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spk10: Greetings. Welcome to Candy Technologies' first quarter 2022 financial results call. At this time, all participants are in the 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. Please note this conference is being recorded. I will now turn the conference over to Kiwa Luo Director of Investor Relations. Thank you. You may begin.
spk08: Thank you, Operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Candice's results for the first quarter of 2022. Earlier today, we issued a press release covering the results. You can find the press release on the company's website as well as from the Newswire services. On the call with me today, are Mr. Hu Xiaoming, Chief Executive Officer, and Ms. Alan Lin, Chief Financial Officer. Mr. Hu will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a question and answer session. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities 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 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 statement, except as required under applicable law. Please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Hu Xiaoming. Go ahead, Mr. Hu.
spk02: Thank you, Kewa. Good morning to everyone in America and good evening to everyone in Asia. Welcome to today's meeting. Looking back at the first quarter, we think our business performance is still very good. We created a revenue of $25 million, which is 56% of the total growth. We have set a good start for this year. Back to last year, we used our own technology to develop new products and enter the new market to develop new products and enter the new market. Now we have seen the results of these efforts, especially in pure electricity, high-end floating cars, cross-border cars, products, supply and demand, sales performance is really good. In the year, we will also launch In February 2022, our U.S. company, The Equinox Company has signed a sales contract for a 5,000-pound pure electric high-frequency cross-border vehicle worth $29 million. On March 3, SC signed a sales contract for a 5,000-pound pure electric high-frequency high-frequency cross-border vehicle worth $39 million with more than 20 manufacturers. Tainan Control We started to build in February. In April, we officially started to produce. By the end of April, we had accumulated 778 taels from Hainan to the United States. In May, we planned to produce more than 2,000 taels to the United States. In the future, We are confident that in the field of pure electric road vehicles, we will do our best. In addition, once the Chinese electric vehicle market reaches a healthy and sustainable stage of development, we also believe that our pure electric motor vehicle project will also be pursued by the market. We are continuing to focus on innovation and innovation to improve our technology Hello everyone. Good morning to those who are in the U.S. and good evening to those who are in Asia. Looking at this quarter, I think the highlight
spk08: is our outstanding business performance. We generated nearly 25 million of revenue, a year-over-year increase of 56%. This is a great start to the year. At this time last year, in order to expand our business, we leveraged our technology to develop new products and enter new markets. We are now seeing the fruits of that effort. In particular, new all-electric luxury crossover golf carts, which are in high demand. And we see a sales revenue is kicking off. We will continue to launch more new models of those all-electric or battery-powered vehicle products in a year to drive meaningful growth. In February 2022, we established a company, Hainan Candy Holding New Energy Technology Company Limited in Hainan Province to produce crossover electric golf carts. On February 22nd, our U.S. subsidiary SC Autosports signed a deal to supply Coleman Powersports with 5,000 vehicles and another deal with over 20 other distributors to deliver another 5,000 units on March 3rd. The company Hainan Candy Holding is already manufacturing the vehicles and will deliver 778 units by the end of April to our U.S. subsidiary and expect to ship another 2,000 in May. We are optimistic that this is just the start of what can be large business for us. Looking ahead, we are optimistic about Canada's prospects in all electric off-road vehicles. We also believe that our EVs supported by our battery swapping technology will make a splash and again strong traction once the China EV market reaches a healthy and stable state. We will remain focused on innovative R&D that can improve our technology and create new opportunities for our off-road vehicles and the electric vehicles with battery swapping. Let's now start the Q&A session. CFO will take any English questions and translate for me, and our CFO will translate the answer. Operator, please go ahead.
spk10: Thank you. 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. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, please take your call off of it so we can register the tones. Our first question is from Harold Gabori, private investor. Please proceed.
spk07: Okay, hello. Hello, everyone. On January 10th, Candy PR announced that Candy enters framework agreement to produce battery swap-enabled electric vehicles referencing a signed framework agreement with Hunan-Hengren Automobile Limited to jointly produce battery swap-enabled pure electric vehicles. At first glance, it looks very positive, as it appeared to provide Candy earlier access to a required China EV license originally projected on the last call, not to be expected until April. This was the requirement that was holding back candy from building and selling passenger EVs in China to outfits such as the 300,000 EV government accredited EV, only ride-hailing program. But upon further reading, it appears the vehicles in the JV will all carry the Hengy, not the candy brand, name. Now, I have four questions. Firstly, has the deal been activated? That's the first question. Has the deal been accoladed?
spk08: Okay, let me translate what you have so far. um um uh, uh, uh, uh, uh, uh,
spk03: First of all, thank you for your questions. The first question regarding the progress of our cooperation, the agreement indeed is in place and then we have working with them orderly. And then the application is already basically approved and then is in public pronouncement stage right now in the China Government Agency Center.
spk07: Okay. Did I misinterpret the appearance that the candy brand in China would not be used, even in the candy-founded ride-hailing program? Question?
spk02: Okay, let's put it this way. Even though we're working together with Hang Ren, and the brand name of our vehicles that we work together is under the name of Hang Ren. Although, you know,
spk03: Candy will take the major role of the whole corporation and the process in the manufacturing.
spk07: Okay. Now about the 300,000 riot healing program and the quick battery exchange, also talked about in the aforementioned PR, what exactly does Hengrin contribute to the candy's practice in quick battery exchange?
spk08: That is about the 300,000... We are in cooperation with Hyundai, mainly because we are responsible for producing the parts of the electric motor vehicle, which is the overall parts, and also the
spk02: So what we're working with Henren is we make the major part in the manufacturing process.
spk03: including producing all the major parts components of those battery swap electric vehicles. And then those parts will be assembled by Hang Ren when we deliver the parts to them. And then because they have the license to sell in China market, that's why once they assemble, they will sell the brand in Hang He to the PLC market. And that's the whole process of the sales.
spk07: One last question. What does each partner primarily contribute, and what percentage goes to Hengri, and what specific products and services? The PR seemed enticing, but left a lot of questions. Hopefully, management can clear this up.
spk08: 我的最后的问题就是每个合作方在Hengri占有多大的比例? 在哪些特定产品的服务中又是怎么样去分成的? This announcement seems to have a very promising future, but many questions have not been expressed clearly. I hope that the management can answer these questions one by one. This question is much simpler.
spk02: Currently, our cooperation is mainly to produce an electric car. At present, there is not much share of shares. But what is our entire profit? We don't see how much money to sell to him. In our corporation, Hunrun, because there's no definition of the shares,
spk03: proportion, so we don't really have the issue of the percentage of the contribution or the sharing of the profit. Instead, we are taking different parts. As you may know, we are producing all the parts and components, and we'll make the margin from those cells of the parts to Hang Ren. And after that, they're assembling and then they own markup to the PLC market. They will have their own margin as well. So we are taking different roles in the whole manufacturing themselves. So it's not really, you know, the percentage of the sales, but then we have our own profit of our own process.
spk07: Thank you so very much. Thank you very much. Thank you.
spk10: Our next question is from Arthur Picari with Corporate Strategies Incorporated. Please proceed.
spk06: Okay. Well, my primary area I was going to try to get more information on is a quick battery exchange. We talk about it a lot, and I'm not sure anybody really understands where we stand in that. But let me first say congratulations on an all-time record first quarter. With all the negativeness in the U.S. and China economies, it's incredible to think that we actually did a $25 million quarter. in the first quarter. It's by the Chinese New Year and all the rest that go along with it. But why did you, why is it we find out now you have some 70 million in contracts you just signed just over the new electric golf carts and we haven't seen any press releases on that? Ask that question first to Mr. Hu, please.
spk08: Okay. First of all, he wants to say he is very happy to see such good performance from the company. Congratulations to the company. This is the first This should be very simple. In the past, if we had some information, we would post it in the news. We would change some things.
spk02: That is to say, I think doing is the most important thing. Let's do it first. Let's just say a few words and do more. Now that we have done it, we will announce it here.
spk03: So I guess in the past, maybe we have, you know, the different kind of the press release of all the news and development. And ongoing, our strategy is we try to strengthen our fundamental businesses and operations. And once we have some achievement, then we will circulate the press release to all the investors. So basically, in order to make the whole thing more positive. Thank you.
spk06: Well, I'm not sure it would have done much good in the market environment we've been having lately anyway, but it's nice to know for the longer haul. Also, we didn't see anything in the press release on share buyback. Did we buy any shares back over the past quarter? Did we continue with the program?
spk02: Yes, we did.
spk03: We actually, as a matter of fact, we have disclosed such a share buyback in a subsequent event footnote in our 10Q that's released on the SEC website. The shares will be purchased from April 1st to May 5th is a total of 603,000 shares of the common stock.
spk06: Okay, thank you. Let me get on to my main area of discussion here. So my primary question, as I said, has to do with Candy's decade-old discussion regarding its quick battery exchange. And a little bit of background first, since I've been around long enough to see it from the beginning. Over a dozen years ago, Candy Patton put into service China's first quick battery exchange program in Gen Y. Even today, there are a few YouTube videos accessible that I personally posted a decade ago showing Candy battery exchange in action both robotically and at a changing terminal in around 60 seconds, as well as a roadside mobile exchange in just a few minutes. The mobile feature to this day, to my knowledge, has not been replicated by any subsequent competitor. What made this possible was Candy's patented QBX quick battery exchange, which allowed the batteries to be exchanged simply by sliding in under the car doors between the wheels. Rather than requiring the car to be lifted or battery turned, the specialized state stations like NIO and all the rest of them seem to have to do. This was considered so revolutionary at the time that the PRC government published a white paper in September 2012 recommending for all of China only three charging methods as the preferred modes for EVs. The plug-in, which we still have today, obviously, leased just the battery, but the third one actually named candy in the official name of the project was called the Hanjiu Candy Lease and Battery Swap Mode. Not surprising, it was the only mode that could allow a battery to be exchanged in minutes anywhere at any time by a mobile unit. Needless to say, this was an exciting time for Candy Stock, what announced by the government. With this background reminder, I'm going to have a few questions for Mr. Hu on the subject. Keeva, could you go ahead and share that with them? Okay, sure.
spk08: Okay, he said, my question is about Combi's 10-year-old, already talked about 10-year-old about fast-change appliances. In the past 50 years, Condi has applied for China's first rapid battery replacement project in Jinhua. And it's already in use. And even after more than 10 years today, we will find some related demonstrations on YouTube videos. For example, the 60-second robot power change. And there are also videos of a few minutes of power change at the American gas station on the other side of the road. As far as I know, this second method has not been copied by any subsequent competitors until today, and replaced with this function. This makes the second method possible. It is a fast-changing patent of Condi. Its whole operation is to slide into the side door, slide into the lower door of the car and change the battery between the wheels. and do not need to put the car in a special replacement station. At that time, this was considered to be a very revolutionary technology. As a result, the Chinese government published a white paper in September 2012, which mentioned only three modes, and was recommended as the first choice for electric vehicles. Among them, 我有几个问题想问一下胡先生。 Go ahead, Art. Okay, okay.
spk06: We've got about five sub-questions here. The first two I'll take together. What happened at that time to cause Candy to lose the momentum after its incredible nationwide government endorsement? And does today's Candy QBX still use the side-by-side slide-in between the tires exchange model, which allows for the mobile change on the roadside as well as mechanical stations?
spk08: The first question is, what exactly happened? Why did something happen that caused Condi to lose its momentum after receiving such a powerful government support from the whole country? The second question is, today's Condi's fast-change patent is still the same, the same model, sliding out from the side to exchange electricity, and it can be used in every train station, Thank you for your question. This is a complicated question. Condi's smart charging technology is indeed advanced and practical, so it was recognized by the relevant departments. However,
spk02: Before 2020, in 2012 and 2020, the government's relevant departments basically supported and promoted the charging mode of pure electric vehicles. So the charging mode of pure electric vehicles has been marginalized. Of course, our country has also taken some detours. In fact, this kind of charging is the most promising. After going through so many twists and turns, I also found that there are indeed some problems with charging. Until April 2020, the National Department of Health and Welfare announced that it would support the electric mode. Currently, there are also many companies promoting the electric mode, but the whole progress is still relatively slow. Why? Because the charging has already formed a certain scale and industry. If it turns around suddenly, Because it takes 2, 3, 4 years for a car to be developed, it will take a certain amount of time to change it. This is the first question. The second question is that our fast smart battery replacement, including our technology and model, is based on the original Slash technology. We think this technology is definitely the future direction of development. We will not give up.
spk03: Okay, to answer your questions, our smart battery swap technology did have its advanced nature and practicality, so it was recognized by the relevant government agencies at that time. However, prior to 2020, those relevant government departments, in principle, focused their support and promotion of the rechargeable EVs instead of the battery swap technology. So basically, our battery-swappable electric vehicles were somehow marginalized. The government agencies did find out the issue and the question, and they noticed that the battery-swappable vehicles is more advanced and then more practical. So until April of 2020, the four major state ministries and the commissions then we list the announcement to support the battery swap mode instead. So at the moment, the battery swap mode of the EVs has been promoted and supported by numbers of the companies in China. However, the progress is relatively slow. Why? Because it does take time for years for them to reinvent, develop those EV models that is battery swappable. So they won't happen right away, but it takes time. but then we can foresee that the progress will be better and better. At present, our intelligent battery swap exchange equipment, we're still using the original side-slide technology. We believe that this technology is definitely the direction of our future development, and we will never give up and will continue to develop and advance this technology in the upcoming future.
spk06: Well, I'm really happy to hear that. In fact, one of the YouTube videos that's up there shows the mobile unit being used in downtown one of the cities where the change was made in about two minutes, two and a half minutes with two guys in a little hand kind of lift type of gadget over there. And I mean, you can break down, you can run out of charge anywhere. Any other battery change program seemed to have to tow the car into the station. Here it can be done in a couple of minutes. But aside from that, let me expand on, but I'm really happy to hear that. Okay, so Candy still controls this patent. Would that mean the third-party automakers that use the technology would have to pay royalties to Candy to use this side slide mode? And you've already said this is the same one that China Battery Exchange is using, so I'll skip that part of my question. And by saying, can the China Battery Exchange subsidiary also custom make QBX stations for other battery exchange modes? 我很高兴你提到这个信息,因为我在视频上也看到在某个城市的市中心就有两个人在通过花了好像一两分钟时间就换电了,就是非常好,因为其实在任何地方换电都会有这种短缺或者
spk08: There is no way, because the power station has been bought, there is no way this car will be dragged to another place to change power. And this model just solves this pain point. Then my next question is, I want to ask if Condi still controls this patent. If the third party car manufacturer uses this technology, does it have to pay Condi for the right to use the patent to use this model? And the last question is, can the Chinese battery company also customize the fast-charging station for other battery exchange modes?
spk02: Okay, thank you. Candy has a TRUS battery charging patent, but there are still not many TRUS battery charging products in the market. Many companies are still in development.
spk03: So our company does own currently the patent for all the side-slide battery swap technology. Although in China market, there are not many products or vehicles adopting the side-slide technology at the moment. Rather, there are more vehicles using the battery exchange from other formats, like a chassis. Therefore, at the moment, the impact or the effect of the satellite battery swap pattern is not very significant, I would say. As for our subsidiary, the China Battery Exchange Technology Company Limited, Yes, we are developing the third-party commercialization. You know, it adopts the satellite battery swap mode, of course, and we are trying to explore the optimal way, you know, that can develop, you know, for the third party to commercialize on our, you know, POEV in the satellite battery swap mode.
spk06: I thought I was going to finish, but I want to do a follow-up on that. It would just seem to me, again, surprising, no other model can be done where they could change it in place. I mean, you can have road call roadside assistant on your, on your, on your cell phone. They can have a unit out there to swap the batteries in a few minutes, even in downtown Beijing. But why is it that such logical technology is not being used or, or even being endorsed or being promoted? It, it, it seemed like it'd be done with any size vehicle. Uh, anyway, uh, Try to address that if you could, please.
spk08: Okay.
spk02: There are some authority departments that can set policies. They think electric cars, electric cars, and batteries are important components. How can you change them? It's the same as human beings. If you are new and old, how can you change them? They think this way of changing electricity is not good. So they didn't promote it in the past few years. They don't support the mode of changing electricity. Through the experience of the past ten years, they think that the policies of the past We can't say it's wrong, but since 2020, it should be said that it already knows that the path it took in the past is not necessarily correct. So now, from April 2020, the four ministries have jointly written a letter supporting the change of power. This is a process of change. But the charging mode has been going for more than ten years. This has to be changed. But the policy, the country can't say that the past is wrong. It can always be changed slowly. China is losing a lot of money. For example, in China, there is a zero-run car. Last year, more than 70,000 cars were lost for 3.8 billion yuan. Whoever loses a lot of money loses a lot of money. Whoever loses a lot of money loses a lot of money. In the end, we think it's abnormal. So we think it's not worth it to invest this money in the industry of losing money. So we have to wait until it is healthy and sustainable. Now, for our project, the pure electric project, we have made some adjustments. We have prepared the technology in various ways to make it healthy and interesting. I think they can't afford to lose a few billion a year. If they lose a few years, they won't lose again. If they don't lose again, we think it's meaningful for us to participate. And we also have the ability to participate. If we lose, we don't have the ability.
spk03: So as for the development in China market, as you may know, back in maybe a decade or more than 15 years ago, the EV is a new topic in China. So at that time, the relevant government agency, they may have not too much experience in this aspect. That time, they didn't really buy the idea of the battery swap mode. even though they recognize it, but it's not their focus. Through the development and experience of the past decade, over the past decade, since 2020, they finally recognize that the rechargeable EV may not be the ideal or optimal way of promoting the EV in the market. That's why they start to recognize and promote the battery swap mode. At that time, the four major state-owned councils, the commissions and the ministries, they all released their announcement to support the battery swap mode. Since it's been in the rechargeable EV market for the last decade, it does take time for them to change. Besides, the current market is not quite healthy yet. You may see many companies, they try to compete the occupancy of the market share. They spend a lot of money and even though they sell all the products with the negative margin. To us, that doesn't make sense. In order to protect our investors, we have to spend wisely. We cannot just go in and compete like there's no tomorrow. So we are waiting for the development to become more healthy and more orderly. We think it will be soon. So once that healthy market becomes more obvious, more viable, we will then go in and compete with others. So that's our plan in market development.
spk06: Okay, well, I can't argue with that. I think it's wise. But again, it's just amazing to see the stock trading at a $50, $60 million under cash in the bank with hardly any debt. At least at the rate you're going, it'll take a couple hundred years or something to use up the cash you have in the bank if you keep having losses of only $600,000 with all the cash. It's just frustrating, but a great, great quarter, and we're looking forward to a great year.
spk01: Thank you. Thank you.
spk10: As a reminder, it is star one on your telephone keypad if you would like to ask a question. If you do not hear a confirmation tone, please press star zero. We will pause for a brief moment.
spk01: Operator, if we have more in queue, please go ahead.
spk08: One moment, please.
spk10: Our next question is from Fred Batcher with Cleantech Equities. Please go ahead.
spk04: Good morning. Congratulations on a great quarter. Considering everything happening in China, this is fantastic. Several years ago, with the stock trading at well over double the current price, the company contracted with an IR firm called Blue Shirt Group. Aside from the fact that the stock is now trading at a five-year low, while top and bottom line have improved considerably. And Candy is trading at a huge discount to both book value and even cash. They seem to be on the payroll. Why is that? Blue Shirt puts out a monthly market letter of highlighted stocks. Candy is nowhere to be seen. You would think Blue Shirt would be able to get the attention of at least one or two legitimate analysts to look at Candy with such an undervalued profile. This is especially true with this current quarter. What is management or how does management plan to get this message out? Thank you.
spk08: Thank you for your question. His question is, first of all, he says he is very happy with this quarter, especially with the current market situation in China. What happened is that the company can achieve such a good performance. It is very good. But my question is that a few years ago, the price of the stock was more than twice the current price. Then the company signed an agreement with an IR company. Although the total income and net profit at that time, although the total income and net profit have been greatly improved, the price of the stock transaction is the lowest point for five years. And the trading price of Condi is much higher than the value of the account. Even cash has a big discount. This investor-related company seems to still be collecting the service cost of the company and serving the company. Why is that? Even though the brochures are published every month, they should focus on the stock market. But Condi was not listed among them. Berlusconi may be able to help at least one or two better analysts to solve Condi's value-added stocks. But Condi currently only has one analyst from Noble Financial Research to track. And he only released a very brief report. gave a strong buy-in rating, the goal was $5, but it did not give any financial forecast, or even any income or profit data. If the management team does not know how to tell the story, why not go to an investment-related company, even if they can pay more money?
spk02: Thank you for your question. We think that we mainly need to do our own business. As for the stock price, it means that the big thing itself is not very beneficial to China. Although the current stock price of Condi is seriously underestimated, but we believe that as long as we do our own thing, the stock price of Condi will naturally return to its rationality. Now it is indeed... China China China China China China China We need to refer to the opinions of the PR companies and our legal team. and the relevant government departments and operations teams. Therefore, from the outside, some things feel very meaningful. But when we consider other opinions, it may not necessarily be meaningful. So now we feel that our stock prices are underestimated. But we will do our best to do our own thing. I believe it will return to normal soon.
spk03: Thank you. So thank you for the question. I guess our main target or main role is always trying to do a good job in our business operation and strengthen our fundamentals. As for the stock price, it's true that the overall trend in the market right now is not very good for the Chinese stocks. Although we believe that the share price for our company is undervalued, we believe that as long as we do our best and we are continuing doing good business in the performance in the financial statements, the share price of our company will naturally rise and get back to a more reasonable price. Regarding the IR firm, the Blue Shirt, we have been working with them for a few years. Indeed, they have a pretty good reputation in the U.S. capital market, and I think they are one of the best out there. They are working with some other leading companies in our industry as well, such as, like, Lucid, or Arrival, or, you know, Too Simple. So the expertise and connections in the market is pretty good, we believe. And we are overall satisfied, of course, with the cooperation in the past few years. You know, they give us advice, they give us all the different opinions. However, you know, the final decision maker is always the management of the company. Apart from the opinion from the IL firm, we also take into consideration the advice from, or opinion from the lawyers, from auditors, and from relevant departments and then the operation team. So as you may know, we're doing our best, and we're trying to work the best for the companies, for the investors. So hopefully in the foreseeable future, our share price will get back to the reasonable level. Thank you.
spk01: Thank you.
spk10: Our next question is from Frank Batterman, private investor. Please proceed.
spk05: Yes. Good morning. Can you hear me okay? Yes. Okay. Since my first question was already answered, I have one question. A while back, you had mentioned about the K-23 and K-27 coming into the U.S. and then that was halted because of an airbag problem. So my question is, do you have an expected time frame for these full-speed K-23 and K-27 to be released to America with the airbag problem resolved to the satisfaction of U.S. regulators?
spk08: Okay. He said his first question was already answered. So there's only one question left, which is about our K23 and K27. They were originally going to enter the U.S., but due to the safety regulations, they've been delaying it. Now we want to know how the safety regulations will be resolved. Is there a time limit for getting approval to officially enter the U.S.? ? Thank you.
spk02: So at the moment, our airbag safety requirement standard has still not met the requirement from the DOT from U.S. yet. We think that the requirement standard is way too high.
spk03: there's another Chinese company having over 180 numbers have passed and still not passed. So at the moment, we cannot tell the exact timeline that we can meet the regulator's requirement. However, in order to shift our strategy and the market approach, we did adjust our models of K23 and K27 to an NEV, the neighborhood EV models. And the sale is doing okay at the moment. So that's the update of H&R 7.
spk05: I understand about the NEVs, but I'm really surprised that the regulations are so difficult for candy because other companies appear to be selling into the United States satisfactorily. They have met the regulations. It seems to me if you bought a Chevrolet car, you could reverse engineer the airbag description and mechanism. But, okay. Would you like to comment on that?
spk08: He said, I know your current plan is to sell low-speed vehicles, but there are also other vehicles that have been transported from China that can be sold here. China still doesn't have a car in the U.S.
spk02: to sell. Because the U.S. safety standards, China and Europe's safety standards are the same. But the U.S. is big and small, fat and thin. Its outbreak points are different. So there are so many outbreak points on the same safety standard. Well, the major reason we cannot meet the standard is not really just for candy, but for overall the EV makers from the PLC market.
spk03: As you may know, the requirements and the standard of the airbag safety is different between U.S. and China and also the European countries. They have more requirements of the airbag based on the size or the weight of the driver and the passengers. So at the moment, we don't believe that any one of the for the EVs and then the gasoline vehicle, you know, manufactured in China, being sold in U.S. yet.
spk05: Okay, that'll have to do. Thank you.
spk08: Thank you. Thank you.
spk10: Our next question is from Francis for Private Investor. Please proceed.
spk09: Thank you. Hello, Kiwa. Hi. Hi. About two years ago, the company spent about $40 million or more on a design contract for a new EV model. And I wondered if Hengron will be assembling that model or if there are some other plans for that expenditure. Thank you. 她说在两年前就大概工资花了四千万去研发一款车。
spk08: I want to know if this car will cooperate with Henry to produce and sell. I want to know the cost and where it is going and what the situation of this car is like. As long as the car is sold in China, it will cooperate with Henry.
spk02: Ellen.
spk08: Mr. Hu is saying that any car that will be sold in the China market will be sold through Henry. Okay, and will this model be sold in the China market?
spk02: Yes, it will be. Any time frame on that?
spk08: Yes, it will be.
spk09: Any time frame on that?
spk02: Like I mentioned earlier on the call, in China right now, it's a game of losing money in order to achieve certain sales
spk08: volume in the market and we are definitely not in that kind of game and we just don't have um that kind of money uh to compete with these uh peers but however we're not out of the game we are still going to try test the order to start with the small volume of ev product in china so i i don't have exact time frame as of when but however This is our plan, and you are not going to see a large volume of the EV or EV models we're going to launch.
spk09: Okay, and what is the status of that very important strategic cooperation agreement between Candy and the Zhejiang State Grid EV Service Company? It was PR'd in 2020, and Mr. Hu emphasized how important this agreement is to the future of Candy and Cubex. So what's the status of that now?
spk08: Please. Han, just let me see. You said in 2020, a strategic partnership with Zhejiang.
spk09: Yes, I'm asking what's the status of the strategic cooperation agreement between Candy and State Grid.
spk08: Oh, State Grid. Okay. Hu Yong, he wants to ask, when we were in 2020, we signed a strategic agreement with the national e-commerce. He wants to know how important it is and what the content is.
spk02: This is what they signed with the national e-commerce Zhejiang company, which is the exchange mode. The scope of work for this strategic agreement
spk08: is to utilize the bad exchange. However, it hasn't been launched in a great deal of volumes yet because, like I mentioned earlier, the market is right now not ready for us. However, we have some trial project going on in Shaoxing But going forward, I believe when the market condition is stable and stay grilled, we'll be the ones who are playing the key role in this project to make great investment into this to promote the battery exchange because that will be the way to go for EV.
spk09: Great. I'm glad to hear that it's still alive at least.
spk08: Yes.
spk09: And last quick question. When the F4 is approved at some point in the future, does the company plan to call a special meeting for shareholders to vote on the reincorporation in BVI? Okay.
spk08: Okay. We're still right now in the process of going through the F4. It's not being approved yet.
spk02: But once it's been approved, of course, you have to go through the shareholder meeting
spk08: in order to get approved, get a vote to execute.
spk09: Okay. Thank you very much.
spk08: Thank you for your question.
spk10: We have reached the end of our question and answer session. I would like to turn the conference back over to Kima for closing comments.
spk01: Thanks.
spk08: Thank you again for attending today's conference call. If you have any more questions, please feel free to contact us via the email IR at candygroup.com or you can also contact our IR consultant blue shirt. We look forward to updating you on our next earnings call in August. This will conclude our call for today. You may now all disconnect.
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