NOTE 4   PRINCIPLES OF CONSOLIDATION The consolidated financial statements reflect the accounts of the Company and its ownership interest in following subsidiaries: (i) Continental Development Limited. ( Continental ) (a wholly-owned subsidiary of the Company) (ii) Zhejiang Kandi Vehicles Co., Ltd. ( Kandi Vehicles ) (a wholly-owned subsidiary of Continental) (iii) Jinhua Kandi New Energy Vehicles Co., Ltd. ( Kandi New Energy ) (a 50% owned subsidiary of Kandi Vehicles. Pursuant to relevant agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy) (iv) Yongkang Scrou Electric. Co., Ltd ( Yongkang Scrou ) (a wholly-owned subsidiary of Kandi Vehicles) (v) Kandi Electric Vehicles (Wanning) Co., Ltd. ( Kandi Wanning ) (a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles) All inter-company accounts and transactions have been eliminated in consolidation. Equity Method Investees The consolidated net income also includes the Company s proportionate share of the net income or loss of its equity method investees. (vi) Zhejiang Kandi Electric Vehicles Co., Ltd. (the  JV Company ) (a 50% owned subsidiary of Kandi Vehicles) (vii) Kandi Electric Vehicles (Changxing) Co., Ltd. ( Kandi Changxing ) (a wholly-owned subsidiary of the JV Company). The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest) (viii) Zhejiang Kandi Electric Vehicles Jinhua Co., Ltd. ( Kandi Jinhua ) (a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest) (ix) Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. ( JiHeKang ) (a wholly-owned subsidiary of the JV Company, The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest) (x) Kandi Electric Vehicles (Shanghai) Co., Ltd. ( Kandi Shanghai ) (a wholly-owned subsidiary of the JV Company, The Compa