Good day, and welcome to the Beam Global Year-End 2022 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kathy McDermott, CFO. Please go ahead.

Great. Thank you very much. Good afternoon, and thank you for participating in Beam Global's 2022 year-end 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, and also following that will be a question-and-answer session. 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 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, March 29, 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. Next, I would like to provide an overview of our financial results for Beam's fourth quarter and year ended December 31, 2022. Revenues for the fourth fiscal quarter of 2022 set a new record for the company of $7.9 million, a 126% increase over $3.5 million reported in Q4 of 2021. Revenues for the year ended December 31, 2022 were a record $22 million, a 144% increase over $9 million reported in the same period of 2021. The increase in revenue was driven primarily by increased sales to federal, state and local customers, which is benefited from federal and state funding programs as well as our GSA contract, which streamlines the contracting process. Revenues have also increased…

Thank you, Kathy, and thanks to all of you for dialing in to listen to this '22 earnings call. Looking forward to answering your questions after I make a few comments about the fantastic year that we've just had and what it means for our future. A couple of months ago, someone who I consider to be one of the best-informed analysts in our industry, asked me what would be, for a normal company, a very reasonable question, "Should you expect 30% year-over-year growth from Beam Global?" I laughed and I said, "I bloody well hope not." We've been growing our revenues consistently for many years. The $9 million of revenue reported in 2021 was 45% higher than the $6 million we generated in 2020. And now we just reported $22 million of revenue for 2022 or about 145% greater than the $9 million we reported in the prior year. At the beginning of the fourth quarter in 2022, we published a contracted backlog of not far off 300% of the full year revenues we were just reported for 2022. So, said another way, starting back in 2020, $6 million in revenue, $9 million in 2021, $22 million in 2022, and about 3 times that much in reported firm contracted purchase orders as of the beginning of the fourth quarter of last year. The $60-plus million in backlog we reported in the fourth quarter by no means tells the full story of the 2022 growth in sales. Actually, our fantastic sales team secured over $76 million of purchase orders in 2022, which was a 548% year-over-year increase over 2021. And 2021 had already been 130% increase in new purchase orders over 2020. We sold over 800 EV ARC systems in 2022, which is more than all the EV ARC systems…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Christopher Souther from B. Riley. Please go ahead.

Hello, Christopher.

Hey, thanks for taking my question. Hey. How's it going? Maybe just starting out on kind of the revenue visibility and backlog, I think you mentioned about $60 million. Can you talk through the cadence of backlog delivery here? Is it really just -- how quickly you can make them? Are there any multiyear type orders in there? I know some of the programs are multiyear. I just want to get sense of some of the backlog is multiyear. Historically, it was -- backlog was maybe representative of what you were going to do in the quarter or so. And I just wanted to get a sense of do you think you're starting to become really a backlog company or if it's really just ramping up and returning to that one or two quarter visibility based on the backlog?

That's a great question. And frankly, I'm remising not addressing that in my remarks. All of the contracted backlog that we have announced our customers want as soon as we can get it to them. So, there are no multiyear contracts in here. The Army orders from us, they're not saying, and it's okay we can take these over the next five years or something like that, it's quite the opposite. So, all of the backlog we have announced, our customers want immediately. And that's why I said in my comments that we really are now more supply opportunistic and demand opportunistic. The demand is clearly there. We just got to catch up with it. And again, that's helpful in terms of the previously choppy nature in our revenue. It won't be like that now. It's just going to be build more and more and more and more. And as fast as we can turn them out, we'll get them to our customers.

Got it. No, that's great to hear. Maybe just comment on supply chain as well as kind of the margin front. We appreciate all the color on the puts and takes from 2021 to 2022. But can you give us a sense or remind us what the component cost inflation headwind was for the year? And of course, we had to offset in order to get that 7% year-over-year improvement, I'm trying to get a sense of where your incremental margins are looking with -- as we scale? And maybe what else you're seeing as far as kind of the component cost moderation improvements and what we can do to improve the supply chain in vast order, I guess?

Yes. So, the last time I did a BOM-to-BOM comparison, a bill of material to bill of material comparison of same product, I can tell you that I was able to -- and I didn't do a highly detailed dive, but even doing a not very detailed dive, I was able to identify 27% increase in costs of components and materials that we are buying. And again, I'm sure I would have found more if I'd gone into the hundreds of smaller items that are on the BOM. 27% increase in costs during the last couple of years. At the same time, you are right to point out that we have improved our gross profitability by about 7% net of non-cash items over the last year. And I forget what it was, but there's another 3% or 4% or 5% the year before that too. So, you could see putting all of this together, 27% increase in BOM costs and yet an improvement of gross profitability of somewhere over 10% at the same time. Now that you don't print money, it's going to come from somewhere. If we have to spend more to make the product and yet our gross profitability is improving, all that can tell you is that you need to combine those two things together to get a true picture of what we've done. And it comes to well over a 30% improvement in gross profitability just over the last couple of years. Look, I don't like having a negative gross profit. I spend every waking hour working on it, so does the whole team here, and they've done a brilliant job of it clearly to extract these types of improvements during such an inflationary period and without increasing our prices. But the trend is very much…

Appreciate all that color. I'll hop in the queue. Thanks.

Thank you, Chris.

The next question comes from Tate Sullivan with Maxim Group. Please go ahead.

Hi, Tate.

Thank you. Hi. Thank you, Desmond. Hello. You mentioned growing the production of battery packs by 10 times since about March of last year is a lot. Are a lot of those battery packs go into your EV ARC units, or can you bifurcate it a little bit?

No, they definitely are. I mean, the team over there has done a fantastic job. I'm so proud of them and so glad that they're part of the Beam Global family now. They really have completely upped their game from where they were when we acquired them. And yes, they are now supplying all of our internal battery requirements. And the savings that we have received as a result of that are really very, very meaningful. I mean, it's a huge amount of money actually. Beautiful thing about this acquisition is I'm confident that we will end up paying for the company just in gross margin recapture. Never mind all the other benefits we're getting from it. So, yes, a huge amount of what they produced came to us last -- came to us for internal use. But at the same time, we can't lose sight of the fact that they sold over $8 million of battery solutions to others. Those are going into drones and robots and submersibles. And I got to tell you that's a side of the business I am very excited by. I don't want them just being -- just producing batteries for us. I want Beam Global going into all these other spaces. We have a drone recharging product. We have EV recharging products. I'm very, very strongly of the belief that there will be a tremendous increase in the use of robots of all sorts, whether they're airborne, submersible, terrestrial or just bringing you a beer from your fridge in the future. I think we're going to see an awful lot of that. All of those devices are going to require energy dense, safe and well-packaged battery solutions. And that is what we are better, I believe, than anybody else at. So, it's been…

Great. And then, just on the GSA contracts, you mentioned -- just clearing out, you mentioned extensions to contracts with customers through the GSA contracts? Or do you extend the actual GSA contract structure? And how long does that -- does the current GSA structure last contracts please?

Yes. So, to be clear, what I mean when I talk about both the GSA and the California contracts is that again, although those are normally restricted to only -- either federal in the case of GSA or California in the case of the California contract, both of those entities have made those contracts available in the case of the federal government to government entities who cited disaster preparedness aspect for their purchasing decision. And of course, that's one of the great strengths and one of the big decision factors for Army, Marine Corps, New York City and so many others to buy our products, including a lot of corporations by the way. They want to make sure they can still charge vehicles when there are blackouts and brownouts, which are happening more often today than any time in our history. Our products are a hedge against that sort of thing. And as such a reviewed as a disaster preparedness solution. And quite a lot of buying decisions, buying our products come from that alone, frankly. Never mind that we're much faster, lower total cost of ownership, and cleaner and greener and everything else like that. Big part of the buying decision for many of our customers, government and corporate, come from the fact that they know that we'll keep charging their vehicles during blackouts and brownouts. So, the feds have extended their contract vehicles to anyone who has that requirement. And then, California has just offered reciprocity to any other government entity across the nation that just wants to piggyback on their contract, which is fantastic. Of course, they want to support us, but they also have a mission to support the electrification of transportation. And what this means now is that other governmental entities who don't have the…

Great. Thank you, Desmond.

Thank you.

The next question comes from Craig Irwin with Roth MKM. Please go ahead.

Good evening. Hey, thank you for taking my questions. So, most of most of what I would have asked has already been covered, but there's a really interesting angle to your story that that I -- you didn't cover in your prepared remarks, the carbon credit angle, right? Over the next number of years, you're going to start generating quite a few carbon credits. And there's an opportunity there to maybe monetize that. Can you maybe share with us where you are in the process of evaluating this? How this could potentially come together for you? What should we be looking for? Or if is this not really a short-term priority?

Well, I think it's fantastic. We've even identified it. And of course, you're absolutely right. The simple fact of the matter is the cost of carbon, particularly in Europe, by the way, has accelerated dramatically. I think just two years ago, it was about $21 per ton, and it's now over $100 per ton. And EV ARC, which is the mainstay product that we produce, generates over -- or removes over 12 metric tons of carbon per annum in its operations. That's a single EV ARC. So, if you think of just -- if you look at our backlog today, multiply that by 12 metric tons and then multiply that by $100 a metric ton, you can sort of see this becomes a really meaningful source of money for whoever owns that EV ARC product. Now, of course, most of the -- well, all of the EV ARCs that we produced today are owned by other us, and we've enjoyed that business model so far. But I've made no secret of the fact that at some point in the future, it's not unlikely that we own a network of these things ourselves through [indiscernible] model or through some other business model. And in those instances, all of those carbon benefits will endure either to us or to whoever we want them to. And there is a very significant monetary aspect to this, which has not been realized by us to date, not been reported by us today. And certainly, I do not think before you brought it up being recognized at all by the markets. But yes, it's very real and it's that kind of recurring revenue that I know that people are so eager to see us producing.

Excellent. And as a follow-up, you haven't really mentioned or focused on sponsored deployments in quite a while, at least in your public communications. Are there any developments there that you might be able to share with us? Or is this something that we still should consider maybe on the back burner while you really focus on serving demand that's already pretty intense right now?

Thank you for recognizing the demand. It's very intensive. There's no doubt about that. People are [indiscernible], but I'll tell you what, there's a brilliant energy here. There's a fantastic buzz both here and in Chicago. Everybody feels like they're on a winning team because they are. Look, the fact is I've been talking about the sponsorship network for some time. I am still confident that we will get it done. I've made a lot of commitments over the years since I've been running this company. And with the help of the fantastic people that I have around me, I've kept all of them, all of them, except for this damn sponsorship thing. It's the one thing, the one nut that we haven't been able to crack yet. I do not want to describe it as being on the back burner, because it certainly isn't for me nor is it for the superlative group who we have working to help us sell that. And again, remember, they are working for nothing but performance-based pay. We're not paying them a retainer or anything. These guys are like the preeminent experts in the United States in selling partnership deals. If they think it's worth going to work in for [indiscernible] presumably, they've got a good feeling for this thing. I can also tell you that I continue to talk to parties who could become sponsorship and have indeed shown an interest in doing so. It's just not closed yet. And I'm conscious of the fact that people are sick of hearing me saying that we'll get it done, and I'm not getting it done. Although, as I say, it's the only damn thing that I've committed to in the last 12 years that we have not done with the -- again, with the help of the tremendous people around me. So, I will tell you, if you're asking me, "Desmond Wheatley, what I think about this?" I think we do sponsorship. I think we get the recurring revenue. I think that all of these things will happen. The old Wall Street adage give a number or a date don't give both. I suppose I should invoke that right now. I'm still firmly believe we'll get it done. I just wish I could tell you exactly when, but I can't. We're going to keep on it because it's such a beautiful motto.

I'm not surprised you're tenacious there, so good luck. We look forward to the progress. I'll hop back in the queue.

Thank you, Craig.

The next question comes from Noel Parks with Tuohy Brothers Investment Research. Please go ahead.

Hi, Noel.

Hi, good afternoon. I just had a couple of things. I was wondering, I think in the last three months, six months in particular, there have been a number of companies offering alternative battery technologies often on the material side. And I was just wondering if any of these emerging technologies, some requiring lower or alternative to lithium. Have you seen any out there that you would consider worthy of investment in either minority or acquisition? I'm just thinking about your sort of longer-term storage portfolio.

Yes. So, there's a lot of things wrapped up in that question, Noel. First of all, we're an innovation company, and we applaud anybody out there who's innovating, particularly when it comes to the intersection of clean energy and transportation, which is where we are focusing. That's obviously a pretty massive area to focus on. But nevertheless, that's what we're focusing on. So, the first thing I'm going to tell you is that, at the moment, we believe that there are many, many years of lithium-based battery business growth ahead of us, many years. Probably 10 years in fact before something like solid state or whatever else that comes along and really displaces that. And you don't have to take our word. You just look at the massive investment being made by all this sort of much larger entities out there who are concentrating on that. And so, I think we're certainly going to continue to improve our expertise and bring the value that we do to making lithium, particularly NMC cells, safer and more energy dense and longer lived than they are to date, which is essentially what we do. Then, beyond that, there are some other things to think about too. Just charging and discharging a battery, in general, is going to create a thermal event, that's physics. It's not anything to do with brand or anything else like that. And so, having great thermal management solutions as we do will be a differentiator for us no matter what technology comes out frankly, because batteries like that goldilocks zone and they're safer if they're in a goldilocks zone, and that's one of the things we provide for them. To your question about whether or not we'd invest, I'm not so arrogant as to think that I should take money that people have invested in this company and reinvested for them in that way to where we would be an outside investor. I'm going to concentrate all of my efforts on growing Beam Global. If I see a promising technology or a solution or geographic growth or talent or any of the other things that I think will grow Beam Global, then I will invest in it. Again, with the advice of the Board -- my Board and all the experts that I surround myself with. But I don't think you should anticipate us making a sort of a third-party outside investment and some other technology at the moment. We're too busy growing our own company to [indiscernible] growing anybody else's.

Sure. Fair enough. I was wondering, the -- your energy storage sales, I assume this year will be full year of impact from that business line. I assume there'll be a somewhat higher percentage of total revenues in 2023. Do you have any sense of that? Any insight on that?

I'm not going to say it will be higher percentage of total revenues, but I believe strongly it will be higher absolute sales. And that's because we are -- I mean, we're bringing -- this is one of these perfect averages. These guys have great product, great technology, great expertise. We are definitely though enhancing their sort of ability to sell and expand. I mean, that's part of the reason that they allowed themselves to be acquired by us or enjoyed being enquired by us frankly, because they were looking for ways to expand. So, we're enhancing their selling. We're enhancing their mark. I mean, hiring more salespeople. We're enhancing their marketing and we are making investments that we need to make in enhancing their ability to produce. I mean, this is part of the reason our operating expenses have gone up this year. I know that, that will raise some eyebrows, but I'm -- this -- is as I said in my closing comments, this is not a time to be a churlish about investing in growth. On the contrary, we need to be really aggressive about it. We have such a good thing going. So, they'll do a lot more, I believe, this year. But I'm not certain that the percentage of revenue will increase because of course, percentage of revenue on the EV charging infrastructure products side of the business is so dramatic.

Right. Actually, the minute you started laying it out, I was thinking that that's right. The growth on the charging side is so likely to sort of swamp whatever trends you might have on storage, that standalone storage, it totally makes sense. And I guess just the last thing. Just wondering if there's anything else as far as greater clarification on NEVI rulemaking or the guidance that around [IRA] (ph) issues that it seems like a lot of parties are still waiting for, particularly from the IRA. Anything on the horizon with those that has crossed your radar screen during the quarter?

Yes. So, I will say this, the simple answer to your question is I am certain that we will see benefits from not just NEVI, but from the other couple of billion dollars that federal government is committed to announcing EV charging infrastructure more to the $10 billion or so that California's putting into it or to all the other spending that's going on. I mean, there are specifics in NEVI, which I frankly think will be really hard to execute on. The idea of having 600 kilowatts of charting every 50 kilometer -- every 50 miles on the highways within the United States is a fantasy. The electrical grid simply doesn't exist to do that. And actually, that will be a great opportunity for us, for example, for our Solar Tree product, not so much for the EV ARC product. But for the Solar Tree product, I think there may be locations where there's 300 or 450 kilowatts, but not 600 kilowatts, and we might be able to fill that last 150 kilowatts for them in a really clever way without having to do all the infrastructure build up. That's one of the -- I don't see that as necessarily a this year thing for us, but I definitely think that will happen as they recognize some of the shortcomings in the plan as there were need to be filled by different and innovative solutions just like ours. On the $2.5 billion that's going to be spent, a lot of it's going to go to disadvantaged communities that [indiscernible] tribal lands and all sorts of other things like that. I just don't know of a better solution for -- than ours to do that. We've already demonstrated that deploying at disadvantaged communities through the Electrify America deal and also through several kinds of authorities. We're very good at that. We bring clean, green, driving on Sunshine with no unit cost for the electricity to these environments where people are -- don't have money. And a lot of that money is going to be channeled in that direction. So, I think we will do very, very well out of those things. But the other thing for us to be concentrating on is this dramatic return from commercial, non-government funded type of growth. That was a really huge number for us to get to 35% of revenues in a year where we had such huge government growth as well. You can see that we're often -- so people say all government. No, we aren't. 35% of our revenues came from commercial. And I think we're going to see that continuing to grow as well. And at the end of the day, I think commercial wins. This is huge.

Right. And I think you alluded to this in your remarks. And that's really in the context of sort of all things commercial, really, really hitting the brakes during COVID, right, and the after effects of that, that's -- it's kind of the rebound from that, I believe, you referred to?

There wasn't too much workplace charging being installed when no one was going to offices anywhere in the country. And we really were impacted by that. But we're seeing it coming back with vengeance.

Great. Thanks a lot.

Thank you, Noel.

The next question comes from Abhi Sinha with Northland. Please go ahead.

Hi, Abhi.

Yeah. Hi, Desmond. Thanks for taking my question. Quickly wanted to ask if could you give us in some sense of idea of how or what percentage of your revenue in 2022 or even in your backlog is coming from repeat customers?

That's a good question. Lots and lots and lots of it. So, I mean, obviously, New York is the most obvious one to mention there. So, we got $5.3 million purchase order from New York City. They've been buying from us since 2015, I think. And by the way, every time they make give us an order. It's bigger than the last one. We love working with them and we think they're doing really great work over there. When you look at things like the Army order, you could stay in a way, the Army order is a repeat order, because it came through the GSA contract. So, it's all coming through the same contract in vehicle. I don't think that's fair. We have contracts like the GSA contract and the California contract, and we have to report a lot of concentration because we've got these orders coming into the same contract vehicle. But in fact, to say that an order from the Army is the same as an order from Department of Homeland Security or the U. S. Marine Corps, although they may come through the same contracting vehicles, it's a folly to talk all those the same things. But we do have great repeat business. There's no question about that, especially amongst those people who bought one or two of our us in the early days to sort of test it back in the days when we used to have to prove ourselves. I think we're way beyond that now. But we've had great success. I'm sure I can't give you an exact percentage on that, because it's so hard to model out what's GSA, what's California and everything else. But I think we love repeat orders especially when they're bigger than the one that we got before from that customer, and I think we've seen a lot of that.

Sure. No. That's -- I'm just trying to understand, like, with that sense of idea, then what's stopping you from basically giving us some kind of guidance in terms of revenue number or unit sales number that will help the spread out there?

Well, I'll tell you why I'm not giving guidance, because I think it'd be foolish for me to do that. Imagine if in the beginning of 2022, I'd said, well, we're going to double our revenues and we're going to end the year, with 300% of that year is in contracted backlog. I mean, it's just -- there are too many moving parts that we don't control. Remember that we are in an industry which is a brand new space, brand new technology, brand new. There is no historical playbook. I can't look back at any sort of ratios or anything else like that. I certainly would never have suggested that we would convert 80% of our pipeline into backlog. I would never suggest that, because like I said, I've never seen that in 40 years of business. So, the fact is that none of us have enough information about what the future will hold to make accurate forecasts. What I am absolutely convinced of is that we are going to continue to see very dramatic and accelerating growth. And again, I'm convinced that because the small amount of data that I do have to look at things like the pipeline returning to over $100 million after we took $76 million out of an $80 million pipeline, you think about what that actually means, that's pretty dramatic. And it always indicating -- telling us that we're just going to sell more and more and more, and I'm very, very confident in the fantastic team that we've got here. And as I said, the fact we've got underutilized space here still we will be able to grow into that. But I'm not going to give guidance.

Sure. No, fair enough. The last one I have is -- and I'm just trying my luck here. So, could you help us get some idea on, like so what would be the dollar revenue number or maybe unit sales number that kind of somewhat threshold that you have in mind to get a breakeven gross margin here? And would that be in 2023 that we can think of?

Yes, I -- asked and answered. We were breakeven gross profit on EV ARC products in the fourth quarter.

Got it. Sure. Thank you very much, Desmond.

Thank you.

The next question comes from [James Michalak] (ph), a private investor. Please go ahead.

Hello, James.

Hi, Desmond, good to talk to you again. Just a general comment in terms of the market opportunity. It seems like you're looking at $1 billion-plus easy market opportunity and the challenge for Beam is going to try and get the critical mass to take advantage of that. So, two conference calls ago, one of your, I think, esteemed older private investor made a recommendation to go out and secure a significant credit line or financing for growth. So, congratulations on executing that. So, obviously, that was a critical piece.

Thank you.

I had two questions. First one was around the current product line. And one was how strong is your patent protection for the EV charging systems that are not connected to the grid? So, how strong do you feel that pack and protection is? And when do those patents expire? And then, the second question was regarding competition. Would you -- are there any current competitors of a larger scale that actually are offering competing systems, again non-grid connected? And I've got a follow-up question.

Yes. So, thank you for the comment about the credit facility. You're absolutely right about that. I mean, clearly, it's magnificent for us to have access to that kind of cash. And again, it's very inexpensive, non-dilutive and with no fees or gotchas or anything else. It was a, again, hard one to grind out. But I'm delighted. I'm really thrilled with the partner that we have is where we should definitely take a look at them. Third largest -- our third fastest growing company in Europe and first largest in the United Kingdom, very well-respected multibillion-dollar deal type of organization. To your questions, the patent portfolio that we have is fundamental to our product. And what I mean by that is there are several patents rolled up in, for example, the EV ARC product, and all of them are fundamental to its operation. In other words, you can't get close to an EV ARC and not be imprinting on our patents. And that was really deliberate on our part. We are about halfway through the life of the earliest of those. And we will, of course, pay attention to that and endeavor to make such improvements and changes as we can to the product in the future to allow us to roll new patents into it as it seems like that's the right idea to do it. So -- and we will rigorously defend our patent portfolio. I mean, the great news is we don't need money to do that. This is America. There are plenty of people out there that would happily take that on spec, because our plans are well written and they will they'll fight on our behalf for a piece of the proceeds, of course. Again, it's America, no one is ready for free. But…

Okay. And you mentioned you halfway through the patent life on the first ones to roll off. How many more years left on that?

Another 10 or so.

Yes, okay. So, you've got 10, all right. So, the second question on the current cost and then I just want to get into market expansion in Europe and you mentioned -- you made a brief mention on the Midwest as well. Freight costs as a percent of your sales of your finished products, say, for example, to the East Coast for both the shipping to finished product as well as bringing raw materials in the San Diego, what percent of the total product cost is -- ballpark is your freight and is prohibited to -- are you prohibited -- that's prohibited from a cost standpoint and logistics standpoint to be shipping a significant amount of product to the East Coast for example?

Well, we've -- of course, we have shipping source, because we've had to. We haven't had a choice. I think one of the ways we cure for that is as I said, we do intend to expand into somewhere in the middle of the country. It makes a lot of sense for us to be there from a whole host of it, less expensive to do business, easier to expand, trained workforce. I believe we're going to be heading into a recession. And I think if you look at the employment numbers right now, although employment numbers are still increasing, most of them are in service and hospitality, in this kind of skill sets that we choose. I think we're already starting to see a decline there and there'll be a lot of people available for us. So that we will save money that way. The percentage costs are so varied depending on where we're going and whether or not we self-perform or how we would -- so just to be clear, sometimes we deliver ourselves using our own equipment, sometimes we use third-party carriers and sometimes our customers do the delivery. And so, we don't even do that. So, they're very varied. In no instance, they prohibitively enough to prevent us selling and deploying the product, but we would certainly love to bring these costs down. And what I'll tell you is, we have seen as much as 5x decrease in cost. For example, the shipper container, across the Pacific Ocean from where the battery cells that we buy still come, 5x reduction in cost, dramatic reduction in cost to move a truck across the United States. And even more than the cost reduction, where last year for [indiscernible] be able to show up this time last year, because they were so busy. Now they're calling us looking for loads. And when trucking companies are calling you, looking for loads, two things going on. First of all, they're moving into a recession at some point or something that looks like one. And the second thing is you pay a lot less. Now, where recession is concerned, I want to be actually very clear about something. We have absolutely no top-line risk to right now from recession. None. But I don't think it might go the other way. I think it might do even more because infrastructure build outs and so on will be so important. But at the same time, I do anticipate a continued and even more dramatic reduction in our cost moving forward as a result of reduced demand and the slowing of the inflationary environment and whole host of other things like that. So, we never want these things to happen, but I think we're in as good position as we could possibly be, if something like that does come down the pipe.

That's good to hear. And then the last question on the current product was on pricing. You mentioned that you're pretty proud that you would not increase pricing and you have been able reduce the gross margin operating loss. Are there any restrictions in the GSA and other contracts that actually prevent you from raising prices? Or is it more market forces? And if there are restrictions, when do those roll off in terms of sort of provision in the contract that allowed you to raise price based on either raw material or time?

So, let me be clear. I am proud of my fantastic team for the fact that they have been able to reduce our costs. I'm not proud of myself for not increasing my prices. I'm neither proud nor anything else for that situation. This has been an entirely pragmatic decision on our part. Based on our belief that at the moment, growing the business, increasing volumes, getting more market share, getting more footprint out there, is absolutely crucial to our long-term growth and profitability. And that raising prices would be just adding an additional barrier. And I'll tell you personally, I don't like raising prices to solve profitability problems. That's not where the work is. Anybody can do that. The work is in reducing costs and that's what we are absolutely focused on. And we believe that even where we are with the current pricing, without increasing our pricing right now, we believe that we can get to a 50% gross profit in the future. And that's the job is to get to that, not just raise the prices because it looks good on a spreadsheet. It's not to do with restrictions on GSA contracts or anything else like that. Although, of course, there are contracted or negotiated prices. So, we would be able to increase them whenever we renegotiate those contracts or if there's some extraordinary event that we're able to demonstrate to them. But that's not the real interest here. The real interest is in growing this business and in continuing to do what we've done over the last couple of years, which is have these triple-digit growth. Believe me, we will get the profitability out today. Anybody that mass produces a product does.

Clearly, just given the environment that we're in right now and the cost increases that everybody has incurred, some of them permanent, but the opportunity for a price adjustment to reflect increased cost, everyone's accepting it. Sounds like you've got a product that's in high demand that -- and price is not the main determining factor in the purchase position for this. So, just a thought. Then, last -- second part of this was just on the expansion plans, particularly as far as both Europe and with the United States, if you could maybe elaborate a little bit further as to which is the one that's more of a top priority? And then, on the European, any thoughts as far as Europe? Does the EU have similar to GSA contract, national or not even national, but contracts within all the member states or are the incentive programs negotiated with the individual countries within the EU? And have you given any thought at all in terms of strategy, whether it's greenfield, partner joint venture with an established player in Europe?

Okay. So, from expansion point of view, I'd say you could break it down like this. From the Beam team point of view, U.S. expansion is the same as they're concentrating on. From Desmond Wheatley's point of view, European expansion is the thing that's most important to me right now. And we do kind of -- that's -- I will be that the sharp end of the spear where that European expansion is concerned, not just because I'm from there, but just because it's appropriate that I would do. That's a strategic type of negotiation, whereas the U.S. expansion will be something that's more operational and administrative. And lots of really good talent on the team to do that sort of stuff. I don't think it's where my strengths would be best represented, but negotiating either in an acquisition or some other means of expanding into that market, maybe that's where I think that my skills will be best represented. So, to answer your question about whether we consider a joint venture or something like that, not in Europe. I think in Europe, we want to own it. We don't want to give up any of the equity in that space. But there are other parts of the world where a joint venture makes a lot of sense for us. Those are parts of the world where you just don't do well unless you've got a strong and powerful local partner. And so, I think you should expect to be very pragmatic about this. If I'm going into an environment where we think a strong and powerful local partner is good, then joint venture that if we're going into a place where rule of law governs and where we want to own all of the equity, then we're going to…

Hey, thanks very much, Desmond. Congratulations.

My pleasure. Thank you. I think that's -- we're a little over time here. So, I'll just -- for those of you who are still on, thank you for spending the time with us. Thank you for your support and for your excellent questions. The good -- the great thing for me is every time I do these, they're better than the last, because we just keep knocking it out of the park. And I do not want you to anticipate there'll be any slowdown in that, because I don't think that's coming at all. As I said, it's a brilliant time to be Beam Global right now. And there are plenty of challenges ahead, but they become less all the time. And those challenges are more to do with the tremendous new opportunities that we have than the sorts of things that we'd have to overcome in the past. So, thank you for being along for the ride. And I look forward to doing the next earnings call.

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