Kandi Technologies Group, Inc.

Greetings and welcome to the Candy Technologies third quarter 2020 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Siwa Luo. investor relations manager. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to Candy Technologies Group. Third quarter of 2020 earnings conference call. The company released the results earlier today. The press release is available on the investor relations sector of Candy website at www.candygroup.com. With us today are Mr. Hu Xiaoming, Candice Fonder, Chairman and Chief Executive Officer, and Ms. Allen Lin, Chief Financial Officer. Ms. Hu will deliver prepared remarks, followed by a question and answer session. Before we get started, please note that today's discussion will contain forward-looking statements made under the same public provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company 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 findings with the SEC. The company does not assume any obligation to update any forward-looking statements except as reminded. required under applicable law. As a reminder, this conference call is being recorded. In addition, an audio webcasting of this conference will be available on Candidate's Investor Relations website. I will now turn the call over to Candidate's founder, Chairman and CEO, Mr. Hu Xiaoming.

Thank you, Kewa. Hello, everyone. Thank you for attending today's meeting. As we all know, the COVID-19 pandemic has affected business activities all over the world. Many industries are suffering from continuous negative effects, including the electric vehicle industry. Like many companies, Condi's business has also been directly affected by the pandemic. However, through our efforts, the company has restored production. and fully utilize our special advantages to transform battery replacement technology and power generation systems into production, and lock in partners and opportunities to show our professional technology and application scenarios. At the same time, we have also discovered opportunities for smart transportation and supplementary products. Hello, everyone. Thank you for joining us on the call today.

As you all know, the COVID crisis impacted business activities around the world, and it has had sustained negative impact on many sectors, with electric vehicles being one of them. Canada's business, among others, are affected directly. However, with great efforts, we were able to resume production by utilizing our specialized advantages, We were also able to transform battery swap technology and powertrain system research and development into production and lock-in partnerships and find opportunities to showcase our expertise and use cases in this field. We were also able to discover a number of opportunities in the field of intelligence transportation and products, which further proved our leadership position in the industry. We will explore more opportunities in smart EV while we push forward our main products and again market share.

In the past few months, KANDY has achieved many achievements. I would like to thank all KANDY News friends for your attention. For those who did not get to KANDY News in time, now I would like to Let's look back at Kandi's recent progress and main milestone. In August this year, we handed over to China's Hainan Hikosu's shared transportation operator the first full-automatic smart battery charging system. On the other hand, Kandi successfully launched three products in the U.S. and pushed the K23 and K27 electric vehicles into the U.S. market. In September of this year, Candi set up a full-fledged subsidiary company for the change of electricity business, and took over Zhong Huan Dian Technology Co., Ltd. Now China has Zhong Shihua, Zhong Shiyou as a gasoline car oil. In the future, Zhong Huan Dian will be an electric car change. Therefore, Zhong Huan Dian has no real assets. There will be a lot of room for imagination. It can also provide a variety of patents in the field of battery conversion systems. In October this year, CUNDI, the largest state-owned public service company, National Electric Network, will be a strategic cooperation between electric car service companies and private companies. Taiwan Taiwan Taiwan We are confident that with the support of China's capital market, we will be ready to connect the battery exchange business. However, with great effort, oh, sorry, over the past few months, Candy has very productive

I would like to thank those who follow our news closely. For others, let me give you a recap on recent developments and the major milestones we achieved. In August, we delivered our first fully automated intelligent battery exchange system to the rideshare operator in Haikou Hainan in China. Meanwhile, in America, Candy America was able to hold a very successful virtual event to launch K23 and K27 EVs into the U.S. market. In September, we established a wholly owned subsidiary for our battery swap service. We were able to register the name of China Battery Exchange Technology, which is like Sinopest Group and China Natural Petroleum Corporation. They are the leaders in the sector to provide petroleum. But China Battery Exchange is going to be the leader to provide that exchange in this sector, and which is going to bring us a lot of potential. And this will enable us to monetize dozens of patents we have in the field of battery swap systems. In October, we were able to form a strategic agreement with the world's largest state-owned public service enterprise, the State World of China, Zhejiang State World Electric Vehicle Service Company, to cooperate in our area of expertise, battery exchange for pure electric vehicles. We also launched 300,000 government-accredited pure EV within five years last year program and have begun the gradual delivery of 1,000 EVs to the city of Haikou in Hainan Province and 2,500 EVs to the city of Shaoxing in Zhejiang province. Most recently, we announced that we plan to list Zhejiang Candy's Small Battery Swap Technology Company Limited on Shanghai Stock Exchange Starboard. This is after thorough consideration and extensive engagement with top tier IPO advisors in China. Both we and our advisors are confident that our battery-sweat business is ready to grow more rapidly with support from capital in China. This is a very good news for Candy shareholders as it will enable us all to realize the growing value of our smart battery-sweat business.

We are satisfied with the progress and actual results of Candy's strategy. With the slow recovery of the economy and the government's encouragement and support for the separation of cars and the change of mode, we believe that the development of electric vehicles in the change of mode is very optimistic. We are gradually proving its professional skills and advanced status in the field of smart change of electricity. We believe that there will be more exciting news in the future. We are pleased with our strategy, our progress, and our achievements.

With the economy slowly reviving and increasing government support for the vehicle battery separation battery swap model, we continue to believe that the growth for electric vehicle with battery swap model is very positive. We are progressively improving its expertise and leadership position in the intelligent value swap area, and we believe there will be more exciting news coming. We remain optimistic about our market opportunities and potential market share for Candies.

Now, let me and my CFO, Alan, answer your question.

To save the time, Alan is going to answer your question directly in English. If there is something Alan is not sure, I will take over. Operator, please proceed.

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. In the interest of time, please limit to one question and one follow-up question, then re-enter the queue for any additional questions. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Your first question comes from line of Marla Marin with ZACS. Please proceed with your question.

Thank you. So can you provide a little bit more color on the North American strategy as it pertains to production capacity closer to, you know, the end market and how you feel that will benefit the company. Thank you.

Hi, good morning, Marta. So you're talking about, you know, a strategy to help expand our capacity, especially for the electric vehicles, right? Just to clarify, you know, I understand, you know. Yes. Okay. So, well, I will start with my answers, and, you know, we'll have Mr. Hu to third elaborate, you know, about this question to give you a more detailed, you know, answer. So... Basically, we are now having our EVs primarily manufactured in our China's high-end facilities in order to meet the need in our China and U.S. market. So far, our capacity can meet the need for the time being, including our car-hailing platform in China. And you can tell we have started the sales of EVs the platform in Haikou and also in Shaoxing, and we are preparing for ourselves in the U.S. So, so far, I guess our capacity in China high-end facilities can meet the need. But I guess for the further strategy for expansion, I will delegate to Mr. Hu to give us a further explanation. So allow me to speak to Mr. Hu directly so I can translate the answer for you. 普总,刚刚Mala问到就是关于我们那边的电动车之后的运营 还有一个生产的一个拓展的一个策略 有没有什么布局等等 那我跟他讲目前对美国售售还好 So Marlon, as Mr. Hu confirmed, Yeah, the capacity for now, we can meet the needs, you know, for the foreseeable future. So, so far, I think we'll count on the facilities and the capacity of our high net facilities. And, of course, we'll explore different options, but for now, we'll stick with our facilities in high net.

Thank you.

You're welcome. Your next question comes from the line of Arthur Porcari with Corporate Strategies. Please proceed with your question.

Congratulations, Mr. Hu, on achieving some immense milestones for Canada since the last conference call. Of course, you've covered a few of those, but the two in particular that impressed me is the strategic partnership with the state grid, which is China's massive electric utility, as you said, People, I guess, don't realize how big it is, 1.2 billion consumers, 90% of all the land mass in China, and number two on the Fortune Global 500, second only to Walmart, actually. But just as impressive to me as a former investment banker, you attracted China's largest investment bank, CITIC, to lead an IPO syndicate to underwrite a spinoff IPO of Candy's wholly-owned battery subsidiary that we've been talking about to capitalize and monetize Candy's exceptional expertise in all the facets of EV technology. I assume this is thanks to Mr. Hu's 30-year experience as the pioneer of inventor of quick battery exchange technology, one of the hottest sectors in China today. But a little background here. Ten years and two weeks ago, Mr. Hu may remember, I had the honor of joining him in Jinhua, China, at the opening of China's first quick battery exchange station, which saw Candy selling a small two-seat EV, actually powered by a lead-acid battery, which shows you how long ago this was, which was independent of the car. Neil was not the first one to do this. The car owner would pay around $3 each time he changed the battery. More than just a coincidence at that time, Tiny Candy, who was the first to make and commercially sell EVs in China, had the same state grid as its partner in this early trial, seemingly from the recent PR, providing most all the same services in this new agreement. If I remember correctly, what attracted State Grid most to the Candy QBX at the time was the ability to charge the batteries overnight when grid demand was at its low point, which included excess batteries in the racks, which would allow State Grid to extract power from the excess batteries during times of peak use, usually midday. At that time, this was called B2G or battery to grid. Most will remember at that time midday brownouts in major cities globally. The Candy trial was an early success, and the China national government later officially recognized what they called the Hanzhou Kanji for power mode quick battery exchange as one of only three approved methods of charging nationwide. Yes, they specifically used Candy's name in the official title. With this background, I'm going to have a couple of questions. I don't know whether that was probably too much to overload Mr. Who with, but maybe Alan could handle this one. But do you want me just to go into the questions now, or do you want to try to paraphrase what I said to Mr. Hu?

No, I think you can close with the questions. Okay. And thank you for your long-term support, by the way.

Okay, sure. Thank you. In the PR, Mr. Hu said the two parties will cooperate extensively across the whole supply chain and include about a dozen issues. Most of these were self-explanatory, but three I'd like you to expand upon, and then a final general observation. What's different or unique with this new Candy subsidiary's quick battery exchange over competitors such as NIO, and is Candy's battery technology patented or proprietary? If so, can you tell us more about this? That's part one of a four-part question.

Okay. Well, so I guess, first of all, you know, for us, you know, we have in the field of the battery swaps, we have dozens of the patents in terms of the invention and then the practices. As for them, you know, I'm sure as a well established company, we're supported by the state grid. I'm sure they should have certain patents as well, although we have not really investigated in details about which ones they have and how many they have, you know, overall. Okay.

Is there anything unique about the company's battery recycling? This is a different subject now. Battery recycling technology. This is a subject we've heard very little about until now. Historically, it's been well known that lithium batteries are very difficult to recycle.

Right. Yes, indeed. Well, battery recycling, well, O4 is a thesis of the battery swap company. In this respect... well, we have the, we do have the technology to solve the bad recycling in the process. You know, well, such as one of the technologies can be reflected, I guess, in, like, the separation, like, you know, the activation and the synthesis of those different particles. Like, you know, they, as you may know, I think we will try to first make them into the positive and negative ends. And in order to, you know, to separate them, then we have a pretty high effectively process to recover the composition. So basically these materials, after they get separated, they can be reused to realize the internal circulation of the waste battery materials. So basically that can maximize the economic value of the waste, you know, and make it pretty conservative about process, you know, overall.

I remember hearing when we acquired Genoa NCAL a while back, that was also mentioned at that time, and I believe Mr. Hughes said something to the extent that typically the normal lithium battery is maybe 15 or 20 percent recyclable, but Genoa NCAL had a technology that could make it over 50 percent recyclable. I was just wondering if if we could maybe find out if that was still correct in the same battery we have today and why it's such a big difference between what they have and what others were able to achieve.

Right. I guess for that, I would delegate a question to Mr. Hu. So allow me to speak in Chinese and out there in Chinese afterwards. Sure. Hu Jiong, just now the investor asked about our battery recovery technology. Its recovery rate, for example, we rely on that amount of recovery, about 50%. So they want to know about our recovery technology and some functions of our battery recovery, such as efficiency.

. . . .

I understand. Although, as you may know, OnCal is primarily for the battery swap, right? So we have another battery exchange recycle company. So as for that, basically we're still working on the technology, but so far the efficiency is roughly 50% to 60% of the recycling efficiency.

Okay, yeah, good. That's a big number for lithium. Okay, in the PR it mentions, and I quote, flexible control of power load exchange. Is that similar to the B2G or battery-to-grid technology that attracted state grid to us 10 years ago? Is that what he means? Is that what's planned, the battery-to-grid where they can power back into the grid?

It is? Yeah, well, basically I think that's similar in the technology, similar systems that we use. the battery of the electric vehicles to basically maximize, you know, from the B to G. I think that's pretty similar technology. But then, of course, we have a more intense and more efficient way to process. But that's basically similar, yeah.

Okay, and finally, why do you believe State Grid found Candy's battery technology so attractive that it would partner up with so small a company as Candy? and it's quick battery exchange subsidiary for a second time.

Well, I guess although Candy is not as, of course, not as big as the state grid or the super large companies in China, but then we are the advocates and then the practitioners of, the technology for separation of vehicle and electricity power swap mode, you know, for the EVs in China. So, I mean, we have, you know, a fully automatic smart battery swap system, you know, with over dozens of the patterns of invention and the utility model, the model. So basically, as you may know, our ultimate way is to have a system that realizes the one key, one click, automatic quick battery swap process. And exactly, this is the technology being welcomed by and supported by the China government. And, you know, more than 10 years of or even more of the practice in the field of the battery swapping for the EVs, as you may know, that somebody actually, well, has accumulated pretty extensive experience. So, I mean, disregard of our size, but then our technology, our skill set are pretty, you know, extensive and seasoned compared to other companies in China. And I think that those are basically the reasons why the state grid and this related company are willing to cooperate with us. But then I want to explain is that it's not just our battery technology that is extracted, but also our, you know, the smart battery swap technology is really attractive. That's the key point, and that is a cross that can attract them to work with us.

Yes. Okay. Well, what impressed me the most is that State Grid came back a second time 10 years later to the same little company, so to speak. And so there must really have been something that they saw back 10 years ago. I guess it was just way before its time, again, using lead-acid batteries. That was just a comment. Just one other little thing. You just said a moment ago. I want to get refreshed over here. Is the capacity still 100,000 cars a year in a hanging facility where Candy can make that many?

Yeah, I mean, as you may know, we have the high-end facilities started to work in production since early last year. So right now we're still refining our capacity, but I guess ongoing, you know, the capacity will be more and more, and that should be sufficient to meet the need, you know, for our upcoming sales in China and U.S.

Okay, well, thank you very much. It's very informative. Great quarter coming up, quarter four, and next year should be gangbusters. Thank you very much, and congratulations. Thank you. Thank you. Bye-bye.

Thanks.

Your next question comes from the line of Joel Kramer, private investor. Please proceed with your question.

Yes. It seems that candy, both in China and the U.S., is starting to pick up real positive momentum. However, we have heard Little if anything about Gillies, Holdings, Runny, or Fensheng, which Candy has carried an interest in. Can you update us on what is happening there? And are you still bullish on Candy, who probably still has close to a billion dollars invested, being able to make this deal a major player in the China EV market? Thank you.

Great. Thank you. Well, first of all, apparently, you know, Geely has still been actively involved and participating in the market competition of the new energy vehicles. That's one of the trends of the automobile. But then, however, we do and we are aware of the development of the phone zone, which is a subsidiary under the Geely technology. It's a rather... lower than expected. And so far, we are exploring, you know, with Chile technology to see how to refine, you know, the development plan and make it up to speed as we expect. But again, I mean, we are sure that, you know, Chile and Chile technology, they are, you know, actively and fully involved in the market of the EV market, of course.

Thank you.

Thank you. Your next question comes from the line of Walter Hill with Cardian Company. Please proceed with your question. All right. Thank you.

Two weeks ago, Candy put out a PR establishing the Zijin Ruhing Technology Company, a three-way company owned 80% by Rubio, 10% by Candy, 10% by Jinping, to be the operating company for the five-year 300,000 EV, government-accredited ride-hailing program. That PR did cause some confusion to new investors, thinking that Candy's 10% was the primary way Candy makes its money off the deal. Could you clarify the following points? And I've got four points, and I'll read them. I'm just going to read them all because a couple of them are fairly sharp. A, what specifically is the difference between a government-accredited program and a ride-hailing program? B, in some detail, what is a partner's required responsibility to earn its share of the company? Part C, this PR speaks of two initial programs that appear to be kicking off this month. And I believe Mr. Hu mentioned this. 1,000 EVs for Hainan Province and 2,500 for Saxine Grazing Program. Do you expect all 3,500 will be delivered by candy before this year end? And if so, what types of revenues should be expected? And the last part, the PR does not give an idea of how many of the 300,000 EVs will ultimately be from Candy Stable. However, the state grid PR out the week prior says Candy intends to supply 300,000 vehicles to various ride-sharing programs, which seems to say that Candy will be providing all of the 300,000. If so, can we assume that the new Candy EB models will be shortly on the way? Thank you.

Thank you. Okay, so... I believe that the first question asked is, let me confirm, is about the difference between the accredited program, right, and other regular, other rail-hailing programs, right? Well, as you may know, actually, in order to operate an online car-hailing platform in China, it requires the approval of relevant departments and different government agencies. And Only we get fully approval and other accredited certifications in issue released by the government agencies is considered as a compliant online car platform. Although, I mean, in the market, we do know that there are still quite considerable amount of the platform that are not fully compliant with requirements, so we can call them the so-called non-compliant car-hailing platform. So, I mean, what defends us from those platforms is we are the government accredited, and also you may see the legal online car-hailing platform that will not get shut down because we are fully supported and authorized by the government. Is that answering your question about the first question? Yes. Okay. Yes. Okay. Great, great. And I think the second question was about the roles or the responsibilities of the partners, right? Yes. So, I mean, there are basically three partners. There are Candy, there are GymPlan, and Robo. As Candy, we basically sell the equipment and, of course, the EVs to the alliance. We also will provide the related, you know, the maintenance or the technology maintenance and, you know, rather from like a technical perspective. The second part, the gym plan, basically they're utilizing the large distribution network to promote the program. I mean, they have a great network, and definitely they can bring up more customers to us. And the last one is the Red Bull. Red Bull, I mean, they are the seasoned operator of the similar service of the car handling in other cities. So they have a great experience, extensive management skills that you operate. And so the role is to primarily operate this platform. So that's how we share our responsibility and how we can earn our share to the platform of the alliance. Yeah, I did it. Okay, so I guess let me move to the next question. The next question you're talking about, you're kind of referring to what we started in the beginning of the progress of how we deliver the EVs to Hainan and then the high-coast city and also to the Shaoxing of the Zhejiang provinces, right? And, you know, what do we expect that can be delivered by the end? Well, apparently we are working on the delivery currently. But as for the actual numbers by the end, it's still ongoing. So we cannot be 100% sure that, you know, how much can be actually delivered completely. But I guess in the timeline of the delivery, it would depend on the – the progress of the project. I guess, you know, you can get an idea when the EN completes, then we can have the numbers disclosed on the financial statement. I think that's the best way was to, you know, have actual figures by then. And I think you also mentioned the last question should be about, you know, the relations about how we can supply our EVs to the program, right? Well, yeah. You know, I mean, the so-called 30,000 EVs in five years program is rather like an idea of the program, but not entirely or necessarily means that they will for sure, you know, include 300,000 EVs to the market. So, I mean, for how many EVs will be supplied to the market at the end of the program, we are not But, I mean, the so-called 300,000 is like a, you may say, like a slogan or idea. But then bottom line is we will try to supply one of the major share of the EVs to the platform, and that's our goal. And, of course, I mean, we may even try to invent and launch different new models in the due course to meet the demand ongoing. Thank you. Hopefully, these answers can respond to your answers. Thank you.

Thank you. Your next question comes from the line of Michael with Focus Tech Investments. Please proceed with your question.

Good morning, and thank you. I would like to refer to the joint venture with Ely Holdings, which is named Fengqing. Recently, Candy transferred an additional 28% of their holdings to the joint venture. And when that transfer was made, they made an announcement that they could purchase equity back from the joint venture through March 31 of 2021. I've got kind of a three-part question. Is there any expectation that deadline will be extended? And when will Kenny decide to exercise that option? Or have they made any thoughts on that exercise of the option? And finally, if they do exercise their option, Can you give me an indication of what percentage of the joint venture Candy would ultimately own? Thank you.

Thank you. As for this question, as far as we are concerned, the company, I think, we are still in the process of negotiating with the counterparty, the Geely Technology, at the moment. So, you know, at time, at present, you know, there's not really a very concrete answer for each of the questions because we're still working on, you know, working on them and resolve and we're still exploring our option. So at the moment, you know, there's not really a concrete, you know, progress for each of, you know, regarding the deadline, would that be extended or how we can exercise our option. We're still trying to explore and negotiate. So I guess, you know, Hopefully, by early next year, we'll have a better idea and progress, and we'll keep all the investors updated when the time is right or when the time we conclude with our conclusion.

Just as a kind of clarification, my understanding is that if they exercise their option, they can do it with candy. common shares. Is that correct?

One moment. Let me direct the question to Mr. Hu. Hello, Mr. Hu. When we sell 28% to the other party, we can buy some shares from the other party. His question is, if we assume that we can buy the other party's shares, can we use OK. OK. So, as for Mr. Hu's answer, yeah, I mean, to exchange the shares between Fonzo and Candy, that's one of the options, and we try to explore this possibility, but we have not come up with a very concrete conclusion yet, but that's possible.

All right. Thank you for your answer, and good luck. Thank you.

Your next question comes from the line of Mark Miller, private investor. Please proceed with your question.

Good evening, guys. Just one question here. If I remember correctly, one of the main features of Candy's original quick battery exchange was the ability to have a mobile battery exchange unit available for an emergency battery swap in just a few minutes on locations due to the battery side positioning between the rocker panels and the wheels. Will this feature be available for all of Candy's EVs? That's it.

Yeah, basically it works, you know, for our EVs like K23 and mostly, you know, it works for the K23, you know, at the time being.

Will they be able to make custom side slides for other companies at some point in time?

Oh, yeah. I mean, you know, basically the idea is, you know, the equipment can, you know, fit those side slide electric vehicles. And, of course, for other brands, you know, the equipment can still work with them. as long as there's some adjustments, you know, of some data exchange or some other fine-tuning. But, yeah, that's feasible after some adjustments.

Where does Candice place or compare to their competitors on this? Can you tell us about that? You mean how we – Your technology that you've created, I mean, how do the other people stack up against this?

I guess, you know, for the, so I mean, for that question, let me delegate to Mr. Hu and see if, you know.

Yeah, it appears when I looked at the video, it seems that yours is much more quicker. I saw a version of Neil a while back, and it seemed like yours was much more time-consuming, and yours was more seamless. So, I mean, is anybody else out? Where is everybody else on? Is anybody pursuing this?

Yeah, I'm sure they are pursuing that. I mean, that's one of the, as you may know, the battery swap system now is fully supported and encouraged by the government in China. So I'm sure other companies, they will try to go in the trend and proceed. But then for us, we are one of the pioneers in the market, and our 90-second one-collect automatic swap system is one of the one of the best in the country. So I guess that's how, you know, defends us from other competitors. But, you know, I'm sure other competitors, they were still working on the technology, and I guess you'll be referred to some other research report of how they're doing. But at least for us, you know, we have other patents to do so. So that's, I guess, one of the, I think the timing, the 90 seconds is how defends us from other competitors.

Okay, that's fine. That's all I have. Thanks for taking my question.

Thank you. Your next question comes from the line of Richard Goldstein with National Securities. Please proceed with your question.

Good morning. Thank you. My question has to do with a spinoff the IPO announced last Monday for Candy's battery swap subsidiary. Mr. Yu, You may not remember, but we met at the San Francisco shareholders meeting day in 2014. I am with a major U.S. brokerage firm and as an investment advisor and also have close business contacts in Hangzhou, my clients represented significant holding in candy shares from even before we met. I must admit it was a stunning revelation that CITIC, China's largest and third largest global brokerage, well known to Wall Street, had signed on to lead the Kennedy Battery Swap IPO syndicate in China on the new Shanghai Tech-orientated Star Stock Exchange. As the word gets out on this in the U.S., this should create a lot of respect on Wall Street, but I have a few questions here. First, what was it that attracted CITICS, China's top firm, to take the lead on the Kennedy IPO, and would you envision they would also have potential research coverage to follow. The second part of the question would be, how large would you expect the IPO to be in both dollar and percentage issued of the battery subsidiary? Next, the originally can be announced it would include Yongkang, I don't know if I'm pronouncing that right, with the battery swap company. Is that still the case, or is it just the battery company? And lastly, is it possible for U.S. investors to participate in the IPO or buy and sell aftermarket shares on the store exchange, either individual or institutions? Thank you.

Yeah, thank you for your answers and your support. So, first of all, when you talk about what a travesty to, you know, be, taking the lead of the IPO project. I think in a nutshell, that should be our technology of the smart battery swap. You know, we have the one collect 90-second swap system that is one of the pioneers in the market. And as you may know, you know, Candy, you know, we are an advocate and a practitioner of the technology called the separation of vehicle and electricity technology. for quite a while. And that's how we can develop, you know, such sophisticated system, you know, with dozens of the patterns of inventions and then utility models. So, I mean, it's really our technology that attracted the CDIC to take the lead of this IPO project, of course, because of our extended experience and sophisticated technology. So especially now, you know, the technology and the mode is really encouraged and supported by the state, I mean, by the government, by the China government, and it also, you know, covers the strong market demand for such, you know, the automatic battery system. So I guess those are the reasons that really attract them, you know, to be involved and to lead this IPO project. And as far as about the, you know, the details of the IPO, like the dollar amount and like the percentage to be issued, well, at the moment, there is not really a concrete conclusion yet. Well, as you may know, we're still working with different like the brokerage firms and the other professional institutions to evaluate this whole project. But then, you know, I guess long story short, we are confident that the project will turn out to be a success. But as for the details, I guess we will, you know, have the PL to disclose later on when we come up with the conclusion. So at present, you know, there's not too much detail we can comment on. And I guess in this IPO project, most of you, it includes, you know, the Candy battery swap system, which formerly called, you know, the ANCOW, and it also includes the Yongcan Sikoro, which are with technology, you know, specifically in the electric system and motors. And finally, about how um, you know, how the U.S. investors can participate in the IPO, uh, and, or maybe how they can get involved, um, you know, for the secondary market, right? So, um, basically, I mean, that's no different from other deals, um, to be listed in the, the, the stock board. Um, I guess the, first of all, the common way, um, or the standardized way is for the, uh, I guess, for the institutional investors or the qualified investors to join or participate in some offline issuance or participate in some strategic placement, you know, that would take place under the staff board. So, I mean, again, those are rather the standardized way that we do or no difference from other companies to the list in the staff board. And after that, the investors of China, you know, those foreign investors can also purchase some shares in the stock market under the secondary market through the pathway called the Shanghai-Hong Kong Stock Connect. You know, so that's how you can get some shares, you know, through this pathway. So hopefully, you know, these two questions can, I mean, these two answers can address your question.

Great. Here's one follow-up. Is there a timeframe that you have provided for this battery exchange listing to be completed?

Again, I mean, just like we were still exploring the options and then the timeline of the project. At the moment, we don't have a very, you know, a concrete timeline yet. I guess what we want is to make it a success and brings the best and the maximum benefit to our investors. Great.

Thank you very much. Thank you. Your next question comes from the line of Mike Pfeffer with Oppenheimer. Please proceed with your question. Good morning. Thanks for taking my question.

It was good to see Gandy written up after the last conference call by a true stock research analyst with Zacks Research. Particularly encouraging to see the analyst give Candy an initial valuation of $12 a share and call it very conservative at that price, which is only around half its competitors trading multiple on 2021 revenue estimates. Yet for 2020, she's only estimating around 80 million REVs and $135 million in 2021, about the same as last year's revenues. Can you comment on the analyst's revenue estimate for both years' revenues? and might you hope to exceed either of the two estimates?

Right. Well, regarding the self-focus from the tax research, fairly prestigious firm of the analyst for the company, we respect the estimate, but then we don't have a very – What we can do is we do the best and try to achieve the most for investors, but then as for the results, I think we will let our investors to stay tuned to our upcoming releases of the financial statements of the year and the next coming period.

Okay. Since we've not seen any update notes from this analyst, despite a lot of big news from Do you or would you expect we'll get something soon now that the Q320 numbers are out?

Yeah, I mean, again, you know, all the next disclosures will be included in our, you know, Q3 and then also the upcoming 2020 year financial statement. So, I mean, for all the, you know, updates, changes will be disclosed, you know, thoroughly in the financial statements report.

And... I also noticed that you now have a very attractive, uh, new website with a lot of good info on the company. However, I couldn't find a link to this analyst research report on the candy site. I think, you know, that would be very helpful for new investors wanting to do due diligence on the company. So maybe it's something you can do, put a link on there.

Right, right. I mean, well, thank you for your following sessions. And, uh, We will seriously consider that and, you know, try to explore the option.

And then the last question, and thank you for your time. So you've got the ZAC research report and now CITIC, you know, they're going to be, I assume, following the public battery swaps up. Would it be reasonable to expect some additional legitimate research coming out on candy? That's my last question. Thank you for your time.

Thank you. No problem, and thank you for your support. Well, as for the questions about different other analytic reports, we have been communicating with other analysts as well. So I guess please stay tuned for any upcoming research reports to be released. Then you can find out, you know, what they say about us. And thank you.

Your next question comes from the line of Frank Blatterman with Private Investor. Please proceed with your question.

Yes, good evening. My questions involve the factory on Hainan Island and the battery swap station that was delivered there. How many employees are presently working on the assembly line at Hainan and what is the average output per week? What model vehicles are presently being made there? And are these vehicles being manufactured to fulfill present purchase orders or are they being manufactured for expected demand? And then the question involving the battery exchange station that was delivered there. Is it an operation at this time and how many battery swaps made on an average day? Was the station that was delivered there part of a trial operation or was it purchased and how many battery exchange stations are presently in operation.

Hello, hello. Hi. So, as for the question, I guess, as for the battery shop system, I guess, you know, the question is that we have so far, I mean, first of all, as you may know, we have shipped one of our first, you know, station to the high code, which is, you know, located in Hainan Province as one of the trial and kickoff of the whole, you know, project. And so far, that's the one that's being trial and use over there, and in the quarter four, we expect to deliver more battery swap systems to both the Haikou City and also the Shaoxing City. Those are the two sports that will run our project program to kick off the whole car-hailing platform. So along with the catering fee that we're going to deliver, we also will deliver the battery shop system, you know, to these two locations. But as for how many we'll deliver, you know, by the end, it depends on the progress. So, I mean, again, stay tuned to our financials, and we'll disclose that, you know, accordingly in the upcoming financial statement.

Well, you used the word delivered. Was it purchased or has it been delivered as part of a trial?

Right. I mean, we have delivered one. As you may know, we discussed in the past that there's one already being used and tested in HICO. So in the upcoming quarter, we're going to deliver more stations of the battery swap to cities to kick off the pilot project.

Okay. If I may be permitted to make another question, are there presently any travel restrictions and mandatory quarantine required to travel to the island of Hainan from mainland China? And can residents of other Southeast Asia countries travel without restrictions or mandated quarantines? If you don't know, that's okay.

Yeah, for that question, I'm not 100% sure.

Okay, do you know how many employees are presently working on the assembly line at Hainan and the average house per week?

Sorry, you mean how many employees working at what facility? I'm sorry, can I catch it again?

On Hainan Island.

Kerwa, can you help me to say that to Mr. Hu?

He asked us how many employees are working on the production line at Haoyang Factory. About 300 employees.

Okay, and what model vehicle is he making?

They are currently working on the production line. Okay.

Are these vehicles being manufactured for present purchase orders or for expected demand?

这些车制造是基准于 Right now, the manufacturing, the production is based on the orders from the right share market.

Okay. Okay, now I wasn't able to get a proper answer to one of my other questions. You stated or say you had either shipped or delivered one battery exchange station. Was that actually purchased or was that delivered as part of the trial operation?

We previously announced that the battery exchange equipment Yes, it's purchased by the service provider, and it's part of the trial operation.

Okay. Do you happen to know how many battery swaps are being made on a typical day?

Right now, still in the tri-operation. Per day, probably about 20, 30 cars will be swapping the battery there.

Okay, so 20, 30 swaps per day.

The numbers vary.

Sometimes 10...

15, 20, can be more. They are still in the process of getting more operating approvals from the local government agency.

Okay, very good. Thank you for taking my question.

Thank you, Frank.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to management for closing remarks.

感谢各位参加今天的财报会议。 我尽代表康迪科技集团董事会和管理层团队重新我们的承诺, 我们将会继续努力发展核心电动汽车业务, and accelerate the application of professional technology in the field of battery replacement systems to maximize shareholder benefits. We expect to achieve strong business and financial performance in the coming few seasons. Thank you for your support. We look forward to continuing to communicate at the next phone conference. If you have any questions, please contact the Investor Relations Department. Thank you. Goodbye.

Thank you, ladies and gentlemen, for attending today's call. On behalf of the Board of Directors and Management Team at Candid Technology Group, I would like to reaffirm our commitment. We will continue to work diligently to maximize shareholder value by growing our main EV business and expecting applications of our expertise in battery swap systems. We look forward to delivering strong operating and financial results in the coming quarters. Thank you very much for your support. We look forward to talking with you in the next call. If you have any additional questions, please do not hesitate to contact our Investor Relations Department. Goodbye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.