Beam Global (BEEM) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for participating in this first look for the public at Beam Global's new European facility. The entire team at Beam Global is very excited about the acquisition in delivering clean tech solutions to the largest automotive market in the world. As you may know, we've hosted a few virtual analyst tours from Beam's U.S. headquarters, our main facility in San Diego, California. Now having turned the objective into reality, we're off to a running start with Beam Europe, and we're excited to put the new European facility on display for our investors. Before I introduce Desmond, let me remind you that Beam Global is a publicly traded company, trading on the NASDAQ as BEEM, and we are going to report our Q3 numbers in less than a week on November 14. So now without further ado, here is Desmond Wheatley, the CEO of Beam Global streaming to you live and directly from Kraljevo Serbia, to make -- to take you through this tour. Desmond, please take it away.

Okay. Scott, thank you very much for that introduction. Thank you to everybody who's tuned into this. I'm pretty excited at the moment, the hairs on my forearm definitely standing up. I would say that except for the invention and the introduction of the EV ARC product, what I'm about to show you today is easily the most important and the best thing that we've done in the history of the company. I'm really thrilled about that. So just a couple of things before we get started. First of all, I'm going to say thank you to my friend, Marco, who's behind the camera right now. He's going to do his best to keep up with us. I'm also going to remind you -- or if this is the first time that you've watched one of these things that this is completely unscripted. We've never done this before. And so I just want you to bear with us. I'm relying on the cellular network here. I'm just going to be walking through the place. I've spent a lot of time here during due diligence, getting to know people. But again, it's all new to me as well. So just bear with me and come along for this entirely unscripted tour here. We don't have professionals running the cameras or anything else like that. We're going to do our very best to give you the most complete tour of the facilities possible. Besides me, you're not going to be able to hear him most of the time. But beside me, I have Ivan Tlacinac -- did I say that right?

Almost.

Okay. Almost right. I'm butchering the Serbian names like, I think I got Marco right. But Ivan Tlacinac with me. Ivan is -- 2 things. First of all, he is the person who built the company Amiga to the point that where it was at when we acquired it, and he's done a fantastic job. This is a company that has no debt. Doesn't even use credit accounts and has operated successfully for many years on its own cash flow selling products and generating cash. So the first thing I want to assure all of you is this is not some big money or for us at all. This is a company that operates very well on its own. In fact, I engaged Crowe International as our due diligence specialists when we went through the year of negotiations and due diligence. And I can tell you that the Crowe people told me that of all the companies they've looked in Serbia, this is one of the best run of all of them. So we're really onto something good here and a great deal of that credit goes to this -- he's an engineer, same kind of background that I have. He likes numbers and he likes analysis and he likes facts, and that's why we get along very well. So he's going to walk with me keep me on a straight narrow as we go through this tour here. So -- without further ado, let's just get started moving around here. And I want to show you a couple of things before we even go inside the offices. First of all, you started out by looking at the outside of our offices here and -- you can see we have the sign already installed. All of that, by the way, made here. They made the sign, installed the sign and everything else. They have great skills where that's concerned. The next thing I'm going to draw your attention to is this structure right here, it might be hard for you to see on the camera, but this is a solar canopy here. You'll have seen these things in the United States. And in fact, we used to do a little bit of this at Beam. It's a solar canopy. And it has an electric vehicle charging station integrated. You can see on Audi here charging on it. So I show you that because the company Beam Europe, as it is now, built this from the ground up, the structure, the electronics integration and everything else like that. So you can see how similar they are to Beam Global in the United States, why this is such a perfect fit for us. Right here, not something that we do. But again, it just shows their skills. This is actually a solar-powered integration. He's got batteries and you can plug into it and charges a steel structure solar on the top batteries in it and ability to plug in and everything else. That's -- in many ways, that's like an EV ARC. It lacks a lot of the intellectual property that we have in EV ARC in the patents. But nevertheless, it still shows you their capabilities and how very similar they are to us. So it's kind of a match made in heaven. The dog comes free of charge, but there's a few of them. And I'm going to say something to you right now. I am not responsible for what the dogs do in this video because dogs do what they do, and we can't always stop them from doing that. Okay. Also, I'm very happy to show you the flags here. We've got 3 flag poles. And you'll see on the left-hand side, the flag of Serbia, I don't need to tell any of you what the flag in the middle is and Beam Global flag on the side of it there. So a fantastic job. Remember, we only closed this deal 3 weeks ago. And so when you see the signage and you see the flags and you see everything else that's going on, this is all taking place. So if you look at here -- look here, they just gave me this today. So this is -- we're doing a great job of integrating the company. And the team over here has already done a great job of that. And it's an ongoing process. It's not an event. It's going to take some time, but so far, the progress is really good. Thank you. Okay. What we're going to do now is we're going to walk into the office environment here. And I'm going to show you where the sort of office type of activity take -- reception we're on -- reception here. And then behind Marco here, bring you in and show you the conference room here. There's some activity over there -- sorry for interrupting you. We've got some activities going on here. They've got a nice screen for presenting to customers and all that sort of stuff and just general conference room facilities here. Ivan, may I? Into Ivan -- this is Ivan's office. Now Ivan, of course, I said he's 2 things, not only is he the guy who created the company and from whom we've acquired it, but he's staying with us. Very happy to have him. We'll have him for a very long time. Just to remind you, there's an initial consideration for the company. There are also 2 earn-out periods. So he's going to receive more if he hits some pretty aggressive goals that we've set for him in 2024 and in 2025 as well sticking with us, and I'm really happy to have him. So this is his office here. Through there was a conference room. And then we're going to the next door office here. And this is actually where Ivan's father sits in. He was the initial founder of the company. But Ivan has taken over. And he's taking over this as well. He's got 30 years of experience in fabricating street furniture and street lights and that sort of thing. So it's useful to have that type of experience. And then we're going to come into this office here. Okay. Everybody, we're live. Right now, we're speaking to the United States. They're right there. So say hello, New York and San Diego and California and everywhere else. Thank you. Sorry to interrupt you. I promise you this will not take long. We've been kind of annoying them all day long. There's been some other video activity going on here and stuff like that. They're not getting very much work done today, but we're very appreciative of everything that you're doing. So [Foreign Language]. That's thank you in Serbia. I'm learning a few words here and there as I go. So what we have going on in here is largely engineering and technical stuff, some sales as well, but it's mostly engineering and technical stuff. This is one of the great benefits that we've received in -- through the acquisition of this company is that we've tremendously increased our engineering prowess. Civil engineering and electrical, structural engineering in particular. Ivan's background is in electrical engineering as well. But we've got a great deal of very, very well-educated English-speaking, yes. That was yes. Okay. English-speaking, well-educated people here with a really high degree of skills, and they're working on all sorts of things. Now that's going to benefit us as we grow the European market, but it's also already benefiting us in the United States because actually there are engineering expertise within this office, which we don't have in the U.S. We've either outsourced it in the past or we've been looking to hire it. We don't need to anymore because they're already working with our engineers in the United States, and work product is passing backwards and forwards between the engineers in this room and also in our offices in Belgrade and in our offices in Chicago and in our offices in San Diego as well. So it's a one Beam team all working with each other. And while the time zones sometimes make things a little bit difficult because there's 9 hours of difference, we're 9 hours ahead of San Diego here and 7 hours ahead of Chicago. The time zones are also helpful in some ways. San Diego engineer might send something through a request for information or for some work to be done towards the end of the day in San Diego. When he arrives at his desk -- he or she arrives at her desk in the morning, the next day it's already there because they've had all day to work on it here. So I'm really, really happy with that combination of skill sets and the growth in our team, an addition of 30, 35 engineers to Beam's team at a time when we are expanding and developing particularly the EV standard product, which is going to be a very, very important part of our future. And you'll see more of why that's -- EV standard's such an important product to be developing with this group of people because they're one of the top companies in Europe for producing that kind of thing. Accounting and then some other offices in Europe. And then actually underneath us is a little restaurant. In Serbia, the law requires you to provide a meal to your employees during the daytime. That's fantastic. They're very efficient at here, and it means nobody has to leave or going on to lose any time. And in fact, I ate here today, and it was delicious, really good. Okay. Well, everybody, sorry for the interruption. Thank you, say goodbye for the moment, or not goodbye, but till we meet again to America, okay? Thank you. Okay, Marco, we're going to just head this way now. Ivan, I didn't miss anything in there. Did I?

[indiscernible]

Everything, okay. I didn't miss anything, right? Okay. Very good. All right. Now we are going to leave the office space and go across where the rubber hits the road, where we actually make the products. And I'm hoping that -- in fact, I'll tell you what, Scott, if you are able -- can you confirm that you are seeing and hearing me right now? Because at the moment, I can't be sure of that.

Yes, we are, and you're looking great, and you're...

Thank you. So we're now walking through kind of the park area of the facility here. Just something else I want you all to be very aware of. We're on about 6.5 acres here, of which about 220,000 square feet are under roof. Now just to put that in context for you, in San Diego, we have about 53,000 square feet. So where we've been making the EV ARCs in the past, we had about 53,000 square feet in total. Here, we have 220,000 square feet under roof and then 6.5 acres in total. So we have an opportunity to double or triple the amount of space that we have under roof here, and we're in an industrially zoned area here. The city is very friendly to that type of growth. So it's a nice park area. We don't intend to change that because as you're about to see in a minute, we have an awful lot of space that we can continue to expand on. As we walk down this path, you're going to see examples of the products that Amiga before they became Beam Global were making a lot of specialized products. This is a really nice -- a very unusual streetlight product here that they make, LED lighting and everything else, electronics integrated. So along with the solar things that you've seen in the electronics that integrated there, what you can see is a variety of other types of street furniture, streetlight. And again, these things are all steel structures with electronics integrated into them. Our products at Beam Global to date have been steel structures with electronics integrated into them and the IP and other patented stuff that we have. So I've said this many times, a big reason that -- I've just got to stop here, this is kind of nice. This is a streetlight that has the opportunity to put plants in it. If you're in a kind of a green environment, you can -- you can put plants in each of these things here. Yes. really, really nice. Back to what I was saying, I have often said, and I'm going to continue to say this, that Amiga, was several years have been looking for an international expansion opportunity. This is just like a dream come true because they have all the skill sets, the capabilities required to make Beam Global products, but they didn't have our IP. And so now we are sharing our IP, our drawings with Beam Europe with our employees here for all Beam employees. And with that information, they are going to be able to start to make Beam Global's products. And sell them into what is, as Scott said at the beginning of the call, the largest market for these types of products in the world. I'll give you the numbers. Europe has about 405 million cars. The United States, about 290 million; China about 319 million. So you see Europe is by far and away the biggest market for cars in the world. Furthermore, Europe has already announced that they are going to ban the sale of all but Zero emission vehicles in 2035, 12 years from now. And so all of these 400-plus million cars are going to electrify in the next couple of decades. They desperately need charging infrastructure. They already have a limited amount of capacity on their grids. The war in Ukraine has made them feel very nervous about energy security. And so of course, our products adds capacity and because we're not connected to the grid, we're solving that energy security problem as well. So this is just a perfect market for us to be operating in. And of course, they're very, very aggressive about going green and clean. Europe has not only announced a ban of all but Zero emission vehicles by 2035, but they've also announced a mandate to be net-zero energy-wise by 2050, which again is not very long from an infrastructure point of view. And so having renewably energized products, which charge electric vehicles in which do not fail during blackouts and brownouts which have capacity is clearly going to be a major benefit for us. And although I can't go into detail, I can tell you that the interest right now for the sales department here in the products that we're bringing here in addition to the products they're making right now is fantastic. It couldn't be better. Okay. So we're just about to -- actually, before we come in, I'll just show you -- just to give you an idea of the scale of the place here. This is -- this area behind me here, this is an inventory space for steel sections which are going into the products which are being made. Look at it. Look at the size of it. That space, just the inventory space is about the same size as all of the space that we have in San Diego. Something else I want to say to you. In San Diego, we lease our building. Here, we own it. We own the land, we own the buildings. We own everything else. So there's no lease payment or anything else. It's on our balance sheet, which is another fantastic benefit. Everything I'm going to show you today, Beam Global owns it outright. Okay. So now we're going to go through security. [Foreign Language] He's laughing at me because I can't even say hello very well in Serbian, but I'm doing better. [Foreign Language] Okay. Okay. In we come. And just if you have a look around here for a minute, starting in this space here, you can see, this is some of the product here lying on the ground. These are towers that they're making for lighting or for communications. Those are red and white because they obviously going to go somewhere near an airport communication. Take a look at the sign. Magnificent, Beam Global, Beam Europe. All of these trucks and the cranes and equipment, obviously, we haven't had a chance to -- we haven't had a chance to rebrand them for Beam yet, but of course, we'll do that, but we own all of this. So for installing EV ARCs, installing EV standard, which is our streetlight product, which we're developing, this is going to be very, very important for us to have this type of infrastructure. So we're just going to quickly head into the other set of offices where there's more engineering resources. Just bear with me. And actually, in front of me here, you can see kind of a inventory or a portfolio of various different things. You can see all the different types of streetlights we've made. And remember, EV standard streetlight product that we're going to bring, I believe, will be the biggest single selling product that we have. I think it's far going to outstrip an EV ARC. There's 2 poles here with solar integrated lamp standards with solar integrated. They don't have batteries in them. They don't have EV chargers on them. They don't have wind mills on them yet, but you can see the skill sets here existing perfectly as soon as we give them the drawings and we do the -- actually, we're jointly developing the Streetlight product. As soon as we do that, we're going to be producing them right here and doing all of the work ourselves in this facility, which from a -- obviously, from a cost point of view, really important. That's another thing you should know. Serbia, fantastic place for us to be doing business. We are not in the European Union. Yes. Yes, this is fine. We're not in the European Union. However, we're allowed to trade as though we work. We don't pay tariffs. Oh, sorry. I'm already going a little crazy. We don't have to pay any tariffs. We can trade in the European Union without paying tariffs. But because we're not yet in the European Union, we don't have to go through a lot of the compliance stuff that's required there, the very business-friendly place. And the cost structure here is much better. It's much less expensive to do business here than it is certainly in the United States or in the rest of Europe. So that's going to be a real benefit for us. I think they will join Europe probably in 2030. Everybody seems to believe that. That's the intention, but we've got several years of really good stuff. I've been told that these 2 ladies, they run everything. Nothing happens in the company without going past these 2 ladies or so. Is it okay? Okay. Okay. Okay. Okay. Hello, gentlemen. We're live with the United States. Say hello to the United States. These are the production directors right here. Thank you. We won't disturb you anymore. And then more office spaces here and more engineering going on in here. Hello. Sorry, don't mind me. We're live speaking to the United States at the moment. So just say, hello America. Okay? So again, more engineers who are, again, developing the product and making sure that it's manufactured efficiently. [Foreign Language] See you later. More engineers in here. And then got to show you one of the most important rooms I already mentioned, you have to give everybody something to eat. So this is the dining hall here. This is where the crew all come in here and eat their launch here. I know somebody's responsible for keeping all of them happy. I just learned by the way, it costs about EUR 2 a plate to feed them. And the euro is just over $1. So you're talking about less than $2.50 to feed every -- each person. It's really inexpensive and a great benefit. But and anyway, it's required by the law, but that's a very inexpensive compliance matter for us. How am I doing on time here? It's 25 minutes past. Okay. Thank you for bearing with me. Right. We're now going to walk around the production halls. I'm going to show you -- Ivan is running to keep up here. I'm going to show you around the production halls and show you the land that we have available for expansion. And then after that, I'm going to take you inside the production halls and show you all of these products being made. These are streetlights here. But this company is very like the way we run Beam Global. They don't make anything unless it's already sold. So all of this inventory and everything that you see is already sold. And again, don't forget, they don't have credit, they don't have debt. We don't have credit or debt in this market. Beam Global in this market is [indiscernible] so it's really a great disciplined, very well run business here. Okay. It rained very heavily yesterday. The gods are obviously shining on us because the weather was appalling here yesterday, where you can see it's a little muddy on the ground here. And it's going to be appalling tomorrow, too. But look at it today, we've got these incredible almost looks like San Diego here, although I could tell you it's not warm. But it's -- the whether is absolutely beautiful here at the moment, which is perfect because we also have videographers here right now. They're filming. We're going to be making a new corporate video, which will be on our website, which is going to include our European operations. and they've been flying drones around and stuff. It's hard to film 6.5 acres. But with drones and some of the other equipment they have, they've been able to. Look at all of these produced here. This -- all of this manufactured here, all going off to customers. Again, they don't make anything unless it's already sold. The cars, don't look at that. That's not our property. That's on the other side of the property. But all the way up to the fence on this side of the town is our property. And this is a recycling center I see on the other side. Recycling steel and other stuff is great, actually kind of good to have them with us here. Okay. So now take a look at this. First of all, I'm just going to hop over here. This space here -- the space that I'm looking at here is about the size of the space where we make -- where we do the final assembly work on the EV ARC products in, in San Diego. And so it's ready to be roofed over. With the gantry cranes operate inside the fabrication facility with sewers -- can come back here -- come out here. And so this is a perfect location to do the final assembly. We don't need to do it here, but this is a great option for us to do that. Beyond that, we have all of this land here, all of which can -- any time we can roof over. Now it's useful for storing inventory. These are completed steel sections. Again, everything manufactured here, but we've got a great deal of flexibility here. Again, 6.5 acres, 220,000 square feet under roof, heated, for work in the winter and obviously, weatherproof and everything else. Just compared to about 53,000 square feet that we have in San Diego. Again, 220,000 square feet of production facilities here. And when I take you inside, you're going to see our incredibly well equipped we are to do everything. In fact, we're really much better required here than we are in San Diego. And there's a couple of important economic factors to that, which I will explain to you as we get to the point. And again, I can't stress strong enough. We own everything I'm showing you here, own it, outright. No debt, no mortgage, no lease payment, no nothing. We own all of this outright, Beam Global. And that's obviously quite important. Rent is a significant P&L impact for us. That's a significant cash impact for us in the United States. We pay rent on facility in San Diego and in Chicago. There's no rent here. We obviously have property tax, but they're very, very minimal. This is a very industrial area. It's not a fancy neighborhood at all. And so it's really inexpensive to do business here. Right. Just showing you the rest of the land that we have. There's another space here. You can see all the way to the buildings in the background that you can see and then all the way down the tree line here and then all the way to the buildings off in the far background over there, we own all of this. This is all our land to do with as we see fit. Something else is really interesting to point out. There is a beautiful freeway system here in Serbia. The quality of the route is magnificent. They were all been built in the last 10 years, more or less. And the quality of the route is actually magnificent. To get to this facility from Belgrade, which is the capital of Serbia, it's about a 2-hour drive. We did it this morning, early this morning. It took us about 2 hours. You can do an hour and 40 with no traffic. It could take a little bit longer with traffic. But what's interesting is half of it on beautiful highways. The other half of it, we have to go off on surface road. Until next year, they're building an extension to the freeway, and there's going to be an off-ramp about 500 meters from this facility. So right now, the connectivity is good. There's rail, there's structure everything else like that. But in less than a year with European Union money, I think, mostly yes, they will have a freeway -- yes, built right here with an off-ramp 500 meters from this facility. So the product will leave here and get straight on to freeway. From here, you can go to Istanbul, you can go to Berlin, you could go to anywhere, frankly. Greece -- actually U.S. money bank money, apparently. I'm being corrected here. Yes. Yes. So that's something else we do know about Serbia. There's a great deal of investment coming into Serbia. I think we're at the beginning of it, but there's a great deal of money, and it's all coming from the United States and Europe, nowhere else, not Russia, for example. So really good. We had a -- when we did the signing ceremony, the U.S. Embassy here, the commercial attache came to the signing ceremony and gave a speech. And one of the comments they made in the speech was that we could anticipate their full support as we grow this business, which is obviously important. Okay. Now I'm going to take you inside the production halls. And there's some really important economic factors to point out here. This is the sandblasting facility. Yes, largely automated. So the materials running through this, it's not a human being doing it. The material is running through it and it's being sandblasted so that the rust and everything else is knocked off in new steel work. When the sandblasting is finished, it comes into this facility here where the material is painted. Here's some -- these are products here, which are actually going to Libya. I mean to show you the expanse of this, Amiga prior to becoming Beam Global sold into 16 different nations. This is Libya. Does that make it 17? Yes. Okay. So these pieces are going off to Libya, which is in North Africa, just to show you the kind of international -- they fabricated this whole piece. This is a highly complex piece of equipment to manufacture here. And now it's been sandblasted in that space, and it's been painted here. Sorry for interrupting you. He's doing a bit of paint work here. This stuff he's doing by hand but very exciting. And here, this is all automated. This is a conveyor belt. So we've got electrostatic painting facilities right here and the materials run by conveyor belt through the electrostatic painting facility. Here's the economic I want you to understand. In the United States, we outsource all of this. It's one of the largest cost contributors to the production of our products is sending them out to get sandblasted and to get painted. In this city, we will not have those outsourced cost. I'm certain that we will cut the cost of blasting and painting by -- down to at least probably better than 1/3 of what we're paying right now. And that is a very significant contributor to our cost structure. So -- you heard me talking about improving our gross profits. We're doing that in the United States. We're cutting our costs in the United -- but from day 1, starting here, our whole cost charge is going to be way lower and in a much larger market for 2 reasons. First of all, just because it's cheaper to operate in Serbia. But secondly, because this company, we now own all of this stuff. We don't have to outsource. We don't have to send it to somebody else. We can have the skill sets and the equipment and machinery to do it all in-house. So these are very important piece of the model right here because painting and blasting is so expensive in San Diego. Okay. Now we're going to come into kind of the live part of the building. Not enough. And you can actually see these structures being made here or now. What they're making here is streetlights, communications towers, the products I showed you for Libya, for example. I don't know if I get killed while we're doing this. And there's a tremendous amount of different types of structures being built. This is where the steel is done relatively low tech, although we do have robotic weld as well in here. And the steel structures are made in here, and then they're taken sandblasted, and they're painted in that area, which I just showed you. Huge amount of space in here. And you can imagine for the EV standard products that we're going to make. That's our streetlight product that we have added patents on in 2019. But we haven't been producing it because we haven't had the resources. We're going to be able to make them here in very large quantities and then different from here anywhere in Europe. You got a lot of those inside of shipping containers. So just tremendous amount of activity going on in here. We have about 200 employees in here, and they're doing all the manufacturing work from the -- pretty much from the ground up. And then you've got guys like this, supervising -- you're live in America, supervising providing engineers who are walking around doing his quality checking. He's making sure that everything has been done according to standards. Say hello to America. Live, right now. Okay. All right. So it's a combination of actual manufacturing going on, and then -- and then there's actually quality checking and engineering everything going on. Again, this is a form rather tooling to make that very complicated product that was going to Libya, very complicated to make all of this stuff here. Very high skill set going into that, lots of good machines. And a lot of stuff here. And again, we own all of it. 200 or so employees and all the equipment and everything -- we don't own the employees, but we own all the lands, the buildings and everything else. Okay. So I think that's it. We're in here, a couple of interesting things, you can see over here a robot welding here. One of the -- we have several robots operating here doing robotic welding, and this is a good example of exactly you see more done there as well. So great opportunities for automation here. Again, a great improvement over what we're -- what we have in San Diego. And as you know, and we're making a lot of products and growing very quickly in San Diego. But the capabilities that we have here will be phenomenal in terms of expansion. And again, I can't stress this enough in Europe, which is the largest market for our products in the world. I feel very confident about that, and we're going to have no difficulty making them here. Something else you should know. They have a sales team here. That sales team has, for the last 30 years, been selling streetlight, electronics, integrated structures and everything else in 16 nations. The customer profiles that they've been selling to, cities, states, municipality. Well, I mean municipality -- counties, nations, militaries, large corporations, exactly the same customer profile that we've had success selling our products to in the United States. And what's already happening here is the sales team is already going out to their existing customers, and they're saying, "Hey, you've already have a contact with us. You've been buying these products from us for many, many years. Great success. The company has an excellent reputation. Now we have these new products, off grid, renewable energized, EV charging, are you interested?" Taking the cold call out of this, having existing relationships, having the credibility, having contracts in place in many cases, a tremendous advantage. Anyone in sales would tell you that. And so that's already very fruitful for us. Okay. So that was the sort of welding area there. And now I'm going to take you into this -- into the second of the production halls. We missed -- I should have taken them to inventory, actually just one quick -- and we won't go all the way down here because I'm going to go run out of time here. But I just want to show you very quickly the inventory areas here, actually kind of nice as well as our truckloading out here, and that's always good to see. Not the sky, but behind you, you can see a truck taking product away from here, that's my favorite thing to see. But over on my left here, we have spare parts and all the smaller stuff here in inventory control. That's the restaurant area where we were a little while ago were the crew is, just to give you -- get your bearings back again. And then in this part of the facility, we have a shitload of finished product and product that's in process here. And so you can see on this truck here, this is a great -- this is really good to see from EV standard point of view. Where I said we're going to -- I believe we will sell more EV standards than any other product in our line by far. And part of the reason that I'm so happy about having them manufactured here probably, certainly in the beginning even for the United States markets because you can get so many of them inside a shipping container. Okay, this is not a shipping container, but the format is the same. It's like a 40-foot shipping container same shape and size. And look at how you can nest them in here. 1, 2, 3, 4, 5, 6, 7, 8 across, and then you could go up all the way to the room. There's nowhere near finished so you can get an awful lot of them in a single shipping container. And so the economics involved with manufacturing the structure at least of EV standard here is sufficient to make it worth our while to send it to North America because it's so much less expensive to make it here. Sending 1 shipping container to North America is pretty inexpensive, and we're going to be able to stack a shitload of them in there, pardon my French. Okay. Just very briefly, again, much more inventory. This is all finished product. They do not make anything that isn't sold. And then behind you or Marco too a bunch of other products and then over there in the distance as well [indiscernible]. But there, no debt, no credit facilities, cash flow. All right. With that, we will go now into -- the second -- and the last really production facility that I'm going to show you on the tour. There are some other spaces where they do some electronics and stuff like that, but in the interest of time, I want to show you what's going on there. And I also want to make sure that I leave time for questions. My plan here, by the way, is that we will go to the top of the hour. That will be 16:00 Central European Time and 10:00 in the morning on the East Coast, and I apologize to those of you who are on the -- is it time to -- well, anyway, you know what time it is wherever you are. For those of you who are on the West Coast, I'm sorry, this is taking place so early, but we had to do this because we need day light and also because the employees will go home at some point, of course. So again, enjoy your coffee on the West Coast. Okay. Into the next facility now. Again, we own all of this stuff. This is a fantastically equipped facility here. I'm thrilled by the sort of equipment that we have, the type of machines that we have here. Huge practices, huge other alternative machine, which can do so many things, which we are currently outsourcing in the United States. So instead of having to send them off to somebody else and paying them the margin and all of that, we're going to do it all in-house with our own equipment and our own people here. So just walk through here, we try not to get in anybody's way. This is a press here, a massive machine here for bending a very large sections of plate here. You see them lifting in here right now. These are the different tools to make different shapes and bends. I better not get in there. But one thing -- you look down here, you can see this is an automated robotic welding of streetlights there. That machine is actually welding down the length of the streetlight. We can show you here. This the seam. This is the opening, the bend. These are flat plate and then this machine is drawing it in, closing it up and welding it together. It's all automated. And again, think EV standards. This is a product which I think will be the most successful seller. Okay, better to go this way -- thank you for your time. [Foreign Language] EV standard product, which I think is going to be the biggest seller by far, look at the capabilities here, just all the plates and everything else that they're able to make, all the holes. We outsource all of this again in the United States, but they do everything -- we do everything here. So Beam Europe is going to start from -- well, it's already started from day 1 and this is -- yes, very, very well equipped. The floor is wet because they're mopping it. And that's just, again, the quality of this place, ISO certifications and other quality certifications, even in an environment like this, they're constantly cleaning, even to the point of mopping the floor. Look at this bad boy right here. So this is a cell tower made in -- the size of, just enormity of the capabilities here, made right here in house. We've got more robotic automated machinery here and then a massive rolling and pressing capabilities. And then what we got going on here, cutting here. Yes, cutting and welding here, again, all automated. All this equipment. You could see the machines here running, again cutting and welding pieces there. And then -- we're going to go right process. I'm not even going to tell you what we're looking at here because it's so important. Say hello to America. Live. [Foreign Language] Okay. We'll go around here. This is a rolling machine right here so we can bend the plate there. Be careful not to trip here. Here's another one of these towers. Here's one of the most important people in the whole place. She's the one who is keeping it clean. Say hello to America, live. She is keeping it clean. Look, this is kind of cool here. So they buy -- we buy a roll of steel here. It comes on a roll like this. And then it goes through this machine, and this machine is flattening out into plates. And then every now and again they cut it here too. So it starts out on a roll and it runs through this machine, it comes out flat. And then once a section of it run through there, we don't plan to do it -- this is going to come down and cut it as well. We get tremendous capability, which is well allows us to do this. That flat plate that you just saw. It actually -- they're going to make it and turn it into something that looks like this thing here. It's not easy. There are not a whole lot of people who have the capabilities to do this kind of stuff, we do know. And to be clear, we're going to continue to prosecute this business. It's profitable. We're going to continue to do it. We're just going to add all the EV charging products and everything else here as well. We will not be taking this away. This is a good business. It's a brilliant way for us to get in with customers, cellular communication companies, power companies, cities, states just get the light right here. And all these -- those are all great customers for our EV charging products and for the other products that we're going to bring to line. So this is, a, profitable, good revenue and profitable; and b, a brilliant way for us to enter markets with our charging. And similarly, in some markets where we win with charging, for us, we'll go back and we'll sell them this to. We have the capabilities, and we're going to make use of them. Okay dokey. All right. So no, this is probably the most exciting thing I've got to show you on here. Hey, how are you? [Foreign Language] Now listen, 3 weeks ago, we closed on this acquisition, 3 weeks ago. This is the base plate for an EV ARC. This is the beginning of making EV ARCs in Europe, right here. This process, we outsource in the United States, but they are doing it right here in this facility. So I'm thrilled to [ picture ] that. Thank you very much. It's fantastic. The first EV ARC product starting to be made here 3 weeks after closing the deal. So it's not just branding. It's rather in the reality here, they are actually making the products already in this facility. Now for those of you, let me get the light right here, yes, can you see me okay? Or do you want me to go this way? Okay. Yes. For those of you who have asked me about why we made this acquisition before. For those of you who have questioned the choice of the company and everything, what I showed you right there is a huge part of it. The fact that within 3 weeks, they're able to already start doing things that we can't even do in the United States, they're already able to start making the product. It's just fantastic. Their ability to sell their history selling, the types of customers with whom we've had success. And then the fact that right off the bat -- look at this piece of kit here. This is a huge massive investment you would have to buy. As I told -- as I said to you before, we own all of this, and I'm going to tell you this, we paid EUR 10 million for this company. The land and the buildings appraised independently recently for over EUR 7 million. All of this equipment and machinery and everything would cost another EUR 6 million to EUR 10 million to replace it. So land and the building of EUR 7 million; equipment and machinery of EUR 6 million to EUR 10 million. We paid EUR 10 million for the whole thing, the business and everything else on top of it. Yes. Quality check. Very good. These people -- you know what you're doing. Yes, you do. Thank you. [Foreign Language] Fantastic. That looks really good. And look at -- it's perfect actually. This is yes, really, really good, and I'm very happy with the way that's coming out, very happy. Okay. There's a next one getting ready to go there as soon as they're finished with that one. Here we have laser cutter. Yes. So this thing is able to cut with a laser, and it's run by the computer. The engineers that you met in the offices, they're going to create the drawings. Those drawings come electronically in here, they're fed into the machine, and then the laser cuts the pieces out some of those parts I showed you over there with the holes and everything like that. Cut by a laser automatically here not by hand. That's why they get so much production here with the smaller number of people that they have. And then finally, I think the final thing we're going to show you here is the plasma cutter. Same thing. That one's using a laser to cut holes. This one here is using an arc plasma. Oh, and look at what's on it. Look at what's on it right there. That's another EV ARC base plate right here. Bevel already cut in it. The quality of the bevel is fantastic. I'm bound to say it's better than we're getting from our outsourced vendors over there. And this is an EV ARC based plate right here. They're already cut. That will leave here. It will go on to the presser where it'll be -- if you're familiar with EV ARC product, the base plate is the thing I always refer to as the dumbest and the smartest part of the invention. It's the thing that gives the product stability, makes it withstand 160 mile per hour winds, flood proof to 9.5 years as well. And a big part of that base plate, the intelligence in it is the fact that it's not flat. It has an ARC in it which makes it structurally sound. It has some framing, some other things going on underneath it. And again, they're doing that right here for us now. They're tying this one now. It will then go down there and get that form put into it. Is that another plasma there? Yes, another plasma cutter right there. I'm drilling, I'm drilling, drilling. Yes. Okay. Good. All right. So this is, again, all computer automated drilling and everything. No measuring or anything like that. It's computed through that. And yes, if I were going to look at this last one here. Yes. Okay. Yes. And then we actually have a base plate that they're working on down here. We're just going for a quick thing. And then that's going to leave us with 10 minutes for Q&A. I apologize. I meant to give you 15 but -- as you can tell, I'm a little carried away with the whole thing here, but in a good way. This is an excellent facility, an excellent team of people. [Foreign Language] And again, no debt, no credit. Just -- so good. so here's another base plate here working on right here. He's doing something. He processes to it there. Again, it's a little far -- but it's incredible. 3 weeks after closing, they are already beginning to manufacture the first component of EV ARC. You can see that they've done a great job of branding and everything else. It's a process. It's not an event. It's going to take us a while to finish everything. But the sheer energy and enthusiasm that Ivan and his whole team are putting into this. I've done a lot of M&A in my history. I can -- never have I found a group of people who is more enthusiastic about becoming part of the Beam family, about growing. Look at the flags, look at the signs, everything done in 3 weeks, and they're just getting started. Okay. With that, I'm going to go and stand somewhere slightly less noisy, and I'm going to take your questions. If you -- so Scott, I'm handing it back to you now, and I'm relying on you to relay any questions to me that may have come up, and we'll spend the next 10 minutes answering them.

Sure. Thank you, Desmond. We have an ability for you to ask questions through the Q&A tab in your Zoom menu. And our first question comes from Stephen Wagner and he says, with the cost savings from not having to outsource as much, do you have any idea on what that will do yet for gross margins? Also, when will this begin to have an effect? Thanks. Great presentation. Thank you, Stephen.

Thanks for that excellent question. Yes, I've got a bloody good idea of what impact it's going to have. And so as I've told you during the last couple of earnings calls that we've done, the Beam Global team in America has already done some stellar work in terms of cost reductions. We were not really going to realize them until -- well, we started to see some benefit from them in the third quarter, we'll get the majority of the benefits in the fourth quarter. By the first quarter of 2024, we're going to get the full impact of those cost benefits. And they're really significant. As I told you before, we're already reporting positive gross margin in the United States, the cost benefits that we've looked at are going to reduce our cost by something in the order of 20%. And that's in the United States. Over here, not having to send out for painting, not having to send out for blasting, not having to have the plate. I could tell you that just bending that plate, what they're doing right now, in total, it's close to 2% of our cost in the United States. So that -- just that 1 process is about a 2% benefit there or certainly close to it. The painting and sandblasting and all those other things are, in fact, one of the largest cost contributors to making the EV ARC is sending them out and getting them painted and blasted. The fact that we're going to do them while -- we're getting rid of all the cost because you still have to pay for the paint. And of course, there are some overhead costs for labor. But it will be nothing compared to transporting and paying for everything that we have to pay to do this in San Diego. Look, I'm not going to give you an exact number right now, but I can tell you, very significant cost reductions from performing here. And we've already done a cost analysis on the product here. We're not seeing any increases on any of the components or anything else like that, but we're going to see some very significant cost reductions. When will it take effect? Well, you can see they're already starting to make the product here now. It's all about selling out. They all sell. That we're making the product here. We'll get the cost benefits from it as soon as that happens. We will be incorporating Beam Europe numbers into our fourth quarter numbers. But you won't see the impact of cost production in EV ARC. You'll just see the current state of business. But certainly, we're very aggressive about where we're going in 2024 with it, very aggressive.

That's excellent. Thank you, Desmond. Next question comes from Kevin Lee. Are you selling your solutions in other African countries or only Libya? Excellent tour. Thanks for sharing.

Okay. So Libya's just one of the African countries that this facility has done business in before. Gabon, Angola, Nigeria, Egypt, Algeria -- and he can't remember. Okay. So the fact is Africa right now is probably not a very promising market for electric vehicle infrastructure. But we believe in the future, it will be a very effective market. I think Africa never had wired telephones. Everyone has a cell phone now. Very few people have internal combustion engine power in Africa I mean per capita compared to the rest of the world. When they go to cars, it's all going to be electric, and actually, we're going to be selling there. We're going to continue to do the core products that we're doing here, that we're already selling into places like Libya. As you could see, they're complex parts and electronics integration and everything else like that. But yes, the EV charging and the renewable energized product, without a doubt, we'll be approaching that market for them.

Awesome. Next question. Why is Serbia? Isn't it dangerous? And is there a language or business barriers?

Yes. Okay. That's a good question. Why Serbia? Well, I can tell you, first of all, I didn't look for Serbia. I looked for an excellent target. And I've been looking for international expansion. Those people who know me will know I've been looking for an international expansion opportunity for something like 5 years now. The reason we came here because this -- I literally wrote like 15 bullet points of what we were really looking for. Capabilities, equipment, machinery, engineering and the ability to sell and a proven history in all of that. Of the 15 bullet points, for me, I have like 13 of them. I mean it's extraordinary what -- how close a match this was. We were able to work on a very good transaction with the sellers. But Serbia, it's a business-friendly environment. As I already mentioned, we can trade in the EU but without tariffs. And we're going to be in the EU but we're going to get like a 6-year honeymoon before we have to do any of the compliance stuff to do that. Marco, let's just not get hit by the forklift. Okay. And then low-cost environment here. I mentioned we've got something like 35 engineers on staff. They're much less expensive. They're very well educated, speaks English, really great work ethic here. These people are -- they're tough and they're hard-working people, and I'm really enjoying getting to know them. Probably like Scottish people actually in many ways, and you can take that as a good thing or a bad thing depending on what you think about that. Anyway, but excellent from my point of view. Is it dangerous here? Many of you will have heard that 30 years ago, there was a war environment here. And -- there's -- you will -- in the press from time to time, you will hear about border disagreements between Serbia and Kosovo. I can tell you that the U.S. embassy here has told me that this is a good place to invest. They do not view this as a risky environment for us to invest. That's why so much American investment is coming here. Again, as I also mentioned to you, we've been told that we have the full support of the U.S. Embassy and the U.S. government of Biden. Don't forget U.S. government is a big customer of ours. One of these end results here. So no indication of any danger here. The things that go on in the border between Kosovo and Serbia are largely political, but a [ saber-rattling ] every now and again. But nobody -- I think nobody believes that it's going to develop into anything that we should be worried about. And if I -- actually, Ivan and I talked about it this morning, there's going to be some elections later on a year this year. Ivan is very confident and he's qualified. He's very confident that we're not going to have any problems as a result of this. In fact, things may improve from a business environment front. So no, not dangerous and a brilliant place to do business as you can see how else. Have they sold to 16 nations or 17 nations now all over Europe and Africa over the last few years? I'm thrilled to be here.

Our next question comes from Christopher Souther. Any estimate as to the time line on the EV standard product development?

Yes. We have made -- by the way, just one last thing on Serbia, look at the map. It's also fantastically located from a central point of view. We can get -- We got Turkey, right/? We got Greece, right? Lots of fantastic markets for our products incredibly well and centrally located. That's the last thing I will say on Serbia. It's kind of like doing business in the middle of the United States. Everything is kind of actually distant from you. Okay, time line on the EV standard. Well, -- what can I tell you? We've made more advances in developing the EV standard in the last month than we have in the 4 years since we got the patent on it. It's absolutely fantastic. I've put some very aggressive goals in front of the team, both here in Serbia and in the United States. Ivan is a task master and a driver, you don't get all of this done without being like that. So he's pushing hard on this side. We're pushing hard in the United States on it as well. And as I say, we've made more advances in the last month. Now the other thing that I'd really like to report is we closed on this deal 3 weeks ago, but Ivan's team was already working to develop with our engineers in the United States to develop the EV standard. We were confident we were going to get the deals on. And they are so excited about the EV standard. I think that's true. They just want to bring this thing to market because they've got all of these customers already. We're already buying streetlights and other electronic integrated steel products from them like that, and they just feel very excited about it. So they did start working a little bit before we close. And that helps me close the deal, frankly, because I saw what their life the inclination to get to work and to be helpful. Nobody's saying no or shaking their head here. They're all saying, yes, I'm trying to figure out how to get things done. So I'm not going to put a day on it, but I can tell you it's going to happen way faster now. I don't know how we would have done it without this acquisition, but I'm thrilled that it's going to happen way faster now. And we're going to measure this in a short period of time. We're going to have the first beta version of the EV standard standing up really down soon. And then after that, we're going to figure out how to get it into production. And the good news is I've got world prominent experts here to do that efficiently and to get it into production quickly. So say tuned, it's coming sooner than you might think.

Excellent. Next question, can you remind us of what the terms of the transaction for Amiga Beam Europe were?

Yes, yes, okay. I'm not surprised we got that question. And I know we're at the top of the hour, now so quickly. So the terms of the transaction, initial consideration of EUR 10 million. And again, remember, the land and buildings appraised for around EUR 7 million, the equipment and machinery EUR 6 million to EUR 10 million. So very, very good from that point of view. Of that EUR 10 million, EUR 7 million in cash and the cash is split into 2 different payments. We've already made one of them, EUR 4.5 million. And then the second payment of another EUR 2.5 million at the end of this year. And then the rest in stock, EUR 3 million in stock, and the breakdown the same. So 2/3 a bit more or less on closing and another 1/3 at the end of this year. . But the real benefit and where he's and the sellers are going to make the most money, I believe, is going to be in the earn-out. So we have 2 earn-out periods. In 2024, we have an earn-out where they get shares. For every $1 of revenue that they generate, which exceeds 13.5 million in revenue next year. And then the year after that, they get shares for every dollar in revenue, which exceeds, I think it's 16, 15 -- 35% more than prior year is what it is, which we're excited to be 18-something, I think it is. They're high goals, but we fully expect to hit them.. I mean we're -- the current business is growing. He's doing well here with the current business and the introduction of our new products, again, I got to go to the [indiscernible], but the interest for the products that we're bringing here, the interest for the property that we're bringing here, I'm looking forward to earning -- making this earn-out. And I know he is too. And we are going to do -- by the way, we are going to do everything that we can to support that. We don't want him to miss his earn-out it. We want him to get his earn-out.I like having him as a shareholder in the company. He wants to spend a long time with us. Yes, but we want him to do well, and he wants to do very well at this, and we want to hit those goals. And we're going to do everything that we can to support it. So that's basically -- and then just to let you know, the shares that he's receiving first of all, they're restricted, so they're locked up just under [ Rule 1.44 ] for 6 months. But after that, he has agreed and it's in the contract to restrict his selling of those shares to never selling more than 4% of weekly volume forever, no matter what happens. He doesn't intend to sell anyway. He wants to grow this right now, but that can change. I get that. And if it does, current shareholders of Beam Global are very well protected against anybody throwing a lot of shares on the market here because there's a very strict restrictions. As you guys know, most of these acquisitions are restricted to 10% or 20% of daily volume, he's 4% of weekly volume, and he's agreed to that very readily because he's part of Beam Global now. This is -- we are now 370 employees, 2/3 of them in this part of the world and tremendous growth prospects, tremendous skill set, tremendous equipment, land and buildings and everything else, no lease payments, no debt. And probably with no debt across all of Beam Global. We're in good financial state. You'll learn more when we do our earnings next week. But frankly, as I said at the beginning of this, after the invention and the introduction of the EV ARC, which is what paved the way for all of this, this -- what you're looking at what I'm describing you today, in my opinion, is the second most important thing we've ever done here. And I am thrilled to bits about it, if you can't tell that. Scott, we're after time here. I'm happy to take another question if you have one. But otherwise, I think we need to wrap up to respect everybody's time.

I do have one final question. We've seen earnings reports and other announcements from the leading solar players and EV participants warning that demand is softening. Are you seeing something that they don't? What do you think is protecting you from the weakness that we're seeing in these sector stocks?

Yes. Okay. So let's start with EV sales. Let's be clear about what we mean by that. EV sales, the growth -- year-over-year growth this year was something like 47% year-over-year growth as compared to 59% last year. So we're not seeing no growth in EV sales. We're not seeing negative growth. We're just seeing less growth than we saw last year. Are there stories about the car manufacturers slowing down some production? Yes, there are out there. I think it's not surprising. We had an early adopter group, well-off people buying the first EVs. Now we're trying to get into that more mainstream growth there. There are lots of doubts amongst consumers' minds about lack of infrastructure, which is what we're working on right now. How we're protected from that is that there's not anywhere near enough infrastructure today before the EVs so that's part of the complaint. But anyway, the point is, as I mentioned to you earlier, Europe is going to ban everything but the sale of internal -- of zero emission vehicles by 2035. North American power manufacturers can't produce internal combustion engine vehicles for North America and EVs for Europe. That's why GM and Ford and Stellantis have still committed to 2035 to electrify their fleet even if they're talking about some slowdown. But frankly, I think they may have more to do with unions and UAW strikes than consumer demand, that's an opinion. I am not seeing any indication at all that this is going to do anything other than continue to go over the next couple of decades. Will we see some choppiness on orders? Yes. For EVs, we will. For infrastructure, we will. At Beam Global, we will see choppiness in the order cadence. I told you about over and over again. It's the nature of the new industry. But what we're looking at here for the next couple of decades is a tremendous amount of growth and we won't ever be able to keep up with it. And I'm very confident about that. On the solar part of it, first of all, remember, we're not a solar company. We do not make money turning solar into electricity and selling that electricity for utilities or to other people. Solar companies are very, very impacted by interest rates. Higher the interest rates are the less profitable their projects are because they finance those and then they try and get the money back selling a kilowatt. We don't do that. We sell products which use solar power and now light wind to power them, but we are not a solar company. We're not relying on interest rates. I think interest rates have hurt the solar industry probably more than anything else has. And certainly, the wind industry has been heavily impacted by them. Anybody who's selling utility scale deployments have been very impacted by interest rates. But frankly, so is the EV market. Higher interest rates make products that people already perceive as being a little bit more expensive to launch, all product sales have been impacted by that. Longer and the short of it, I think we're dealing in a high interest environment, we haven't been for a long time. That's had an impact on lots of things. It's having an impact on the industry that we're involved in, but I do not view it as a long-term threat at all. Electrification of transportation is inevitable. We have the fastest deployed, most scalable, most cost-effective solutions that I'm aware of anywhere in the world today. And now we've just expanded into the biggest market in the world, and we have all the capabilities to execute on that and with a very reduced cost structure. So I'm feeling great about it. It's an excellent question. And with that, Scott, I think we better let people go.

Yes. I think that's going to conclude the Q&A. I want to thank everybody for joining in. Desmond, maybe you could just say some closing words, and then, we will end the call.

Yes, of course, I just want to start by thanking my friend -- my new friend and my new colleague, my Beam brother, I call him, Ivan Tlacinac and I apologize, I'll get back to saying your name. Marco, thank you for your help buying the camera here today. And look at what we are, folks. This is just the most exciting expansion. And we've done it very cost effectively. We have a tremendous future here. It's -- as I often say, it's a great time to be Beam, it's never been a better time to Beam. It's just thrilling. I'm delighted to be here, and I'm really glad to have all these magnificent people around here working towards this future. So thanks for joining. Thanks for your support and your interest, and keep asking us. Keep engaging people asking those questions. We'll keep answering them. And with that, we're going to end this webinar. Let's have one last look at the sign and the failing light that we have here today. And then Marco, if you can hit end webinar. If you see some way to do that on there, I think you own that -- and then we'll sign off folks.

Awesome. Thank you, everybody.