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spk02: Good day, ladies and gentlemen, and thank you for standing by. And welcome to the IEH and Second Quarter 2022 Earnings Conference Call. As a reminder, we are recording today's call. Now, I will turn the call over to Giulia Crian, Managing Director of the Bush Group of Asia. Here I affirm. Ms.
spk03: Crian, please proceed. Hello, everyone.
spk06: Thank you all for joining us on today's conference call to discuss the company's financial results for the second quarter of 2022. The earnings release is available on our website as well as from Newswire Services. Please note the conference call is being recorded and the audio replay will be posted on the company's IR website. Today, Yi Hao management team, which include Mr. Hu Huazhi, chief executive officer, Mr. Xing Fang, chief operating officer, and Mr. Richard Liu, chief financial officer, will successfully give the prepared remarks. Remarks delivered in Chinese will be followed by English translation. All translation is for convenience purposes only. In the case of any discrepancy, management's statement in the original language will prevail. A Q&A session will follow afterwards. Before we continue, please note that today's discussion will contain forward-looking statements made in pursuit to the safe harbor provision of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filing with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under Capable Law. Also, please note all the numbers present are in RMB and are for the second quarter of 2022, unless stated otherwise. With that, let me now turn the call over to CEO, Mr. Hu Huazi, Please go ahead, Mr. Hu.
spk07: Thank you, Mr. Hu. Our orders, pre-orders, deliveries and customers are constantly growing, especially in China and the Southeast Asian market, pushing the second quarter's total revenue to a significant increase of more than 150%. We continue to develop strategic cooperation partners in the fields of business and finance, such as Zhengda Group, the largest retail company in Thailand, and China Agricultural Bank, which has provided strong assistance for the long-term development of the future business of the bank. Later, our COO and CFO will introduce what is currently the most important thing for Yihang, which is the test and validation work of Yihang 216S products. In this regard, we have entered a new stage. Yihang has fully understood Europe, the United States and other countries in the past half of the year through a set of complete aviation test and validation concepts that have been summarized in the past half of the year. The whole process of mass production has a deep and important meaning for the safety and manufacturing and operation of aviation products. I would like to thank the seniors who summarized the experience for us with their blood and tears. At the same time, I express my sincere admiration for them. But before the special conditions were announced, a new type of aircraft like Yihang There has never been a suitable market standard. Yihang's aircraft has passed its own safety standards, productization and mass production in advance. In recent months of work, we have worked together with the Chinese Civil Aviation Bureau to start from the beginning according to the concept of aviation market. First of all, we have established a standard that meets the requirements of the aviation industry. It is also suitable for the aviation product design and production management protection system of the industry management system. First of all, let each industry person start from me, fully understand the concept of the market, and comply with the scientific management and design methods of the market, so that the design and production of the industry 216 will be controlled in each link and science in each process. On such a basis, we finally reached a consensus on the Q2 and the Civil Aviation Bureau review group, on the special review plan PSCP, the review foundation and the review plan CP. For the world's unique unmanned aerial vehicle system, we refer to the ASTM, SAE, RTCA, MIL standards recognized by the United Nations and the 23 rules of unmanned aerial vehicles, and the construction and management and test experience of the traditional aircraft main airport, including unmanned aerial vehicle systems, including unmanned aerial vehicle systems, railways, ground control systems, and so on. In the new subject, we will explore innovation and summarize the comprehensive verification method of 13 subjects that are suitable for the 216 in a row. Based on the previous 216, we will carry out the test verification test again according to the market standards and promote the verification activities according to the plan. In recent days, The Chinese Civil Aviation Bureau and the Guangdong Provincial Government jointly published the Promotion of High-Quality Development of Civil Aviation in Guangdong Province. The strategic cooperation framework agreement clearly wants to accelerate the development of aviation manufacturing and the use of new aviation industry. It clearly puts the promotion of UAM urban air traffic related test work and the large-scale promotion of the E-HR6S in the human drone model as one of the focus of work in 2022. We are encouraged It has also further enhanced the confidence of getting TC licenses. In addition, in June this year, the Chinese Civil Aviation Bureau established Guangzhou Aerospace Procurement Center in the city of Yihang headquarters, which is responsible for the design and inspection of small aircraft in the country. Currently, the Yihang VTOL series VT30 product is in the stage of product design and inspection and component verification. Here's the translation of Mr. Hu's remarks. Thank you, operator and Julia. Hello, everyone. Thanks for joining our earnings call today. In Q2,
spk01: it has actively adapted to the micro environment at home and abroad. The world was gradually recovering from the continued impact of the COVID pandemic. We were able to achieve excellent results. In such an environment, we not only spend more time and efforts to strengthen ourselves, but also continue to expand our orders, pre-orders, deliveries, and customers, especially in China and Southeast Asia. This drove up our total revenue in Q2 by a significant increase of over 150% from Q1. We continue to expand our strategic partnerships with business and finance partners, such as the CP Group, one of the largest commercial companies in Thailand, and the Agricultural Bank of China. These partnerships will be of strong support to EHAM's long-term business development in the future. Our COO and CFO will elaborate on them later. The most important thing for us at present is the EHAM 216S Airworthiness Certification, and the process has progressed into new phases since this year. It is based on our full understanding of the comprehensive set of airworthiness concepts that have been summarized by the Western countries with their experience in recent century. This set of concepts has been embedded in the entire process of making an aircraft from design to mass production, which has an essential and profound influence on the safe production and operation of aviation products. Here, I would like to express my sincere admiration and appreciation to the pioneering predecessors who contributed their valuable experience with tremendous efforts. However, before the CAC issued special conditions, there hadn't been any available airworthiness certification standards applicable to this new type of aircraft, like EH-216. In the early days, our AVs conformed to our own safety standards, based on which we explored to start productization and production. As there was no precedent We had to closely work with the CAC to further develop this new type of airworthiness standards together, according to the relevant airworthiness concepts and principles in the past several months. We had established the aircraft design and production management systems, which not only meet the requirements of the aviation industry, but also are compatible with our own management system. With that, Every member of our team can work in line with EARWISNESS concept and conforming to the scientific management and design methods so as to enable every process in a controlled and regulated manner from design to production of EHA216. In this regard, we finally reached a consensus with the CAC expert team in Q2 on our project-specific certification plan and the certification basis, as well as the certification plan, respectively. In respect of the airworthiness process for this unique airman aircraft system, we have not only referred the CCER 23 Airworthiness Regulation and internationally recognized the standards such as the ASDM, SAE, RTCA, MIL, etc. and learned from the configuration management and airworthiness experience of conventional aircraft OEMs, but also made an innovation exploration on new topics in airman aircraft systems, including the airman system, data link, and ground control system. We worked out 13 means of compliance applicable to EH-216. Based on our previous experience, We are continuing carrying out internal tests according to the Airworthiness Standards and planning activities for the demonstration of compliance. Based on the CAC and Guangdong Provincial Government's Strategic Cooperation Framework Agreement for Civil Aviation Development in Guangdong, they recently emphasized on speeding up developing the aviation manufacturing industry and new business forms of general aviation. Both the CAC and the Guangdong government have clearly put pushing forward relevant UEM pilot projects and strongly pushing forward the 116S AAV type certification process as their key tasks in 2022. It encouraged us and further enhanced our confidence to obtain the type certificate. Moreover, in June, the CEC newly established an aircraft airworthiness branch center in Guangzhou, where our headquarters is located, to be in charge of the airworthiness certification work for small aircrafts nationally. Currently, the VT30, one of the products in our VTOL aircraft series, is at the stage of the product design, airworthiness preparation, and component verification. We believe that these favorable conditions and policy support in Guangdong can lay a solid foundation for VP30 design, test flight, and airworthiness certification. Next, I will turn the call over to our Chief Operating Officer, Mr. Fang Xin, for a business highlight in Q2. Thank you.
spk08: Thank you, Director Fu. Hello, everyone. Since the second quarter of this year, the domestic epidemic has gradually stabilized, and the tourism market is gradually warming up. The era of good luck has accelerated the transition and upgrade of tourist attractions such as scenic areas and other tourist attractions. Active adjustment, innovative business model, and expansion of new consumption. In June this year, the Chinese Civil Aviation Bureau issued the 14-5 General Aviation Development Special Regulatory Act to drive the development of low-altitude tourism, support the coverage of the scenic areas such as the expansion of the public tour of the cultural heritage management department, and establish the connection of scenic areas and holiday areas. theme park, and other low-altitude tourism destinations. Under the policy background of the country's policy for the integration of aviation and tourism, we have achieved strategic cooperation with the Tianshijian Cultural Tourism Investment Development Co., Ltd., which is one of the leading people's governments, and its subordinates. We have built a low-altitude tourism project based on the Yihang 216 in the Wu'ai Prefecture, which is located in Qiguan, Weinao, Xiangxi province, and obtained the first purchase order. In the second quarter of this year, we have completed the delivery of five Yihang 216s. and jointly launched the air-to-air flight operation point. There are still 25 purchase plans for the customer service. The base project has created a repeatable low-altitude travel and air-to-air cooperation model, which has created a good demonstration effect for the business projects that we are promoting in other regions. According to statistics, there are more than 300 awards in the 5A scenic area in China, and more than 4,000 awards in the 4A scenic area. The scale of the low-altitude travel market is huge. Our air traffic northbound plan is a good progress. It has carried out a standardized operation of E-Hang 226 at 11 points in China. It has completed more than 5,700 times of low-altitude travel and experimental scenarios. After receiving the four-stop certification, E-Hang 226 will be able to provide travel customers and medium-sized passengers with low-altitude travel with unique, safety, technology-oriented, high cost-effectiveness and good experience. In Southeast Asia, which also has a huge UAM demand and a rich application scene, we have the ability to cooperate with local partners. We also have a strategic cooperation with a large Thai multinational corporation, Zhengda Corporation. The three countries plan to integrate the company into the Thai market in Thailand. In the future, we hope to see the signs of business recovery in the second half of this year. The company is actively adapting to the macro environment, continuing to promote the 216 four-storey provincial order, getting more product orders, and promoting the air media business in the regional expansion of the European market. Based on the core values and unique advantages of e-sports, we are optimistic about the future growth potential and long-term prospects. Next, let's have our Chief Financial Officer, Liu Jian, introduce the financial situation of the company in the second quarter. Thank you.
spk01: Here's the translation of Mr. Fang's remarks. Thank you, Mr. Hu. Hello, everyone. As the COVID situation in China has gradually stabilized since Q2 of this year, the tourism market has been recovering steadily. The post-pandemic era expedited the transformation of tourism, such as scenic spots, by bringing innovative business models to scale up emerging consumption. In June this year, the CAAC issued the 14th Five-Year Special Plan for General Aviation Development to promote the development of low-altitude flight tourism by supporting related authorities to expand aerial sightseeing in more scenic spots and to establish a low-altitude flight tourism network, connecting scenic spots, resorts, theme parks, and other tourist destinations. Under the national policy of supporting integrated development of aviation and tourism, we formed a strategic partnership with Tianxingjian Cultural Tourism Investment Company, an affiliated enterprise of the Jishou city government in China's Hunan province, with the plan to develop a scenic flight project at the Aijiai Wander Tourism Area, a national 5A-level scenic spot in Jishou. In Q2, we delivered five units of EH-216 AAVs for the customer's initial purchase order, and initiated 12 flight operations in Ajai. The customer plans to purchase additional 25 units of EH216 in the future. This project creates a replicable public and private business cooperation model for low-altitude flight tourism, which is helpful for expanding our ongoing business projects in other regions. According to statistics, China has more than 300 5A-level scenic spots and over 4,000 4A-level scenic spots, indicating tremendous market potential for expanding low-altitude flight tourism. Against this backdrop, we are making excellent progress in our 100 air mobility routes initiative. So far, more than 5,700 operational trial flights of V-Hunt 216 has been conducted in practical aerial sightseeing scenario at 11 operation spots in China. After obtaining the Air Witness Certificate, Ehang 216 is expected to provide our tourism customers and end-users with a unique, safe, technologically advanced, cost-effective, and pleasant low-altitude flight tourism solution and experience. In Southeast Asia, where the UN market is also in high demand and has rich use cases, we are actively expanding our presence through the empowerment of local partners. In Q2, we received a pre-order for 100 units of E-126AVs from an Indonesian aviation company, Prestige Aviation, which is the largest pre-order we have received in Asia so far. We've also reached a strategic cooperation with CP Group, one of the largest conglomerates in Thailand, with an intent to establish a joint venture for introducing Ehang AAVs to Thailand. The two parties also intend to carry out comprehensive cross-sectoral cooperation in aerial tourism, aerial logistics and transportation, urban mobility, and smart city management in the future. We expect signs of a business recovery in the second half of this year as we are actively adapting to the macro environment, continuing moving forward on E-Hunt 216 certification, securing more product orders, and expanding our regional AeroMedia business in the Europe market. We remain confident in our growth potentials and long-term outlook, given our core values and unique advantages. I will now turn the call over to our CFO, Richard Liu, for financial results. Richard, please go ahead. Thank you.
spk09: Thank you, Xin, and hello, everyone. Before I go into details, please note that all numbers presented are in RMB and are for the second quarter of 2022, unless stated otherwise. All presented changes are on a quarter-over-quarter basis, unless otherwise specified. Detail analysis are contained in our earnings press release. which is available on our IR website. I want to highlight some of the key points here. In the second quarter of 2022, our strategic shift towards an urban air mobility platform continued as we aimed for a solution and operational service integrated model. The ongoing efforts are yielding positive results with increasing deliveries in China and orders or pre-orders in Asia, reflecting our solid business strength. As we continue to focus on the Yihang 216 pipe certification process, we also made further development in our 100 air mobility routes initiative with continuously increased operational tri-flights, as well as expansion of operational spots in China. Additionally, we struck a strategic partnership with the Agricultural Bank of China Guangzhou branch for 1 billion RMB indicated credit facilities to support our strategy execution and business growth in the following years. In Q2 of 2022, total revenues were 14.6 million, representing an increase of 152.5% from 5.8 million in Q1. This was along with a 166.7% increase in Yihang 216 AAV deliveries in Q2 to 8 units. from 3 units in Q1. Demands for our AAV products have been increasing both in China and internationally. One typical example in China is that in Q2, we delivered 5 units of Yihang 216 AAVs to a local government-backed tourism operator in Hunan Province for aerial sightseeing operational services. The customer plans to buy additional 25 units as the project progresses. Another example is that we have obtained pre-orders of up to 210 units from customers in Japan, Malaysia, and Indonesia since the beginning of this year, and we see the trend of further expansion in Southeast Asian markets. Additionally, we were able to further drive a 4.6 percentage points expansion in gross margin to 67.1% in Q2, from 62.5% in Q1, even though our overall growth margin has already been at a high level compared to other new energy mobility product companies, such as electric car companies. This continues to show our competitive edge as the first mover in the global UOM and EV2 industries. In Q2, our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, were 63.4 million compared with 46.1 million in Q1. The increase was mainly attributed to continuous R&D of new AV models and the ongoing EHang 216 certification process, both of which are progressing steadily. and professional service fees related to any report filing and other legal matters, and additional provisions for accounts receivable in light of impact from the ongoing COVID-19 epidemic and the control measures in China. With that, in Q2, our adjusted operating loss was 51.2 million compared with 41.7 million in Q1. Our adjusted net loss was $50.8 million in Q2 compared with $40.9 million in Q1. Our balance sheet remains solid with $240.7 million of cash, cash equivalents, restricted cash, and short-term investments as of the end of Q2, even with a slight increase of $3.8 million quarter-over-quarter. With that, we believe our business is on a good track. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.
spk02: Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star 1 and 1 on your telephone. We have the first question. Please stand by. The first question from Tim Hisayo. Please go ahead. Your line is open.
spk03: Hi, management team.
spk11: Thanks for taking my questions. I actually have two quick questions. The first one is we saw Yihan having been making some good progress in terms of their customer acquisitions, especially in Asia over the past few quarters. Just wondering how many pre-orders we've got so far and when do we plan to start a delivery? In addition, could I also get some updates regarding our collaborations with the government and what kind of size of the contribution should we expect and when do we think it's going to kick in? And my second question is about the funding and the investment because we noticed that we've has the partnership with the Agricultural Bank of China, and that entitles to around a billion dedicated credit facilities. Just wondering how we are going to use that, and are we going to accelerate the investment in upcoming months, and what kind of cash flow rate does it look like now? So could you share a little bit more information about our investment plan in the upcoming quarters. Thank you.
spk01: Thanks for your questions. Please give us a second to translate the questions to the management team. We will provide the answers with the translation later.
spk03: Thank you.
spk08: Tim, this is Fang Xin. Let me take your first question about orders. Since the beginning of this year, we have received a total of 210 units of pre-orders for passenger-grade AAVs in the Asian market. The more than 200 units of pre-orders in Asia are expected to be delivered in about three years, subject to customer needs and are obtaining the type certificate in China or other relevant certification in the local market. In addition to the pre-orders, we also have received some customer orders, both in-hand or in discussions.
spk01: which are able to be quickly delivered in a short time based on the customer's demands. For example, in Q2, we received the orders from the customer in Jishou and also completed the deliveries for the first batch of five units, which have already been put into trial operations.
spk08: Yihan is currently in cooperation with some local governments to develop a operating center in different areas, At present, we are in talks with some local governments regarding potential cooperation and plans to set up operational centers in different regions.
spk01: in order to actively prepare for the commercial operations once we obtain the tax certificate. We have already signed a strategic cooperation agreement with certain governments. Upon this agreement, there will be some purchase orders which plans to be completed successfully within this year and expected to make a notable contribution to our full year results.
spk09: Hi, Tim. This is Richard. I will take your second question. Basically, this partnership is the first time that Agricultural Bank of China has one of the largest commercial banks to partner with and grant such indicated credit facilities to us as an innovative eVTOL technology company. This represents that traditional financial institutions have started to tap into this type of new industry. So it is a good sign, not only for Yihang, but also, I believe, for the industry. Basically, the 1 billion RMB indicated credit facilities cover comprehensive banking products and services, of Agriculture Bank of China to support our operations and business development over the following years, including regular credit loans, financial leasing, supply chain financing, et cetera. So as a starter, they have extended to us a 30 million RMB credit loan. Further, we have been discussing the financial leasing option to facilitate our business growth after the TC is obtained. Thus, in the near term, money will be used more towards supporting operations and the sales growth. In respect of investment, in terms of CapEx investment, And so as we have an existing production facility, we will see how the sales would grow to plan for any future CapEx needs. Regarding the cash boom, as you know, Yihang has been running a lean operation in China, and this is somewhat Yihang's unique style if compared to others. You probably can get a feeling from our cash flow statements. If you ask for current level to give you a rough idea, the current average monthly cash flow rate of our operations is around 17 million RMB, or roughly 2.5 million US dollars. If annualizing it, you would get around 200 million RMB or roughly 30 million US dollars. As it is expected that sales would increase after the TC is obtained, the operational cash flow or the cash flow situation is expected to be further improved following that. Hope this answers your question.
spk03: Yes, thank you very much, Stefan and Richard, for the detailed sharing. Thank you. Thank you for your question.
spk02: The next question. Please stand by. We're taking the next question.
spk03: Thank you for your question.
spk02: The next question. Please stand by. We're taking the next question from . Please go ahead. Your line is open.
spk10: Thank you. Thank you for taking my questions. And I have two questions as well. The first one is, could the management team elaborate a little bit more on the business model for the AAV for the tourist attraction corporation? Like, for example, will the tourist attraction be leasing or buying the AAV from or who will be operating the AAV and such? And for a second question, now that we've seen that there are many competitors now in the making of AAV, what would the management team feel is the most important innovation to stay as AAV industry leader? For example, like battery or noise cancellation technology or propeller technology or like having a command and control center? Like what will be the most crucial? And how is EHON doing in that particular area? Thank you so much.
spk03: Oh, thanks for the questions. Please give us a second for translation. Of course. Hi, Wudi. This is Fang Xin.
spk08: I will take your questions.
spk01: The demand and business model for LRFIC in scenic spots have existed for a long time. The traditional ways, including the cable cars and helicopters, which can not only provide a tourist with a fresh LRFIC experience, but also serve as a point-to-point transportation vehicles in scenic spots, which are favored by both the tourist and scenic spot operators.
spk08: The traditional ways have certain limitations, such as the high cost and expenses for infrastructures, the aircraft acquisition and maintenance, and professional pilots.
spk01: Therefore, the scenic spot operators cannot have a good return on investment.
spk08: AAV's most important innovation is the operation of low-cost, safe, and efficient aircraft for application scenarios. The structure of the aircraft is closely related to the safety, design, and operation of the back. Yihan 216 can achieve ultra-low-altitude stable flight based on multi-selector structure in low-altitude. It can focus on monitoring and operation, and it does not need to invest in high-cost commercial pilots.
spk01: The key innovation of our AVs is that they are designed for the multiple use cases with features of high safety, efficiency, and the low cost operations. Reflected in our aircraft structure and a full redundancy safety design and a fleet management. In terms of the aero tourism, the EH-216 can realize stable flight in low altitude based on our multi-rotor structure. and it can be centrally monitored and managed. And what's more, it saves the high cost of hiring professional pilots.
spk08: The ScenicSpot, as our customers,
spk01: can purchase or lease our AAVs, or only provide infrastructures for qualified operators who can take charge of the flight monitoring and operational spots.
spk08: Yihang can be used as a customer service for the sale of AAVs and UAVs. In the case of Q2, customers not only purchase Yihang 216 in bulk, but also build low-altitude tourism projects in rural and rural areas.
spk01: Eham provides both the AAB sales and the UAM operational services to our customers, taking our partnership with Jishou customer as an example. In Q2, our customer not only placed the purchase order for the Eham 216, but also plans to work with us to develop a scenic flight project at Ai Zhai Wander. It's a national 5A level scenic spot in Hunan. Through both parties' complementary resources and joint operations.
spk08: 欢迎您的第二个问题。 我们在AAV行业的领先地位是无人驾驶。 目前其他的竞争对手还是处于手动驾驶的阶段。 在无人驾驶方面,我们从一开始就投入了全部的精力, 包括飞控算法,动力系统, About your second question, as an industry leader, our timeless technologies are our leading competence in the AED industry, while other competitors are still at the stage of a matter controlling.
spk01: In terms of autonomous technologies, we have invested all our efforts from day one, including flight control algorithms, the flight lift systems, the battery systems, and also the command and control systems. All together integrated our airman aircraft system. With continuous iteration and evolution of these technologies, we are able to stay ahead in the industry.
spk03: That's the answer to your question. Thank you. Thank you so much.
spk02: Thank you for your question. We're going now to take our next question. Please stand by. And the next question from Verena Jang. Please go ahead.
spk05: Thank you, Manager Chen. Two questions, please. First, it's about the technology between different products. We have logistics, fire, and delivery products. I would like to ask if these products have any difference in technical thresholds. Can they be shared if they are produced? How many units do they need to be produced? How can they be balanced? My second question is about safety. If an emergency happens, our ground control system Let me translate quickly here. I have two questions, first on the technology. Any differences in the entry barrier across the logistic firefighting, and also the passenger AAV. And can these different products share the same production line? And what's the roughly unit level to break even? My second question is on safety. Could we take over the flight if any emergency happens? And if hackers paralyze the system, what can we do to let the AAV safely landed? Thank you.
spk09: Hi, Verena, this is Richard. Thanks for your question. Let me try to answer your questions. So basically, our 216L, the logistics model, 216F, the firefighting model, are essentially within the, we call it the 216 series of products. Basically, our approach has been to first focus on developing a fundamental model for passenger carrying use, which is the corresponding model is 216S. It requires large payload and the highest safety level. And then further develop 216L and 216F. on top of the fundamental model based on different specific needs. The core modules such as flight control, propulsion, et cetera, are the same actually. The relevant functional parts are tailor-made to suit for different needs. With that, I guess you probably can tell now the entry barrier was still beyond the core technology part. which are shared and require a large amount of time and manpower to be developed. As to the production line, it can also be shared. In respect of breakeven, we can look at them as a whole. To give you a rough idea, it is estimated that annual sales of roughly, to give you a rough range, around 250 to 300 units of 216 series of products could carry the company to break even on an adjusted basis given the current levels of expenses and prices. And regarding your second question, so basically our AAV flies by itself along the predetermined flight routes in normal situation. In case of emergency, the AAV usually can deal with the situation by itself. Having said that, if necessary, the ground operational staff who are monitoring the flight can take over the control through the ground command and control system. In respect of your hacking question, the connection between the AAV and the command and control system is through wireless private network and separated from the public network. And there are high level cyber security protection measures. So in case the ground command control system will be hacked, the AV can still fly by itself to complete the predetermined flights or find the nearest safe area to land. Hope I answered your question. Thank you.
spk03: Thank you, Richard. It's very clear. Thank you. Thank you for your question.
spk02: There are no further questions. I will now hand the back conference over for closing remarks. Please go ahead.
spk04: Thank you, operator, and thank you all for participating on today's call and for your support. We appreciate your interest and look forward to see you again next quarter on our progress.
spk03: That concludes the conference for today. Thank you for participating. You may all disconnect.
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