Kandi Technologies Group, Inc.

Greetings and welcome to the Candy Technologies second quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kiwa Lau, Investor Relations Director. Thank you. You may begin.

Thank you, operator. Hello, everyone. Thank you all for joining us today on our conference call to discuss Candice's results for the second 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 Ms. Alan Lang, Chief Financial Officer. Mr. 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 Security Litigation Reform Act of 1995. Forward-looking statements inherit 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 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 conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Dr. Dong. Please go ahead.

Hello everyone, I'm Xueqing Dong, CEO of Candy Technology. Welcome to our conference call today. I'm pleased to present the key results of our second quarter.

our sales revenue soared to 36 million U.S. dollars, showcasing an impressive growth rate of over 70% compared to the same period last year. This remarkable achievement is a direct result of a withering effort and dedication we have put into product transformation over the past few years. Our exciting journey led us to develop a series of cutting-edge all-electric off-road authoritarian vehicles from using auto technology, which played a pivotal role in driving continuous sales growth.

這表明我們在面對前幾年的挑戰後取得了重大成果。 這一成就使我們致力於優化產品組合, 針對高利潤和快速增長的類別, 並密切關注客戶不斷變化的需求的結果。 In the second quarter, our net profit reached a significant $4.4 million, turning losses into gains.

demonstrating that we have achieved significant success in overcoming the challenges of the past few years. The achievement is a result of our commitment to optimizing our product mix and targeting higher profit and fast-growing categories while keeping a close eye on our customers' changing demands. 另外,截止2023年6月30号,

Furthermore, as of June 30, 2023,

we had a robust cash balance of over $230 million, giving us the confidence to tackle challenges and seize the opportunity. Moving forward, we will continue to strive and innovate to meet customers' demands, steadily advancing on the path of sustained success. I want to express my gratitude to all of you for your unwavering support and dedication to our shared vision.

Thanks again. Now we will move on to the Q&A session. Chairman Hu Xiaoming and I will answer your questions

and Ms. Kewa and Mr. Allen will provide translations for English questions. Please go ahead and ask your questions.

Operator, please go ahead.

At this time, we will be conducting a question and answer session. If you would like to ask your question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that you limit yourself to one question so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Frank Blatterman. Please proceed with your question.

Yes, and a good evening to those of you in China. And a good morning to those of you in the United States and Europe. I actually have two very short questions. The last authorization to buy back shares expired at the end of December past. Has the company submitted the paperwork for another buyback? And if not, is it under active consideration? Go ahead, Chiwa.

The first question is the last time our stock was repurchased. It expired at the end of December last year. Has the company submitted the document work of repurchase again? If not, will it be in the company's active consideration? Hello.

The company has not made any further repurchase plans. Our goal is to make the company bigger and stronger and create value for shareholders. As for the stock price, So thank you for your question.

The company currently has no further plan for the buyback transactions. Our goal ultimately is to strengthen the fundamental of the company and create the largest value for the shareholders. As for the stock price, we believe that once the company's performance improves, financially, it will organically bring up the tension and attract the investments on the market.

Thank you.

My second question, and this is a little bit different than what I initially was going to submit. With Candies Cash on hand, apparently above the company's present market capitalization, and a half dozen new products, why have there been only two press releases this year? One to announce the CEO transition on January the 11th and one to announce the acquisition of Northern Group on June 26th, with none at all announcing the new products.

Go ahead. What's your question? I'm sorry. I thought I was on.

With Candy's Cash, my question is a little bit different than what I was initially going to say.

Right. I got you through that part. Okay.

With Candy's Cash on hand, apparently above the company's market capitalization, and a half dozen new products, There have only been two press releases this year. Is the company planning on having additional press releases since we are now a very good profit-making company, and is it time to start touting our newer products?

Okay, he said his second question is different from the original one. The problem is that the company now has a huge cash flow. But at present, the company is not very active in revealing the product updates of the company to the market. So far, the company has only two real news. The first one is the announcement of the CEO's appointment in January. The second one is the recent acquisition of a northern group. Will the company be more active in disclosing the company's product information and telling the market about the development of the company's products?

The company has been adjusting the structure of the product in recent years. We have also encountered some difficulties. So the company has been adjusting our product mix strategy in the last few years.

Indeed, we encounter certain difficulties from time to time, and sometimes it may not go well as we expected. So we end up adopting the strategy of refining, optimizing our products before we disclose too much. Fortunately, the transformation of our production has achieved successful results, and the company has turned losses into gains in the first half of this year. Ongoing, we will consider to refine our disclosure approach to the public.

Thank you very much and congratulations on excellent results. Thank you, people.

Thank you, Frank. Our next question comes from Joel Kramer. Please proceed with your question.

Thank you. The very quick Extremely quick pace. Candy is now growing. How long does Mr. Hu feel it will take before candy catches up or beats Polaris, at least in the EV sector of the off-road vehicle space? And then I have a question after that.

Thank you. 第一个问题是在康迪目前这么飞速的成长中, Mr. Hu, how long do you think it will take for County to catch up with the leader of the industry, Polaris Industries, at least in the field of electric non-vehicle vehicles or off-road vehicles?

We will do our best to make our company as big as possible. We will try to make the company into a pure electric all-terrain vehicle sector in two or three years.

We will strive to improve and strengthen our fundamentals in the foreseeable future, and we strive to build the company into one of the leading manufacturers in the pure electric ATVs field within the next two or three years.

Thank you.

What new off-road vehicles Of all types and sizes, do candy expect to release this year, and is there one or two that Mr. Who favors as particular winners? And secondly, also, what percent of sales in this year's first half were sold outside the U.S., and what were the top three markets outside the U.S.? ? Thank you.

What are the three major sales markets besides the U.S. market?

So currently, our main product market is the U.S. market. In addition, we have some sales in Europe and Mexico. Thank you. Thanks for your question.

We have recently launched the model called 10K. It's a pure electric dual motor four-wheel drive UTV in the U.S. market. We believe this model will be favored by the customers in the U.S. market. In the second half of this year, we will also launch a pure electric mini golf cart. We hope that this will be another popular model as well. At present, our products are mainly sold in the US market, and then we also have some sales in Europe and Mexico region through our channel distributors. Thank you.

Hello?

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Mark. Can you please proceed with your question?

Yes, hello. Good evening. Good morning to everybody here on the line.

I have a question about Candy's recently announced acquisition of the 20-year marketing and analytics company Northern Group. Looking at Northern's website, it is easy to see why Candy would embrace this company based on its blue-chip existing clientele in business that have obviously connections to Candy manufacturing expertise. Lowe's and Fleet Farm already carry Candy golf carts, Home Depot, Manor, Tractor Supply, and Mid-State, while similar demographic of Lowe's. And now, would with this acquisition have a straight-line relationship too? Walmart Target and Best Buy carry the Hoover 1 board and the scooter line. Even sharper image and Halmacher Schlemmer carry Hoover board, e-bikes and scooters. However, Hoover 1 connects to Candy, its powertrain division, which has provided over 100 million in batteries and electric motors in recent years. I can see all of these both using various products or having Candy design custom products. or private level vehicles from candy conglomerate of various divisions that already manufacture parts in-house for 95% of its complex golf carts and duties. However, Norburn also has existing clients such as Walgreen, Ulta Beauty, and other nation brands in unrelated industries. My questions are, Kilo, would you go ahead with the introduction or should I come up with the first question?

Sure, sure. This question is about our recently acquired Beifang Group. It says that from the website of Beifang Group, you can see why the company wants to acquire such a company that has 23 years of sales analysis experience. And this company also has a lot of customer groups in the blue stock market. And with these customer professionals, these customer groups and Condi's uh, uh, uh, uh, Walmart, Target, Best Buy, they want to sell Hoover 1 electric scooters. There are also some, for example, Shopper Image and Hand Marcher. uh uh uh uh uh are all made inside Condi. And almost 95% of the golf carts and all the other 95% are all made and assembled inside Condi. The northern group also has some limited customers, such as Walgreens, Outer Beauty, and other large, well-known national brands. Go ahead.

My questions are, could this deal have been done for 30 million cash or was it required to be done for stock by the seller? Does Northern as a candy division keep all the above out of the industry clients like Altra, Walgreens, even in the revenues? even if the revenues are derived from totally unrelated business? Also, will its marketing team continue to solicit this unrelated business?

Will the North Korean group keep all the customers that have nothing to do with the condo industry? For example, Ultra Beauty and Walgreen, even if the income comes from completely unrelated industries. The last question is, will the North Korean group's marketing team continue to contact customers that have nothing to do with the condo industry?

Thank you.

So first of all, the acquisition transaction of North End Group will be closed with candidates' restricted shares with certain escrow restrictions. For specific agreement terms, please refer to the equity transfer agreement attached to this quarterly report of 10Q. As for the business and the goal of the company, of course, the main goal of the North End Group is to promote and operate the company's products. That's our main focus. But definitely, they will keep those profitable operations and businesses. Thank you.

Okay, I understand. And just a couple of more questions. The acquisition terms filed with the SEC seems unique, if not confusing. Please explain the earn-out terms for the 3.9 million shares and under what circumstances the deal could be unwind. And second, for only less than 5% of Kennedy, this deal looks excellent. Where does management see this taking candy in the future?

我还有几个简短问题, 第一个就是你们提交给FDC的收购条款是挺独特的, 但是也让人有点困惑。 请解释一下就是390万股的对赌的收购条件, 会在什么情况下这个交易可能会取消? The second is the share of less than 5% of Condi. This transaction looks good. What direction do you think this will lead Condi to in the future? We acquired the specific contract terms of the North Group. Please refer to the acquisition agreement in this quarter report.

We acquired the North Group and want to use their rich sales resources

So as for the questions about the agreement terms, kindly refer to the equity transfer agreement attached to the 10-Q for this period. And in the future, of course, we would like to utilize the sales resources to expand our sales channel and subsequently boost up the company's sales revenue. Thank you.

Thank you for taking my questions and have a nice day.

Thank you. Our next question comes from Michael Pfeiffer with Oppenheimer. Please proceed with your question.

Hi. I have two related questions requiring some context. The first concerns a candy long promise guidance trend. While not yet included in the company earnings press release, I'm happy to see the almost mandatory requirement to ever get Wall Street analyst coverage, guidance, or forecast has now started to partially appear in each of the last two candy conference calls in response to investor questions. In the year-end 2022 conference call, Mr. Hu forecasted 20,000 to 25,000 units for 23. On the Q1 23 conference call, Management reconfirmed the 25,000 full-year unit sales and added three more forecasts, including 6,000 to 7,000 unit sales forecasts in Q2, up from 3,000 in Q1, full-year revenues and gross margin forecasts. The revenues forecast came as an affirmative response to a question of whether $150 to $200 million was realistic for 23 full-year revenues. and was guided to the high end of $200 million by this quote. So far, our forecast, we believe that there now will be roughly $150 million, even more the top line with the $200 million of the USD sales for this year. I think we can achieve that goal. Maybe you can translate that, and then I'll get to the question, please.

Okay, thank you. um um On the phone conference at the end of 2022, Mr. Hu predicted that the sales volume in 2023 would be 20,000 to 25,000 units. And then on the first quarter of this year's phone conference, the management level has also resumed. The total sales volume can reach the 25,000 units previously mentioned, and it has also increased the other three predictions. The second quarter sales forecast was 6,000 to 7,000 units. Compared to the first quarter, it increased by 3,000 units. The full-time revenue forecast and net profit forecast also impressed everyone. The revenue forecast gave a very definite answer. Go ahead.

Thanks. If achieved, this would be an oppressive 80% year-over-year increase from 2022. Also, from a management response to gross margin question for the entire year, the response was equal to excellent 35% achieved in Q1 versus 16.6% in 2022. If achieved, by putting those two together, we could see a gross profit of some $70 million or more than $0.90 a share for 2023. My first questions are, do you stand by these full year numbers, higher or lower? And how about expectations for Q3? At the current pace, is it doubling to 400 plus million and 24 realistic? And if so, does Candy have the current capacity to deliver? 如果刚才我描述的这些你给予的预测可以实现的话,

um um um Last year, the same period was 16.6%. If we achieve these two goals, it is very likely that we will see that the net profit in 2023 will reach about $70 million, or that the profit per share will exceed $0.09. My first question is, with the sales data you gave us, Um, Is there enough production capacity to achieve this kind of sales?

In the first half of this year, our pure electric golf cross-country car sold more than 7,000 units in the U.S. market. This has exceeded sales of more than 6,000 units last year. Our net profit has also increased significantly. The detailed data can be seen in the quarter report. For the second half of the year, we believe that our sales revenue will still grow. As for next year, we are confident that we will be able to achieve continuous growth in this year's infrastructure. However, it depends on the stability of the international situation and the user acceptance of our new products. As for productivity, the company has adjusted over the past two years. As long as the product has enough market share, our production capacity is sufficient. Thank you.

In the first half of this year, we sold more than 7,000 pieces of the pure electric golf cart in the U.S. market, exceeding the 6,000 plus in the whole year of 2022. And of course, it comes with a higher and significant increase if the gross margin. For the details of our financial figures, please refer to the quarterly report. In the second half of this year, we believe that the sales revenue will still increase to a certain extent. As for next year, 2024, we are confident we can continue to grow based on the momentum of this year. Of course, it depends on the stability of the international market and then the use acceptance of our new products. As for production capacity, we have been adjusting in the last few years. As long as there's a need and demand from the market, we believe that our production capacity should survive to meet the need. Thank you.

Thank you. Okay, on to my second related part. In hindsight, on May 10th, right after the excellent last Q1 conference call, the stock price had been going up the prior week, but closed that day down around 3% to $3.08. The next day it started moving up, and over the following 25 trading days reached a 52-week high of $4.28. Noteworthy, during this period, the overall market and China stocks were generally weak. Also, there was no published news from Candy to account for the rise. The only logical reason for the move up was the publication and circulation of the conference call transcript led by its four excellent guidance comments. My point is that guidance does make a huge difference. At the time of the conference call, there was no guidance in the actual earnings press release, only some mediocre numbers. The live conference call likely had a small audience of long-time investors and due to only 5% fund ownership and no analysts, little if any Wall Street professionals attending. These likely the reason it initially dropped. However, once the third-party transcript started circulating the next day, the move-up started. Maybe you can translate that, and then I have one question, and then I'm done. Thank you.

Okay. My second related question is about May 10th. At that time, Our press conference was also very good. The stock price has been rising in the previous week, but it fell 3% to 3.08% on the day of the auction. The second day, the stock price rose slowly. In the next 25 trading days, it reached the highest 4.28% in the year. It is worth noting that during this period, the entire market was generally sluggish, especially some medium-sized stocks. And the company didn't have any public announcement. I think the only reasonable reason to explain the company's stock price rise is that the record of the May 10 call meeting was broadcast by the third party so that more people could see it on the market. In this call meeting record, it includes the four very important things that the company management mentioned in the last part. very good prediction guidance. In my opinion, I think that these predictions will have a great impact. Because in the press release we published, it did not include these prediction information, but only reported some very ordinary data from that period. And this phone call actually only attracted a relatively small number of long-term investors. And at present, only 5% of the company's shares are owned by the fund, and there is no real analysis room to pay attention to. So this is the reason for the decline. However, the third party spread the record of the company's phone call in the market, so that everyone can see these four... go ahead, please.

Thank you. In my opinion, if the company would follow typical successful public company trends, which incorporate forecasts and the actual earnings release, which carries a much more extensive distribution, profile, and stickiness than a transcript, this candy best-kept secret will finally have a chance to be discovered by Wall Street, particularly now, in light of candy having a few quarters track record with its new predictable market of products. So my last question is, in the future, will management assure shareholders they will seriously consider making this necessary step to significantly increase investor awareness? Thank you.

um um First of all, thank you for your advice.

The company has undergone product structure adjustments in recent years. We have indeed encountered some difficulties. So our company has adopted a strategy of less talking and more doing. So it can be said that our product structure adjustments have been effective. So this year, the company has achieved its goal. So next, we will make positive assessments of your suggestions and will also adjust our work strategy. Thank you.

First of all, thank you for your great opinions. The company has been adjusting our product structures in recent years and indeed encountered some difficulties and sometimes it may not go at what we expected. So we end up adopting the strategy of few words and many deeds. We try to strengthen our fundamentals. Fortunately, the strategic product transformation leads to turnaround in profitability and And that's why we have more income generated and net income generated in the first half of this year. Upcoming, we will definitely take your opinion into consideration and try to explore and optimize our strategy of communication to the public. Thank you.

Our next question comes from Arthur Pocari with Corporate Strategies. Please proceed with your question.

hello can you all hear me okay good good all right well it was a very good quarter excellent quarter I don't matter how you cut it but let me cover just an area I won't take near as much time as I have in the past because everybody to precede me I think did an excellent job so this And my question's a bit bizarre, maybe, but essentially my question is, who is Jaskol Zizang Kuku Sports Technology Company Limited, and how does it relate to candy? But let me give you some background for these questions first. I was perusing the candy products on Alibaba. I discovered a very impressive marketing sub-website on Alibaba for a company founded in 2001 called Jaskol Zizang Kuku Sports Technology Company. At first glance, it looks like an international wholesaling site specializing in a lot of off-road vehicles in several different variations. It has thumbnails showing some 246 different off-road vehicles, both electric and ICE, that can be bought in bulk at wholesale prices. Its impressive homepage features some very familiar-looking vehicles, six to be sure. If you look closely, you see that the front plate says Candy on about three of those vehicles. But the rest of them all have letters that start with KD, which we all know that's been around for a while. KD is Kandy's designator. So interesting that this shows up almost as if we're a Kandy site. Go ahead and tell that to them first. I'm going to go a little bit more and I'll ask some questions.

Okay. Who is Zhejiang Cook Sports Technology Co., Ltd.? I asked the reason. And what is the relationship between this company and Condi? I asked the reason of this company is because I was on Alibaba, which is the website, to check the products of Condi. I was surprised to find a website. It looks like it was founded in 2001. The name is Zhejiang Cook Sports. um um Go ahead. Okay. And at the bottom of this first page, it had pictures of a vast, beautiful, new manufacturing facility. It looked exactly like K&E's new Haiku hand-in,

100,000 vehicle facility, but was missing just a few things. At the center guard gate, which normally would have a large ground sign, and on that sign it would show Candy's name with a shield logo on it. Instead, it had a brown redaction patch over those pictures. And in the upper levels, as I know that facility has also the Candy name and this shield type of logo that we have is normally up there on the real facility wall, and there was also a protection patch on the picture there. So it got a little confusing. Go ahead and tell them that much right now, and then I'll finish up.

There are hundreds of thousands of Hainan factories. It's very, very similar. It's just that the details are very different. For example, in the middle of the central gate, next to the gate gate, there is no Kandy logo. It's covered. And the ceiling of the building is also a name and logo that you can't see. It's not like what we used to see before, where there was a Kandy name.

Okay, moving on to the company's profile page, under company certification, to my surprise, they had a single document for download for the CE mark, which we all know is the authorization to do business in Europe, which I had no idea they can't even have the CE mark. Anyway, it went on to say the actual document, the Zhejiang Candy Technologies, was listed as the manufacturer on this certificate. Also on that page are some video and VR, virtual reality clips of the same facility as the homepage, except this time the redactions were not there. And now the page clearly shows the Candy and the Candy logo in those two locations, actually. So after further internet search of their name, I found a second Jazz Coal website with a beautiful aerial portrait of Candy's old Genoa facility on the banner. On that site, it broke down its international sales statistics with 70% to North America, and the rest detailed out to some 15 additional countries. The pages actually had the feature to retranslate each page into some 80 different languages. This company at least currently appears to be an independent global wholesaler with long-term, very close ties to Candy. Finding that C mark, which it says mandatory for Eurozone, was also encouraging. So I'm going to have a few questions to follow. Read that to them and hit them with the questions.

So I'm going to have a few questions to follow. Zhejiang Kangdi Technology is a manufacturer. And then there are some videos, VR clips, showing the factory on the main page. And this time, in this page, you can clearly see Kangdi's signature and Kangdi's logo. And then, I'll go further and dig more. And then I saw the second one, which is called Jesco's website. The horizontal picture on the website shows the picture of Kandy's old Jinhua factory. On this website, it also lists its international sales statistics in detail, of which 70% is sold to North America, and the rest is sold to 15 other countries. This company looks like an independent global wholesale company. And the entire website can be translated into 80 different languages. It looks like there is a long-term, close relationship with Condi. I think from this website, I found that Condi has a C mark. It's very good. I have a few simple questions.

Okay, first question. What is Candy's current relationship with this company, Jazz Call? Or is it perhaps something like the Northern Group, a company that maybe Candy is looking to buy because they seem to be very proud of the Candy name?

我第一个问题就是康迪和这家Jazz Call到底是什么样的关系? 是否相似于和北方集团一样,康迪想要收购这家公司? I believe that Jesco should have a close relationship with the company. Otherwise, there won't be so much information related to Condi on its website.

This is a long-term customer of our Condi company. Now, they will purchase some all-terrain vehicle products from Condi according to market needs. Our Condi company has not purchased such a plan from Cooke. Thank you.

Zhejiang Cooker is a long-term customer of the company, and now they would still purchase certain kinds of the ATV products from us, according to the demands from the market. We have no plans to acquire Zhejiang Cooker.

Okay. Well, does Candy have any other international wholesale relationships, and what percent of Candy's business do you expect will be done outside the U.S.? ? Question for our friend.

Does Candy have any dealerships in Canada?

Currently, we do not have other wholesalers, although sometimes there are some small-scale customers who will come to us directly and purchase certain items. As for the wholesale plant in Canada, we are currently working on it to set up the

wholesale channel. Thank you.

Okay, just a little follow-up there from what I've noticed. This particular company, again, seems to have changed just over within the past year or so to really put a lot of stress on candy. Of those 240-odd various products, which, by the way, also includes lithium batteries, which can be bought there in bulk, So I guess my question is the lithium batteries, candy batteries, and on the other hand is why are they seem to be stressing? The whole front page is candy. I mean, I'm very happy to see that, but are they just focusing a lot more on candy now than they have in the past? I guess that's my question. 我最后的问题就是我观察到就是在主页上面展示产品的页面。

In addition to its more than 200 products, there are also Li batteries. Are these Li batteries also produced by Condi? I find it very surprising why such a company has nothing to do with Condi. It's just a customer of the company. Why is it that the entire main business is a Condi product? Of course, I am very happy to see Our next question comes from Francis Forte. Please proceed with your question. Thank you.

In May, the company entered into a consulting agreement on business growth and financial advisory services, a $1.1 million contract. Is that a follow-up on the arrangement they had with CITIC before COVID for a possible spinoff or listing on the Chinese exchange?

In May, I saw that the company Operator and Francis, can you hold on for a second? Management says they still need time to answer the previous question, then we'll come back to you, okay? Please hold on and wait in line.

Okay, so right now we're answering the last question of the previous

previous caller, then we'll go to go back to the question. Sure.

Okay. Sorry, there was some interruption for our answer for the previous question.

As for the question, so first of all, is one of our long-term customers, and they also would like to promote our products. That's why you will see such information on the website. Currently, we do not supply any lithium ion cells to Zhejiang Kuke.

Thank you.

We can resume the questions from the last.

Hi, Francis. You can proceed with your question one more time.

...agreement on business growth and financial advisory services for $1.1 million. Is this a follow-up with CITIC on the agreement they had before COVID to possibly do a spinoff or... take part of the, list part of the company on the Star Exchange in China?

um um

So as for the consulting agreement, it's not related to our potential listing in China market with the CITIC.

Indeed, it is for our separate plan to have our U.S. subsidiary as the other sports to explore the possibility to be separately listed in the U.S. main board.

Ah, that's very interesting.

Thank you for your observation.

Okay. And another question for you, Mr. Lim. When Candy sold its Xinhua facilities a couple of years ago. As I recall, a large part of the compensation for that, over $70 million, I think, was a tax benefit, a potential tax benefit on our profits. And I think it was for eight years. Have we ever been able to take advantage of that until now? And now that we are profitable enough, could that tax benefit really come into play and could we recoup a large part of that in the future?

I remember at that time, we got a benefit of a certain amount of tax, which could probably last for up to 8 years. Now the company is already profitable. I want to know if the benefit of the sale of land So thank you for your question. As for the tax benefit utilization,

we believe we can utilize in the upcoming future. First of all, the golf carts are currently manufactured from our high-end facilities. Ongoing, we will try to expand our production in Tsinghua as well. But since we have those net loss carried forward that we can able to utilize, so yeah, as for your questions, we can utilize those tax benefits in the upcoming future. Thank you.

Thank you very much. Thank you, and congratulations.

Thank you.

There are no further questions at this time. I would now like to turn the floor back over to Kiwa and Laura for closing comments.

Thank you. Thank you again for attending today's conference call. If you have any more questions, feel free to contact us or contact our IR agency, BlueShirt. We look forward to updating you on our next earnings call. This concludes our call for today. You may now all disconnect. Goodbye.