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Operator: Good day, and welcome to the Envelope Enterprise Holdings Second Half and Fiscal Year 2022 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to David Rudnick. Please go ahead.

David Rudnick: Thank you, Marliese. Good morning, ladies and gentlemen. Good evening to those of you who are joining us from China. Welcome to Antelope Enterprise Holdings second half of fiscal year-end 2022 earnings conference call. With us today are Antelope Enterprises Chief Executive Officer, Mr. Weilai Zhang, Chief Financial Officer, Mr. Edmund Hen. Before I turn the call over to Mr. Zhang, I would like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties and include, among others, those regarding revenue, operating expenses, other income and expense, taxes and future business outlook. As for future performance, outcomes and results may differ materially from those expressed in forward-looking statements.

The company claims the safe harbor protections for such forward-looking statements as contemplated under the Private Securities Litigation Reform Act of 1995. Please refer to the documents filed by the company with the SEC, specifically, the most recent portion on forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. And now it’s my pleasure to turn the call over to Antelope Enterprise’s CEO, Mr. Weilai Zhang; and Antelope Enterprise’s CFO, Mr. Edman Hen. Charlie Jay will be translating for CEO, Weilai Zhang. Mr. Zhang, you may proceed.

Weilai Zhang: Thank you, David. On behalf of the company, I would like to welcome everyone to our second half and fiscal year-end 2022 earnings conference call.

Weilai Zhang: I’m extremely proud of the achievements of our team in 2022 and pleased with our results as we successfully executed on our strategic plan to enter the high-growth livestreaming and commerce sector. Our KylinCloud livestreaming business generating 96% of our total revenue for the second half of 2022 as we pivoted away from the legacy ceramic tile building materials business, which was divested on April 28, 2023. Our top line revenue for our livestreaming e-commerce business came in $40.7 million for the full year 2022, modestly ahead of our pre-announcement, and the registered investors and host on our KylinCloud platform increased 8 times to 316,696 in 2022 from 39,624 in 2021.

Weilai Zhang: As the first mover in the livestreaming e-commerce space, KylinCloud provides turnkey livestreaming marketing and broadcasting services to consumer brand companies by matching companies’ brand characteristics and products with hosts and influencers. This result in livestreaming sales presentation that can generate increased sales and profitability for this company. We believe that KylinCloud has a core competency to increase its market share and be highly competitive in this key sales channel as a pure play in the sector.

Weilai Zhang: I believe that we have a tremendous market opportunity ahead of us and have the financial resources, operating infrastructure and the vibrant team culture to achieve long-term growth. I am genuinely excited about our unique business model and execution capabilities, and I am confident that we will create value for our shareholders.

Weilai Zhang: With that, I would like to turn over the call to the company’s Chief Financial Officer, Mr. Edmund Hen, who will discuss the company’s second half and fiscal year-end 2022 earnings results in more detail. Thank you.

Edmund Hen: Thank you, Mr. Zhang. I will now move to a more detailed discussion of our financial results for the 6 months ending December 31, 2022. Revenue for the 6 months ended December 31, 2022, was RMB 168.1 million or USD 24.1 million, a 164.3% increase from RMB 63.6 million or USD 9.9 million for the same period of 2021. The increase in revenue was due to RMB 161.4 million or USD 23.1 million in revenue generated from KylinCloud, the company’s livestreaming e-commerce business in the second half of 2022, which constitute 96% on second half of 2022 of the total company revenue. Gross profit for the 6 months ended December 31, 2022, was RMB 26 million or USD 3.7 million as compared to RMB 1 million or USD 0.1 million for the same period of 2021.

The increase in gross profit was still due to RMB 25 million or USD 3.6 million in gross profit generated by the company’s livestreaming e-commerce business. For the second half of 2022, our gross profit margin was 15.5% for the livestreaming e-commerce business as compared to a gross profit margin of 5.1% for the second half of 2021. Other income for the 6 months end December 31, 2022, was RMB 1.3 million or USD 0.2 million as compared to RMB 24,000 or USD 4,000 for the comparable period of 2021. Selling and distribution expenses for the 6 months end December 31, 2022 for RMB 14.5 billion or USD 2.1 million as compared to RMB 24,000 or USD 4,000 for the comparable period of 2021. The increase was due to an increase in commission expenses, advertising expenses that was attributable to KylinCloud.

Administrative expenses for the 6 months end December 31, 2022 were RMB 21.6 million or USD 3.1 million as compared to RMB 8.3 million or USD 1.3 million for the same period of 2021. A increase in administrative expenses was mainly due to increase in professional fees, compensation fees, insurance expenses, R&D, favorable expenses and promotional expenses primarily attributable to KylinCloud. Net loss from continuing operations for the 6 months end December 31, 2022 was RMB 6.1 million or USD 0.9 million as compared to RMB 17.7 million or USD 2.8 million for the same period of 2021. In terms of our livestreaming e-commerce business, net income was RMB 0.7 million or USD 0.1 million for second half of 2022 and a net loss of RMB 1.4 million or USD 0.2 million for the second half of 2021.

The decrease in the company’s total net loss from continuing operations was mainly due to the increase in gross profit attributable to our livestreaming e-commerce business and the reversal of bad debt expense that occurred in the second half of 2022 as compared to the same period of 2021. Loss per basic share and fully diluted share from continuing operation from the 6 months ended December 31, 2022 were RMB 0.73 USD 0.1 as compared to loss per basic fully diluted share of RMB 3.44 or USD 0.53 for the same period of 2021. Turning to our balance sheet. As of December 2022, we had cash and bank balances for RMB 3.9 million or USD 0.6 million. As of December 31, 2022, compared with RMB 27.9 million or USD 4.4 million as of December 31, 2021. Trade receivables turnover was zero of December 31, 2022 due to no outstanding trade receivables at December 31, 2022, as compared with 11 days as of December 31, 2021.

Trade payables turnover of our social and livestreaming e-commerce business was three days as of December 31, 2022 as compared with seven days as of December 31, 2021. As has been publicly announced over the past 2 years, the company enacted a corporate transformation to pivot towards high growth technology areas which included the acquisition of livestreaming e-commerce business. In December 2022, the Company’s Board of Directors unanimously agreed to divest of its legacy ceramic tile building materials business. On December 30, 2022, the Company entered into a share purchase agreement pursuant where it agreed to sell the Company’s legacy ceramic tile manufacturing business to New Stonehenge Limited in exchange for a 5% unsecured promissory note with a principal amount of USD 8.3 million – USD 8.5 million.

The Note will mature in four years and the 5% interest and principal amount on the note is to be paid in four annual installments. On February 21, 2023, the company’s shareholders approved the sales of this business. And on April 28, the transaction closed and the company completed the divestiture of the business. Moving to our outlook. The company operates a livestreaming e-commerce business through it’s KylinCloud subsidiary, which comprises virtually all of Antelope Enterprise’s ongoing business operations. Kylin Cloud’s platform strategically matches appropriate hosts and influencers to the products of consumer brand companies which results in increased sales for consumer brand companies. For the 6 – for the second 6 months and the full year 2022, KylinCloud generated 96.0% and 84.5% of the Company’s total revenue, respectively.

The Company believes that livestreaming product marketing is an important growth engine for consumer brand companies since it heightens consumer engagement and can build brand loyalty through rich content and online interaction. The Company expects that livestreaming e-commerce will comprise an ever-increasing percentage of China’s e-commerce sales in the years ahead spurred by a consumer ecosystem that includes a young demographic and their high usage rate of mobile devices. AEHL also believes that China’s livestreaming e-commerce sector will experience high double-digit growth for many years to come, and the Company is encouraged by the strong contribution to revenue of its KylinCloud subsidiary to date. This business outlook reflects the Company’s current and preliminary views and is based on the information currently available to us, which are subject to change, and is subject to risks and uncertainties, as well as risks and uncertainties identified in the Company’s public filings.

At this point, we would like to open up the call to any questions pertaining to our second half and fiscal year 2022 financial results. Operator, please?

Operator: Thank you. Our first question comes from Daron Evans from PoC Capital. Daron, please go ahead.

Daron Evans: Great. Good work on the addition Couple of few questions. First is, how is the first half of 2023 tracking?

Edmund Hen: I’ll use the 2023 or – may I now have your question again?

Daron Evans: How is the first half of this next fiscal year tracking?

Edmund Hen: We do not disclose the forecast for our guidance at this point. And we have a significant growth from our data for the first few months. So we believe that we will have a very promising revenue from this year.

Daron Evans: At some point in time, will you guys start to issue guidance?

Edmund Hen: We – as you may notice, we will announce our results in the second half reporting and also the year-end reporting. So — which we believe somewhere in September, we will announce our second half reporting. So you will know the results for our second half — first half results. But whenever we have some good news to the market, we will let the investor know our good news to them.

Daron Evans: Okay. Great. And how about the ownership, the management team and major stakeholders who kind of the major owners of the company?

Edmund Hen: We just have announced to our this . So you may refer to our annual reports just announced today — public today. We have some basic management ownership on this share on this whole…

Daron Evans: Okay, great. Thank you. Good growth, guys.

Edmund Hen: Thank you very much.

Operator: Our next question comes from Jeff Con. It’s a private investor. Jeff, please go ahead.

Jeff Con: Yes. How big of a market is this for your KylinCloud?

Edmund Hen: This is a very big market, but we do not have official statistic on this. And we believe that we only have a very small market share at this moment. And we believe that we still have a lot – a huge room to grow in our sector.

Jeff Con: Are there other public companies that we should compare you to?

Jeff Con: There’s no strict comparison for the public company. We also are in the revenue nature and new sector, and we are doing very differently from the market. But there is one seen with some similarity with our business, which are listed in Hong Kong. The ticker is 2291, I think, I remember. So you may chat on that.

Jeff Con: Okay. And then if I’m reading this right, you’re not profitable yet, but when do you expect to reach profitability?

Jeff Con: We are still in the very beginning of our business we now. We believe that this year, we can have a breakeven. And from — we believe that we will have a breakeven from this year. So in terms of future, I cannot promise anything at this moment. But we think that we will have a very significant very soon.

Jeff Con: Okay. Thank you.

Jeff Con: Thank you.

Operator: Thank you If no more questions are placed at this moment, I would like to turn the conference back over to David Rudnick for any closing remarks. Thank you.

David Rudnick: Thank you, Marliese. On behalf of the entire Antelope Enterprise management team, I want to thank all of you for your interest and participation on this call. This concludes Antelope Enterprise’s second half and fiscal year 2022 earnings call. Thank you all very much.

Operator: Thank you for attending today’s presentation. You may now disconnect.+