles on the icing but we're going to make those bubbles pretty important.

The next question will come from Alejandro Nuno [ph] with Maxim Group.

I was curious if you could touch a little more on Electrify America. They recently announced the new charging which is going to include those solar canopies. I know they had about 30 -- they've ordered 30 EV ARC so far. Is there any more orders in the pipeline that we should be expecting soon? Or have they spoken to you at all about how much expense -- they plan on spending on that off-grid EV ARC technology?

Yes. So I'm not going to speak for what orders Electrify America may or may not make but I will tell you that we're actively engaged with them. In fact, I was -- I had a conversation regarding that piece of our business just last night. Let's not get to -- I want to make sure that we don't, in any way, conflate the idea of putting a solar canopy with an EV charger with what we do for a business. There are lots of companies out there now installing solar canopies above or near or adjacent to EV chargers. That's a construction project. In most instances, those solar canopies are grid connected. Even if there are batteries on site, the whole thing is grid connected. And it's a construction project. You're talking about permitting. You're talking about pouring foundations. You're talking about teams on site, engineers and specialists and all that sort of stuff. That simply is not what we do for a living. Another against set value, I think all EV chargers should have a solar canopy with them. That's a great idea -- shade and some solar onto the grid is a great idea. Nothing against them. I got nothing against battery storage, EV chargers as a means to sort of deflect demand charges and other utility costs that the charging companies are trying to get away from. And even frankly, as a resiliency play and the grid goes down, you got battery backup. That gives you a couple of hours of batteries. But let's not, in any way, complete that with what we do. Our resiliency is forever. Every morning, we produce more energy. We don't -- it's not a matter of charging batteries from the grid. And then when they're discharged, you wait until the grid comes back up which after Hurricane Ida, was six weeks in certain areas. That's not a solution, okay? Our products continue to operate during those types of environments and generate and store electricity. So from a resiliency point of view, we beat them hands down. And then the key thing I keep saying is product. We are a product. We are not project. Everything we do is produced in a factory delivered site, ready to operate. This is not going out and scaling out your tape measure in your tool belt and starting on a process which -- and I shouldn't say that's not starting on the process. two years earlier when you go into the environmental impact and permitting process is when you started that. So yes, look, I think it's great. We love and value Electrify America as a customer. We can't wait to do a lot more work with them. We're proud of them for going solar arrays on their deployments but it should not be completed in any way with what we do for a living.

Great. I appreciate that. And then one last question. Along the lines of the increase for the EV ARC, the number you gave was about -- was $6,000, correct?

Now to be absolutely clear, the increase I cited was $6,600 a little bit more than that actually. And what that refers to is the increase in cost of components materials like steel and aluminum and that sort of stuff that we have incurred and absorbed since COVID began. So we've had an increase of $6,600 in cost. And yet, we improved our gross profit. That's the thing I want everybody to understand from this. As you're looking at gross profitability, just please understand that we did not increase our sales price. And yet we increased gross profitability or improved gross profitability, to use a better word, in the face of all these costs and in spite of all these cost increases which tells you we had to get the money somewhere else. And the only way we could do that would be by reducing our own cost through increased efficiencies, disciplines and other things that we have been doing.

Understood. And that -- so that $6,600 did not include the cost of the charges as well that you were taking on in 2021, correct?

And in that instance, that did include an increase for cost of the charger. I was just comparing to like EV ARC and included the cost of increase of the charger. What I went on to say was after that, that -- although I do not anticipate or intend to increase the cost of an EV ARC today, remember, when we deploy an EV ARC, we deploy on it a factory-integrated charger which is produced by somebody else, ChargePoint, Blink and now Electrify America or whoever it is. And those have gone up in price. And what we are going to start doing now is telling our customers that we will not absorb the price increase of the EV charger that they are acquiring from any other vendor, that we will, in fact, pass those cost increases through to them. And we've been absorbing that in 2021. We're not going to do that anymore. And as I mentioned in one instance, that's worth about 2% of gross profit to us. 2% may not sound like a lot but we were bloody hard to squeeze every percentage point as we can out of these things. And I'm done, if I'm going to subsidize charging companies, charges -- not that there's anything wrong with what they're doing by the way. But I just don't think we're not going to absorb it. We're not going to subsidize it. We will pass that cost increase through to our customers and endeavor to hold the cost of the EV ARC steady. And all the gains that we will get will come through further cost reductions which, as I say, we have a pretty darn good line of sight to.

The next question will come from Jay Burke [ph], investor.

I am an investor and I have a couple of questions. One is -- hello? Yes?

Yes. Please go ahead.

One is why did you change auditors?

Good. Do you want me to -- say that once again?

Why did you change auditors?

Yes. simple reason and there's nothing sinister about it. .

I'm not suggesting. I'm not suggesting it is.

I can -- the red flag. So I just want to make sure that nobody is raising their red flag. The fact is we have been using a company called Solberg & Co which is a Bucaraton-based boutique audit company. And the fact -- and when we were small and before we went up on to a national exchange, they were perfectly appropriate and adequate and, frankly, much less expensive than the much larger nationally recognized audit firm that we've gone to now. But the simple fact is, when you are operating on a national exchange and when you're growing as we are and capitalized as we are and everything else, you really cannot proceed with a boutique firm. You have to have one of the large and nationally recognized auditors. And that's why we made that decision. There's nothing negative at all about Solberg. They did a great job for us. The new auditors have found nothing remiss with anything that they did or anything that we ever previously reported. But it's just a fact of life. Move up to national exchange, get bigger, you need a nationally recognized audit company.

And who did you change to?

RSN.

Okay. And my second question is, do you think your M&A background is going to drive this -- in other words, is your focus going to be on your product? What I understand is that you're product-driven. And as you discussed with the battery, I mean, with the -- whoever this is that you're getting part of the components from, to pass that on to the consumer. Is that going to be sort of the goal so that you can control that?

Yes. Whenever I see opportunities which will allow us to lower our costs or increase our technology stickiness, make us harder to compete with or introduce us to new markets or new customers but within our strategy, then you would expect me to be interested in those opportunities. Also, by the way, global -- or geographic expansion. I'm very interested in Europe. Acquiring our way into Europe is a significant potential for us. What I will not do is go out and buy a profitable dog food company just because it's -- I will continue to execute on our strategy. We're not -- we're very happy with the clean mobility for all strategy. And as long as it fits within the -- that nexus of clean energy and transportation, you can expect -- and it has the other attributes I've already described, you can expect me to be interested in it. But again, most people who have ever done M&A with me will call me difficult. And difficult translates to you as an existing shareholder that I will not do a deal unless it's absolutely right for us. I don't fall in love with them. I don't grab at shiny things. And I won't do a deal to enrich future shareholders or bankers.

Yes. So when you try and get some cash to buy something, you're doing it to reduce the cost.

Of course.

The next question will come from Amit Dayal with HC Wainwright.

So just focusing on 2022, how should we think about sales mix between government and enterprise this year compared to, say, 2021?

They're both going to grow. Now you didn't -- you asked me mix. And the truth is I think at the moment, I have more insight into where I think government sales are going to go than where enterprise sales will go. And so I would say that if someone was holding a gun to my head and I had to pick one or other, then at the moment, I would say government sales. But I want to be absolutely clear. We have a couple of enterprise, nongovernment opportunities which we're working at the moment which could eclipse anything we've ever done with the government before. So it's -- there simply isn't enough historical data for me to give you a scientific response to that question. There is going to be some more than science and forecasting at the moment. The good news is that there's no question in my mind that the combination of the two things, we're going to see some very, very good stuff this year.

So is that pipeline -- I guess, I think you said $19 million. Is that pipeline sort of 50-50 between government and enterprise?

At $90 million, not $19 million, in case you said that. You may not have but it's 90 million and it's in excess of that. And I think that that's probably more heavily weighted government at the moment. But in truth, you've caught me unprepared. I did not actually look at the breakdown between government and enterprise in the pipeline prior to the call. But I would say at the moment, it's probably a little more heavily weighted to government but that can change very, very quickly.

Understood. And then with this AllCell acquisition, are we looking to be potentially gross margin positive in 2022?

Yes.

Okay. Have you already implemented any price increases? Or are these going to come through maybe later in the year?

We have not yet implemented any price increases. However, we are -- as I said in my comments -- and we do not intend at this point to increase the price of our product. But we are starting -- well, not right now. We've already started to communicate to new prospects that in the event that they select an EVSC, a charger which has increased in price, we will be passing that price on to them. And they have options, right? The truth of the matter is there are quite a lot of now good-quality EV chargers out there. And we will -- one of our philosophies and one of our commitments to our customers is that we will always try to steer them towards the least complicated, least expensive solution which will fit their needs. And their needs come first. Sometimes they choose things which, frankly, are a lot more than they need. We're going to help them where that's concerned if they'll take our help. But the fact is if they choose a charger which has gone up in price, then we will not absorb that cost. And as I said in the one instance that I described, that's a 2% return of gross profit to us and it happens to be one of the most -- one of the instances that we do more often than many others. So it should be impactful.

Got it. And then the folks who are coming to get a tour of the facility through the sponsorship side of things. how deep are those discussions? I mean at what stage of these transaction potential are you at with those guys?

They know the cost, they know the business model, they know the benefits and they are coming to see us and get comfortable with our ability to manage it. Now as I tell everyone in my sales team, if there's no ink, it stinks, right? We can tell a lot of people the cost and benefits and do tours all day long. It doesn't make us any money. But I'm just -- what I'm trying to communicate to you is the types of organizations that are doing this. It's just -- it doesn't -- it's not reasonable to suggest that they would come and visit us and tour the factory and everything else like that, unless they were at least -- had some pretty high degree of interest in what we're doing. I don't want to overstate something. I want to be careful about how I described this. But I'm just -- it's when you've been in business for as long as I have, you start to understand that when enough people keep asking for something, eventually, one of them takes it.

Have there been other tours like this or other sort of the discussions that have gone thus far on the sponsorship side of things?

No, it's much more active now than it's ever been. There's no question about that. It's taken a little while. I mean there's all the other things that contribute to remember, the sponsorship of this network is kind of like -- it's in many ways, it's very, very tuned into the whole EV thing, right? A couple of years ago, when we first started putting this in front of people, they didn't really kind of get -- there was no much urgency. They weren't really sure not but that's very much changing now. You could yourself in five minutes right down to the back of a napkin about 10 different companies that would be obvious players for this. And you might find that some of those are on our pipeline list.

The next question will come from James [ph], investor.

Yes. So I had a question regarding the pricing strategy. So it's almost a three part question. First one was, is there a price ceiling right now on your product that you feel that you can't bump up against? Number one. And then as far as the strategy, most well-run companies, I would say, are passing on raw material or the cost increase now more so than we've ever seen. And for the most part, consumers are accepting those increases. I'm a firm believer in your product and the need for your product and would anticipate a huge demand. So I was just usually price follows demand. So I was just curious as to why you felt it was so important to not pass on legitimate cost increases on your current product line as opposed to putting forward some modest increases? Third question was on the pricing. Is that due in part to the government contracts you've got that limit the potential or have a fixed price in the contracts? And then the last question being absorbable. This is if you know what percent of your cost of goods sold is actually the purchase price of the chargers that you're installing?

Yes. So those are all -- I mean, those are all excellent questions, James. And frankly, you're talking about things that we spend a great deal of time talking about here. The first answer to the first part of your question is no, there is no ceiling on our product. We have invented a brand-new product for a pretty brand-new industry. There is no comp -- there are no comps out there. I'm not Komatsu selling against Caterpillar or anything else like that. Similarly, it's not a cost plus margin type of model like a project would be. So what we've had to do is we've had to try to price the product in a way that there are two contributors. First of all, we seem to be getting an ever-increasing sales doing that. So we're not -- it's obviously not priced so high that no one will buy it. And at the same time, we have a very clear path to profitability, in fact, very good profitability even at this price. Taking out inflationary matters right now, I'm very confident that at this selling price, we can get to a 50% gross profit. And if you look at the sort of volumes that you and I believe are going to happen, then you can see that, that ends up being a very profitable business because we have a lot of operating leverage. So there's no ceiling. To your point about the government contracts, yes, we do have pricing in place with certain government contracts which we are -- we have to negotiate an increase over -- if we do that. And then you also -- but again, we're very happy to have to. I don't view them as problematic, I really don't because as I said many times, the…

You got them all.

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

Well, we're over time. So I'm going to keep them brief. You can probably gather from my tone, feeling pretty good about the business right now. Everybody is operating well. We -- the first half of last year was not stellar for us. We made the changes that we needed to make, I think, when it was all personnel. And so any of the benefits that we described year-to-date pretty much took place in the second half, particularly in the fourth quarter. I'm really looking forward to continuing through this year. Everything seems to be lining up right for us. It's tough. We've got a lot of inflation to deal with but everything is lining up for us at the moment. And I feel very good about the business. I'm happy that you're involved. I thank you for your questions and your attention. And let's make some money together. Bye-bye.

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