Xiaoming Hu: 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.
Unidentified Analyst: 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?
Kewa Luo: 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.
Unidentified Analyst: 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?
Kewa Luo: 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.
Unidentified Analyst: Is that facility in California, — did we know about that? Have you ever announced it? Or what kind of a facility is it?
Xiaoming Hu: 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.
Unidentified Analyst: 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?
Xiaoming Hu: 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.
Unidentified Analyst: 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?
Xiaoming Hu: So essentially we are paying the tax based on the category of those products pursuing the U.S. tax regulation.
Unidentified Analyst: So is there an advantage for them to be unassembled versus assembled or does that make a difference in what you pay?
Kewa Luo: They’re the same. Mr. Hu adding that the reason we assemble here because this way each container can have more shipments versus if you ship the whole car here.
Unidentified Analyst: 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 two 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?
Xiaoming Hu: We are adopting a different sales approach in last year and this year. That’s why there’s some variance of the sales volume.
Unidentified Analyst: Okay, do you want to explain that any bit more so that we can understand that?
Xiaoming Hu: What exactly do you not understand that you like Chairman to explain?
Unidentified Analyst: 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.
Xiaoming Hu: 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.
Unidentified Analyst: 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 four 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?
Kewa Luo: 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 —
Unidentified Analyst: At the end of quarter one in 2022, SC Autosports had inventory of 4.5 million. In the end of the quarter one in 2023, it went up to 22.8 million. And at the end of the fourth quarter just last year.
Kewa Luo: I’m sorry, end of Q1 2023 went up to what?
Unidentified Analyst: 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?
