Kandi Technologies Group, Inc. (KNDI) Earnings Call Transcript & Summary

Greetings, and welcome to the Kandi Technologies Fiscal Year 2023 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kewa Luo, Investor Relations Manager for Kandi Technologies. Thank you. You may begin.

Thank you, Melissa. Hello, everyone. Thank you all for joining us on today's conference call to discuss Kandi's results for the full year 2023. Yesterday, 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 Lim, 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. 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. Xueqin Dong. Go ahead, Dr. Dong.

[Interpreted] Hello, everyone. I'm Xueqin Dong, the CEO of Kandi Technologies Group. Welcome to today's conference call. Looking back on the challenges of 2023, I am very proud of the success we achieved through our strategic pivot into off-road or electric vehicles and associated parts. 2023 was a landmark year for us as we developed and launched new products such as electric UTVs and electric mini golf karts. We beefed up our sales channels by acquiring Northern Group and expanding collaboration with Lowe's. At Lowe's, we grew our partnership by partnering more of their super centers and dealers, thereby expanding our coverage of North America. In 2023, we returned to profitability with revenue hitting its highest level of the past 3 years. Gross profit increased by 112% to $40.4 million, and we achieved a net profit of $1.7 million, a huge swing from the $12.9 million net loss in 2022. These achievements laid a solid foundation for our future growth, strengthening our belief in the potential of the electric off-road vehicle market. As we look to 2024, our enhanced focus on research and development will enable us to introduce more competitive or electric off-road vehicle products. This strategy shows our confidence in the company's future growth and is a pledge to boost shareholder value by addressing the growing demand for electrified off-road vehicles, we are confident we can achieve significant growth in 2024, which can translate into greater value for our customers and shareholders. We hope our strategic shifts are understood and supported by you, our shareholders. Now we will move on to the Q&A session. Chairman, Hu Xiaoming and I will answer your questions and Ms. Kewa and Mr. Alan Lim will provide translation for English questions. Please go ahead and ask your question. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Mike Pfeffer with Oppenheimer & Company.

Couple of quick comments and then a couple of quick questions, please. In January, according to the Kandi American Facebook page, Mr. Hu came to the U.S. and with senior management and first visited the PGA Expo where Kandi got Coleman Lowe's and its first 10,000 golf cart orders in 2022. Kandi was honored by the Expo as an innovator with its patented expandable mini cart by the NBC Golf Channel. Afterwards, he went on to meet with Lowe's home office management to plan Kandi's expansion for this year and beyond. Maybe you can just translate that quickly, please. A few weeks later, another message came up on the Facebook page announcing that Kandi was invited to present its current line of golf carts, cowboys side by side, e-bikes, et cetera, at Lowe's annual all-hands manager meeting. From the looks of the video on the Facebook page, it appeared that Kandi was given the largest and prime location in the display hall and from pictures was inundated by Lowe's managers. Not surprising since Kandi has the highest priced products sold by Lowe's and managers' bonuses are based on the dollar volume of sales of their store. Here are a few questions. Maybe you can just translate that and I'll go to the questions quickly. Since Lowe's has now worked with Kandi for over a year, can Mr. Hu give us any color on just how big this Lowe's relationship can evolve?

[Interpreted] We are glad that our products are popular among the customers of Lowe's. This shows that our cooperation with Lowe's for more than in the past year has been pleasant. As our cooperation between the 2 parties continue to expand and deepen, on top of the golf carts that we are currently selling, there will be other products will continue to be sold in the retail stores of Lowe's. We believe that our cooperation with Lowe's will continue to expand and deepen.

As compared to Walmart, which at least for now does not seem to stock the carts locally, Lowe's seems to have a rotating inventory in the store of various Kandi products. What are the payment terms that Kandi has with the various chains, primarily, Lowe's and Walmart?

[Interpreted] Please note that the payment terms we have with Lowe's or Walmart and some other super stores are confidential. But what we can say is all the payment terms are certainly following the terms agreed upon by both parties.

Okay. How many more super store chains over and above the 5 who currently know, does Mr. Hu think Kandi will add over the next 12 months? And how many outlets are involved?

[Interpreted] So for this year, on top of what we are working with the Lowe's superstores, we have now added the corporation with more than a dozen or so of the retail chains with different scales. Currently, we are working on the [ child ] sales in those superstores. In addition, on top of the cooperation of the supermarket, we are working with the dealership with more than 300 partnerships during the 2023. And in this upcoming 2024, we are trying to work with more than 1,000 dealerships in the U.S. market.

It appears that a few states, including Texas, have not yet approved the Kandi Cowboy side-by-side for sale. Can you tell us what the holdup is and when it may be released?

[Interpreted] Regarding the sales plans, like what kind of products or the time line, it's based on the sales plan with our partners and is working accordingly. Currently, our cowboy products is selling based on our selling plan.

Last question. In 2023, it appears that Kandi sales at the big box stores were mainly golf carts, what new products are being introduced this year and then next year?

[Interpreted] So on top of the golf carts, we will gradually launch different other -- the highly competitive electric off-road vehicle series. On top of that, we're going to launch the lithium batteries for different kind of utilizations. Moreover, we are planning to develop the electric for the fourth quarter.

Our next question comes from the line of Arthur Porcari with Corporate Strategies.

All right. At the last bullish November conference call, Kandi traded at $3.40 a share, at that time as a premium to its reported $2.89 per share in cash in CDs. A few days ago, it traded below $2.30, just above its 52-week low. I said bullish based on the CFO's response in that question last report, regarding the announced purchase of Kandi's second 75,000 square foot distribution assembly facility in Garland, Texas, which increased the total capacity to 125,000 square feet. In the PR, they announced that, the -- one of your people say, Kandi American tends to drive growth through geographic penetration across the U.S. with this and additional distribution centers. This will likely be key to fueling demand in a timely and [ quarterly ] effective manner. That was a quote out of that. Let me follow it a little bit here. A shareholder follow-up question went on to ask, is it safe to assume with this added capacity reached over the next 2 years, the revenues could approach $500 million, and that was the question. The CFO's response was, "the purpose of purchasing the new warehouse in Garland, Texas is to increase our sales capacity." Our sales in the state will definitely increase in a more significant manner. Go ahead and pass that on to him right now. Okay. He went on to say, this is a quote out of it, our goal of sales target is estimated to be close to $500 million within the next 2 to 3 years. He also said, "it is estimated that the gross profit margins for the whole year 2023 would be above 30%. If even close to achieving these targets, the CAGR, compound annual growth rate would be over 80%; gross profit around $1.75 a share in that year, which I assume, he's talking about is 26%. Obviously, with the stock down 40% since the last conference call and 85% below its all-time high, not only is the market not believing management, it's betting on a negative growth over the next few years. This is despite the company announcing a $30 million share buyback right after the last conference call. I have a few questions to follow up, but just say that to them first. Okay. Do you think maybe the major price decline could have something to do with no press releases in over 4 months and when Kandi in years has put out over 40 a year for the past 10 years?

[Interpreted] We have been through the strategic shift in the last 2 years that caused cost certain -- caused uncertainties, right? That's why we stick with a more conservative approach of the PR effort. As our performance continues to grow and become more steady, we will definitely increase our PR effort.

That's quite obvious with the stock being down that you're not doing any effort to get public relations out, I think that's very bad. Stocks need to be promoted. It's not by management, by analysts or somebody, but let me move on. This management still stand by the target of $500 million in sales and 30% gross margins over the next 2 to even 3 years.

[Interpreted] During the fiscal year 2023, we achieved a turnaround from net loss to net profit. So we are convinced that the sales and profit will continue to increase significantly in the next 2 to 3 years.

So you're not standing by that 500 number, but that's okay, I guess. Why do you not report non-GAAP numbers as well? If you were to report -- about $11 million in non-cash charges for stock-based compensation, that would have added 12 -- at least for analysts to look at, they like looking at that number because it's a one-time item. It's a non-cash charge. And in this particular case, we would have earned $0.12 or $0.13 for the year. If it was any other company, it would report the non-GAAP.

[Interpreted] So what we are doing right now is full gap disclosure. We stick with complying with the SEC disclosure regulations and requirements. So basically, we would like to present an accurate presentation to investors without too much confusion. And second of all, it's based on the recommendation from our auditors to present GAAP complying figures. We are trying to take a more conservative approach to present the exact correct amount to all the investors and regulators. But what you mentioned, we may take into consideration in the future.

Okay. Well, first, to comment to that as well. Well, again, that cost us about $0.12 a share in earnings, where any other firm out there would report both sets of numbers. Analysts, particularly in tech-related companies, don't even care about GAAP anymore when they put out their research reports. They look at the non-GAAP because you know that these companies are putting out shares all the time. So they're -- I mean, as far as stock-based compensations, a lot of times, they don't even get exercised. So again, it cost us about -- we would have had probably $0.14 to $0.15 in non-GAAP income for the year instead of just showing $0.02 and I can promise you, the stock would not be trading at $0.90 under cash or $0.70 under cash in the bank. You have $3 a share in cash in the bank now, on top of everything else has been growing. And I see you also bought back, am I correct, over 700,000 shares of stock so far since December when you started the share buyback.

This is the question whether we have bought back 700,000 shares. I think we disclosed all the shares buyback in the K. Is that what you're trying to ask?

Yes, there are 2 sets of numbers in it. One was -- I mean, you didn't start buying until probably December because you announced it the last week in November, and that shows about 175,000 shares last year, but you also have a subsequent event in there that shows over 0.5 million more shares were purchased. So my question is, is it -- have we, in fact, repurchased somewhere between 700,000 and 800,000 shares in just the past couple 3 months?

So your question was that's the number, 700,000 we have purchased, right?

Right. I mean, that's the number that you have. I just wanted to make sure you have 2 separate numbers. It does seem to say that in 2023, you purchased around 180,000. And I guess, so far, you've traded -- bought over $0.5 million at an average price of around $2.74.

[Interpreted] So as for the amount of shares we have purchased since December until February, the figure we get is correct. It's roughly 700,000 shares we have buyback in last 2, 3 months. Correct.

That is pretty impressive when you consider the average daily volume has shrink down to about 60,000 to 70,000 shares a day, and you can only buy 25% at any given day of the average daily volume. But what about insights? We used to see insiders buying the stock at $4 or $5 a share in years that they were losing money hand over fist. We haven't seen Mr. Hu or Henry Hu or any other insider buy a share of the stock in 2.5 years. And if you're doing 10b-5s with the corporation, that should not restrict inside executive buying as well, at least I'm starting within the window.

[Interpreted] Well, for management, especially those from PRC because of the restrictions of the foreign currency disbursement. So it takes us more effort to buy the shares. But we definitely, will have such plan and proceed in the future.

With the stock trading $60 simple [indiscernible] I can't imagine the time being any better than right now than worrying about the future, unless you just like paying higher for it. But anyway, with all this cash we have, now it's almost $3 a share and it's gone up every quarter, which is amazing this year. Are you going to make an acquisition with that? You're going to buy a manufacturing facility, maybe in the U.S. or Mexico? Or how about just doing a straight $20 million share buyback at $3 a share. Just don't worry about Dutch auctions or anything else. Tell that, I'm just about done.

I'm sorry, can you repeat the last part? You say, if we are going to acquire any facility in U.S. and Mexico and what's after that?

Yes. What I was saying -- no, I was just saying or maybe make an acquisition with this cash, maybe a manufacturing or maybe buy another company or do an actual tender to buy -- I mean, there's no better -- there's no more undervalued stock than your own right now. You're treating 1/3 of book value. You're trading like I said, $0.80 below cash in the bank. Just go out and make a $20 tender for -- I'm sorry, 20 million shared tender for $3 a share. I doubt you'll get anything wanting to meet it, but at least it will wake up the market.

[Interpreted] Yes, we are striving to work on it, including we are considering the plan for any possible acquisitions or the facilities set up. And as for the share buyback, yes, we will work on it.

That didn't really answer my question, but let's just [indiscernible]. You're talking about maybe buying a facility in this hemisphere. Is that perhaps what he was just saying?

[Interpreted] Yes. As you mentioned, we are really seriously considering such plan. Considering there are some other factors like from the political, the economy, we will definitely take those all into consideration. And if there are further development, we will timely disclose to the public.

That might be a surprise. One last question over here. No, one of the -- so we don't even know who the chains are. I mean all the company has reported in press releases has been that Rural King and Peavey in Canada, we have a total of about 410 locations. Can you go down the list right now and tell us what other Walmart, Amazon just a whole list of who we're doing business with right now?

I'm sorry, you want us to grow the list of…

Again, you've only put press releases out on Peavey Mart and Rural King, a total of 410 locations. We know that you're in Walmart. We know you're in maybe that Marcus Lemonis' company, Camping World, and we know you got your own Amazon site. We've never seen any press release. So average person looking at would think that you only got 400 locations, but you got $60 million in inventory. So what other locations do you have within the United States? Or in the area…

[Interpreted] Well, I noticed that you would like to know exactly how many the retail stores we have our exposure to. It's hard to confirm because what we can confirm is how many the companies like our company megastore company or the retail chains we're working, we are working with over a dozen of those megastore companies and the mega chain or the retail chains in different scales. But then each company they have a number of the retail stores that -- not all of them necessarily will sell our products. So I guess it's easier for us to disclose the number of the partners we have working with instead of the retail store number to give a more accurate figures to the public. Besides, currently, we are working with over 300 dealerships in the U.S. market. We expect to expand our exposure to over 1,000 of those channels to dealerships in 2024. We expect that the sales will be -- and the volume will continue to improve this year. So that's what we can tell you for the plan of the sales.

Okay. That pretty much answered my question. But right now, I think I named 5, and you said you're working with 12. So -- and maybe they should explain why they don't want to give up the names in press releases. I understand that, I'm not holding against it, but to give the shareholders a reason why don't you put the names out?

[Interpreted] Well, see, we are working with those different types of the superstores and the retail chains. And apart from the 5 that you have found out from the public information, the rest actually are doing the cloud sales of our products. That's why it's not 100% like finalized that. We are still working on the terms and the sales plan among both parties. We will disclose more information when it's all finalized. We would like to add more color there, as you may know, just like what we have been through with Lowe's, the sales form with Lowe's is pretty material, but then they -- we need to have their consent for the public information disclosure. But then many of those stores maybe they declined. So because they are working on their own sales plan. So there's just a confidential idea, and then that's how that works in the business world. So we have to get the concern before we can give our information even though we want to. We just have to stick with the terms with both parties. We're working on that. We try to release more information in the future and trust us, we're working on that collaboration. And besides, even though we entered the agreement of our sales with those parties, it will take months for them to finalize and go through the legal and other department before all the information becomes public. So there will be a time lag, so I hope you understand that.

I am 100% agreement with you. That's what I was hoping you were going to say. We understand -- but the only ones we have, like I said, we had to find out on our own, those do an individual investigation in the past. But if they don't want to say who they are, why can't we do something and just put out on the website, for example, just put on there the total number of chains -- if you can't name the chains, just put total number of chains, a total number of stores that have been increased to a certain level, just something like that. But anyway, look, I think you're doing a great, great job with Lowe's at all. You're doing a terrible job in getting the stock information out. It's got to be an ultimate embarrassment. You've been trading under cash in the bank and half a book value for 2 years now. And in the meantime, you added Lowe's and Walmart and Marcus Lemonis' company, I mean, there are big companies. And somehow, if you just put up -- that you passed 20,000 vehicles made or 30,000 vehicles made. It just or just generically, if you put out and say we're now up to 12 chains. You don't even have to name them, something like that. Just stay in touch with the public. We haven't had a press release since November, okay? And no new product one. I mean, Johnny tied this his own press releases, for Kandi America, but they're dedicated to the trade journals. They don't necessarily show up on the Wall Street tickers. Okay. I am done. Thank you very much. It can only go up from here.

Our next question comes from the line of [ Frank Laderman ] private investor.

Well, yes, good evening to those of you in China. I have two quick questions, is a Dutch auction still under active consideration? I didn't quite understand the answer that was given to Art. My second question, take care of the first one.

[Interpreted] Currently, we did not adopt the Dutch auction for the shares buyback. However, the company is undergoing the share buyback process. For more detailed information, please refer to our 10-K disclosure.

And my second question, I, along with many of the long-time shareholders, invested in the company due to the electric car business. Do you have any plans to reintroduce the electric cars, perhaps with quick battery exchange in the future?

[Interpreted] Currently, because of the market in China being too competitive, is unhealthy for the EV industry. That's why we shift our focus to the electric off-road vehicle series for a better return in terms of the -- from the financial perspective. But definitely, like in the EV products, the battery charging, we are working on it at the current, but -- and we'll see and assess the market when the time is right, we will end in a more active approach.

Our next question comes from the line of [ Steve Miller ] private investor.

For almost 2 years now, I've been tracking on a daily basis, 7 days a week using U.S. import data, Kandi shipping container imports coming into U.S. ports and compiling various cargo information from the accompanying bills of lading, I received the data within 24 hours of port arrival. So I've got some questions relating to your imports so I can gain a greater understanding. Kewa, can you go ahead and translate that?

[Foreign Language] Go ahead.

Great. Thank you. Whether those containers arrive at the ports of Houston, Los Angeles or Long Beach, SC Autosports is listed as the recipient on the bills of lading. Do you ship any product to the United States from China that does not bear SC Autosports name on the of bills lading, that is, is any product sent directly to a U.S. or Canadian customer from China? Regarding the latter, if so, are those contents fully or partially assembled?

I'm sorry, can you repeat. My understanding as you said, you have seen, we shift a container to Houston, Los Angeles and the Texas and what's the second part?

Okay. My question is, all the containers that arrive at any of those ports are shifted to SC Autosports without regard to whether it's Houston, L.A. or Long Beach. I want to know, does Kandi ship any containers directly to a U.S. or Canadian customer outside of SC Autosports directly? And if so, are those contents in those containers fully or partially assembled. That's my question.

[Interpreted] So there's no direct delivery from our China base to those end customers. We have 2 sample points in U.S. One is the primary point in our Dallas base where our SC Autosports subsidiary is located. There's another sample point in Los Angeles. So once the products assemble, we will then ship the end products to the dealerships for them to deliver to the customers.

Okay. So you have some kind of receiving or distribution facility in L.A., but not in Long Beach. So when containers arrive there, are those all sent to your Dallas facility before arriving at your customer's location or they ship directly to a customer location, for example, from the L.A. port?

I'm sorry, can you repeat one more time?

Right. Alan said that you have some kind of a receiving distribution facility at the Los Angeles port apparently not at Long Beach or in Houston.

[Interpreted] I think there was a confusion. I think what the Chairman meant in California, Los Angeles, he meant Long Beach, he just doesn't know the exact city name.

Okay. So let me see if I can understand this. So if containers arrive in Long Beach, those are not -- those are not sent either by rail or by truck to Texas. Those are sent directly to customer locations.

[Interpreted] So for those products that we -- those products we receive and that we assemble in Los Angeles County, we will then ship to the West Coast region.

Okay. And then in the -- then is that -- from that's Long Beach? And then for Los Angeles, are all those containers then trucked or sent by rail to Texas?

No, they don't. They don't. They just directly -- once they have been assembled in Long Beach, they will just directly shift to the customers.

So whether the containers arrive at Long Beach or Los Angeles, those are dealt within your facility there and are sent directly to the customer, is that correct?

Correct. So basically, we only have one. Just to clarify, we only have one location in California, which is Long Beach. So there is one in Long beach, one -- the other one in Los Angeles.

Is that facility in California, -- did we know about that? Have you ever announced it? Or what kind of a facility is it?

[Interpreted] You mentioned that we didn't disclose such facility in Los Angeles because it's not owned by our company. It's one of the partners we are working with in that region, then we pay them to do the sampling of our products, then they will ship those products to the end customers or the dealerships in that region.

Got it. How does your product get to Canadian customer locations? Do you use any Canadian shipping ports? And if so, do you have any kind of a distribution facility at those ports?

[Interpreted] So currently, those products selling in Canada are shipped from our U.S. subsidiary. Ongoing, we plan to add another point of the assembly over there in Canada. Yes. But then it will be in a similar process what we do in Los Angeles that we will work with those local partnerships for the assembly and then shipping to those customers in the region.

Understood. And then which of your products in the containers arrive fully assembled and which require assembly? And are there any tariff or tax considerations involved in that decision?

[Interpreted] So essentially we are paying the tax based on the category of those products pursuing the U.S. tax regulation.

So is there an advantage for them to be unassembled versus assembled or does that make a difference in what you pay?

They're the same. [ We're also ] adding that the reason we assemble here because this way each container can have more shipments versus if you ship the whole car here.

Okay, so then according to the numbers for North America from the U.S. import data, at least according to what I track, you shipped 4,474 golf cart containers in the first quarter of 2023. But as of 2 days ago, March 13, this quarter, you've only shipped 2,036 golf cart containers. Why has the number of golf cart containers shipped to North America dropped this quarter so far? Is that due to product going instead to resellers in China for worldwide sales and or to distributors that you now set up like for example in the UK? Or has demand simply fallen off? Or is the current buildup inventory adequate?

[Interpreted] We are adopting a different sales approach in last year and this year. That's why there's some variance of the sales volume.

Okay, do you want to explain that any bit more so that we can understand that?

[Interpreted] What exactly do you not understand that you like Chairman to explain?

Well, the number of golf cart containers during this first quarter appears to have basically been slushed in half. So I was just curious to know or try to get a better understanding of the reason for that. Whether it was related to demand, adequate inventory or if the product is going not to the U.S. but to resellers or distributors that you've set up in other places.

[Interpreted] Okay, let me try to explain. I think Alan got cut off the line. So Chairman is trying to say, so last year in 2023, all the golf carts in the U.S., we have to go through Coleman, if you remember, as a median, in order to sell to those Lowe's stores. But however, this year, we directly deal with Lowe's, with other buyers. So we only ship the amount of products they need. So this way we don't have to ship more than what they need. But last year, Coleman required us to ship more so they can have enough inventory for them to market to those companies for sale.

And then I guess related to that, the value -- I've noticed that the value of what SC Autosports has in stock at the end of each quarter has increased rather dramatically from 4.5 million at the end of the first quarter in 2022 to 22.8 million at the end of the first quarter in 2023, then up to 50.5 million at the end of the quarter 4 in 2023. My question is, is all of this inventory actually sitting at SC Autosports, or is it located at large customers like Lowe's as an example, but not yet invoiced so that the sales have not yet been booked? Or can you explain how that works?

Okay, I got a question, but can you just tell me the numbers one more time so I'm writing down so I can accurately…

At the end of quarter 1 in 2022, SC Autosports had inventory of 4.5 million. In the end of the quarter 1 in 2023, it went up to 22.8 million. And at the end of the fourth quarter just last year.

I'm sorry, end of Q1 2023 went up to what?

End of the fourth quarter in 2023, it went up to 50.5 million. So I'm just trying to figure out, is this inventory sitting at SC Autosports?

[Interpreted] So I guess the increase was based on the sales plan of partners like Lowe's. So we will have more inventory in U.S. under our facilities like SC, just to get ready to meet the sales plan of our partners. And as we mentioned earlier, right, we have expanded our collaboration of the -- over tens of those, the retail chains and then the superstore companies, plus we are expanding our channels to those dealerships. So that's why we have to get ready and have more inventory in place to be prepared for the upcoming sales transaction and activities.

And then we've heard unofficially about Kandi distributorships for off-road sales outside of the U.S. and China, like in the UK and in the EU. Can you describe what your business plan is for utilizing distributorships for off-road sales outside of China and the U.S.? What distributorships currently exist and what's your projected timetable for expansion of those?

[Interpreted] So we are going to -- those are the foreign trading companies located in China to have ourselves shipped to those areas like the UK, the EU and some other Southern Asia areas as well. And volume right now is not so large at the moment. So, yes, that's what happened right now.

And can you give us any color of what's in your backyard in China for off-road EV sales?

[Interpreted] The amount is not that material. There are some distributors and some other wholesaler to get our samples for the test cells. But then the amount, as I mentioned, is not the material.

Okay. And then the political change -- there may be a political change in the U.S. that might significantly increase tariffs on manufactured goods from China. Are you very concerned about that, somewhat concerned or not concerned at all? And might that propel you to fall through with the press release that you issued a number of years ago about possibly establishing a manufacturing facility, if not or close to the Texas facility, perhaps in Mexico?

Did you say the political will impact what?

Well, there's a possible political change here in the United States. And there's a chance that, that might have a result of increasing tariffs on manufactured goods received from China. And I just wondered how concerned you guys might be and how much that might motivate you to establish a manufacturing facility either in Texas or in Mexico following up Mr. Hu's press release that he put out a number of years ago about wanting to do something like that.

[Interpreted] Yes, so we are considering those factors and thinking of the plan for the facility establishment in Northern America. We are thinking about it, and we have such thought, and we'll disclose more information before the development.

All right. And then just one follow up from something that Art kept asking about, and this is sort of a crazy question, but I'll ask it anyway. Those 540,362 shares that you repurchased using your buyback in January and February of this year, was that done in the open market, or was that part of a private transaction?

[Interpreted] So yes, we are -- through our broker, we do the shares buyback from the open market [ compliant with ] the SEC regulations.

Okay. That's all my questions, and I will just echo what Art was trying to get across to you and it doesn't seem to be getting through to anybody there. You guys went public back in 2007 where the stock sitting now and what you've been managed to accomplish is not being reflected in the share price. And from anyone's third-party view, it doesn't appear that, first, you're very concerned about it, and second, that you're doing anything about it. Blue shirt, you seem to have their hands tied behind their back. You're not letting them loose to go out and try to generate institutional interest. All they seem to be doing is reviewing drafts of your press releases and chiming on comments on your monthly meetings, but not utilizing the resources that they have to promote companies stock. I just don't -- most of us are just puzzled why you don't seem to be more concerned about it and using amorphous, ambiguous, and arbitrary language, saying that you're working on it and you know you're concerned. It just gets old hearing it year after year. Shareholders are very frustrated.

Our next question comes from line of Walter Hill with Carty & Company.

On the last conference call, it was explained [ with no ] press releases mentioning Lowe's superstores as the first big box Kandi retailer with 2,500 locations. This was done in deference to letting Lowe's make the first promotion move. Subsequently [indiscernible] was taken again in August with Walmart coming aboard with 4,500 stores. Next the Amazon store. Early January, with no PR, it was discovered that all Kandi products are now in Marcus Lemonis' Camping World stores, which is a public company. However, in November, 2 smaller chains Rural King with 140 stores, Peavey Mart in Canada with 270 stores were given Kandi PRs, Peavey also holds a Canadian license to Tractor Supply and ACE Hardware. So based on published information, both PR and SEC filings, if an average Kandi shareholder relies on press releases and SEC filings for stock updates, might assume that Kandi's total outlets are less than 1,000, even when adding independent dealers. This is despite the actual outlet count, be over 8,000 when adding in unannounced Lowe's, Walmart and Camping World. Where this lack of knowledge becomes a problem is when looking at Kandi's 47 million in inventory at the end of Q3, this much inventory might be a red flag if there were only reported 1,000 locations, but a very well timed smart position with 8,000 plus locations. Now my question is, if new account…

I'm sorry. Let me translate what you have so far. [Foreign Language]

If new accounts or products are added, Kandi should announce milestones without being specific, such as each time a chain is added, starting out with PR with the total number of outlets also keeping a [indiscernible] on Kandi America website. If an investor needs to know specifics, all he'd have to do is search big box ecommerce sites.

[Interpreted] Thank you for your suggestions. That's a very good opinion. We will make corresponding adjustments after communicating with and confirming with our partners.

All right. Another part and possibly similarly replicate, update continued Kandi's November 2022 PR where it said Kandi Technologies produces 10,000 crossover electric golf carts. You should put out each time there's maybe another 10,000. Put out a new PR showing that they've passed another 10,000 units.

[Interpreted] Thanks again for the suggestion. That's a great idea. In the past 2 years, we have been through the strategic shift with cost uncertainties. That's why we are relatively conservative in terms of the public release. The press release approach ongoing. We will strengthen our effort in the PR and make more promotions of our products and development.

The other question I was going to ask has already been answered whether you're going to add any new superstore outlets this year. So you all already answered that question. So that's all of my questions.

You still want to ask how many new superstores?

Yes, I just was going to find out how many -- if they were going to add any superstore outlets this year and if so, how many outlets would there be?

[Interpreted] So based on the foundation working with Lowe's superstores, we have now added more cooperation with more than 10 superstores outlet with different scales. Besides, we are expanding our cooperation with the dealerships from 300 in the past to more than 1,000 in 2024.

Our next question comes from the line of [ Mark Cano ] private investor.

First, I have to make some comments and then my question. On the prior conference call, a question was asked from the filing about the company's retention of a business growth and financial advisory service consultant. CFO simply responded, indeed, it is for our separate plan to our U.S. subsidiary SC Autosports to explore the possibility of being separately listed on the U.S. main board. Nothing further was discussed on the subject since it was the last question's answer. If I understand this correctly, it appears the board of directors are considering splitting off the U.S. subsidiary, Kandi America into a separate U.S. Nasdaq company. This makes a lot of sense in the releasing of the true value of Kandi as a separate manufacturer, being able to book its sales and spin off, also being able to book its own P&L particularly since Kandi at its current price is not being given any value for all of its business entities above its cash values. Can the CFO give us some more color as to what the Board is thinking and what is the end goal?

[Interpreted] So regarding the IPO process of our U.S. subsidiary SC Autosports, the company is still considering of this matter. And as for further development, we will provide disclosure timely in accordance with the relevant regulations of the SEC.

Also, since Kandi China makes in house 85% to 90% of all parts that go into its own vehicles, it can double dip. So how would the revenues be booked should Kandi spin off its U.S. subsidiary?

[Interpreted] So first of all, for all the intercompany transactions occurring in the company, we will not have any double dip or any recognition of the revenue or related amount. Based on the proper accounting treatment, we will eliminate all those related balances to make sure no double or duplicate [ reconnections ] of the revenue. And besides, if SC Autosports will be separately listed, it's very likely Kandi, our group will still be the controlling shareholder of the SC Autosports and the related parties and ended such group. So we will continue to consolidate the financial statements of SC into our group consolidated financial statements. I hope that can resolve your question.

Yes, that solves my question. And the last question is, in the past there were also talks about the China subsidiary that produces lithium batteries and power trains to be spun off separately. Is there anything happening here? Or is this off the table?

[Interpreted] So currently we are having the strategic shift of those battery recharge industry and related business. So I guess once we will have it all settled, we will go from there and discuss more upcoming development information.

We've come to the end of our time allowed for questions. I'll turn the floor back to management for any final comments.

Thank you again for joining today's conference call. If you have any further questions, please don't hesitate to contact our IR consultant [email protected] or you can contact us at [email protected]. We look forward to updating you on our next earnings call. This concludes our call for today. Thank you very much. You may now all disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]