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spk12: And welcome to the Candy Technologies third quarter 2022 financial results call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Iwa Luo, Manager, Investor, Direct Investor Relations at Candy Technologies Group. Please go ahead.
spk07: Thank you, Operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Candidate's results for the third 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 Newswire Services. On the call with me today are Mr. Hu Xiaoming, Chief Executive Officer, and Mr. Alan Ling, Chief Financial Officer. Mr. Hu will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US 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 filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please note that unless otherwise stated, all figures mentioned during the call are in U.S. dollars. With that, let me now turn the call over to our CEO, Hu Xiaoming. Go ahead, Mr. Hu.
spk01: $3.7 billion. This is the highest sales revenue since the beginning of 2021. It is also important that the net profit is also reduced to profit in this quarter. We can solve the problem of the pandemic and the global economic recession and the continued supply chain barriers and other external factors. It's not easy to achieve this kind of performance. To achieve this kind of performance, we rely on our industrial adjustments in recent years and the result of reorienting resources. First of all, I would like to thank all our shareholders for their understanding and support. In addition, I would like to thank all our employees who have worked hard to achieve this kind of performance.
spk04: Go off.
spk07: Thank you. Hello, everyone, and welcome to Candice's earnings conference call today. Let's start with financial results, which were promising. We doubled Q3 revenue versus last year, growing to $33.7 million from $16.8 million in Q3 2021. This was our highest quarterly sales since the start of 2021. As important, if not more so, net income turned positive midway through the quarter. We are excited about this performance, considering the global economic slowdown and ongoing supply chains to mass, as well as resurgence of COVID. The solid performance was driven by the strategic pivot we initiated a couple years ago when we redirected resources in reaction to the pandemic. I would like to thank all our shareholders for their understanding and support during this transitional period. Also, I'm grateful to our dedicated employees for their hard work in delivering this positive performance. 净利润扭亏为盈的转变主要是因为我们纯电动非公路用车及其相关零部件的毛利率提高。
spk01: The swing to positive net income was a function of better margins. Gross margin improved largely due to the higher gross margin earned
spk07: by off-road vehicles and associated parts. This plan's operating expense control also contributed to the bottom-line performance.
spk01: We were pleased with the product mix.
spk07: which improved as we executed our strategy. Off-road vehicles and associated parts sales contributed over 60% of total revenue in the third quarter. Rising sales were primarily driven by our strategic pivot and the onboarding of new sales channels in the U.S. established by Candy America. Consumer interest is accelerating for our golf carts, UTVs, and other off-road vehicles. We expect to see higher sales and net income in 2023.
spk01: Finally, we believe that our healthy cash position enables us to be open to opportunities. We expect more top line growth
spk07: based on our diversified and resilient business model. Despite possible economic weakness that could affect the consumer demand, we will constantly launch new products in the electric vehicle business to gain market share and create more value for our shareholders. Let's now start the Q&A session. QA will take any English questions and translate for me.
spk03: Operator, please go ahead. Operator, please go ahead. We can start Q&A session.
spk12: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Harold Gabri, a private investor. Please go ahead.
spk05: Thank you. Hello to everyone. My questions have to do with the status of candy's off-road products like the K32 off-road truck or bikes. I heard that dealers want the K32 truck, but it's not yet available almost a year later. If true, why? Besides that, I have three short questions. How about the various go-karts, which I believe are gas-powered? Are we going to consider making an electric go-kart? Another question. What about our electric bikes? Are they currently available for purchase, and how are the sales doing? And my last question is, since off-the-road looks like a major primary business in the U.S. for candy, I would think it's time for the companies to start breaking down each of the segments in the security filings instead of all together under off-road vehicles. I see some of the stuff has been done in the latest quarter three report, but still we think that we should separate golf carts, bikes, and scooters so that we see the numbers for each group. Thank you.
spk07: Good question. um um Thank you very much for your question. You mentioned a few questions like this. Regarding the Kandy K32 off-road vehicle,
spk01: In the past, in the past few months, it has been improving. Now, it is fully equipped with the conditions for mass production. Now, the left side has been shipped normally. We will arrange production according to the demand of the market. This is the first question. Regarding the black 3.2. Regarding the blue car, the sales volume this year has decreased. Currently, all the vehicles we produce will gradually be electrified. That is, in the second question, will it be electrified? So all our current products will gradually be electrified. Now, internationally, the trend of electric vehicles is becoming more and more obvious. So we will take this step earlier than others. You mentioned electric bicycles. We haven't produced electric bicycles yet. 那么还有一个呢,确实我们的重点会转向纯电动非公路用车站。 关于披露问题,我们会根据ACDC的要求来进行的。 这个你提的,我们会注意这个问题,今后会根据这个ACDC相关要求的话做准确的披露。 谢谢你的问题。
spk06: First of all, thank you for your questions. Regarding the production conditions for the K32 off-road trucks, we have been refining the whole production workflow in the past few months. Right now, we are capable of the full and mass productions. As a matter of fact, we have been gradually starting to ship in a normal process. and we will arrange the production plan according to the market demand. And as for the go-karts powered by gas, indeed the sales volume is also for the whole market has declined this year. And so all vehicles, including the go-karts, are currently produced by us will be gradually electrified, which is the trend for the whole market, but we are in the more advanced position. And besides, we do not produce the electric bicycles at the moment. And finally, our focus really sticks on the pure electric off-highway vehicles. As for the disclosure issues, we actually stick with the requirements and the guidance from the SEC. We'll make sure we have accurate reporting and disclosure. But we'll consider your points and consider how we can refine down the road. And thanks again.
spk04: Thank you very much.
spk12: The next question comes from Frank Bladerman, a private investor. Please go ahead.
spk08: Yes. Good evening to those in China, and good morning to those in the other time zones. I have two questions. Has Candy solved the airbag issue regarding the K23 and K27? and either self-certified or submitted to the DOT for certification for highway use. And number two, on July the 19th, 2021, a press release was issued announcing the purchase of Jingxia Huai Battery Company. Forgive my pronunciation. What was the contribution of revenue of that acquired company in the third quarter?
spk07: Thank you for your question. 他的这个问题第一个是有关K23和K27的安全气囊的问题。 他问这个是否已经得到解决并提交给了安全局来获得高速公路使用的认证。 The second question is, on July 19, 2021, the company announced that it was going to buy Jiangxi Huyin Battery Company. What I want to know is how much of the revenue contribution this quarter has been contributed by this company? Thank you for your question.
spk01: These two questions, K23 and K27, have not been solved so far. So thanks for your questions.
spk06: The first question regarding the airbag problem for K23 and K27. At the moment, we have not been able to resolve that, and we are trying hard to do so. We will keep you posted for any new update. As for the sales revenue from the Jiangxi Huiyi, the revenue generated for the third quarter was about $6.3 million. Thank you.
spk04: Okay, thank you very much. Just one moment.
spk12: The next question comes from Mike Pfeffer with Oppenheimer. Please go ahead.
spk09: Good morning. Based on Q3 2022 financials to date, it appears that the 2022 could be the strongest year ever for Candy. Yet to date, the company has only put out one breaking news type of PR back on January 10, 2022. Candy PR announced Candy enters framework agreement to produce battery swap-enabled electric vehicles, referencing a signed framework agreement with Hunan Hengren Automobile Company to jointly produce battery swap-enabled pure electric vehicles. So let me ask a few questions regarding this relationship. First, on the last conference call, Mr. Hu said our cooperation with Hengren is mainly that we are responsible for the production of the electric vehicles that enable that battery swap mode. We produce the motors, parts, and then Hengrin will take our parts and assemble to be a whole vehicle. What does it mean that we are responsible for the production of electric vehicles, but on the next line you say Hengrin will take our parts and assembly to be a whole vehicle? What is the difference between production by Candy and assembly by Hengrin? Is the final assembly at Hengrin or Candy Haiku facility If this is a GEV, what is the detailed sharing arrangement?
spk07: Thank you for your question. Let me translate to you right now, then you can ask after that, okay? But so far, Condi has only released company news on January 10th of this year. And the other news is some regular news about the report. At that time, Condi said that the company signed a framework agreement to produce a pure electric car with an electronic version. In the news, it was also mentioned that it has signed a framework agreement with Hunan Hengrui Motor Co., Ltd. to jointly produce electric vehicles that can be replaced. I have a few questions about this. The first one is, in the last meeting, Mr. Hu said that our cooperation with Hengrui is mainly responsible for the production of electric vehicles that can be replaced. Condi produces electric machines and parts. Then Henry will assemble these parts into a whole car. In this sentence, how do you understand that we are responsible for producing electric vehicles? Because you said that Henry will assemble our parts into a whole car. What is the actual difference between the so-called production of Condi and the assembly of Henry? Finally, this assembly Thank you for your question. This question is related to China's policy. Our cooperation with Hengleng, the key version of the pure electric car, its main component is produced in Kandy, Hainan.
spk06: Okay, so the corporation, it really depends on the regulation from China's system. So the way we work is basically for the key and main components are all produced by us of the Kandy high-end. And our partner, Henren, is responsible for the final assemble of the vehicles. And those vehicles are sold with the Henren's production qualifications or the license. So that's how we cooperate.
spk09: Okay. One other question. From a PR by Henren on its website in China, October 13, 2022, they announced their Henren H23, formerly the Candy K23, with quick battery exchange, has been officially released for sale at 139,800 RMB, around 19,800 USD. Can you give us some details on this? And if true, why didn't Candy put this news out in the U.S.? U.S. holders have been waiting for years for Candy to be back in the China EV market.
spk07: The next question is, we see that China's Henry released a news on October 13th this year. The news said that the fast-changing version of the Henry H23, which was originally called Condi K23, has been officially sold. The price is 139,800 yuan, which is about $19,800. Can you provide us with some Thank you. We are working with H&M to produce
spk01: 23 has been announced by the Ministry of Industry on May 11 this year. And in the second and third seasons, there are small sales. Due to China's domestic electric car market has not yet entered a healthy and sustainable development stage. Now these companies are struggling in such a stage. Then the business, we are in the current stage, is to maintain, as I said in the past, to maintain follow-up, perfect small-scale operation. Okay, so the update is that the model H23 that we manufactured along with Hang Ren was actually announced by the Ministry of Industry Information Technology
spk06: on May 11 this year. So basically, we are approved and qualified to produce and manufacture such model in the PLC market. And there were a small amount of the sales that incurred in the second and third quarters of this year. At the moment, the China's domestic electric vehicle market is still not in a healthy or orderly development stage. The companies, they even try to sell with deficit or loss in order to occupy the market. So right now, we will keep track and try to improve. However, we're trying to keep and retain the small-scale operation at the moment in order to keep our budget and our cash. And we will definitely accelerate that progress when the China market becomes more healthy and profitable. And we'll keep you posted for any third update, of course. Thank you.
spk09: All right, just the last question, and thanks for your time. What does this really mean to Candy, i.e., is this part of the 300,000 EV program? What specific revenue amount and sources does Candy get from each sale? With Gilly, we knew we got paid for the parts and 50% initially of the profits and loss. How is this the same or different? Thank you.
spk07: Thank you. These two questions are very good. Our cooperation with Hengleng means that the model we produce can be advertised by the Ministry of Industry, that is, it can be sold in the market.
spk01: Now, because Condi itself has not yet been produced, this is the first problem. The first one is that the profit we get is from the whole set of pure electric vehicles that we sell to Henglun. Compared to Henglun, the difference is that we cooperate with Jili, which is a joint business relationship. The joint business relationship, whether it is making money or losing money, So first of all, our cooperation with Hang Ren means now our
spk06: electric model H23 produced by our corporation, also announced by the Ministry of Industry and Information Technology. So meaning we are now officially approved and capable of manufacturing and selling such model in the PLC market. We don't have such qualification ourselves, that's why we are working with Hanren to work together in order to get such qualified process in place. As for the income and the revenue, we basically get all the income generated from the complete set of the parts we sell to Henren. Unlike the cooperation with Geely, which we are in the joint venture relationship, meaning we will share and split whether there's profit or loss, the relationship with Henren is a partnership and then the trading relationship, meaning We will generate the revenue as long as we deliver the sets of the EV parts to them, and then they will go and sell from their own resources. But basically, the revenue is generated once we deliver to Hangren.
spk04: Hope I can address your question. Thank you.
spk12: Just one moment. The next question comes from Arthur Porcari with Corporate Strategies. Please go ahead.
spk10: Good morning, Mr. Hu. Really nice quarter. I'm glad to see you beat the street estimate by about 15% and went from a negative to a positive on that. But that brings me to my question today. It's going to be a little lengthy. I know they usually are, but this one is important. Because this has primarily to do with new U.S. candy electric golf cart crossovers and some recent discoveries made. So this may require me to lay down some background first. So let's start with that. Kiewit, tell them that.
spk07: Thank you for your question. He said, first of all, congratulations to this season for the very exciting performance. And this performance has exceeded expectations. Okay, on our last conference call, Mr. Hu confirmed that
spk10: In the earlier 10Q also, the candy had at that time received two contracts for electric golf carts totaling some 70 million U.S. dollars for this year with almost all in the second half. He told us he was anticipating strong immediate production in the vicinity of 2,000 golf carts per month. What he didn't tell us was who was going to be buying all those golf carts. A few weeks ago, on info I got from an excited candy independent dealer, who was patiently waiting for his own golf cart order, and the truck, by the way, that Lowe's Corp was now selling Candy's golf carts. Initially, I doubted him as I couldn't conceive such a huge contract would not have been announced by the company. As a regular at Lowe's, I'd never seen golf carts of any brand there being sold. This time, to my surprise, a really sharp golf cart was right outside the front door. A quick look around, I noticed the front plate said Coleman. Then I saw a small inspection plate behind the front right wheel. To my amazement, it said Candy Cruiser with a K at SC Autosports, which is Candy's subsidiary company, along with Candy America's Dallas address. I'll stop right now. You can pass that on to Mr. Hu.
spk04: I have more to say.
spk07: It shows that at the end of the Conde, when we reported the 10Q, we received two contracts for the electric golf club. The total value is $70 million. It will almost be realized in the second half of the year. And Mr. Hu also mentioned that it is expected that there will be nearly 2,000 golf clubs every month. But it didn't mention who these cars would be sold to, who would buy them, and ultimately who would buy these golf carts. A few weeks ago, I heard from an independent dealer in Condi that an American company, Lowe's Corp., was selling golf carts in Condi. At first, I was very suspicious because the company would not announce such a large contract. But then I went there myself When I went to Lowe's, because I often go to Lowe's, I've never seen any high-end golf cart in Lowe's. So I was very surprised. But there was a golf cart outside the front door. I noticed that the car sign on it said Coleman. When I was about to drive, I noticed that on the right front wheel of this car, there was a small check board that said Condi KMDA Cruiser and SC Autosport and the address of Condi Dallas. So then I went back to the store and saw the second Condi golf ball in the garden. It was also there. And then it's also written in the same place, Coleman. The price of these two cars is $9,999. It seems to be lower than the recommended retail price of $10,999 published by Condi on its official website. Then I went to the YouTube video website and found that the two cars bought from Lowe's, Coleman's golf ball car, have several very positive reviews. They didn't talk that much, right?
spk03: Go ahead, Hugh.
spk10: Okay. I went back into the store in the garden section, saw a second similar cart parked there. Both were priced at $9,999, which was under the Candy's $10,999 MSRP that you have on your website. I then checked YouTube and found that actually a couple of very positive reviews had already come out on the Coleman Candy electric cart purchased at Lowe's. Positive in both price and quality by several YouTube providers. And most impressive was confirming its 35-mile range and 25 to 30-mile-an-hour top speed. Go ahead and pass that on.
spk07: Why don't you keep going then? Finish this part.
spk04: Oh, you want me to finish it?
spk07: Finish this part, yes, please.
spk10: Okay. I learned from these videos that the Lowe's carts were cheaper than the independent dealers due to less features, front rack, ice chest, and only two collars. I then went to two other Lowe's in my area. Both had the golf carts. One of them actually had four on site just received. The carts are also available through Lowe's online. The U.S. alone has some 2,250 Lowe's stores. I posted on the private chat board about this, and shortly members from all over the country were reporting back that golf carts were also in many but not all of their local Lowe's stores. With this setup, I have more to add on the subject, but let me stop now and I'll have a question for them now.
spk07: OK. OK. OK. Okay, my first question is,
spk10: Why were shareholders not told about this? It's incomprehensible that Candy would do a private-label deal with multi-billion-dollar Coleman for Lowe's, one of the world's largest big-box stores, and not put out a press release. I'm sure even EasyGo, the largest golf cart maker in the world, would have put news out on something like this.
spk07: My first question is, why didn't I disclose such a big deal? Coleman is a company worth billions of dollars. Thank you for your question. Actually, although we haven't discussed
spk01: So for that transaction, even though we have not released individual news separately about the matters you mentioned, we did include a
spk06: include such transaction in the earnings press release of the first quarterly report of this year that was released back in May 2022. But ongoing, we will, you know, consider such transaction and maybe consider how to improve our press release channel. Thank you.
spk10: Okay, well, here's something else, too. You may or may not, you might have heard about it now, but you probably know about it, but you probably didn't know the shareholders could get access to this. Additionally, members of the private chat board recently discovered a publicly available subscription service tracking all commercial container movements globally. Through this service, it appears that Candy's already shipped almost 500 containers in the past four months with either 20 or 12 carts in each container, depending on whether they were four-seater carts or six-seater. With this level of information easily available to the public for a few-dollar subscription, it seems almost unfair to unaware shareholders to be left in the dark the information so i appreciate the fact you say you're going to start looking at putting out more news on this but let me go on a few weeks ago with candy in the low twos and 30 discount the cash 60 discount the book value with no news for eight months it appeared to many that candy was going out of business i even know some long-term holders that threw in the towel sold the stock however With this information available, it's easy to see that Candy has already embarked on an incredible future in just this very hot sector alone that could pass 80 million in sales the second half of this year, surprising all of last year's revenues. I mean, you've already said earlier in the year we should do 70 million on the first two contracts, and we did about 20-some million so far, so we should probably do the balance, I'm sure, in the fourth quarter.
spk05: Anyway,
spk10: It's very rare that blue-chip companies such as Coleman and Lowe's would risk their reputation and give such a vote of confidence on such a new provider as candy in this high-ticket market, unless they saw a bright future together. So let me wrap this up with a few more questions. So go ahead and pass that on to Mr. Hu, and then I'll have just three more quick questions.
spk07: I'm very happy to hear that you said you would improve on the news. I think that's it. Yes, I can't be there. I don't know. I don't know. I don't know. I don't know. I don't know. And the exact quantity of each box is very clear. It depends on whether there are four or six boxes in the box. Each box can hold 20 or 12 golf balls. I think when some investors can spend a few dollars, they can get this kind of information. But many shareholders actually don't know in the stock market. This kind of information is not flat. It's very unfair. And a few weeks ago, Condi's stock price dropped to only $2, which is 30% of the current price, and 60% of the current value. But many people see that the company has no news, and they think that the company is about to collapse at such a low stock price. I know some shareholders may want to sell Condi's stock. This is very understandable because there is no information in the last 10 months. But in fact, Condi has already entered a very popular field and opened up an unimaginable future. It can be compared to such a big basketball company like Lowe's or Coleman. They have a very good reputation in the United States and even in the world. Go ahead. Go ahead.
spk10: Okay, in addition to the Candy four-seater crossover cart, some independent dealers also on the Candy America website are now showing two additional variations, the six-seater I aforementioned and a new modified version of the four-seater, which gives up the back seat and replaces it with a hydraulic dump bed and includes a 3,000-pound electric winch on the front. This utility version would seem like a natural for Lowe's. Do you anticipate that Coleman Lowe's would also be taking on these new variations or will this be mainly for independent dealers?
spk04: Hello?
spk03: Here.
spk07: There are two different versions, one is the 6-seat version and the other is the 4-seat version. These have all given up the rear seats and have been replaced by some kind of night-pressure turn signal. It also includes a 3,000-pound electric footboard. The UTV version is very natural for Lowe's. 你是否希望将其添加到Coleman和康迪这辆车在Lost的购物价上面进行销售?
spk01: According to your proposal, we will make as many announcements as possible in the future. As for the other products that you mentioned, I can only say this. Please pay attention to our next announcement. We are in the process of making these announcements, but we can't say for sure yet.
spk06: Okay, first of all, about the sales information, you know, and update development, even though we may not have the individual press release separately, however, we have always disclosed such sales information and related analysis in our quarterly reports Based on your opinion, we'll definitely take a seat on that and try to refine our disclosure as much as possible in the future. Regarding the product information and the questions that the models that you talk about, I guess we are still working on the details with our partners in U.S. market. We may not be able to disclose too much at the moment, but please pay attention. to upcoming disclosure for any new development. So stay tuned, please. Thank you.
spk10: That's very encouraging. Okay. A couple more. I seem to remember from a prior call that Candy has a China partner with this project. If so, who is it? What facility is making the cards? And what are each company's responsibility, each company's revenue and profit sharing terms and percentages? Yes.
spk07: The second question is, I remember in the previous meeting, Kang Di mentioned this project. We also have a Chinese partner. If there is, who is this partner? Which factory is it produced from? And what are the responsibilities of each partner company? And what are the terms and percentages of the final profit sharing of each company's income?
spk01: We have revealed in the first quarter that in February this year, Conde Hainan and Jiangsu Xingzhi signed a joint venture agreement. The two sides jointly invested RMB 30 million in a contract of 4.6 million dollars. In Hainan's Haikou City, it is called Hainan Control Technology Co., Ltd. So, Condi Hainan has 66.7% of shares in this company. Jiangsu Xingzhi has 33.3% of shares. Currently, the luxury car, the high-end luxury car, is produced by Hainan Condi. But the factory is located in Condi Hainan. According to the share of shares with Xingzhi, according to the share of shares in the company,
spk06: So as for questions, our partner is called Jiangsu Xingchi. Regarding such transaction, we have actually fully disclosed in our quarterly report since the first quarter of this year. In February of this year, we and Jiangsu Xingchi signed a joint venture agreement. The joint invest approximately 4.6 million US dollars. to establish a new entity. It's called Hainan Candy Holding New Energy Technology Company Limited at the Haikou City of Hainan Province. Well Group Candy Hainan holds 66.7% of such entity, whereas the Jiangxi Xingzi holds 33.3% of the entity. At the moment, the crossover golf cart is manufactured by the new entity, Hainan Candy Holding, even though the production was taking place in our Hainan facilities of candy. The profit-sharing scheme is based on the sharing ratio of such entities, so meaning we will have 66.7% of such revenue generated from this entity.
spk10: That's excellent. I remember Ginzu, that's a huge operation. We talked about dealing with them a few years back. Okay, just about finished here. Are there any more major clients like this expected in the near future? Can you give the shareholders and companies revenue growth forecast for Q4? You already said 2023. This should continue into, so maybe a forecast for 2023 as well. I know he doesn't like giving forecasts, but I can ask.
spk07: Very good. The next question he wants to ask is, for such a big client like us, are there any clients who are looking forward to working with us? Also, you gave us good expectations in 2023. I know you don't like to give expectations, but I still want to ask, in 2024, what are your expectations for our sales?
spk01: Thank you.
spk06: Okay, as for the major customers, there are some parties they are working with and are in the negotiation, so please stay tuned to our upcoming disclosure for further development and the details. For the 2023, as we mentioned in the past, we do believe that there will be a large increase of the revenue for upcoming year. However, we don't have such detailed figures at the moment.
spk10: Fantastic. Y'all finally looks like you've hit your stride and Mr. Hu has handled this COVID situation magnificently in spite of what the stock has done. Okay, my last question is just kind of off topic. I noticed that Candy has put out an excellent new investor presentation deck on its parent website IR section recently without any shareholder notice. Usually Candy does this when they're getting ready to attend a stockbroker analyst symposium of sorts. Any particular reason why it was quietly put out now?
spk07: 我的最后一个问题是一个题外话。 我注意到康迪最近在某公司网站上面发布了一个新的投资者简报PPT。 这同时但是没有给予任何的新闻或者股东的通知。 在我的印象当中,通常只有康迪要准备参加一些分析师座谈会或者股东会议的时候才会这样做。 那为什么这次是悄悄的推出来,有什么特别的原因吗?
spk01: Thanks for your attention to our website.
spk06: Actually, from time to time, we are updating the content and the information on the website according to the key development of the companies. It's just a routine process, and we don't really have a specific reason of doing that. It's just routine, you know, a task force to update the website. Okay.
spk10: Looks very good. Anyway, congratulations to both Mr. Chu and the quiet person back in the U.S., Johnny Tai. I think maybe Mr. Hu should bring him on the next conference call and introduce him to the shareholders.
spk04: Seems like he's done a pretty phenomenal job.
spk02: Thanks again for your opinion and suggestions.
spk04: Thank you all.
spk12: Again, if you have a question, please press star then 1 on a touch-tone phone. The next question comes from Mark Miller, a private investor. Please go ahead.
spk11: Good evening, Candy Management. Just a quick one here. On your wholly owned battery subsidiary that you announced in December of 21 and your first quarter filings, you achieved $8 million in revenue from it. Slight drop off in quarter two. And in comparison to what you guys paid, it seems like it did a really great transaction here for the candy shareholders. Was the sales decline in Q2, what was the reason for it? You had $8 million in quarter one and $6.3 million in quarter two. Go ahead.
spk07: This question is about our battery acquisition. What makes our battery sales drop? The battery factory is like this. Due to the continued impact of the epidemic, the battery sales will drop this year.
spk01: The whole year's sales revenue will also be around 200 million RMB. The decline is mainly due to the pandemic. The supply chain is closed. The supply chain is not working. So the second quarter of this year has some decline.
spk06: About the issue you mentioned, due to the continuous impact of the pandemic and the lockdown, there's disruption of the market for the demand and the whole production chain. So it brings the whole decline of the supply and demand in the market. And subsequently, of course, sales of the lithium batteries was impacted proportionally. Although we have a more stable revenue since quarter three compared to quarter two, we stayed around 6.3 million U.S. dollars. For the whole fiscal year of 2022, we expect it will generate roughly 27 or 28 million U.S. dollars of itself from this Jiangxi Hui entity.
spk11: That's good news. Okay, one quick one here. Does Candy OEM, do they make their own batteries for their own golf carts, bikes, cars, et cetera?
spk07: 他想问就是Candy有没有自己OEM 自己的这个为自己的高尔夫球车或者电动的产品 提供自己OEM电池 那个现在我们会议的电池
spk01: Yeah, so basically the golf cart, they adopt two types of the battery. One is the lead acid battery. Another one is the lithium battery.
spk06: So we are now gradually switching the motors from electric battery to the battery. So upcoming Hui Yi will manufacture more batteries for our golf cart.
spk11: Okay, great. And then last one here, how am I pronouncing the subsidiary name? Hui Yi, H-U-I, how are we pronouncing that name?
spk03: Hui Yi.
spk11: Hui Yi, okay. Do they do any private labeling here? For other battery companies?
spk06: Yeah, so where they have their own market share and so they have their own brand. That's why they usually just manufacture their own brand of batteries without the OEM for other companies.
spk11: Okay, great. Listen, thanks for taking my question. I wish you guys all the best and keep up the great work.
spk03: Thank you. Thank you.
spk12: The next question comes from Frank Bladerman, a private investor. Please go ahead.
spk08: Yes, thank you for taking my second major question here. With regard to your reorganization plan, part one, what is the current status? Part two, if it goes forward, will your shares continue to be listed on the NASDAQ, and if not, where? And at what stage will shareholders know? Part three, What is the legal impact of candy incorporated in the British Virgin Islands on its obligations to keep shareholders appraised of material development? Legal obligations aside, what do you intend to do once you're incorporated in the British Virgin Islands with communication to shareholders? And number four here, the last part, what will be the impact on candy filing and communicating quarterly earnings reports once you are incorporated in the BVI.
spk03: Thank you for your questions.
spk07: He has a few questions. First of all, he wants to know how much has the transfer of the registered land improved? um um I'm sorry, can you repeat your last question?
spk08: Yes. What will be the impact on Candy filing and communicating quarterly earnings reports?
spk07: Okay.
spk04: Thank you for your question.
spk01: We are still promoting the registration of BVIPI. We are completing the re-organization of the relevant F4 document. After the F4 document is issued, we will hold a shareholder meeting. If the rescheduling plan is approved by the shareholders' meeting, we will maintain the status of Nasdaq last time. If the rescheduling is successful this time, the legal framework of the company will be more accurately reflected in the overall business of Condi. and operation development. This will further protect the long-term interests of shareholders. Even if we sign the PBI, we are still a Nasdaq listed company. Our communication and disclosure with shareholders will not change much. If the PBI is successfully registered, we will continue to So regarding the status of the reorganization and the demos out to BVI, our company is still in the progress of taking such tasks. In the meantime, we are completing the Form F4,
spk06: the filing that is necessary for the reorganization plan. Once the Form F-4 gets effective, we will then plan to hold a general meeting for the shareholders. At that time, we will have the voting to determine whether the registration to BVI and the demo cell can be completed. And once the reorganization plan is approved by the general meeting of the shareholders, Our listing status on the NASDAQ actually remains unchanged. So basically, actually the legal structures can be more accurately reflect our operations, our development, and then all the plans upcoming. And we believe with such reorganization can protect the long-term interest of the shareholders to a great extent. And even though we don't worry, we are still a regular NASDAQ listed company. So our communication and the disclosure to the shareholders actually will be pretty much the same without much material changes. Because for all the disclosures and such as the financial reports, we have to file quarterly or regularly based on the NASDAQ requirements. and all other public information will be submitted and filed to the public as per the requirements of the SEC regulations.
spk02: So that's pretty much it for our status update for the Recognization Plan.
spk06: Thank you.
spk08: Thank you.
spk04: Thank you very much.
spk12: The conference call is coming to an end. I would like to turn the conference back over to Yiwa Luo for any closing remarks.
spk07: 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.candygroup.com. You can also contact our IRs, advisor blue shirt. We look forward to updating you on our next earnings call. This concludes our call for today. You may now all disconnect. Thank you.
spk12: Again, the conference has concluded. You may now disconnect. Thank you.
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