Kandi Technologies Group, Inc. (KNDI) Q3 2024 Earnings Report, Transcript and Summary

Greetings, and welcome to the Kandi Technologies Third Quarter 2024 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [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, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Kandi's results for the third quarter 2024. Earlier today, we issued a press release covering those results. You can find the press release on the company's website as well as from Newswire services. 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 statement, except as required under applicable law. Additionally, unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. Before we continue, I would like to introduce the team joining me on today's call. Joining us are Dr. Xueqin Dong, our newly appointed Chairman of the Board; Mr. Feng Chen, our new Chief Executive Officer; and Mr. Alan Lim, our Chief Financial Officer. Mr. Chen will deliver his prepared remarks in Chinese, which I will translate afterward. Following that, we will have Q&A session, where our Chairman, Dr. Dong, will also participate. With that, let me now turn the call over to our CEO, Mr. Feng Chen. Go ahead, Mr. Chen.

[Foreign Language] [Interpreted] Good day, everyone, and thank you for joining us. I'm Feng Chen, the newly appointed CEO of Kandi Technologies Group. Before we dive into our Q3 results, I want to thank our Board for their trust and recognize the dedication of our team and the leadership of my predecessors whose efforts have positioned the Kandi for the opportunities ahead. It is a privilege to lead this company as we work together to navigate challenges and unlock new growth. [Foreign Language] [Interpreted] This year, our revenue temporarily declined as a result of changes in the sales model for our fully electric off-road vehicles. Third quarter revenue was $29.9 million, decreased from $36.4 million in the same period of 2023, while nine months revenue totaled $89.8 million, a decrease of 5.7% year-over-year. Off-road vehicles and associated parts remained the primary revenue source in Q3, contributing $27.5 million, down 9.2% from the prior-year quarter, while revenue from the segments for the first nine months slipped 1% to $81.5 million. To address these challenges, the new management team has developed a detailed growth plan for 2025 to 2029, recently approved by the Board, which aligns with our current position. With disciplined execution, we are confident that all business segments are well positioned for stronger growth and new opportunities. [Foreign Language] [Interpreted] The all-electric off-road vehicle segment holds tremendous potential for Kandi. Over the past few years, we have established a strong foundation, advancing our technology, expanding product offerings, and strengthening our market presence. Our golf carts and other models are not only highly competitive but also well received by consumers. Partnerships with key clients like Lowe's have fostered our reach, and the recent launch of our NFL-branded golf carts, featuring all 32 NFL teams and sold exclusively at Lowe's, has further elevated the Kandi brand. Looking ahead, we will continue leveraging our technological innovation, enhancing our product portfolio and strengthening our distribution network to expand our market share. [Foreign Language] [Interpreted] Amidst the complexity of today's global economic landscape, we remain mindful of the pressures from trade tensions. Our 2025 to 2029 growth plan incorporates proactive measures, including establishing U.S.-based production lines for golf carts, utility vehicles and lithium batteries. These facilities will enable faster deliveries, improved after-sales support and a closer proximity to key North American markets. In parallel, we will continue to expand internationally, targeting growth in Southeast Asia, the Middle East, Europe and other regions, supported by a competitive and diversified product portfolio. [Foreign Language] [Interpreted] Even as we adapt to changes in international markets, we are focused on growing in China. To start, we are targeting the fast-growing smart mobility sector, which is really taking off with Chinese consumers, and we are aiming to build a strong presence there. On top of that, we will use our expertise in manufacturing battery swapping equipment and running battery swapping operations to support major providers in China. Our goal is to position Kandi as a top supplier and operator in China's battery swapping market, paving the way for even more growth. [Foreign Language] [Interpreted] Building on the opportunities ahead, our strong financial position provides the resources and stability needed for future growth. With $260 million in cash, cash equivalents, restricted cash, short-term investments and certificates of deposit as of September 30, 2024, we are well positioned to pursue our strategic objectives. Our share repurchase program, which has already seen 1,480,786 shares repurchased at an average price of $2.49 underscores our confidence in the company's future. [Foreign Language] [Interpreted] As we move forward, we will stay focused on effective execution and sound strategies to support steady growth and shareholder value. With a clear plan and a solid foundation, we are prepared to navigate challenges and make progress towards our goals. [Foreign Language] [Interpreted] Now, we will move on to the Q&A session. Together with Chairman, Dr. Xueqin Dong, I will answer your questions. Ms. Kewa and Mr. Alan Lim will provide translation. Please go ahead and ask your questions.

Operator, please go ahead. Thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Mike Pfeffer with Oppenheimer & Company. Please proceed with your question.

Thanks for taking my questions. A few weeks ago, you had the back to back press releases on the same day announcing the generational restructuring of the Kandi C-suite and Board of Directors. And the second one was titled "Kandi Technologies' Board approves several major initiatives and new management's '25 to 2029 projected growth plan." For a dozen years shareholders have been asking management to accept the norm of the vast majorities of the U.S. NASDAQ-listed companies and begin giving guidance as well as longer-term forecasts, both integral if a company has any hopes of attracting accredited stock analysts. The five-year detailed forecast, particularly with the disclosure of previously unknown five additional profit centers, was a pleasant surprise. Maybe you could translate that and I'll continue please.

[Foreign Language] Please go ahead.

Okay. Regarding analyst, Kandi has never had sell-side analyst support, primarily due to never having used a retail broker investment banking group to raise money. The three prior financings since inception were done using a single independent investment banker, who retained two to three transactional brokers. The difference is that sell-side analysts work for brokers that sell stocks and stock ideas to clients. Transactional brokers buy blocks of newly registered stock for their accounts usually to cover prior short sales and a discount to the market. They mainly make their money by covering the original short as in most cases they take a large chunk of the three-plus year stock purchase warrants that they use. Maybe you could just translate that, please?

[Foreign Language]

Okay. The fact that you put out five-year forecast is comforting to analysts, brokers, clients, savvy investors compared to only one year if a company misses its guidance, the first year, the analyst doesn't and investors are not too concerned and look forward to the next year. With this background a few questions.

Go ahead. Please start your question.

Okay. So, in that you put out this five-year forecast without giving quarter to quarter and full year revenues and earnings guidance, it creates suspicion that the longer-term guidance is just pure guess. Is it the company's intention to give full year guidance for full year 2024 and subsequently for Q1 2025 and the full year?

[Foreign Language]

[Foreign Language] [Interpreted] So, thank you for your questions. The '25 to '29 projected growth plan prepared by the new management was actually done with careful research and rounds of multiple discussion internally, taking into consideration of various factors such as the external environment of the economy and the market, and we develop the trends, as well as our own address -- advantages and existing resources. This plan demonstrates our management team's confidence in the company's strategic direction and it helps the investors to understand the company's short-term plan and long-term plan and the goals in the '25 to '29 growth plans, and we try to present the plan as transparent as possible. As for the Q1 '25 and then the whole year plan and the guidance, we will disclose in due course based on the company's development and our own assessment. Thank you.

I'd just like to add, in addition to earnings and revenue guidance, investors would receive a wealth if company would also announce off-road vehicle unit delivery guidance or at least breakout unit sales each quarter in the earnings announcement. And that information was usually historically published in 8-K and 10-K. Anyway, thanks for your time.

[Foreign Language]

[Foreign Language] [Interpreted] Thanks for your questions. We will also disclose such information in a timely manner based on the development and company's assessment. Thank you.

Thank you. Our next question comes from the line of Arthur Porcari with Corporate Strategies Incorporated. Please proceed with your question.

Thank you. Before my questions, I want to welcome the new management, and also thank Mr. Hu for his 17 year, [indiscernible] retirement from Chairman of the Board and 20 years of executive service and leadership to Kandi and also a true pioneer of all-electric vehicles in China. On to current business. Next month, Kandi will have its Annual Shareholders Meeting for the past 2023. In fact, the 2023 proxy materials have now started to arrive. While most of the issues are boilerplate, one in particular is not boilerplate. Management is asking shareholders to vote to allow a new 10 million shares be authorized to reload its 15-year stock option plan as the prior active 2008 plan had finally been fully activated. Employee stock options are usually issued and authorized by shareholders as rewards for outstanding performance. In a public company, a good bit of that performance has to do with stock appreciation. I'm curious, now here's my first question, does management really expect any shareholders to happily reward management by voluntarily providing a possible 12% increase in shares while the stock is trading at its 15-year low, down 94% of its all-time high? I can assure you shareholders will not be happy, particularly since the company's product distribution base is at an all-time -- and growing rapidly -- at all-time high and growing rapidly and the company is at its strongest cash and fundamental position of all times. This disconnect can only be blamed on management, not operationally, they're doing a great job there, but public company management of a NASDAQ company. I'm sorry, I left you with a lot there, Kewa. Hopefully, you can carry it. Those are my questions.

[Foreign Language]

Okay. Over the past three conference calls, I and other market professionals have addressed this, but in return, we've only received, "We will look into it," but nothing further. Hopefully, the new management will pay more attention, because there is a solution to this problem, particularly with Kandi sitting on $260 million in cash and only $25 million in short-term debt, and assets that are probably worth -- well, book value is $5 a share, but assets are worth probably 50% more than that because of depreciation of the $300 million in facilities that they have. Basically, what I'm going to do here since you've answered a lot of questions in the opening, which I congratulate you also, that's new. Usually the opening goes right into questions and we don't get an overview from management. We got it this time, so that's great. Go ahead and tell him that. Now, I'll go into some of the question areas.

[Foreign Language] Go ahead with your question.

Okay. Well, a lot of this is going to be basically just informational purposes one more time, because like I said, a lot of questions were answered, but I'll try to make this quick. For the past three years investor conference call, the issue was raised that Kandi should take advantage of this [foolish] (ph) selling at massive discounts, I should say, for the past three conference calls, discounts the cash and book value by filing an [F-14] (ph) stock tender for at least 10 million shares. The price initially discussed on the prior calls was put in around the $3 area. On each occasion, response by management has been [effective] (ph), "We'll look at that," but nothing further. If management wants to fix this and send a signal to Wall Street, do the right thing and create this a win-win-win for all loyal but severely penalized shareholders and incentive for all shareholders to be in favor of the management stock option request. Go ahead and pass that on.

Please finish everything and start your question.

Okay. You want to start over again or just take it from there?

No. What's your question?

It is -- I'd say, basically, this is more for informational purposes, because you've answered a lot of questions already. So, there doesn't really have to be a question right there yet. Okay?

Okay. [Foreign Language]

Okay. What I'm going to suggest is truly a win-win-win for all loyal but severely penalized shareholders and incentive for all shareholders to be in favor of the stock option request they are asking for in this proxy. Now, is the time to do something proactive, accretive to all shareholders and the company value it and that's to quickly file its F-14 tender offer at $2.50 or $3 a share using only 10% of Kandi's cash or even bank borrowing. A few years ago, Kandi had bank borrowings as high as $75 million, at the same time, only $50 million in cash. So here is the upside for all involved. Pass that on to them, and then I'll do the right...

[Foreign Language]

Okay. The win for the shareholders would be an immediate double in stock price appreciation plus free Wall Street publicity, which will bring the undervalued focus on Kandi by the immediate huge stock percentage jump, showing new investors just how undervalued Kandi really is. Secondly, for the company -- you want to go ahead and pass that on?

[Foreign Language] Go ahead.

Okay. For the company, with its current $5 share book value, every share bought by the company at $2.50 or half the price of the book value, not only drops the outstanding share count, but it also increases the remaining shareholders' equity for each additional remaining shares by $2.50 a share. And the third...

[Foreign Language]

Okay. And finally for management and the company, if the company buys back 10 million shares, then the 10 million [auction they're] (ph) requesting would initially show a 12% reduction in the issued outstanding that will ultimately flatten out to no more shares than we have today.

[Foreign Language]

So, my really only question out of all this was, will the company finally pay attention to the ways of Wall Street? It seems like that's what they've forgotten in this company. We've been here for 17 years, undervalued the whole time. And so, my question is, will they finally pay attention to Wall Street and get U.S. advisors? And I don't mean Patrick Ho, I'm sorry to say, get U.S. advisors who can help them along that line. I can give them some advice as well. And I've been with the company 17 years, as you well know, and 51 years as a Wall Street professional. That's my question, and that's all I have to say.

[Foreign Language]

[Were there] (ph) a question in there?

[Foreign Language] [Interpreted] First of all, thank you very much for your sharing and your thoughts in us. About your questions, we will address them altogether. First of all, regarding the equity incentive plan, it is an important approach for us to attract, retain and motivate our outstanding employees. The combination of the share buyback program and then the equity incentive plan can balance the interest of the shareholders and the company to a certain extent, basically to ensure the rationality of equity structure and the optimization of the numbers of the outstanding shares. We understand that some shareholders are concerned about the dilution effect, so we will continue to work hard to balance these and maximize the shareholder value. Regarding the tender offer or the share buyback program you mentioned, we understand this is the expectation of many investors and the shareholders. Management did mention in the past that we will carefully consider the possibility of the share buyback and a repurchase because such measures need to be combined with the market conditions, our long-term development strategy and then the capital efficiency. We are not trying to avoid such suggestion, of course, but we are comprehensively evaluating the optimal solution. At present, we are cautious about our investments to maximize the long-term returns for the shareholders of the company. As for the further action arrangements, we will consider executing in the most beneficial way for the company and the shareholders, including the possible share buyback, while assuring the financial health and appropriate market conditions. Thank you.

Actually, I said I was finished, one last comment. I'm glad to hear that -- it sound like Mr. Hu was involved in that call, that response right there. But seriously, it doesn't get any cheaper than this. I've been in this business 51 years, and I've never seen the stock get down to where it was trading. It's 40% of cash in the bank, not a company that was effectively going out of business. So, I hope you will take my advice to at least further discuss the situation outside of conference call. I can make the introduction to people that can help you with this. Hope you will take that advice. There's no reason for this stock to be trading at a 15-year low while everything else is closer to its all-time high. Thank you very much. And again, thank Mr. Hu. He's been a great pioneer with this company over the years, the Innovator of the Year in China for EVs in 2014. K17 was the Car of the Year for all of China 2015, and Kandi was the first company in China to ever do 25,000 units in one year back also in 2015. So, it has a heritage of being very successful in the past. Hopefully, we'll continue it. Thank you.

[Foreign Language] Thank you. Operator, we are ready to take next question.

Thank you. Our next question comes from the line of [Frank Blatterman] (ph), private investor. Please proceed with your question.

Yeah. And a good evening to those in China. My question is, is there anything in the contract that dissolves the joint venture between Kandi and Geely that prohibits Kandi from entering the electric car business now or in the future? That's my question.

[Foreign Language]

[Foreign Language] [Interpreted] There's no such clause.

Thank you very much.

Thank you.

Thank you. Our next question comes from the line of [Steve Miller] (ph), private investor. Please proceed with your question.

Good morning, Kewa. The bulk of my questions deal with your two October press releases and I'll sort of work my way through those with questions. In your October press release, you made reference to autonomous driving technologies and projected that China's ride-hailing market is expected to experience significant growth. You then said that Kandi will expand its presence within the smart mobility business industry, a phrase I know you included again in today's press release, by your plan to acquire an established company and, excuse my pronunciation, Hangzhou Honghu. Do you want to go ahead and translate that?

I'm sorry. Yeah. I'm sorry. Please say one more time. You referenced the press release that we issued in October, right?

Yeah. You issued two press releases in October. They made reference to autonomous driving technologies, and also ride hailing, et cetera. And you basically said in those press releases that they would be facilitated by your acquisition of Hangzhou Honghu.

[Foreign Language] Please go ahead.

Okay. My question is, explain going forward what Kandi's business will have to do with autonomous and ride hailing? And examples would be helpful. And how, if at all, is Hangzhou Honghu currently involved in those areas?

[Foreign Language]

[Foreign Language] [Interpreted] So, first of all, about our potential target, Hangzhou Honghu, the car-hailing platform, right now, the company is in the stage of due diligence to understand more about the company, of this target. The progress is going smoothly. However, there's no written agreement or contract in place yet. So, we have no too much information to be disclosed for the time being. Thank you.

Okay, Alan. In the October press releases, you made reference that Kandi's business would somehow -- have something to do with autonomous and ride hailing. Is that correct?

[Foreign Language]

[Foreign Language] [Interpreted] To address your question, that's correct. We have a plan in [indiscernible] of the pilot and then the car-hailing platform businesses.

In those press releases, you provided projections for what you call your Smart Mobility Solutions business, and it went from annual revenue projected of $24.37 million in 2025 to a higher number by 2029. And so, I guess my question is, what exactly is the business that Kandi will be involved in that will be generating those revenues and profits that you mentioned in those releases? And can you provide greater color how you arrived at those numbers considering that currently you have none of that business?

[Foreign Language]

[Foreign Language] [Interpreted] So basically, the Smart Mobility Solutions business plan includes the maps, the smart dispatching system, the customer service support, the resource integration and the operation management as well as the driver management, et cetera. It basically provides a one-stop technology and operation service for all the scenarios for those commuting and transportation companies. So far, Honghu has served nearly hundreds of those -- the transportation companies covering more than 200 cities across the country, processing over million of the orders every day and helping millions of the drivers to help their works. By covering everything from driver screening to itinerary guarantee, it ensures the safety and reliability of those transportation services.

And what is the status of the Honghu acquisition?

[Foreign Language]

[Foreign Language] [Interpreted] I believe that we answered that question at the beginning that [indiscernible]. So, we are in the due diligence stage at the moment for this target, Honghu. The process goes smoothly, however, there's no imminent written document or contract in place. So, at the moment, we cannot disclose further information. Thank you.

Why have we seen no information about the purchase in the media or even statements from Honghu that they've even agreed to be acquired or will have anything to do with Kandi?

[Foreign Language]

[Foreign Language] [Interpreted] Currently, since our due diligence is being processed, it's a quiet period for both sides. So that's why neither side has disclosed too much information about this deal.

Okay. And then, did you indicate that until a purchase does go forward, there's currently no other contractual relationship between Kandi and Honghu?

[Foreign Language]

[Foreign Language] [Interpreted] Yes, your understanding is correct.

Okay. And then, in the one of the October press releases, you said Kandi will be focusing on expanding two main business lines, electric off-road vehicles and lithium battery production in North America, Europe and at least you said Southeast Asia. From what I've read about lithium batteries, technology is quickly changing. What gives you the confidence that you can compete with others on lithium battery production that you can develop new technology especially with larger companies with greater resources that have research and development?

[Foreign Language]

[Foreign Language] [Interpreted] We don't believe that will be a big issue to us because from two perspectives. One of them is we have excellent supply chain in China that can ensure our production -- our progress in a proper order. Second of all, our products are where we sit in the U.S. market and they are competitive even to some other big brand products. Other from the U.S. market like European and Southeast Asia region, we have started also ourselves in those areas as well. So, we believe that our sales and production will be -- go smoothly without any larger issue.

Your press release said that in 2025, you plan to invest $100 million in the U.S. to establish a lithium battery manufacturing and battery pack facility. Will you be exporting those products out of the United States to other locations around the world?

[Foreign Language]

[Foreign Language] [Interpreted] As for the battery factory, we're going to invest in U.S. Primarily the plan is to supply to those at the North America market, because of our needs and other sales. So, basically, for other regions of U.S. and North America, our primary plan is to supply those products with the battery pack produced in China.

Okay. And then, over the years your battery swap revenues have been minimal to say the least. We've heard of no alliances that Kandi has with major car manufacturers or ride-hailing firms anywhere. Yet in your October press release, you gave projections of sales as well as revenues and stated that Kandi aims to establish itself as a strategic supplier and a leading force in this sector. Do you want to go ahead and translate that, Kewa?

Okay. [Foreign Language] Go ahead.

Okay. So, my fellow shareholders are asking what makes you think that your battery swap business is going to suddenly change when it hasn't in the past? What are your projections based on? What are we not seeing or being told?

[Foreign Language]

[Foreign Language] [Interpreted] So, first of all, as you may know, our company Kandi has been involved in the battery swap business for a long time. We have accumulated a lot of experiences and knowledges and as well as the patents from the last years and decade. So -- and then, right now, we believe that's a good time to enter in the market because as you may know, now the battery cost has been dropping gradually in last few years. And then, in China, there are few cities has actually been implementing the battery swap process, like such as Chongqing and some other big cities. And then, we also are in touch with a few leading companies in the very small -- in the field. We believe that we will have quite a material market share in upcoming years. And that's based on our expectation as well as our analysis and experience in the market and the discussion with peers. Thank you.

Is the 300,000 government-accredited ride-hailing program in China from four years ago that you were involved with, is that still alive? Is it a factor in your projections? Isn't that going to expire in 2025?

[Foreign Language]

[Foreign Language] [Interpreted] So, primarily our -- the upcoming business operation and model will follow our '25 to '29 projected goal plans. So, please stay tuned for any further updates, any developments. Thank you.

Okay. And is the battery swap business going to stay in China and will the units be customizable for other for a wide variety of different manufactured vehicles?

[Foreign Language]

[Foreign Language] [Interpreted] So, first of all, our business of the battery swap definitely being promoted and in demand in China for the time being. And we are targeting to those -- the companies operating the battery swap businesses and services, but not really the car production manufacturer. So that's our biggest model for the battery swap.

Okay. And then, in one of the October press releases, you had given revenue and sales projections for your off-road electric vehicles, which shareholders were glad to see after so many years of not willing to divulge that kind of information. And on average, it seems like your revenues or your projections are conservative that they mainly average around $6,000 per vehicle, but you're still able to keep a 30% margin. Does that sound about right?

[Foreign Language]

[Foreign Language] [Interpreted] Yeah, the revenue projection is a bit quite conservative. Then, when you mentioned about the average price of $6,000 is actually from the product mix of the variety of the high-end and low-end models. So, $6,000 is rather average price. And then, the average gross margin of -- the gross profit margin of 30% is expected to be achievable. Thank you.

Okay. And those projections for those off-road electric vehicles, I assume that is worldwide and not only in the U.S.?

[Foreign Language]

[Foreign Language] [Interpreted] The figures we mentioned are for the overall sales in total, not just focused on the U.S. market, but overall, globally.

Okay. And then finally, again from your October press release, you had indicated that you plan to invest $30 million in 2025 to establish a production line in the U.S. for various off-road vehicles et cetera. Do you plan to build that from scratch or do you plan to lease the facility and then customize it?

[Foreign Language]

[Foreign Language] [Interpreted] So, basically our preliminary plan for the site location will be selected around Dallas region in Texas, but the whole setup will be based on the multiple considerations such as the policy report of the local government, the infrastructure, the labor cost, et cetera. So, right now, we don't have a very concrete plan of the setup yet, and based on management prudent evaluation, we will announce it after it get finalized. Thank you.

Okay. And until that facility is ready, will all U.S. production be handled by your partner Hartford in Taiwan?

[Foreign Language]

[Foreign Language] [Interpreted] Once our site in U.S. is finalized that we will still consider the cost and the policies and other different infrastructure and the supply chain out and the logistics from the two sites, from Hartford in Taiwan and the site at Texas.

Okay. I guess -- I don't understand. So, it's going to take a while until...

We will basically consider multiple factors, as I mentioned, the costing, the logistics, the infrastructure and then the supply chain and then other factors when we consider both sites. So, it's not like we have -- we don't have the [final determination] (ph) yet and we'll announce later on when that time is right.

Okay. My question is obviously derived from the fact of the possible or pending tariffs on Chinese-manufactured vehicles, including golf carts. And on previous earning calls, you had indicated that 90% of the golf carts were manufactured by Kandi in China. So, what I'm wondering is that now that I understand that from your -- in fact, I think you did put out a press release that Taiwan is now manufacturing Kandi off-road vehicles, are they manufacturing that 90% or are they getting those parts from China?

[Foreign Language]

[Foreign Language] [Interpreted] So, our -- for the process flow right now, it's basically around 40% is done at Hartford and then the rest is taken care by the Kandi, including our China facilities.

So, is that -- I guess my basic question is, can you assure shareholders and potential investors that the planning that you've done today that is making this arrangement with Hartford and Taiwan pending the completion of the facility in the U.S. that it's not going to have a significant -- that if tariffs are in fact -- or additional tariffs are imposed, that those won't be a significant negative factor to your business going forward?

[Foreign Language]

[Foreign Language] [Interpreted] Yeah. In order to address the current concern, it's true that for those, the products that have the large impact by the tariff, we will work together with Hartford in Taiwan in order to mitigate this issue. And then, when our facilities and production line in U.S. is set up in the future, we will then have more of the production to be carry out in the U.S. side as well. So basically...

Okay. Great. Okay. And then, according to my own due diligence, and feel free to correct me if I'm in error, Hartford, your partner in Taiwan, has exported one shipment of golf carts and that was back on August 13th. The last shipment of golf carts from Kandi Electric Vehicle Hainan Company arrived on October 20th. The last Twitter post from either of Kandi's Twitter sites was on October 29th. Do you want to go ahead and translate that, Kewa?

I just want to get this right. You asked that based on your due diligence, you saw the last shipment from Hartford to the US was in August 13. And then, from Kandi, you saw shipments from August 20. And on the Twitter, you saw there is a shipment coming on October 29. Is that...

No. Let me try again. So, Hartford has sent one shipment to the U.S., and that was on August 13th. Okay. And then, the last shipments from China, from Kandi Electric Vehicle Hainan Company, who sends most of your golf carts, those arrived on October 20th.

Okay.

Okay. Just go ahead and...

And what about you said, on the Twitter, on October 29th?

Then I also added, I noted that the last Twitter post from either of Kandi sites was back on October 29th. Today is, what, November 18th. So, go ahead and translate that first.

[Foreign Language] Yes. Please go ahead.

So, my first question is, why has there been only one shipment from Hartford and that was over two months ago?

[Foreign Language]

[Foreign Language] [Interpreted] So, the shipment you noted is actually on the trial production that was shipped from Hartford to U.S. That time, as you may know, the tariff policy was not [really finalized and imposed] (ph) until the late September. So, the shipment you mentioned was just for trial production purposes, because it takes multiple rounds of our judgment in terms of the quality control, the compliance and different other factors of consideration. That's why there was only one shipment we have from Taiwan to U.S. in the past like in August. Once the production in Hartford is taken more optimal and regulated, there'll be more shipment to be carried out from Hartford to U.S. in the future.

Okay. And then, U.S. imports apparently have paused because the last one was back on October 20th. Are sales in U.S. being made from your existing inventory in the U.S.?

[Foreign Language]

[Foreign Language] [Interpreted] So, the shipment you mentioned, actually right now the sales of that particular product is still underway along with our other products of the inventory.

I'm sorry, I don't understand. So...

Basically, the sales of that shipment is underway.

Okay. And speaking of existing inventory, last year, I know you had a fairly high inventory that you reported. Can you give us any kind of an update on where your inventory levels are at the moment?

[Foreign Language]

[Foreign Language] [Interpreted] So, for the inventory levels, I think it'd be the best if you can refer to the financial statements we have included in the earnings release of the 6-K, [which can give you the accurate] (ph) information. Thank you.

Okay. And can you give us sort of a status update on the proposed Kandi America spin off IPO? Can you basically tell us what are the factors that are keeping it from going forward today? What needs to happen?

[Foreign Language]

[Foreign Language] [Interpreted] The [related] (ph) process was being proceeded based on the market conditions and then the company development. And further disclosure will be presented based on the regulation and requirement by the SEC. Thank you.

Okay. Has Kandi filed any complaint with the SEC, FINRA or the NASDAQ with regard to trading of its stock?

Wait. Say one more time about FINRA and NASDAQ about trading?

Has the company filed any complaint with the SEC, FINRA or the NASDAQ with regard to trading of its stock?

[Foreign Language] Okay. We're trying to understand why you think that company should file a complaint to the FINRA, SEC and NADAQ.

I don't know. I guess I don't have much of a life, but I watch your stock trade every day and that the service seems rather odd and the stock is sitting at $1.20. Anyway, let me just ask one other question or just two other questions and I'll be done. In the past when we were -- I'm talking about international expansion for your off-road products. And on past earning calls when asked -- when Mr. Hu replied, he usually would reply as if you're just basically testing the waters in different locations. Could you provide any, I guess, guidance or more color in terms of what your business plan is for international expansion? I know in the last couple of days, we've noticed -- or I or some other shareholders have noticed a lot more activity in South Africa as well as the UK. And I just wondered if you could expand on how you're going to be approaching your expansion in Southeast Asia, of course, you're in Thailand, in the EU and other locations.

Okay. [Foreign Language]

[Foreign Language] [Interpreted] We have actually started some trial sites in the European region such as the UK, Germany, Austria, Switzerland, Montenegro, [Slovenia] (ph), Romania and the Netherlands. We believe -- and also some part in the Southeast Asia. We believe that there will be a certain sales volume to be brought up next year.

Okay. And finally, I understand that now that you're in BVI that there is no requirement that any officers or directors report purchases of Kandi shares. The stock traded last week as low as $1.20. There is no indication of any insider buying for the past several years, including this year. To the Kandi company folks on this call and listening to this call, is $1.20 not low enough to entice you to make an insider buy? What kind of a message do you think that sends to shareholders that insiders seem to have no interest to buy Kandi shares under $2, as low as $1.20?

[Foreign Language]

[Foreign Language] [Interpreted] The company actually is still working on the stock buyback program as planned and that we are setting up another upcoming program, but the process is still underway.

Yeah, I'm not talking about the company buyback program, I'm talking about insider buying.

[Foreign Language]

[Foreign Language] [Interpreted] Okay. And let me rephrase. The plan we mentioned is actually addressing the buyback plan by the management and the insider. And so, such plan is underway.

Great. Thank you very much. Appreciate it. Thank you for taking my questions.

Thank you.

Thank you. Our next question comes from the line of [John Ritter] (ph), private investor. Please proceed with your question.

Hello. Thank you for taking my questions. I have a statement to make, and then, Kewa, you can translate, and then I'll get into a couple of questions, not many. As management is aware, the stock is at $1.25 and it's been trading at a new 15-year low. Virtually every day, it's been hitting the new low. Yet, it is by far the strongest fundamental position, both in sales growth potential and cash and overall financial condition it's ever been. The stock has been trading under cash value for the last three quarters. Now, it's at less than 40% of cash value and 25% shareholder equity. As discussed on the last conference call, the replacement value of Kandi's multiple facilities in China alone, though carried on the books only at a depreciated $92 million would be over $300 million, which if liquidated, would raise the book value to about $7 a share. Since the announcement of the new management team, the stock has dropped another 22%. Yeah, Kewa?

[Foreign Language] Go ahead.

So, what is management's opinion as to why the stock has dropped so low? And please don't tell me it's just market forces. What is your opinion? Why do you think the stock is trading now today another 15-year low, especially since you published such an incredibly bullish five-year forecast just six weeks ago?

[Foreign Language]

[Foreign Language] [Interpreted] Well, there are many factors that will affect the stock price. For example, the result of the U.S. election that led to some sort of increased friction in the international trade market. And the capital market, we can see that those uncertainties, and you may see that so-called the pricing effect. So, they have included in their pricing already in the stock price, and sometimes they are rather pessimistic. So that's why the company's stock price is seriously underestimated at the moment.

So, to someone who watches the stock relatively closely, it seems quite clear that a multimillion share seller, ignorant of how stocks trade in the U.S,, has really destroyed the morale and buying enthusiasm of U.S. investors for this stock. Since there are only two reported holders of multimillion share positions, that being Mr. Hu and Olen Rice, and they're certainly not selling because they would have to report sales, plus they're involved in the company. So therefore, any selling is likely coming from Chinese holders who have received shares totaling between $5 million and $10 million, mainly through Kandi acquisitions of their companies going back a decade. And since the company has an active 10b-5 share purchase program, has there been any effort to contact these suspected large sellers with a single bid to buy their whole block? Because there's no restriction under 10b-5 for negotiated block purchases.

[Foreign Language]

[Foreign Language] [Interpreted] So, based on the statement that -- based on your assumption or speculation observation, we currently do not have those information on hand. We are not sure about how that comes from. So, we have no comments on that. [Foreign Language] [Interpreted] And of course, if there's any further development in the market, we'll try to get that information, and so, we can be more sure about the development in the stock market.

Okay. So, with the share repurchase program currently in place, in the third quarter, you purchased 58,000 shares. Right now, the stock being what it is, is there some reason that you're not purchasing more? Are you waiting for the stock to go lower to get an even better price? Because this is insanity. What you want to be efficient with your capital, then don't you think you ought to be buying as much as you could possibly get at this price? And then, my other question is, what price range does management feel the stock should be trading in? If it's not $1 to $1.25, where do you all think it should be trading at?

[Foreign Language]

[Foreign Language] [Interpreted] We do believe that the stock price is seriously totally undervalued. However, we have -- we are not in a position to comment the minimum price [issue currently] (ph) trading. So, no comment on that. Thank you.

Okay. I get that, but you're certainly in a position to accelerate the buyback. I think you all need to take real seriously how demoralized your shareholder base is and start taking some actions to rectify this problem. That's all I've got to say. Thank you.

[Foreign Language] Operator, we can take next question.

Thank you. Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.

Hi, and thanks for taking the questions. On last quarter's call, a lot was made about the excitement and the momentum about the launch of the golf carts through Lowe's. I'm just curious as to whether there's been any feedback about the market reception to that launch, given the fact that it's now a couple of months out. Just maybe if sales of the Loew's partnership have met expectations so far? Thank you.

[Foreign Language]

[Foreign Language] [Interpreted] As for the NFL product, the reception from the customer in the market is pretty good, and we are working well with Lowe's on this business. Thank you.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. 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, gary@blueshirtgroup.co, or you can contact us at IR@kandigroup.com. 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.

Thank you. You may now disconnect your lines. This concludes today's call.