Kandi Technologies Group, Inc.

Good morning and welcome to the Candy Technologies first quarter 2023 financial results conference call. All participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 that this event is being recorded. I would now like to turn the conference over to Kiwa Luo, IR Director. Please go ahead.

Thank you, Operator.

Hello, everyone. Thank you for joining us on today's conference call to discuss CANDi's results for the first quarter 2023. 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. Xiaoming Hu, Chairman of the Board, Dr. Xueqin Dong, Chief Executive Officer, and Mr. Alan Lin, Chief Financial Officer. Dr. Dong 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 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 the expectations expressed today. But the information regarding these and other risks and uncertainties is included in the company's public filing with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Please note that unless otherwise stated, All figures mentioned during the call are in the U.S. dollars. With that, let me now turn the call over to our CEO, Xueqin Dong. Go ahead, Dr. Dong.

Hello, everyone. I'm the CEO of Candy Technologies.

My name is Dong Xueqing Dong. Welcome to today's conference call. Our first quarter revenue of $22.9 million was down slightly from one year ago due to the strategic shift in business focus. Over 90% of the revenue was attributed to steadily increasing sales of our off-road vehicles and associated parts. which nearly doubled year over year.

其高利润率对整个毛利率的提升起到了重要的作用。 由于强劲的毛利率,我们在这个季度实现了盈利, 这与去年同期亏损相比有了显著的进步。 The higher margins of off-road vehicles boosted overall growth margins. Thanks to the strong growth process, we achieved

positive net income for the quarter, a significant improvement from the loss experienced last year. Incorporating fully electric off-road vehicles into our product line not only aligns with our values of environmental sustainability and social responsibility, but also positions us as a leader in the industry. We are confident that our focus on this market will benefit us in the future. Our strong balance sheet and financial position put us in a unique position to capitalize on opportunities in this market, and we are excited about the potential for growth. Looking ahead, we are committed to delivering innovative and sustainable solutions to meet the involving needs of our customers and the market.

Now we will move on to the Q&A session. Jim and Hu and I will answer your questions, and Ms. Kewa and Mr. Allen will provide translation for English questions. Please go ahead and ask your questions.

If you have any questions in asking questions, feel free to ask the operator.

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. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question is from the line of Mark McLoughlin, private investor. Please go ahead.

Hi, good morning. I'm Mark McLoughlin. I run a family office in Jacksonville, Florida. A little bit of background. First, thank you, Mr. Hu, for finally offering at least a partial unit guidance for 2023 unit guidance covering golf carts alone of 20,000 to 25,000 units. While not reported in the preferred press release or announcement, you are at least on record saying that on the year-end 2022 conference call, to quote Mr. Hu, Quote, so for the fiscal year 2023, we expect the sales during this year roughly to be 20 to 25,000 pieces of golf carts to be sold in the U.S. market because we have more in-depth discussions and cooperation with Lowe's directly. Great statement. However, it does beg the question, why haven't we seen this in news or press releases? So, again, to unpack your quote, 20,000 to 25,000 units would mean a quadrupling of 2022's golf cart sales, which would generate revenues between $125 and $150 million. And reviewing Candy's data on import key software for Q1, it appears you've already shipped 6,500 units in Q1. and this is at the high end of your forecast according to your earlier disclosure. So question, do you have a further guidance update for Q2 and for the balance of the year? I have a few other questions as well, but if you would answer that.

Okay, thank you. in Florida, an investor. His question is, good morning, Mr. Hu and Mr. Guan. First of all, I would like to thank Mr. Hu for finally providing the market with a little bit of future, future, full-fledged information. Although this information was not announced in the news, but at the end of 2020, at the end of the press conference, Mr. Gu mentioned that in 2023, we expect to sell about 20,000 to 25,000 cars in the U.S. market. And this is based on our direct discussion and cooperation with Lowe's. This is very attractive information. But why don't we I didn't see it in the news in a more public way to enjoy this exciting news. If I can read and interpret this information, 20,000 to 25,000 cars will be four times as much as the high-speed car sales in 2020. The income may be between $1.25 to $1.5 billion. From the current public news, a considerable number of cars have already been shipped to the United States. I would like to know if Mr. Hu can provide the sales status of a golf car in the second quarter, as well as the sales status, and what the next half-year will be like. I still have a lot of questions, but this is my first question.

Thank you for your question. In the second quarter, we expect our golf cart sales to be around 6,000 units. In the second half of the year, it should be between 10,000 and 15,000 units. Around 10,000 units.

So, thank you for your question. So, our estimated sales for the Q2 are roughly around 6,000 pieces of golf carts. And for the half year, 2023, we expect there will be a sales of roughly 10,000 pieces of the golf carts.

How many pieces were sold in Q1 according to your press release today?

So for the first quarter of this 2023, roughly around 3,000 pieces of the golf carts were sold.

Another key point that is

deserves a press release, was that Candy was able to close on a new contract directly with Lowe's and to bypass the middleman Coleman. A few questions. Looking at Lowe's website for a search of Candy products, some 16 items show up under golf carts in the Candy brand, which seem to be the two-seat utility golf cart with dump bed and winch and the six-passenger golf cart's which, by the way, are showing available at Lowe's with both the AGM lead acid for $12,999 and the lithium batteries for $1,000 more. The more conventional four-passenger candy carts still show up under Coleman on the Lowe's sites with the AGM lead acid batteries. Question, did management give more detail as to how candy was able to secure this deal direct, and where does this leave Candy's relationship with Coleman, and what is the likelihood Lowe's will pick up new Candy products other than golf carts?

Thank you for your question. 第二个问题是,他说从另外一个新闻稿中发现一个细节, 就说Candy现在不需要这个中介商Coleman, 就可以直接跟Lowe's签订新的合约了。 那关于这个声明的话呢, 我有一个初步的问题,就是说, But on the Lowe's website, you will still see some regular four-seater Convys with AGM battery. But this brand is not Convys, it is Coleman. So I want to ask if the management team can give us more details to explain this matter. And then explain how Convys did this, which is directly with Lowe's. And now, what is the relationship between Condi and Coleman? And in addition to the golf cart, will Lowe's choose more other Condi products to sell? Thank you for your question.

Currently, the Coleman brand is only on one of our golf carts, which is the four-seat twin-disc. So what they consider is mainly price and profit. But in the case of Roy's supermarket, he hopes to become a leader in the field of outdoor leisure electric vehicles. So Roy's hopes that we, Conti, can provide more diverse products to help them achieve this goal. It is precisely because of the diversification of our Conti products that we can customize the products for them according to the needs of different customers, so that the customer experience

So as for your concerning questions, at present, under the brand of common, there's only one golf cart available in the market, which is a four-seat lead-acid battery model. As for the consideration, primary is the price and the gross profit. However, to Lowe's, they hope to become a leader and occupy more market in the field of the outdoor recreational electric vehicles. So Lowe's hopes that we, Candy, can provide more diversified products to help them to achieve this goal. And because of the highly diversification of our products, we can customize the products for our customer comment according to their needs, and yet there's no conflict for us to supply our products to the loads. So in this year, it's likely that you will see more candy products at loads market.

Thank you for your answer. To that end, the Candy America website added a new $13,999 heavy-duty utility vehicle under the EV link called the Cowboy E10K, the Husky lithium-powered vehicle. It's a perfect offering for the Lowe's demographic, but nothing's been mentioned yet. Do you anticipate Lowe's picking up this cowboy line as well? And why aren't we telling the world how great we are?

谢谢你的回答 那接着就是问一下 在康迪美国网站的 EV 电动车链接下面呢 又看到增加了一款新的重型多功能车 叫 Cowboy E10K This car is priced at $13,990. This car looks like it's completely in line with the customer choice of Lowe's. But it hasn't been mentioned or promoted yet. Do you think Lowe's will also cooperate with Condi to launch this car?

So Lois is well aware of our new product development. So yes, they know about our new model, the Cowboy E10K.

And I believe that Lowe's is also considering this product. In the meantime, we have plans to promote this product to other retail and chain stores to increase our sales channels.

And what about more visibility from the company in terms of putting out press releases, introducing all this great news to the investing public, which I'm sure would be exceedingly interested in this great company.

So based on our development and our operations, we will release the news in a timely manner.

But we haven't released anything about Lowe's and the development of selling to them directly, correct? And will we soon so people can realize this development?

But we haven't seen any news about our cooperation with Loss yet. We don't know how our cooperation with them is going. Because we are now in the early stage of cooperation.

In the beginning, we were working through Common, which is a private company that uses quantum batteries. Now Loss is looking for us directly. So we still insist on our small talk and do more. When things are done well, everyone will know.

Well, actually, at the moment, we are in the early stage of the cooperation with Lowe's. It's not like we're not going to disclose the news. However, we'd like to consolidate and get our fundamentals done and wait until the cooperation becomes a more massive volume. Then we'll disclose accordingly. Our strategy is always get things done first, then we release the news accordingly. when it's fruitful and becomes more mature.

I appreciate that answer. In any meal, there's always an appetizer. And to that end, perhaps you could put something out there relatively soon.

Thank you for your suggestion. Very good.

Now, when we go back to your numbers, the unit guidance for 2023 as given on the year-end 2022 conference call,

the unit guidance for golf carts alone was 20,000 to 25,000 pieces. And is that for golf carts alone, VLOs, I take it? What about all vehicle units from the K-32 to golf carts to the cowboy? What is the total unit projection? 你当时给的,在电话会上你给的这个全战性的

What do you think will happen to other cars, like the K32?

So, yeah, first of all, for your questions, the estimate of cells, 20,000 to 25,000 pieces of cells,

only indicate for the model, the golf cart. It doesn't include any other UDVs such as the K32 or the E10K. In the meantime, we try to expand our sales channels to consolidate our resources. Hopefully, we can have a better sales of this year.

And how soon does Candy expect to get the K32 pickup truck approved for sale under the farm truck rules as mentioned on the last conference call?

那你觉得K32什么时候能获批,能够正式上架进行销售? 那我们的K32的话是UTV,电动UTV,并不是这个皮卡车。 另外我们K32的话这个比较高档,售价比较高,所以这个销量的话我们预计今年是200台左右。 So actually, we have all the approval necessary for the sales of the launch of K32 in the U.S.

market. We estimate there will be roughly 200 pieces of the K32 in this year, but then it's ready to be launched in the U.S. market.

That's very good news. I have to commend, financially commend you of your management skills. I'm looking at a huge jump in gross margins from 19.8 in 2021 on 30 million in sales to 22.6 in 2022 on 71 million in sales. A bigger number this year and a bigger gross margin That's spectacular when one considers a big inflationary jump in the supply chain, shipping, and transportation. Most important question, when you add up these other product offerings in addition to the golf carts, and things look like they're really going to ramp up here, a low end, what would you expect this year's approximate revenues, gross profits, and margins to be? on a low-end, all-in, all the product offerings. Thank you.

to the sales of $7,100 million in 2022, with a net profit of $22.6 million. And considering last year's supply, use, and cost, when these services rose, the company was able to achieve such a high rate of profit growth. But I want to ask, can you estimate, from the golf ball you just mentioned, all kinds of products, all companies that can launch products, Thank you.

Alan. Alan.

So due to our gradual advancement of our strategic adjustments, we believe that the revenue of this year will definitely increase significantly. And then the gross margin will be roughly around the same level of the Q1 of this year.

Well, I really appreciate your patience, and I have a great deal of respect for your skills, your management, And I congratulate you.

Thank you.

Thank you very much.

I have no other questions.

Thank you. Operator, next.

Thank you. Our next question is from the line of Khan now.

private investor please go ahead mr. Khan your line has been unmuted please go ahead with your question mr. Khan now your

line has been unmuted you can go ahead with your question as there is no response from the participants line may request the management that we move to the next question sorry our next question is from the line of mike pepper from Oppenheimer. Please go ahead.

Good morning. Thanks for taking my question, which has to do with Candy's new emerging lithium battery business. From the $10K, it seems that this is another hot sector for Candy. The company reported battery sales in 2021 of only $4.5 million with a 10.8% margin. This impressively jumped five-fold to $24 million in 2022. However, the gross margin went down to 4.6%. From what I can get out of the 10K, it appears that almost all of last year's battery sales were sold to third parties, which in the current competitive environment in lithium vehicle batteries in China squeezes the margins. However, this year, as can be seen by Lowe's now offering a lithium battery option for candy golf carts in the U.S., one would think candy's margins would increase significantly here. as would likely be reflected in total battery sales. If you could just pass that on, and I'll ask three brief questions. Please.

Thank you. In 2021, the company had a battery sales of only $4.5 million, with a net profit of only 10.8%. In 2022, this figure rose 4 times to $24 million, but the net profit dropped to 4.6%. Out of 10K, almost all battery sales were given to the third party last year. And in the current China's Li battery competition environment, it may be suppressed. Its profit rate. This year, as we can see, the United States now provides a golf ball car Li battery. Then I. Thank you. Am I correct in my assumption that last year's battery sales went to third parties? I first want to ask if my prediction is correct. Last year, most of the battery sales were given to the third party.

Last year, most of the battery sales were given to the third party. This year, we gradually used it on our own car. But using it on our own car, it can't be sold directly.

So for past year, 2022, it's true that primary of lithium-ion cells was sold to the third-party customers. We're going to strip our strategy for this year. We're going to have more... demand from our own in-company sales. So, of course, in this case, it will not be reflected on the consolidated sales on the financial statement. So, it will show a less or decrease of the sales in the lithium-ion sales sector because there's more demand from our own in-company transactions.

Thank you. And so, is Candy Batteries only lithium? And is it the goal to have all the company's vehicles powered by its own lithium batteries?

So basically, we're going to develop clear directions of adopting lithium ion cells.

And then could you give us a forward look at what the company is expecting from the battery division this quarter and full year?

That's all for me.

Thank you.

And during the past year, due to the surge of the raw material price of those, you know, iron and then all the sales materials in our China market,

it caused all the uncertainty in the market. Of course, it hurts the demand and then ourselves. From the fourth quarter of last year until April of this year, our battery sector was in a state of net loss. At present, the domestic market, the China market of the raw material price of the batteries was in a decreasing trend. So hopefully, it will have... positive impact to the market and then hopefully our sales will be improved.

Thank you. Thank you.

Our next question is from the line of Walter Hill from Carti & Co. Please go ahead.

Thank you. My question comes under two topics. The first has to do with the opening comment Mr. Hu made on a prior conference call. Specifically, he said, we will constantly launch new products in electric vehicle business to gain share and create more value for our shareholders. I have questions in two related topics. First, while there was no company PR as previously mentioned on the new hefty off-road vehicle, the Candy Cowboy E10, selling for $13,900, which recently appeared on the Candy website with no publicity available to shareholders. Are there any other major surprises like the Cowboy on the near horizon?

Okay, thank you. Mr. Hu mentioned that we will continue to launch new electric vehicles, and will use it to achieve more value for shareholders in the market. For this, I have a related question. We haven't seen any company news announcement, but recently this new heavy-duty SUV, the Condi Cowboy E10K, appeared on the American website of Condi. But we haven't heard from the shareholders. I would like to ask if there are any other similar surprises in the near future that will make us discover. Condi E10K UTV is a pure electric design developed for the 500cc blue oil UTV market.

Our new model, the E10J-UTV, is a pure electric model.

They'll develop to tackle a 500cc field UDB market. We have started to have mass production of this model since April this year. Then it will be sold through the retail store of the Lowe's and other dealer channels. So whether there will be a major surprise like what we have for the golf cart, it depends on the market direction. We do believe that this model will be a very competitive model in the market.

My second topic is regarding to the Haiku Hainan 100,000 capacity EV manufacturing facility designed and built by Candy a few years ago. At that time, it appeared Candy was going to produce most of its own fleet of EVs. Questions on the topic are, A, what vehicles and our parts specifically are being manufactured or assembled in this facility? B, how many units of various vehicles were built in this facility in 2022 and what are your expectations in units do you expect to be built this year? C, does Candy also make its chassis and body parts in this facility or is it just a vehicle assembly? Do you attribute this facility's close proximity to only a mile or two from the export shipping port of Haiku as being a major reason Candy was able to have such a great year in China in 2022, while 90% of the China manufacturers have a bad or terrible year due to supply chain and transportation problems?

My second topic is about a few years ago, Condi built a 100,000-horsepower factory in Haikou. At that time, we said that we would produce our own cars for Condi. I have a few questions. The first one is, in this factory, What kind of vehicles are currently being manufactured or assembled? Can you explain in detail? The second question is, how many different types of vehicles were assembled in this factory in 2022? What is your expected production this year? uh uh China's more than 90% of manufacturers, due to the supply chain and transportation issues, have been through a very bad year. But in comparison, Haikou is very close to the port of Haikou. What do you think? Is this the main reason for Condi's outstanding performance in 2022?

Okay, I'll answer the first question first. Our company's electric vehicles in Haikou Factory, including low-speed vehicles, pure electric multi-purpose vehicles, pure electric golf, and non-road vehicles, So that's for your first question.

So basically, the company's electric vehicles, including the electric vehicle components, and then the off-highway vehicles, like the low-speed vehicles, the pure electric utility vehicles, those golf carts, you know, the ADV, UTVs, as well as the components of our electric vehicle, K23, all produce and manufacture, you know, high-end facilities.

Okay, so the second question is, In 2022, our Hainan factory mainly produces more than 10,000 Golf cross-border vehicles. In addition, we also produce some K23 electric vehicles and K32 products. In 2023, we expect to produce 20,000 to 25,000 Golf cross-border vehicles, and about 200 K32 UTVs. In addition, we will produce a small number of K23 electric vehicles and K32 cross-border vehicles.

As for the second question, during the 2022, our Hainan plant mainly produced the golf carts with more than 10,000 pieces. Moreover, certain parts of the K23 electric vehicle package and then the K30 products have also been manufactured during last year. This year, we expected that the production for the golf cart product will be roughly 20,000 to 25,000 pieces. And then there will be also 200 pieces for the K32 UDVs. As for the K23 EV package, we expect there will be small amounts to be manufactured as well.

So our Hainan plant

The facility actually is a comprehensive production site that includes all four major processes of the car manufacturing, including the stamping, the welding, the painting, and then the final assembly of the vehicle's components. 第四个问题,这个海口离港口近,这不是主要原因。

Thank you. Ben, as for your last question, the export shipping port in Haikou is closed to our facilities. That's not a major reason that we are able to have a great year in 2022.

Indeed, the capacity of the export in Hypro is relatively small. It doesn't meet our full needs. During the past year, 2022, roughly 50% of our products were shipped from the Shenzhen port.

So hopefully that can address your question. Thank you. Yeah, that answers my question. Thank you. Thank you. Thank you.

Our next question is from the line of Arthur Percory with Corporate Strategies. Please go ahead.

Good morning, all. Sorry, I've got a sore throat over here, so I'll do best I can here.

I want to end with some questions on the reported Q1 numbers, which we just saw. But first, I want to make a few points to management. For years, Candies investors have suffered in the stock market. I know this sounds like a broken record, but it's broken. I was repeating again, not because of business failure, quite the contrary. As the uncontested NASDAQ EV first mover a dozen years ago in the global EV sector, candy survived against all odds where there's a 90% likelihood any undercapitalized first mover will fail or be bought out. However, candy not only survived these 14 years, but finds itself today in some parallel universe where this debt-free company stock is trading around $3, about a dollar off its all-time low, and 85% below its $22.50 all-time high, which was, I think, 2014. It's also trading at discounts at $3.2 cash. It's also trading at a discount of $3.21 cash, a 45% discount to the five and a quarter book value. And all this at a time when candy is now rapidly growing with its e-golf cart business at Lowe's and others as well. While 90% of tech stops, particularly in the EV sector, are seeing a significant business and stock deploying. Clearly, this has to change. Pass that part on to Mr. Hu, please, or whoever.

And it's not because of the company's business failure, but when the global electric vehicle industry was born, Condi was one of the pioneers of NASDAQ electric vehicles without any controversy. Condi successfully overcome many difficulties. And as a pioneer, Actually, most of the companies have failed or been acquired. But Condi has overcome difficulties during the past 14 years of listing. And now it is still in a very favorable position on the market. And in the case of debt-free, the exchange rate of the company is only 2.98 yuan. It is slightly higher than the lowest since the beginning. um um Go ahead.

Okay, well, as we know, Candy's never had used an actual full-service sell-side brokerage or invested banking firm to raise any money. But in turn, that just means Candy has no accredited analyst to apply and give comfort to funds. So they avoid the stocks. What is the company going to do, if anything, to try to attract Wall Street analysts? Not putting out press releases is not the solution.

That's question one.

What's your question? That was the question. What is the company...

What is the company doing, if anything, to attract Wall Street analysts? 我们觉得我们关心的是把企业做好。

The data, the electric vehicles, China has no need to compete in the past few years. They are all fighting for the market with a few losses. With this kind of potential, we still need to find a way to do business well. So we still insist on doing more. As for the analysts, I believe that the data will be better in the future. After we make the data better, I believe that the analysts and all aspects will come to the door themselves.

First of all, thank you very much for your concern and support for our company. Of course, we appreciate your suggestions. In recent years, due to the quarterly competition in China's electric vehicle market, we have been forced to make some very difficult strategic adjustments in order to survive. Well, in the end, I think the capital market, you know, we need data to support, right? We always adopt the model of the few words, many bits. So our goal is always to enhance our fundamentals. In case of ourselves, so you can tell that from this corner, finally we can turn our net deficit, the net income to net loss to net income in this current quarter. So hopefully with our stronger fundamentals, better performance in terms of the managers and then our revenues. This kind of data can be recognized by the market and also by the analysts. So then they'll come back to us and promote our company. So, yeah, basically our goal is to help the mental stronger and better.

Okay. Lack of breaking news types of press releases. We've only had two in the past 12 months. Candy used to do 30 or 40 of these when they were doing stuff in just China. Now, we've added, just in the last few months, Candy's added three new $10,000 to $15,000 vehicles. No press releases on any of these three, just since the last conference call. By the way, that's how many we've added. I asked Kayla why none of these U.S.-based vehicles were being press released. Her response was along the lines of, The responsibility to announce these products go through Candy America, not Candy the parent company. It has its own, Candy America I'm referring to, has its own PR company. While this sounds totally ridiculous, if true, this policy's got to change. Putting PRs out in the U.S. when more than 75% of your product sales are big-ticket items in the U.S. should even further increase product sales. Think of where Tesla's stock would be if they ignored sharing new products and updates through news releases with its shareholders. They wouldn't exist. They don't advertise.

You know, they don't have dealerships. Anyway, pass that on, please.

There are about 20 pieces of news. We don't know about many products like golf balls. He said this kind of concept needs to be changed. Otherwise, the market will not be able to understand the company. Okay.

Thank you very much for your concern and support. And thank you very much for your suggestions. In recent years, due to the fact that the electric car market in China has been struggling to compete, we have undergone relatively difficult strategic adjustments. In the end, we feel that we still need to use data to talk about the capital market. So we adopted a method of small talk and more talk. I believe that when we adjust the strategy to an effective return, we will get Um, first, again, you know, for your concerns and advice, uh, well, again, um, usually we take a, um, strategy and a model of, um, you know, um, few words and many bits and

in terms of our operations and then our promotions. But then we definitely will take your advice and consideration in our upcoming I.O. plan, and, yeah, we'll try to fine-tune accordingly. That's our plan, too. Thank you.

Okay, let me just kind of wrap it up here with a few questions that have to do with the numbers that just came out today. I just had a chance to take a quick, brief look at it. You know, we mentioned on the last conference call about this import key software that's available to, I guess, those of us who are members of our chat board subscribe to it. And they're pretty good about carrying all the shipments back and forth, what's going through internationally through containers. According to their software that tracks the global movements and international container shipping sector, Candy exported some 6,600 vehicles to include 5,900 golf carts and 700 LSEs in Q1. which would put it on par to reach the high end of Mr. Hu's 25,000 unit guidance for the year.

I'm sorry, can you slow down with the number?

You said 6,600. 6,600 vehicles were showing up as being golf carts. Now, maybe that's mislabeled when we put them in containers, but I think you have to be pretty honest about that. And some 700 were LSEVs. So in Q1, I would put them in part to reach the high end of Mr. Hu's 25,000 guidance for the year.

And I'll tell that and I'll have more to add.

He wants to say that he just saw some data. I want to continue to ask about the data question. In his last call, we mentioned that there is a software that we can see any information Keep going. Okay. And to...

Let's see here. It would seem that the revenues would be higher in that we only reported $22 million this quarter in total revenues, but we seem to have done about the same, according to import key, about the same number of vehicles, 14,000 to 15,000 total. Now, I guess what we really need to know is with the company showing such high margins to start with, We've been told that Candy's goal is to provide almost all the drivetrain parts and batteries. The numbers should increase overall for total revenues. Even now, Candy batteries appear in U.S. vehicles. If we take an average retail price of, say, $10,000 per unit, how much is Candy gross of this, and what is the timeframe between shipments to the U.S.

and anticipated sales to retailers? Do I need to do that again?

Alan, did you get the part?

Yeah, that'd be great if you can come again if the question is kind of fast.

It apparently, it appears that we have shipped almost 15,000 units in the two years according to import key to the United States. And in the last two quarters, I'm sure, sorry, $14,000 to $15,000 in just the last quarter of last year and the first quarter of this year. But we've only booked so far maybe $10,000 or so or even maybe less. I don't know what $22,000 is because somebody doesn't break that out. But I'm just kind of curious, if the average price is $10,000 in retail, what should that generate per unit to candy?

Oh, okay.

Alan, I'll translate it. If I didn't translate it, you can add it. His question is, he said this year's sales income is similar to last year's. It looks like we only have... He's thinking about this, because of the 22 million sales income, we haven't divided it into how many, how much is there in each business, So from this unit price point of view, he wants to know how much profit each car can get. Is that the problem?

At the same time, he also said that he felt that from this point of view, the amount of cars that we transport to the United States is a little bit lower than ours. This is mainly because of time difference.

There is a difference. There is no difference.

Yes, this is the difference in the time of confirmation.

The time of confirmation is that the American company has to sell it to receive the money before it can be sold. So what we see is that what is sent out from Hainan to the U.S. warehouse is not sold.

so well when you talk about you know our competitive data of the import and then ourselves of course there's some kind of the lag time because we recognize ourselves based on the revenue donation methodologies per the u.s. gap and of course there will be some kind of a timing difference between the cells and then the import I mean all the export to the to the to the US market

Can you be more specific? Is it like 90 plus 90 days, 60 days? And also, basically, bottom line, if it's $10,000 sticker price, what do we actually sell it for? That we would ultimately book in revenues.

He said, can you be more specific? When did you receive the money? Was it 90 days or how many days? He said if it's $10,000, he said it's $10,000, right?

He said in $10,000, we have a lot of, this is our income, but he asked if it's our profit rate.

We're about 30% or more. Yeah. Elaine, you can answer. So as for your question, it really depends on the actual cells. There is no really standard time frame. It depends on how we fulfill our our terms and how we can meet the requirement to recognize the revenue. So it depends on how the transaction get closed in the U.S., so that's the timing of how, like, 30 days or 60 days between the export and the sales organization. So again, you know, we recognize all the sales based on the U.S. GAAP requirement, and so to make sure the numbers are fairly presented. As for the margin, roughly for each piece of the golf cart model, roughly over 30% of the gross margin for each piece of the golf cart.

That's an incredible number.

I mean, that's great. That's an incredible number. If you do 25,000 golf carts alone this year, if you can somehow get $5,000 per cart, That's $125 million with a 30% margin. Anyway, the last question has to do with, could you address the drop in the lithium battery sales and expectations for this division, the balance of the years?

There are two reasons for the battery decline. One is that last year, the battery material fell from 180,000 to 600,000 a ton. So it's hard to control. So we reduced the amount a little bit. Another main reason is that we have some of it used on our own cars. It can't be sold on our own cars. We are also the most important part of the U.S. market. Because the U.S. is a full-fledged company, the battery is also a full-fledged company. It can't be sold separately.

So as a question, we have similar answers to a former question from another investor. So basically, there are two reasons contribute to the decrease of the sales of lithium ion cells. First of all is the uncertainty in the Chinese market. During the past year of 2022, the raw material price of the batteries has surged significantly. That caused uncertainty and hurt the demand of the cells in the domestic market of China. Second of all, we have started to adopt more and more of our lithium-ion cells to our own products. such as the golf carts and other products. And because that's considered as an intercompany sales, we have not recognized that as our consolidated financials because they'll be eliminated. So basically, we recognize those sales, you know, as per US GAAP, and so certain sales with the intercompany transactions will not be presented separately.

Okay, well, actually, I thought that was the last question. One other comment over here. Is it unreasonable to expect $150 to $200 million in revenues this year? I mean, just based on just the golf carts alone? Well, not just based on alone, but overall?

Are you asking are we expecting $150 to $200 million revenue forecasting for this whole year?

Right.

Including everything, right? He said, is it possible to predict that all sales revenue this year will be between $1.5 to $2 million? This year it should be around $1.5 million.

So for our forecast, we believe that the amount will be roughly, you know, $150 million, even more. The top end with $200 million of the USD sales for this year. I think we can achieve that goal.

Fantastic. One last thing. It's been nine years since we've had a shareholder's day in the United States with Mr. Hu of management. I think we're due for another one. What's your thoughts on that?

Nine years ago, Mr. Hu personally came to the U.S. to meet the investors. It's been nine years. When do you think the management will be able to come to the U.S. to meet the investors?

When my transformation is successful, when the business is in full swing, I will go to meet them.

So our plan is once the transition succeeds, with our whole fundamental becoming stronger, then we'll come to the U.S. market to meet up with all the investors.

Sounds like you're already almost there. If you can do $150 to $200 million this year, that should be a record all the time for the company and with great margins. We'll do our best. Just an observation. Thank you very much. And, hey, great job on getting this new product line in. Please, some press releases. Let the public know. It'll help your dealers. It'll help everybody. They'll sell more vehicles. Shareholders will want to go buy one, maybe, the more shareholders we can bring in. But thank you very much. I'll pass it.

He said he hopes to see more news from the company. He said he believes... Thank you very much. Thank you. That was the last question for our question and answer session. I would like to turn the conference back over

to Kewa Luo, IR Director, for any closing remarks.

Thank you again for attending today's conference call. If you have any additional questions, feel free to contact our IR consultant, Blue Shirt, or via email to contact me directly, ir.candygroup.com. We look forward to updating you on our next earnings call. This concludes our call for today. Thank you.

You may now disconnect.

Thank you. The conference has now concluded. Thank you for attending today's presentation.