Beam Global

Good day and welcome to the BEAM Global Year-End 2021 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Kathleen McDermott. Please go ahead.

Thank you. Good afternoon and thank you for participating in today's fiscal 2021 conference call. We appreciate your support and interest in BEAM Global and for taking the time to join our call. Joining me today is Desmond Wheatley, President, CEO, and Chairman of BEAM. Desmond will be sharing his thoughts and observations about our fiscal 2021 results and his perspective on the business. But first, I'd like to communicate to you that during this call, management will be making forward-looking statements, including statements that address BEAM's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in BEAM's periodic report on Form 10-K that will be filed tomorrow, March 31, 2021, our most recent Form 10-K. and other periodic reports filed with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, March 30, 2022. Except as required by law, BEAM disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. I'd now like to take you through financial results for the 2021 fiscal year ended December 31, 2021. Beam Global reported record revenues in fiscal 2021 of $9,001,751 compared to $6,210,350 in fiscal 2020, an increase of 45%. In the fourth quarter of 2021, the company generated revenues of $3,487,649, a 56% increase over $2,207,006 in the fourth quarter of 2020. The company invested in sales and marketing resources during the past two years by increasing the sales team, adding consultants, and investing in marketing. We're delivering more higher unit orders, the largest of which was a 52-unit order for the State of California's Department of General Services. There's an increase in state and federal funding programs available to provide incentives to invest in electric vehicles and electric vehicle infrastructure. These programs have supported our growth, and we expect that they will continue in the future. Our gross loss in fiscal 2021 was 971,644 or 10.8% of sales compared to 710,974 or 11.4% of sales during fiscal 2020. The gross loss in the fourth quarter of 2021 was 340,624 or 9.8% of sales compared to 537,937 or 24.4% of sales in the fourth quarter of 2020. During 2021, we saw price increases on many of our purchase materials, primarily for steel and batteries, as well as transportation cost increases due to COVID-19 related issues. We were able to partially mitigate some of the transportation costs by delivering systems using company resources. We implemented some design changes and streamlined our manufacturing, which provided some cost reductions in labor efficiency during the year. In addition, with the increased production levels in 2021 compared to 2020, we were able to benefit from increased fixed overhead absorption. This resulted in a small improvement of our gross margin, excuse me, our gross loss, as a percentage of sales in 2021 compared to 2020, despite the cost increases. Operating expenses as a percentage of revenue decreased by 10% in fiscal year 2021 compared to 2020. Operating expenses were $5,627,674 in fiscal 2021 compared to $4,496,660 in fiscal 2020. Operating expenses in the fourth quarter of 2021 were $1,674,683, down from $1,799,242 in the same period of 2020. The increase in total year operating expense was primarily due to increases in sales and marketing to support revenue goals, research and development for design changes and cost reductions, and accounting and filing fees related to a change in auditors and our proxy and meeting costs. Net loss as a percentage of revenue decreased by 11% in fiscal year 2021 compared to 2020. The net loss was $6,596,039 for the 2021 fiscal year compared to $5,213,025 for the 2020 fiscal year. For the three months ended December 31st, 2021, the net loss was $2,014,811 compared to $2,336,524 for the same period in the prior year. This is primarily attributable to the increase in growth loss and increased operating expenses. At December 31st, 2021, we had cash of $21,948,512 compared to $26,702,804 at December 31st, 2020. The cash decrease was primarily from operating activities, which was partially offset by cash generated from the exercise of warrants. Our working capital decreased from $28,133,031 to $24,611,810 from December 31, 2020 to December 31, 2021. And with that, I will turn the call over to Desmond to provide a business update.

Thank you, Kathy, and thanks, everybody, for tuning in and for your support. And listen, before I get started here, I just want to remind all of you that we are in the flight path of the Marine Corps Air Station Miramar. So far, nothing's flown overhead since we started this call, but it's going to happen for sure. And when that does happen, there's going to be a tremendous roaring noise because we're literally a mile away from the base and they fly right over our offices. That's part of the way we keep the rent down here. But at any rate, just be aware of that. If that happens, I may even have to stop talking because it's so loud, but I'll pick up right where I left off. Just don't be surprised. And please don't concern yourself for me. 2021 was a year in which Beam Global broke record after record after record. And the various records which we broke spanned almost every area of our business. Let's start with deliveries and revenues. In the second quarter of 2021, we delivered a record number of EV arc systems, up 109% over the same period prior year. In the third quarter, we set another record for deliveries and revenues, with deliveries increasing over 123%. Year four was time for another record for deliveries and revenue, with a 45% increase in system deliveries over 2020. Not surprisingly, all these record quarters contributed to the biggest year of system deliveries and revenues in our history. By the time the year was over, we'd manufactured 124 EBR systems, delivered 119, and generated revenues of over $9 million. This compares to 69 systems in 2020 with revenues of just over $6 million, amounting to a 45% year-over-year increase in revenue. In Q4 of 2021, we had a 59% increase in revenue over the same period prior year, with a significant increase in system deliveries over the prior quarter and over the same quarter in 2020. Now in the past, when we've had a very strong fourth quarter, we generally entered the following year with little or no backlog and a lot of work to do to start the machine rolling again. But in 2021, along with all the record-breaking deliveries and revenues, we also had a record year of sales, which were up over 131% from the prior year. This meant that for the first time in our history, we're able to enter a new year with a strong backlog of contracted orders for our products and little or no interruption to our production. Backlog is not always the best metric to use when measuring our progress, because of course it goes down when we convert it to revenue. It is nevertheless very positive for us to enter a new year with a healthy backlog, particularly because January and February can be slow months for new orders. This record number of new contracted sales in 2021 was contributed to by several other records. For example, we received the largest single order in our history, 52 system order from California's Department of General Services. The order was funded by California's Office of Emergency Services, validating again the disaster preparedness and resiliency aspects, which are unique to our EV charging infrastructure products. That 52 system order was, of course, a follow-on order through our California contract, which has been in place for many years and renewed more than once. In fact, we're currently in the process of renewing it again. A further contribution to our historically high 2021 sales came from yet another record, which was that we received the largest first-time order in our history from the United States Marine Corps, 21 EVR systems as a first order to be deployed across Marine Corps bases in the continental United States and Hawaii. All the DGS and Marine Corps systems have since been deployed. That Marine Corps order set another record in that it was the largest order we received through our General Services Administration contract. I feel very confident that it will not retain this record for long. But the Marine Corps was not the only federal agency to place orders through our GSA contract in 2021. Historically, we've generated significant revenues through government sales. In fact, during COVID, that's how we earned the majority of our revenues. But most of those have come from state, municipal, and local governments. 2021 did not disappoint in this area either, as we received orders from or delivered product to 20 different U.S. states and also Canada during the year. But 2021 was the first full year in which our GSA contract was active, so I suppose it's not surprising that it was also the year in which we received the greatest amount of revenue from federal opportunities in our history, another record soon, I believe, to be broken. The United States government is today the largest consumer of diesel and gasoline in the world. It has a current mandate to replace its 675,000 internal combustion engine vehicles with zero-emission vehicles. It will soon become the largest consumer, of electric vehicle charging infrastructure in the world. We're all aware that the federal government does not always move at a pace consistent with the commercial world. However, like a mighty battleship with a full head of steam, it does not readily change course and is very hard to stop once it gets going. Beam Global has the fastest deployed, most scalable, lowest total cost of ownership, and most resilient EV charging infrastructure product in the world. It's made in America. and it delivers clean green energy to the vast new fleets of electric vehicles which are coming. I cannot think of a product which is better suited to meeting the aggressive and accelerating goals of the federal and indeed all other governments in the United States and globally for that matter. With that said, we believe that the orders we received from the federal government in 2021 though they did set a new record for us, will seem fairly insignificant as the machinery of that contract spins up in the remainder of 2022 and the years to come. We are not leaving this to chance. We have significantly increased our investment in government relations and it's paying off. Our internal government relations specialists and our two DC-based consultants have been responsible for making sure that off-grid EV charging infrastructure language is included in funding bills where it was previously neglected. and we've been made eligible for programs which previously excluded us, like Cal EVIP and the Carl Moyer Incentive Program. Beam Global has been voted onto the Board of Directors of the Electric Vehicle Charging Association, and perhaps most striking of all, when the Federal Highway Administration released its program guidance document on the National Electric Vehicle Infrastructure Program, they used a picture of Beam Global EV arcs on the front cover. I think that's what's called a buying sign in sales parlance. People quite often comment that we generate a lot of revenue from government customers, as though there's something wrong with that. And it's true, as I've mentioned, that particularly during COVID, a very high percentage of our revenues came from government customers. But prior to COVID, enterprise customers often made up more than half of our annual revenues. Of course, as people stopped going to the office and visiting other types of businesses, the requirement for workplace or amenity-style charging was reduced significantly, and therefore, so were our enterprise revenues. Notably, Even though we lost this avenue of revenue generation, which, as I said, was more than 50% often, we were still able to hold and even grow our revenues in 2020 and 2021 because the growth in government made up for the loss in commercial sources. It might be reasonable to assume that post-vaccine, with the return to normal life or at least something like it, Beam Global ought to expect a return of enterprise spending on EV charging infrastructure, and indeed we have. In 2021, we received purchase orders from non-governmental businesses sectors, including automotive, commercial real estate, construction, travel, entertainment, and education. We also saw continued growth in sales to utility customers. One of the many misconceptions about being global is that we compete with utilities. In fact, we're increasingly adding them to our customer list because our product is ideally suited to their requirements on many levels. They too need to deploy very large volumes of electric vehicle charging stations, and they need to do it quickly. Utilities are not generally known for their rapid deployment of infrastructure, but our EV arc gives them an opportunity to provide EV charging faster than any traditional method. The increasing number of blackouts and brownouts is causing utilities to seek methods to deliver electricity to their customers in manners which are not reliant upon large and centralized infrastructure. Regulators are calling upon them to provide resiliency in the face of the increasing risk of blackouts caused by more severe weather conditions and, of course, the ever-present threat from nefarious nation-state actors. This is only going to become more important as electricity replaces oil as our transportation fuel. The United States has a strategic petroleum reserve to ensure that we never run out of diesel or gasoline, but there is no strategic electric reserve. In fact, in most markets in the United States, have insufficient capacity to serve current load. This is why we experience blackouts and brownouts during heat waves when everybody turns up their air conditioning. Our products continue to provide electric vehicle charging and emergency power during those sorts of events or any other grid failure. The current situation in Ukraine and our deteriorating relationship with the Russians, who we know have already hacked the US utility grid, when combined with the existing lack of capacity, makes the requirement for rapidly deployed EV charging infrastructure, which does not rely upon centralized utility grid, more urgent than ever. It's probably true that for the foreseeable future, the majority of EV charging will be supplied by the grid, but the utilities know, and so increasingly does the government, that we must have charging solutions which are faster and more scalably deployed and which will continue to operate when the utility grid fails or cannot add sufficient capacity quickly enough to keep up with the demands of all the new electric vehicles. To give you an idea of how acute a problem, and therefore an opportunity for us, this is, it's helpful to understand that an electric vehicle has a similar load profile to a single family residence in California. Each time you add an electric vehicle, it's as though you're adding another home to the demand on the grid. Of course, electric vehicles will come far faster than new homes ever could, and as a result, will be much harder to keep up with. Charging an electric vehicle with a 350 kilowatt DC fast charger is like turning on 500 homes at the same time. because of the speed at which the electricity is delivered to the vehicle. The electric utility grid was never designed to replace oil as a source of transportation energy, but will need sufficient electricity to replace oil over the next few decades. The grid cannot be expanded quickly enough to keep up with transportation of electrification. Beam Global is in many ways creating the early stages of a strategic electric reserve with our products. A fact that is recognized not only by our federal and state government customers, but also by our growing portfolio of utility customers. The combination of our pipeline and backlog continue to set new records throughout 2021 and leading into 2022. Pipeline is in many ways a better metric than backlog when measuring our progress, as long as we continue to do a good job of converting it into revenue. Historically, we've taken a fairly conservative view where pipeline is concerned. meaning that we don't add opportunities to our pipeline unless we have a very reasonable expectation that they can and may convert to revenue at some point within a reasonable timeframe. The reason the pipeline is a more worthy metric, so long as we stick to these high standards, is because, as I've already mentioned, backlog converts to revenue and increasingly does so within the period between our reporting on it. Said another way, the more efficient we become, the faster we deliver products to customers who've ordered them since the last time we reported backlog, As a result, those orders never appear in the backlog that you get to see. I believe that we're continuing to use sensible and reasonable methods where calculation of the pipeline is concerned. There are four important aspects to our pipeline which I want to share with you. Of course, the most obvious is the size, which today is over $90 million. The second is whether or not the pipeline is growing, and it is. As long as the pipeline is growing, and the revenue that report is growing with it, then we are executing on our growth plan. The other two important aspects of our pipeline makeup are A, that the size of the initial customer orders are increasing and B, that the timeline between initial contact and receiving a purchase order from a customer is shrinking. In other words, prospects are ordering more units in their first order and accelerating through our sales cycle faster than any time in our history. Our improved efficiencies in the factory and our ability to produce and ship product in greater volumes and shorter timeframes, combined with this accelerated sales process, means that we're in a position to convert early stage pipeline into revenue at a faster and greater rate than ever before. Now, I believe there are several reasons why these initial orders are bigger and moving through our sales cycle faster. Some of those reasons are related. First of all, there seems to be an increase in the urgency around the ordering of EV charging infrastructure. This is not surprising, as there are more and more mandates and financial incentives in place at a time when there are simultaneously more and more attractive EV models available to the public. Ten years ago, when we first started making solar-powered electric vehicle charging products, electric vehicles were the domain of elitists and Teslas and tree-huggers in cars like the Nissan Leaf. Fast forward to today, And now we see a whole host of new products, like the Ford F-150 Lightning, GM's electric Hummer, Rivian's RT1, Ford's electric Mustang, the Kia EV6, and about 100 other compelling EV offerings, which are formatted and increasingly priced to be attractive to the average American consumer. The situation in Ukraine is again contributing, in that the very high oil prices, which are being translated into greater than $6 a gallon of gasoline, are invigorating consumer interests at a pace which might have been hard to predict even a year ago. All in all, there's a dramatic increase in the requirement for EV charging, and that increase is coming with urgency. Customer urgency is music to our ears because, again, we have the fastest deployed, most scalable, most robust, and lowest total cost of ownership EV charging infrastructure solution available today. Because we positioned ourselves to support any EV charging company rather than competing with them, we're in a position to be in increasing demand regardless of which EV charger or service provider a customer may choose. We deploy ChargePoint, Blink, Electrify America, Enel, or any other quality EV charger and service provider. We just do it faster and without the need for construction, electrical work, permitting, utility bills, or risk from blackouts and brownouts. we have essentially productized out all the risky, time consuming and variable cost aspects of EV charging installations. The same time as we're seeing this significant increase in the urgency around the deployment of EV charging infrastructure, we're also seeing an increase in the acceptance of our product as a mainstream solution to provide the infrastructure which makes EV charging work reliably, scalably and robustly. Whereas in the past, we used to have to spend a good deal of time convincing prospective customers that our products worked and then go through a process where they ordered one or two units before feeling sufficiently confident to order larger quantities. The questions we now get are no longer about whether or not the product works. Rather, they're focused upon whether or not we can produce the quantities that our prospects require within the increasingly urgent timeframes under which they're now operating. This year, I've already toured several large organizations through our factory to demonstrate not how our products work, but that we are set up to meet their requirements for the types of large orders which they believe they will need fulfilled. I'm not representing to you today that we've received such an order, but I do believe that the inquiries are serious and that they're coming from entities who have the wherewithal and the need to place such an order. In my view, it's only a matter of time. I'm happy to report that none of these organizations left disappointed. This is in no small way due to the investments and efforts that we've been making in our factory, anticipating that this time would come. In our final assembly area, which is, if you like, the bottleneck in our production capability, we now have six workstations, each of which is capable when staffed of producing an EV arc in a shift. That means if we produce one EV arc per station per shift and run five shifts a week, we can produce 1,350 EV arc systems per year. Moving to two shifts five days a week, we produce 2,700 systems per year. And if we move to three shifts seven days a week, we can produce over 4,000 systems annually from our existing 53,000 square foot facility in Miramar, California. And remember that our fixed costs will not increase along with the increase in revenues. Producing that volume of products would generate somewhere between $100 and $260 million of revenue in a year, but it would do nothing to satiate the requirement of our customers and prospects. A quick glance at our current customer list will, I believe, leave you recognizing that any number of them could deploy several thousand EV charges without coming close to meeting their needs. We've made further investments in the factory, such as tooling, equipment, and most importantly, human resources. We've increased headcount on our manufacturing floor, and we've also increased the experience and skillset requirements of those newer employees. The result of this is that we're paying more per hour for those employees, but we're reducing the labor cost per EVR to increase efficiencies, utilization, and quality of workmanship. In 2021, we also invested in bringing new manufacturing leadership to our company. This, of course, the most important step that we could take along the path to mass producing high quality products with controlled costs. And I'm very happy with the progress that our new leaders have delivered. The fruits of their labors and our investments are clear to see when you look at the increasing volumes of products passing through our factory. They're perhaps a little harder to see, but no less dramatic when considering our cost structure. In the face of the highest inflation in over 40 years, and without increasing our prices, we actually improved our gross profitability in 2021 over prior year. It's true that we continue to report the gross loss, and it's also true that the improvement year over year was minor, but it was an improvement nonetheless at a time when the costs we were paying for materials and components were going up faster than I have ever seen. Comparing two equally equipped EV arcs, one produced shortly before COVID and one produced during this last month, I can see over $6,600 of cost increases for steel, aluminum, copper, EV chargers, and even for the first time in our history, batteries. $6,600 accounts for around 10% of the selling price of an EV arc model I'm comparing. In other words, we've even seen a greater than 10% increase in cogs required to make an EV arc. and yet we improved our gross profitability at the same time as we bore these costs and without increasing our selling prices. How did we do that? Simply stated, while the costs that we cannot control have been going up, we have done a very good job of bringing down the costs that we can control. I've been reporting for some time that as we increase volumes through our factory, the fixed overhead costs shared amongst larger volumes of product would have a decreasing impact on cost of goods sold for each individual product. We have witnessed that impact in 2021 as a result of the dramatic increase in units fabricated in shift. We've also decreased the cost of direct labor required to fabricate an EV arc by approximately 36% since the end of 2019. Transportation is another area where we've seen significant external cost increases over the last couple of years. To counter that, we've invested in increasing our ability to deliver our products with our own equipment. We now employ a mix of third-party transportation companies and our own in-house delivery equipment and personnel. Using our own teams and equipment reduces risks and costs and has played a significant role in our increasing ability to deliver our products on time and as inexpensively as possible. While the gross profitability improvement has not been as impressive as I would have wished, in the face of the highly inflationary period we're currently navigating, our own internal cost reducing and efficiency increases have been dramatic, better than 10% in 2021. We believe that many of the inflationary cost increases may be temporary. And while we do not anticipate a full return to pre-COVID cost structures, we do believe that some of the higher prices we're paying, particularly for steel, will return to some sort of normality through the end of 2022. Our vendors are certainly representing that to us. As prices normalize, we will see a reduction in our bond costs, and all the improvements we've made, which have resulted in better than 10% cost reductions internally, will compound to provide what I believe will be a significant improvement in gross profitability. Of course, we always have the ability to increase our selling price if we do that as being in the best interest of growing the business. I'm hesitant to do that at the moment, as increasing volume is so important to our growth plans. And I don't want to create any barriers to that increased volume. There are some areas where I believe we can increase costs without negatively impacting our opportunities. For example, we do plan to start to pass on any increased pricing in the EV chargers our customers select that we buy and install on their behalf or integrate rather into our products. For example, charge point chargers, which are a popular choice with many government customers, have increased in price by 26%. We absorb those cost increases during 2021, but we do not intend to do that with new customers. That particular reversal of absorbing a vendor's pricing increase is worth 2% of gross profit to us. But the real opportunities for margin expansion come from cost reductions. We already have line of sight to other material cost savings through the efforts of our engineering and operations teams. And we will continue to rigorously pursue those efforts. I believe that additional significant cost reductions will be achieved as we replace the energy storage solutions we're currently using with our own, as we integrate the new battery packs from our recently acquired company, formerly known as All Cell Technologies in Chicago. Batteries currently account for almost a third of our bill of materials. and I believe that the initial margin recapture will reduce our BOM costs by something in the order of 7%. Further collaboration between our Chicago-based engineers and scientists and our San Diego-based engineering team promise to deliver as much as a 15% decrease in our BOM costs within the next 12 months. The combination of our cost reduction efforts including a significant reduction in battery costs, along with some return to normalcy in materials costs and the increasing volumes we anticipate in 2022, lead me to have a high degree of confidence that we will return to positive growth profits this year. Because of our tremendous discipline around cash management and cost controls, the route to bottom line profitability and positive cash flow is not intellectually challenging to chart thereafter. To illustrate this, it's helpful to analyze the change in our operating loss between 2020 and 2021. While our operating loss increased in absolute dollars during the year as a result of our investments in sales and marketing, R&D, and other improvements to the business, it did not increase anywhere near as much as revenues did. As a result, we actually had an 11% reduction in our operating loss as a percentage of revenues. Absent the extraordinary inflationary pressures that have increased the cost of materials and commodities that we integrate into our products, that reduction would have been closer to 20% as a percentage of revenue. This is a perfect illustration of what I've long reported, which is that as we increase volumes to our factory, and I certainly expect that we'll continue to do so, we will be able to reduce our costs through increased efficiencies, value engineering of the products, and as a simple result of the increasing operating leverage that we have. We remain well capitalized with the funds necessary to execute on our growth plans and with no foreseeable need to raise capital. Now, as I've often said in the past, not needing to raise capital is not the same thing as saying I would never do it. There may be a strategic benefit to doing so from time to time. And if there are, and if they clearly are in the best interest of our existing shareholders and the growth of our company, then I will, of course, consider them. Two examples of what I consider to be excellent strategic reasons to raise capital are, firstly, if there's a dramatic run-up in our share price and I'm able to further shore up our balance sheet defensively and to assist with our growth plans without it being terribly diluted, I might consider that. Secondly, I am acquisitive, as is perfectly illustrated by a recent acquisition of AllCell Technologies in Chicago. In the case of that acquisition, we did an all-stock deal, and so there was no need to raise capital alongside the acquisition. It also came with no debt. However, there may be other worthy targets which will bring tremendous increased value to Beam Global and which would be improved by the raising of capital, either at the time of an acquisition or at some point in the future to fund growth or new technologies or some other competitive advantage for Beam Global. In any event, were I to countenance such a move, I would only do so through the same lens that I always use when considering investments for this company. Is it in the best interest of the existing shareholders our employees, our customers, and the company? If the answer is yes, you can count on me to at least explore the opportunity. If the answer is no, you can equally count on me not to invest our cash or precious equity in a folly. To be absolutely and abundantly clear, we do not need to raise capital and we are not seeking to do so. I hope you will agree that the all-shell acquisition illustrates this level of discipline on my part. In that instance, we have borrowed 100% of the assets in a fantastic technology company operating in a vibrant and growing space for around 10% of our equity. The seller has an opportunity to gain more equity in Beam Global through earn-out provisions in 2022 and 2023. I'm looking forward to paying those earn-outs. because I'll only do so in the event that we've had a couple of fantastic years of performance from this newly acquired entity. The acquisition was accretive in almost every way. With it comes increased revenues and gross profit from Allcell's existing line of business. With it also comes a significant reduction in our COGS through margin recapture first, and then through cost reductions in our suite of products as a result of the engineering and scientific efforts of our combined teams. We acquired a significant intellectual property portfolio, which will help make Beam even harder to compete with when combined with our existing patents and other IP. We acquired a team of some of the most experienced and respected engineers, scientists, and manufacturing experts in the battery space, perhaps anywhere in the world. This at a time when energy storage and battery technology is more important than it has never been, and yet nowhere near as important as it's going to be. The structure of the deal was well crafted in that the seller at once became one of the largest shareholders in Beam Global. Our priorities have become perfectly aligned as they seek to help us grow the business, and as a result, their significant equity stake in it. As if that weren't enough, the stock we use as currency for this acquisition is restricted. And even in the event that those restrictions are lifted, the seller has contractually agreed to sell no more than 4% of average weekly volume ever. So even were they to liquidate their entire position, they'd have to do so in a way that would have an immaterial impact on the way our stock trades. I'm confident that we won't have to rely on that covenant because these are clever people who own a big chunk of Beam Global. The last thing they want to do is hurt their investment through irresponsible trading. They certainly don't need the cash. Our new energy storage product makes batteries safer. Many of the fires you may have heard of would not have happened had they been using our new technologies. It also makes them longer lasting and more energy efficient, which is another way of saying less expensive, because you can cycle more energy through the batteries without having to replace them. It's an excellent and well-protected technology differentiator at a time when the world is electrifying rapidly and increasingly in an untethered manner, which relies upon safe battery energy storage for its efficacy. You can see from the way this deal is structured and from all its many benefits that if we do continue down a path of acquisitions, and it's my plan to do so, that we will only acquire companies which will bring the greatest amount of value for the best possible deal structure. Our corporate sponsorship business unit continues to make progress, though of course not always as fast as I or perhaps many of you would like to see. Nevertheless, the progress is real. We've engaged the Superlative Group, arguably one of the best respected and most experienced corporate sponsorship selling consultant groups in the world. sell the driving on sunshine contract superlative has made a business of selling corporate sponsorships for stadiums mass transit and other highly visible venues our model of engagement with them sees them being paid only if they're successful the fact that they're investing significant time and resources into selling the driving on sunshine network is a strong indication to me that they believe they will succeed i continue to believe that too They have a growing pipeline of qualified prospects who've demonstrated active interest in sponsoring the network. I have personally been involved in several face-to-face and virtual meetings with many of these prospects, so I know that their interest is real. Half an hour after we finish this call, I will lead a tour of our factory for one of those prospects, here only because they're interested in the sponsorship program. It's a very large organization, whom all of you will have heard. they would not waste their time coming to see our factory unless they had a legitimate interest in the Driving on Sunshine sponsorship program. This does not mean that I have closed a deal, but it does mean that the business model of sponsoring the world's only Driving on Sunshine network is a sufficiently good idea to attract the very best organizations in related fields. I remain confident that we'll make a success of this business entity, though I still cannot say when. So 2021 was a year of records, and many of them, including, by the way, a new world record for the longest flight of a production electric airplane powered only by locally generated and stored renewable energy. It was a lot of fun, and it got us a lot of good press, but we should also not lose sight of the fact that there are around 20,000 airports in the United States. They will all need a significant amount of charging infrastructure, and our products are uniquely suited to provide that charging because we do not require construction, electrical, or other disruptive activities which most airports dread. Yet another niche market, which provides a huge opportunity for us. Of course, we intend to sell a lot more of our energy storage solutions, which provide lightweight and high energy density to the aviation sector. We're already powering aircraft, drones, and a whole host of marine and other vehicles, such as submersibles. Another record we set was through the improvements to our EV Arc product, which resulted in its being able to deliver 12% more energy than previous versions. The new EV Arc is the most powerful version of the product we've ever produced. We'll continue to improve our existing products and develop and deliver new ones like our EV standard and UAV arc in the months and years to come. We will also continue to develop our IP portfolio, both in energy storage and in our charging and energy security products. In fact, we received another Chinese patent in 2021 and filed many other applications. So, as I said, 2021 was a year of records, but those are all records that we intend to break in 2022. I believe we will do that and I believe we will break them again in 2023 and I believe we'll keep doing that for many years to come. We're addressing several massive and new opportunities with huge influxes of capital coming from both government and enterprise. We have unique and patented products and a proven history of being able to sell them and produce them at ever-growing volumes and with ever-improving cost structures, even during the most challenging of times. I have never been more committed to this company or more excited by the prospect of continuing to grow it. Thank you all for your support, your time, and your attention. And now I'll return the call for any questions you may have.