Fraser Atkinson: Well, I’ll let Brendan get into some of the details on your first question, but at a high level, the — and I’m glad you mentioned the word utility because it’s not just — the perception is that the availability of chargers or the hardware side of the charging infrastructure is the pinch point. It’s really in large part the utilities and it’s also the expectation of customers that are looking at vehicle to grid solutions and a broader implementation than simply acquiring and running school buses or all-electric school buses. So there’s a lot of dynamics that are in play that have affected the timing on that side of our deployments. As far as the mix of products that we have brought to market is that you’re quite right that the Type A Nano BEAST, which is built on our EV Star platform and by extension utilizes a lot of the same parts and components, which provides for ease of deployment, also is easier to deploy in terms of the infrastructure side as one can use a Level 2 charger or a DC fast charge.
And so it really has a lot of flexibility. And that if the vehicle or the Type A Nano BEAST can be charge between a morning run and an afternoon run and still have sufficient battery capacity to do an evening event or activity run then it’s a lot easier to install that Level 2 charger. But if they need to get a much faster top charge then we have the flexibility of installing Level 3 charger for that vehicle. And on that, I’ll turn it to Brendan, who can provide a little bit more visibility on your first question regarding charging infrastructure.
Brendan Riley: Yes. Thank you, Craig, for the very thoughtful question. This is Brendan Riley. The — part of our strategy was, of course, to have the three different battery sizes from the [Betco]. We have a car size battery of the EV Star line of vehicles which the Nano BEAST has built on, that allows us to charge very easily with Level 2 overnight charging the same kind of charge you would have in your house, the same charging that I have in my house. With the BEAST, again, we’ve got a 200-kilowatt hour battery. You can do overnight charging on level 2, but you’re really pushing it a total limit. And then the Mega BEAST was really designed for those where DC fast charging available and to have an interest in using vehicle for all of its efforts to bringing students to and from school and the V2G.
So you’ve got really enough left over to be meaningful to the grid and have some normal access to the battery storage on vehicle. Now the marketplace has changed more slowly than we hoped, but has changed in part, there are a lot more companies able to install chargers. The utilities are trying to get ahead of the curve a lot better these days, and we do see improvements also including the availability of charging EVSE, which is electric vehicle support equipment and chargers and related equipment. But the main thing we’re seeing right now is we mentioned our pipeline. Some of that pipeline are orders that the customers are waiting to figure out how they’re going to do charge it. I think they’ve got the money and the ability to buy, but they’re waiting until they have their charging figured out.
So I think you’re going to see kind of a fast uptake on charging capabilities, installation charging for the chargers. We are having more companies involved in that space, and I think they’re becoming more efficient and better at installing the chargers.
Craig Irwin: Thank you for that. So my second question is about working capital. You guys have done a really good job managing working capital and generated a decent amount of cash there over the last few quarters. Can you maybe describe for us how well-matched the inventory of work in process or finished goods is to anticipate near-term deliveries. Would you expect working capital to be a positive contribution to cash in this current quarter?
Fraser Atkinson: I’ll turn the details over to Michael. But at a high level, our work in process is fairly well aligned with the production flow that matches the fulfillment to customer orders as opposed to production to inventory whereas we have been over the last few quarters and will continue over the next couple of quarters to realign our finished goods to match that. So at a high level, finished goods needs some work to fully align and the rest in terms of work in process and to some extent, our parts supply that we sell separately as well to customers is better aligned with where we are right now with our strategy on manufacturing.
Michael Sieffert: Yes. Just to add a couple of very quick points. I think it really has been a focus of the company over the past nine to 12 months to focus on inventory and bringing that down to a level that is better match the sales. But I think the other thing to point out, Craig, is that with the facility that we announced this morning of $5 million, that’s earmarked for funding production. And so that is really focused on funding that inventory growth. And we anticipate given our current order book that a lot of that will be used towards all-electric school bus order book fulfillment.
Craig Irwin: Understood. So my last question, if I may. Gross margins in the quarter, the historic average is quite a bit higher. So is it fair for us to maybe consider the early production of some of these BEAST, Nano BEAST units to be maybe a lower margin because of greater man-hours to complete and other factors in there and that we could see those trend up over the next couple of quarters as far as the overall gross margin levels? Is that fair?
Brendan Riley: That is very fair, Craig…
Fraser Atkinson: Yes, go ahead, Brendan.
Brendan Riley: That’s very fair. Training, getting employees up to speed cost money. It’s an investment. And you’re going to see the margins continually improve. Also, we’re starting to see some stabilization of our cost as it goes from materials, raw materials and so on. So we should see a good shrinkage in our costs and an increase in our GP.
