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| <NonNumbericText> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> <b>NOTE 4 – PRINCIPLES OF CONSOLIDATION</b> </font> </font> </p> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">The consolidated financial statements reflect the accounts of the Company and its ownership interest in following subsidiaries:</font> </font> </p> <table border="0" cellpadding="0" cellspacing="0" style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; " width="100%"> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(i)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">Continental Development, Ltd. (“Continental”) (a wholly-owned subsidiary of the Company)</font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(ii)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”) (a wholly-owned subsidiary of “Continental”)</font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(iii)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> Jinhua Three Parties New Energy Vehicles Service Co., Ltd. (“Jinhua Service”) (a 30% owned subsidiary of Kandi Vehicles) </font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(iv)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”) (a 50% owned subsidiary of Kandi Vehicles with 100% profits and loss absorption due to contractual agreement) </font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(v)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">Yongkang Scrou Electric. Co., Ltd (“Yongkang Scrou”) (a wholly-owned subsidiary of Kandi Vehicles)</font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(vi)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) (a wholly-owned subsidiary of Kandi Vehicles)</font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(vii)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> Zhejiang Kandi Electric Vehicles Co.,Ltd. (“JV Company”) (a 50% owned subsidiary of Kandi Vehicles) </font> </font> </p> </td> </tr> <tr> <td valign="top" width="5%"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">(viii)</font> </font> </td> <td> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) (a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles, with 100% profits and loss absorption by Kandi Vehicles) </font> </font> </p> </td> </tr> </table> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;">Inter-company accounts and transactions have been eliminated in consolidation.</font> </font> </p> <p align="justify"> <font style="font-family:times new roman,times,serif;"> <font style="font-size: 10pt;"> Pursuant to the JV Agreement (see note 1) and according to US GAAP, the Company will not consolidate the financial statements of the JV Company into the Company’s financial statements, but will include the operating results of the JV Company and the Company’s 50% ownership interest in the JV Company by reflecting the Company’s 50% share in the JV Company’s net operating income in the Company’s equity account for this investment. </font> </font> </p> </NonNumbericText> |
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