Kandi Technologies Group Inc.

Company Overview

Business Model: Kandi Technologies Group, Inc. (the "Company") operates as a British Virgin Islands holding company, conducting its primary business through wholly-owned subsidiaries in the People’s Republic of China (PRC) and the United States. The Company designs, develops, manufactures, and commercializes electric vehicle (EV) products, EV parts, and off-road vehicles. Its revenue streams include sales of off-road vehicles and associated parts, EV products, electric scooters, lithium-ion cells, and commission income. The Company has strategically shifted its focus towards the production of pure electric off-road vehicles, aiming for a leading market position in this segment.

Market Position: The Company is positioned as a producer and manufacturer of EV products, EV parts, and off-road vehicles in the Chinese and global markets. It is actively pursuing a leading position in the pure electric off-road vehicle segment within three years, driven by the global trend of "fuel to electrification." The United States is identified as the world's largest market for pure electric off-road vehicles, where the Company focuses its sales efforts through its U.S. subsidiary, SC Autosports, LLC.

Recent Strategic Developments:

• Reincorporation: Effective April 17, 2024, Kandi Technologies Group, Inc. (Delaware predecessor) merged into Kandi Technologies Group, Inc. (British Virgin Islands), with the BVI entity as the surviving company.
• Strategic Shift: The Company has adjusted its development strategy since 2020 to focus on the production of pure electric off-road vehicles, including electric crossover golf carts and electric UTVs, due to the perceived unhealthy development stage of the Chinese EV market.
• Product Launches: Successfully developed and rolled out a series of pure electric off-road vehicles, with plans to successively launch various new models.
• Organizational Restructuring: Established Kandi Electric Innovation, Inc. in Nevada on January 1, 2024, making SC Autosports, LLC its wholly-owned subsidiary.
• Executive Leadership Change: Feng Chen was appointed Chief Executive Officer effective October 6, 2024, succeeding Dong Xueqin, who became Chairman of the Board.
• Equity Incentive Plan: Approved the 2025-2034 Long-Term Incentive Plan on March 19, 2025, to motivate management through equity awards tied to financial performance and strategic/operational objectives.
• NGI Deconsolidation: Northern Group, Inc., acquired on November 30, 2023, was deconsolidated on October 31, 2024, following the termination of its equity transfer agreement.

Geographic Footprint: The Company's headquarters are in Jinhua City, Zhejiang Province, PRC. Primary operational regions include:

• China: Jinhua, Yongkang, Haikou, and Xinyu (Jiangxi Province).
• United States: Dallas and Garland, Texas (through SC Autosports, LLC and Kandi America Investment, LLC).
• Canada: Ontario (through Kandi Technologies Canada Inc.).

Cross-Border Operations: The Company operates through a holding company structure with Kandi Technologies Group, Inc. (British Virgin Islands) as the parent. Its operations are primarily conducted via its PRC subsidiaries (e.g., Zhejiang Kandi Technologies Group, Co. Ltd., Jinhua Kandi New Energy Vehicles Co., Ltd., Yongkang Scrou Electric Co, Ltd., Kandi Electric Vehicles (Hainan) Co., Ltd., Zhejiang Kandi Smart Battery Swap Technology Co., Ltd., China Battery Exchange (Zhejiang) Technology Co., Ltd., Jiangxi Province Huiyi New Energy Co., Ltd., Hainan Kandi Holding New Energy Technology Co., Ltd.) and U.S. subsidiaries (SC Autosports, LLC, Kandi America Investment, LLC, Kandi Electric Innovation, Inc.), and a Canadian subsidiary (Kandi Technologies Canada Inc.). The Company faces legal and operational risks related to doing business in China, including evolving PRC laws and regulations concerning overseas listings, cybersecurity, and data privacy.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 30.8%
• Operating Margin: -53.9%
• Net Margin: -39.9%

Investment in Growth (2024):

• R&D Expenditure: $4,995,940 (3.9% of revenue)
• Capital Expenditures: $934,985 (Purchases of property, plant and equipment, net)
• Strategic Investments: $1,015,836 (Long-term investment, converting amount due from Hunan Hengrun Automobile Co., Ltd. into shares listed on NEEQ).

Currency Impact Analysis: The Company's functional currency is Renminbi (RMB), while its reporting currency is the U.S. dollar. This exposes the Company to foreign exchange risk, as fluctuations in the RMB/USD exchange rate can affect reported revenues, costs, and overall financial results. The Company has not entered into any hedging transactions to reduce this exposure. Appreciation of RMB against the U.S. dollar would adversely affect the U.S. dollar amount received from converting U.S. dollars to RMB for capital expenditures, while appreciation of the U.S. dollar against RMB would negatively affect the U.S. dollar amount available for dividend payments or other business purposes when converting RMB.

Business Segment Analysis

The Company's Chief Operating Decision Maker (CODM) relies on the consolidated results of operations as a whole and does not distinguish between markets or segments for internal reporting. Therefore, the Company has only one reportable segment.

Product Portfolio Performance

Off-road vehicles and associated parts:

• Revenue: $116,556,517 (+8.9% YoY)
• Operating Margin: 31.7% (Gross Margin)
• Key Growth Drivers: Increase in sales of crossover golf carts, reflecting the Company's strategic focus on pure electric off-road vehicles. This category accounted for approximately 91.4% of total net revenue in 2024.

EV products:

• Revenue: $2,286,093 (+88.2% YoY)
• Operating Margin: 5.1% (Gross Margin)
• Key Growth Drivers: Increase in sales in the PRC market. This remains a relatively small business line, accounting for approximately 1.8% of total net revenue in 2024.

Lithium-ion cells:

• Revenue: $3,857,535 (-51.7% YoY)
• Operating Margin: 21.5% (Gross Margin)
• Key Growth Drivers: Decrease primarily due to less market demand. This accounted for approximately 3.0% of total net revenue in 2024.

Electric Scooters, Electric Self-Balancing Scooters and associated parts:

• Revenue: $1,351,331 (+97.6% YoY)
• Operating Margin: 8.4% (Gross Margin)
• Key Growth Drivers: Increase in sales of associated parts in the PRC market. This accounted for approximately 1.1% of total net revenue in 2024.

Commission income:

• Revenue: $3,512,189 (+1,366.6% YoY)
• Operating Margin: 37.1% (Gross Margin)
• Key Growth Drivers: Generated by Northern Group, Inc. (NGI), which was acquired on November 30, 2023, and subsequently deconsolidated on October 31, 2024. The Company does not anticipate generating such income in the future. This accounted for approximately 2.8% of total net revenue in 2024.

EV parts:

• Revenue: $5,948 (-99.9% YoY)
• Operating Margin: 8.6% (Gross Margin)
• Key Growth Drivers: Decrease primarily due to the strategic shift to focus on off-road vehicles with larger profit margins.

Battery exchange equipment and Battery exchange service:

• Revenue: $0 (vs. $674,927 in 2023)
• Key Growth Drivers: No revenue generated in 2024.

Market Dynamics: The off-road vehicles sector is undergoing rapid electrification, with pure electric models showing significant development potential due to zero emissions, low noise, and high energy efficiency. The U.S. market is the largest for pure electric off-road vehicles, driven by policy incentives and outdoor culture.

Geographic Revenue Distribution (2024):

• U.S. and other countries/areas: $74,242,060 (58.2% of total revenue)
• China: $53,327,553 (41.8% of total revenue)

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Holding Company: Kandi Technologies Group, Inc. (British Virgin Islands).
• Hong Kong Subsidiary: Continental Development Limited.
• PRC Operating Entities: Zhejiang Kandi Technologies Group, Co. Ltd. (parent to several PRC subsidiaries), Jinhua Kandi New Energy Vehicles Co., Ltd., Yongkang Scrou Electric Co, Ltd., Kandi Electric Vehicles (Hainan) Co., Ltd., Zhejiang Kandi Smart Battery Swap Technology Co., Ltd., China Battery Exchange (Zhejiang) Technology Co., Ltd., Jiangxi Province Huiyi New Energy Co., Ltd., Hainan Kandi Holding New Energy Technology Co., Ltd.
• U.S. Operating Entities: Kandi Electric Innovation, Inc. (parent to SC Autosports, LLC), SC Autosports, LLC (d/b/a Kandi America), Kandi America Investment, LLC.
• Canadian Operating Entity: Kandi Technologies Canada Inc.

Cross-Border Trade: The Company's products are manufactured in China and sold to international markets through two main modes: indirect sales to Chinese import and export trading companies, and direct sales to retail stores and dealers outside China. The U.S. market is a key export destination, particularly for off-road vehicles. The Company is subject to U.S. tariffs on electric vehicles from China, which increased to 100% from August 1, 2024, and European Union tariffs ranging from 17.0% to 36.3% from August 21, 2024.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $3,920,356 (1,892,568 shares repurchased in 2024 at an average price of $2.05 per share). As of December 31, 2024, $25,612,712 remained authorized under the $30 million repurchase plan.
• Dividend Payments: The Company does not anticipate paying cash dividends to its ordinary shareholders in the foreseeable future, intending to retain all earnings for business plan implementation.
• Future Capital Return Commitments: The Board authorized a share repurchase program of up to $30 million on November 21, 2023.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $37,307,867
• Total Debt: $43,235,341 (Short-term loans: $37,528,831; Long-term loans: $5,706,510)
• Net Cash Position: $(5,927,474) (Cash and equivalents less Total Debt)
• Debt Maturity Profile: Short-term bank loans and long-term loans are outstanding. Key maturities and interest rates are not explicitly detailed beyond the short-term nature of some loans.

Cash Flow Generation (2024):

• Operating Cash Flow: $(17,820,412) (Net cash used in operating activities)
• Free Cash Flow: Not explicitly provided or calculable from the given data.

Currency Management: The Company's cash and cash equivalents are primarily denominated in RMB. The Company does not currently engage in hedging transactions to mitigate foreign currency exchange risk.

Operational Excellence

Production & Service Model: The Company's manufacturing operations are primarily located in China. The Jinhua factory produces off-road vehicles, EV battery packs, electric scooters battery packs, smart battery swap systems, and some EV parts. The Hainan factory, with an annual production capacity of 100,000 units of various EV products, EV parts, and electrical off-road vehicles (including Neighborhood EVs, pure electric UTVs, and pure electric golf carts), has passed its completion acceptance inspection. The Company has strategically adjusted its production line to focus on pure electric off-road vehicles.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Primary Supplier: Zhejiang Kandi Supply Chain Management Co., Ltd. (accounted for 51% of total purchases in 2024). Zhejiang Kandi Technologies Group, Co. Ltd. owns a 10% equity interest in this supplier.
• Manufacturing Partners: Hunan Hengrun Automobile Co., Ltd. (jointly manufactures the K23 EV model). The Company relies on a limited number of suppliers for major components and raw materials.

Facility Network (as of December 31, 2024):

• Manufacturing:
  • Jinhua City, Zhejiang: Factories (84,717 sq meters), Office (6,195 sq meters), Staff quarters (5,643 sq meters). Fully operational.
  • Yongkang City, Zhejiang: Office (1,237 sq meters), Factories (11,054 sq meters), Warehouse (341 sq meters), Multi-purpose room (480 sq meters). Fully operational.
  • Haikou City, Hainan: Factories (145,000 sq meters floor area). Fully operational, passed completion acceptance inspection.
  • Xinyu City, Jiangxi: Office (3,482 sq meters), Factories (15,795 sq meters), Warehouse (6,411 sq meters), Staff quarters (6,351 sq meters), Canteen (3,197 sq meters). Fully operational.
• Research & Development: Implied by R&D expenditures and patent activity, with centers likely co-located with manufacturing facilities in China.
• Distribution:
  • Dallas, Texas: Assembly area (43,524 sq ft), Office (5,536 sq ft), Showroom (5,312 sq ft). Fully operational.
  • Garland, Texas: Warehouse area (74,758 sq ft). Fully operational.

Operational Metrics: The Hainan factory has an expected annual production capacity of 100,000 units of various EV products, EV parts, and electrical off-road vehicles (three shifts).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales (China): Products are sold in the China market primarily through the Company's sales department, which signs sales contracts directly with customers. This includes the K23 model, jointly manufactured with Hunan Hengrun Automobile Co., Ltd.
• International Sales (U.S. and other countries/areas): Products are sold through two main modes: indirect sales to Chinese import and export trading companies for onward distribution, and direct sales to retail stores and dealers. SC Autosports, LLC (d/b/a Kandi America) is specialized in sales in the U.S. market.
• Digital Platforms: Not explicitly mentioned in the filing.

Customer Portfolio: Customer Concentration: For the year ended December 31, 2024, major customers (individually contributing over 10% of aggregate revenue) collectively accounted for 53% of the Company's total sales. Customer A accounted for 31% and Customer B for 22% of sales in 2024. The Company is working on developing new business partners and clients to reduce dependence on existing customers, with a focus on the pure electric off-road vehicle business.

Regional Market Penetration: The Company is focused on expanding its presence and sales in the U.S. market, which is identified as the largest market for pure electric off-road vehicles.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The off-road vehicles sector is experiencing rapid electrification, driven by global energy transition and environmental protection policies. The market is characterized by rapidly changing technologies, price competition, new entrants, evolving government regulation, and changing consumer demands. Pure electric off-road vehicles are gaining traction due to advantages like zero emissions, low noise, and high energy efficiency. The U.S. is the largest market, supported by policy incentives and outdoor culture.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The Company faces competition from two groups:

• Traditional Vehicle Manufacturers: These are often larger with greater manufacturing capabilities, customer bases, and financial, marketing, and human resources.
• New Market Entrants: The rapidly evolving EV and electric off-road vehicle market attracts new competitors.

Regional Competitive Dynamics: In the U.S. market, Chinese auto products face competition disadvantages in technology content, product structure, quality, and brand influence. The Company relies on overseas distributors to establish its marketing and after-sales service network in the U.S.

Risk Assessment Framework

Strategic & Market Risks

• Global Market Dynamics: Dependence on consumer adoption of alternative fuel vehicles, particularly EVs and pure electric off-road vehicles. Risk of slower-than-expected market development.
• Technology Disruption: Dependence on ability to keep up with advances in EV and pure electric off-road vehicle technology, including battery cell technology, and to integrate the latest technology into vehicles.
• Customer Concentration: High concentration of sales to relatively few customers (53% from major customers in 2024) poses a risk to operational results if one or more major customers are lost.
• Product Performance: Risk that EVs and pure electric off-road vehicles may not perform in line with customer expectations (durability, ease of repair, battery degradation), leading to reputational harm, recalls, and warranty expenses.
• Intellectual Property: Risk of unauthorized use or infringement by third parties, challenges to patents, and the need to defend against infringement claims, especially in the competitive international automobile market with preemptive patent filings.

Operational & Execution Risks

• Global Supply Chain Vulnerabilities: Dependence on a limited number of suppliers for major components and raw materials (one major supplier accounted for 51% of purchases in 2024). Disruptions from key suppliers could negatively affect business and operations.
• Regional Disruptions: Operations in China are susceptible to major disasters (earthquakes, fires, floods), epidemics (e.g., COVID-19), and other unpredictable events, which could damage facilities, delay production, or disrupt supply chains.
• Product Safety: Lithium-ion battery cells used in vehicles have the potential to catch fire or vent smoke and flame, leading to recalls, redesigns, adverse publicity, and potential safety issues during storage.
• U.S. Operations: Failures in U.S. business expansion, insufficient assessment of partners' capital strength or commercial credit, or fraud in risk prevention systems could lead to significant losses.

Financial & Regulatory Risks

• Currency & Financial Risks: Exposure to fluctuations in the RMB/USD exchange rate, which can affect balance sheet and earnings. Restrictions on RMB convertibility for capital account items may limit ability to use revenue outside China or make U.S. dollar dividend payments.
• Interest Rate Risk: Exposure to interest income from bank deposits and notes receivable, and interest expenses from short-term bank loans.
• U.S. Regulatory Compliance: Strict U.S. environmental laws and product safety regulations (EPA, CARB, CPSC, NHTSA) require significant compliance expenditures and pose risks of non-compliance penalties.
• PRC Regulatory & Compliance Risks:
  • Government Intervention: Substantial uncertainties and restrictions on PRC government policies, laws, and regulations, which can change quickly and influence operations at any time.
  • Overseas Offerings/Foreign Investment: Increased government control over offerings conducted overseas and foreign investment in China-based issuers (e.g., HFCAA, Cybersecurity Review Measures, CSRC Trial Measures) could limit or hinder ability to offer securities or accept foreign investments.
  • Data Security & Privacy: Compliance with China’s Data Security Law, Cybersecurity Review Measures, and Personal Information Protection Law may entail significant expenses, operational changes, and potential penalties for non-compliance.
  • HFCAA: While the Company's current auditor is subject to PCAOB inspection, future changes could lead to delisting from Nasdaq if the auditor is not inspectable for two consecutive years.
  • CSRC Filing Requirements: Uncertainty regarding interpretation and implementation of the Trial Measures for overseas listings and offerings, potentially requiring future approvals or filings.
  • Legal System: Difficulties for U.S. regulators to conduct investigations or collect evidence within China due to PRC laws (e.g., Article 177 of PRC Securities Law), limiting legal protections for foreign investors.
• U.S. Tariffs: Imposition of higher U.S. tariffs on electric vehicles from China (100% from August 1, 2024) and other trade barriers could significantly impact international business, particularly EV sales in the U.S. and EU.
• Inflation Reduction Act (IR Act): Share repurchases are subject to a 1% excise tax, though currently not anticipated to have a material impact.

Geopolitical & External Risks

• Country-Specific Risks (U.S.-China Tensions): Escalating political tensions, trade wars, sanctions, and investment restrictions between the U.S. and China could adversely affect business, operating results, and the value of securities.
• Economic Risk: Slowdown or contraction of the Chinese economy, global financial crises, and economic downturns could adversely affect sales, increase costs, and impact access to capital.
• Unforeseen Policy Implications: U.S. policy updates (e.g., Clean Network project, Entity List, outbound investment restrictions, Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles Final Rule) may present challenges for international market presence.

Innovation & Technology Leadership

Research & Development Focus: The Company is dedicated to research and development of pure electric technologies and product innovation, particularly in the off-road vehicle segment. R&D efforts include developing new products and processes, improving existing products, and conducting consulting work with third parties. The increase in R&D expenditure in 2024 was mainly due to a battery products project.

Global R&D Network: R&D activities are primarily conducted in China, with several subsidiaries recognized as national High and New Technology Enterprises (Zhejiang Kandi Technologies Group, Co. Ltd., Zhejiang Kandi Smart Battery Swap Technology Co., Ltd., Kandi Electric Vehicles (Hainan) Co., Ltd., and Jiangxi Province Huiyi New Energy Co., Ltd.), qualifying them for a preferential 15% income tax rate.

Intellectual Property Portfolio (as of December 31, 2024):

• Total Patents: 329 valid patents across subsidiaries.
  • Zhejiang Kandi Technologies Group, Co. Ltd.: 97 valid patents (2 invention, 58 utility model, 37 appearance design) and 2 software copyrights.
  • Zhejiang Kandi Smart Battery Swap Technology Co., Ltd.: 96 valid patents (9 invention, 74 utility model, 13 appearance design) and 4 software copyrights.
  • Kandi New Energy: 2 utility model patents.
  • Yongkang Scrou Electric Co, Ltd.: 25 valid patents (11 utility model, 14 appearance design).
  • Kandi Electric Vehicles (Hainan) Co., Ltd.: 46 valid patents (3 invention, 41 utility model, 2 appearance design).
  • China Battery Exchange (Zhejiang) Technology Co., Ltd. and subsidiaries: 3 valid utility model patents and 10 software copyrights.
  • Jiangxi Province Huiyi New Energy Co., Ltd.: 59 valid patents (9 invention, 39 utility model, 11 appearance design).
• Patent Strategy: The Company intends to continue filing additional patent applications. Invention patents are valid for 20 years, while utility model and appearance design patents are valid for 10 years.
• Licensing Programs: Not explicitly detailed, but the Company has received patent licenses from third parties related to vehicle manufacturing.
• IP Litigation: The Company faces risks of patent barriers and intellectual property litigation in the competitive international automobile market.

Technology Partnerships: The Company jointly manufactures the K23 EV model with Hunan Hengrun Automobile Co., Ltd.

Leadership & Governance

Executive Leadership Team (as of April 11, 2025)

International Management Structure: The Company has a global management team with executive officers and directors having diverse backgrounds and regional expertise, supporting operations in both China and the U.S. Regional leadership is implied by the presence of U.S. and Canadian subsidiaries.

Board Composition: The Board of Directors includes four independent directors (Henry Yu, Jerry Lewin, Chen Liming, Lin Yi). The Audit Committee consists of Henry Yu (Chairman), Jerry Lewin, and Chen Liming, with Mr. Yu and Mr. Lewin qualifying as "audit committee financial experts." The Compensation Committee consists of Chen Liming (Chairman), Henry Yu, and Lin Yi. The Nominating and Corporate Governance Committee consists of Lin Yi (Chairman), Henry Yu, and Chen Liming. All committee members are independent under NASDAQ listing standards.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework:

• PRC: The Company's operations are subject to complex and evolving PRC laws and regulations, including the PRC Company Law, Foreign Investment Law, Data Security Law, Cybersecurity Review Measures, and the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies. Several PRC subsidiaries qualify as High and New Technology Enterprises, receiving a preferential 15% corporate income tax rate. Hainan Kandi Holding New Energy Technology Co., Ltd. also benefits from a 15% tax rate in the Hainan Free Trade Port.
• U.S.: The Company is subject to U.S. federal securities laws, environmental laws (EPA, CARB), and product safety regulations (CPSC, NHTSA). The Holding Foreign Companies Accountable Act (HFCAA) poses a risk of delisting if the Company's auditor is not subject to PCAOB inspection for two consecutive years. The Inflation Reduction Act of 2022 imposes a 1% excise tax on certain share repurchases.
• Canada: Kandi Technologies Canada Inc. is subject to Canada’s statutory federal income tax rate of 15% and provincial income tax rate of 12%.

Cross-Border Compliance:

• Export Controls & Sanctions: The Company's international trade is subject to U.S. tariffs on Chinese-made electric vehicles (100% from August 1, 2024) and EU tariffs (17.0% to 36.3% from August 21, 2024). The U.S. Department of Commerce is investigating antidumping duties on low-speed personal transportation vehicles from China, which includes Kandi Electric Vehicles (Hainan) Co., Ltd.
• Anti-Corruption: Not explicitly detailed, but the Company operates in jurisdictions with anti-corruption laws.
• Data Privacy: The Company monitors regulatory developments in China regarding cybersecurity and data privacy, including the Cybersecurity Review Measures and Personal Information Protection Law. Management believes the Company does not hold personal information of over one million users and has not been informed of any cybersecurity review requirements.

International Tax Strategy:

• Transfer Pricing: Not explicitly detailed in the filing.
• Tax Treaties: The Company may be eligible for benefits under the United States-PRC income tax treaty if deemed a PRC resident enterprise for U.S. tax purposes.
• BEPS Compliance: Not explicitly detailed in the filing.
• U.S. Federal Income Tax: Due to reincorporation, Kandi Technologies Group, Inc. (BVI) is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874(b) of the Internal Revenue Code, making it subject to U.S. federal income tax on its worldwide income. The Company elected to treat Global Intangible Low-Taxed Income (GILTI) as a current-period expense when incurred.

Environmental & Social Impact

Global Sustainability Strategy: The Company's strategic shift to pure electric off-road vehicles aligns with global energy transition and environmental protection policies, emphasizing advantages such as zero emissions, low noise, and high energy efficiency. Its products are designed to comply with international emissions standards and regulations, including those from the China Environmental Protection Agency, the United States Environmental Protection Agency, and the California Air Resources Board.

Regional Sustainability Initiatives:

• China: The Company's PRC operating entities are required to comply with national and local environmental protection regulations and hold necessary environmental permits.
• Supply Chain: Not explicitly detailed in the filing.

Social Impact by Region: No specific information on community investment or labor standards by region is explicitly provided in the filing.

Currency Management & Financial Strategy

Multi-Currency Operations: The Company's functional currency is Renminbi (RMB), and its reporting currency is the U.S. dollar. A majority of its revenues and costs are denominated in RMB, and a significant portion of its assets and liabilities are also denominated in RMB. This exposes the Company to foreign exchange risk from fluctuations between the U.S. dollar and RMB.

Currency Exposure (2024):

Hedging Strategies:

• Transaction Hedging: The Company has not entered into any hedging transactions to reduce its exposure to foreign currency exchange risk.
• Translation Hedging: Not explicitly detailed.
• Economic Hedging: Not explicitly detailed, but operational diversification across China and U.S. markets may provide some natural hedging.

Cash Holdings by Currency: Not explicitly detailed, but the majority of earnings and cash assets are denominated in RMB.