- Off-road vehicles sales increased 51.6% to $8.9 million
- Gross margin of 20.9% up versus 16.7% year-ago

JINHUA, CHINA, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2020.

Operating Highlights

During the third quarter, Kandi achieved:

  • In September, established China Battery Exchange Technology Company, a wholly-owned subsidiary for its battery swapping services.
  • On August 18, Kandi America held a successful virtual launch event to introduce its K23 and K27 EVs into the U.S. market.
  • In August, delivered its fully automatic intelligent battery exchange system to the rideshare operator in Haikou City, Hainan.
  • In July, the Affiliate Company Fengsheng Automotive launched sales of the Maple 30X, its first pure electric SUV.
  • Fengsheng Automative’s Maple 60V all-electric multi-purpose vehicle) was approved for purchase subsidies by China’s Ministry of Industry and Information Technology.

More recently, Kandi also announced:

  • A strategic cooperation agreement with the Zhejiang State Grid Electric Vehicle Service Company in the area of battery exchange for pure electric vehicles.
  • The establishment of Zhejiang Ruiheng Technology Company, which intends to operate a ridesharing service across China.
  • Initiated the IPO process for its wholly owned subsidiary, Zhejiang Kandi Smart Battery Swap Technology, to list on the Shanghai Stock Exchange STAR market.
  • Kandi America, the U.S. subsidiary has received the required clearance from the United States Environmental Protection Agency (EPA) for its two electric vehicle models – the K23 and K27 – via Certificates of Conformity. 

Financial Highlights

All figures refer to the third quarter of 2020 unless noted otherwise. All comparisons are with the third quarter of 2019, unless noted otherwise.

  • Total revenues were down 40.9% to $18.7 million.
  • Electric Vehicle (“EV”) parts sales decreased by 67.4% to $8.4 million.
  • Off-road vehicle sales increased by 51.6% to $8.9 million.
  • Gross margin of 20.9% increased 42 basis points versus the year-ago period.
  • Net loss was $1.5 million, or $0.03 per fully diluted share. This compares to net income of $12.1 million, or $0.23 last year.
  • As of September 30, 2020, working capital was $79.8 million. Cash, cash equivalents and restricted cash was $24.2 million. 

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “As we approach year-end, we are proud of our progress despite the challenges posed by COVID-19 around the world. We were productive in the third quarter. Most importantly, after a lengthy process of preparation, the ‘300,000 government-accredited pure EV within 5 years rideshare’ program—of which Kandi was a co-founder-- has begun its trial with the gradual delivery of 1,000 EVs to the city of Haikou in Hainan province and 2,500 EVs to the city of Shaoxing in Zhejiang province. All the EVs delivered for the program include our battery swap feature. We believe that this program can drive the production and sales of our EV parts and battery swap equipment, and we can thus restore growth in our pure EV business.”

Hu also discussed the plan to list Kandi’s Battery Swap Subsidiary on the Shanghai Stock Exchange’s STAR Board: “Based on feedback from three world-class advisors’ preliminary due diligence, we are confident about this proposed spin-off listing on the STAR market. By tapping China’s capital markets, listing on the STAR Board will accelerate the Company’s business growth and also enable Kandi to unlock and realize the value of this emerging business.”

Net Revenues and Gross Profit

  3Q20  3Q19  Y-o-Y% 
Net Revenues (US$million) $18.7  $31.7   -40.9%
Gross Profit (US$million) $3.9  $5.3   -25.9%
Gross Margin  20.9%  16.7%  - 

  
The decline in revenue was due mainly to slower sales of EV parts, a result of reduced demand from our customers due to the economic effects of the COVID-19 pandemic. 

Operating Loss

  3Q20  3Q19  Y-o-Y% 
Operating Expenses (US$million) $6.3  $5.0   26.8%
Operating (Loss) Income (US$million) ($2.4) $0.3   -851.3%
Operating Margin  -12.7%  1.0%  - 

  
Operating expenses increased due to higher sales and marketing expense related to the Company’s entry into the U.S. electric vehicle market.

Net Income (Loss)

  3Q20  3Q19  Y-o-Y% 
Net  (Loss) Income (US$million) ($1.5) $12.1   -112.1%
(Loss) Earnings per Weighted Average Common Share ($0.03) $0.23   - 
(Loss) Earnings per Weighted Average Diluted Share ($0.03) $0.23   - 

Net loss was $1.5 million in the third quarter of 2020, compared with net income of $12.1 million in the same quarter of 2019. The decline was due to recognition in the third quarter of 2019 of a $20.6 million gain from the sale of equity in the Affiliate Company.

Financial Condition

As of September 30, 2020, the Company had cash and cash equivalents of $23.9 million, restricted cash of $0.25 million, and working capital of $79.8 million. This compares to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019, respectively.

As of September 30, 2020, accounts receivable were $38.4 million, compared to $61.2 million as of December 31, 2019.

For the first three quarters of 2020, cash used in operating activities was $13.4 million, as compared to cash used in operating activities of $14.6 million for the same period last year.

Third Quarter 2020 Conference Call Details

The Company will conduct a conference call and live webcast to discuss its third quarter 2020 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 9, 2020. Management will deliver prepared remarks to be followed by a question and answer session.

Dial-in details for the conference call are as follows:

  • Toll-free dial-in number: +1-877-407-3982
  • International dial-in number: + 1-201-493-6780
  • Webcast and replay: http://public.viavid.com/index.php?id=142327  

A live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations page on the Company’s website at http://www.kandivehicle.com. An archive of the webcast will be available on the Company’s website following the live call. 

About Kandi Technologies Group, Inc.

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. ("Kandi Vehicles") and its subsidiaries including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States and Fengsheng Automobile Technology Group Co., Ltd (formerly known as Kandi Electric Vehicles Group Co., Ltd., the “Affiliate Company”). Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

In 2013, Kandi Vehicles and Geely Group, China's leading automaker, jointly invested in the establishment of the Affiliate Company in order to develop, manufacture and sell pure electric vehicle ("EV") products. Geely Group (including its affiliate) and Kandi Vehicles currently holds 78% and 22% of the equity interests in the Affiliate Company, respectively. The Affiliate Company has established itself as one of the driving forces in the development and the manufacturing of pure EV products in China.

More information about KNDI is available on the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes,""expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

For More Information:

Kandi Technologies Group, Inc.

Ms. Kewa Luo
Phone: +1 (212) 551-3610
Email: IR@kandigroup.com

The Blueshirt Group

U.S.:
Mr. Gary Dvorchak
Email: gary@blueshirtgroup.com

China:
Ms. Susie Wang
Email: susie@blueshirtgroup.com

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

  

  September 30,
2020
  December 31,
2019
 
  (UNAUDITED)    
Current assets      
Cash and cash equivalents $23,909,159  $5,490,557 
Restricted cash  250,000   11,022,078 
Accounts receivable (net of allowance for doubtful accounts of $105,833 and $254,665 as of September 30, 2020 and December 31, 2019, respectively)  38,370,898   61,181,849 
Inventories  30,244,514   27,736,566 
Notes receivable  235,249   42,487,225 
Other receivables  54,654,688   5,019,971 
Prepayments and prepaid expense  10,980,473   10,615,063 
Amount due from the Affiliate Company  20,869,315   31,330,763 
Other current assets  4,262,285   688,364 
TOTAL CURRENT ASSETS  183,776,581   195,572,436 
         
NON-CURRENT ASSETS        
Property, plant and equipment, net  71,132,470   74,407,858 
Intangible assets, net  3,264,500   3,654,772 
Land use rights, net  9,042,991   11,272,815 
Investment in the Affiliate Company  39,442,126   47,228,614 
Goodwill  28,792,031   28,270,400 
Other long term assets  13,132,240   10,811,501 
TOTAL NON-CURRENT ASSETS  164,806,358   175,645,960 
         
TOTAL ASSETS $348,582,939  $371,218,396 
         
CURRENT LIABILITIES        
Accounts payable $42,154,366  $72,093,940 
Other payables and accrued expenses  5,857,897   6,078,041 
Short-term loans  -   25,980,364 
Notes payable  -   10,765,344 
Income tax payable  1,087,338   1,796,601 
Advance receipts  36,691,372   - 
Long term loans - current portion  16,761,501   13,779,641 
Other current liabilities  1,456,108   1,379,808 
TOTAL CURRENT LIABILITIES  104,008,582   131,873,739 
         
NON-CURRENT LIABILITIES        
Long term loans  12,156,573   14,353,792 
Deferred taxes liability  3,460,346   1,362,786 
Contingent consideration liability  3,403,000   5,197,000 
Other long-term liabilities  588,123   574,152 
TOTAL NON-CURRENT LIABILITIES  19,608,042   21,487,730 
         
TOTAL LIABILITIES  123,616,624   153,361,469 
         
STOCKHOLDER'S EQUITY        
Common stock, $0.001 par value; 100,000,000 shares authorized; 56,531,702 and 56,263,102 shares issued and 54,610,758 and 52,839,441 outstanding at September 30, 2020 and December 31, 2019, respectively  54,611   52,839 
Less: Treasury stock (487,155 shares with average price of $5.09 at September 30, 2020 and December 31, 2019, respectively)  (2,477,965)  (2,477,965)
Additional paid-in capital  260,605,209   259,691,370 
Accumulated deficit  (15,663,602)  (16,685,736)
Accumulated other comprehensive loss  (17,551,938)  (22,723,581)
TOTAL STOCKHOLDERS' EQUITY  224,966,315   217,856,927 
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $348,582,939  $371,218,396 

KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) 
(UNAUDITED)

  Three Months Ended  Nine Months Ended 
  September 30,
2020
  September 30,
2019
  September 30,
2020
  September 30,
2019
 
             
REVENUES FROM UNRELATED PARTIES, NET $18,717,212  $26,968,385  $44,525,756  $63,360,044 
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET  6   4,720,159   962   10,543,190 
                 
REVENUES, NET  18,717,218   31,688,544   44,526,718   73,903,234 
                 
COST OF GOODS SOLD  (14,806,322)  (26,412,129)  (35,911,785)  (61,288,228)
                 
GROSS PROFIT  3,910,896   5,276,415   8,614,933   12,615,006 
                 
OPERATING EXPENSES:                
Research and development  (987,285)  (596,187)  (2,777,426)  (1,766,210)
Selling and marketing  (2,165,383)  (930,810)  (3,807,355)  (2,448,291)
General and administrative  (3,212,209)  (3,432,920)  (10,186,135)  (11,096,246)
Gain on disposal of long-lived assets  76,159   -   13,983,733   - 
TOTAL OPERATING EXPENSES, NET  (6,288,718)  (4,959,917)  (2,787,183)  (15,310,747)
                 
(LOSS) INCOME FROM OPERATIONS  (2,377,822)  316,498   5,827,750   (2,695,741)
                 
OTHER INCOME (EXPENSE):                
Interest income  558,059   209,736   1,118,795   559,954 
Interest expense  (788,589)  (435,524)  (2,894,579)  (1,304,062)
Change in fair value of contingent consideration  (1,069,000)  57,000   1,794,000   694,000 
Government grants  13,431   502,146   111,329   725,189 
Gain (loss) from equity dilution in the Affiliate Company  -   (49,285)  -   4,291,974 
Gain from sale of equity in the Affiliate Company  -   20,574,217   -   20,574,217 
Share of loss after tax of the Affiliate Company  (1,550,568)  (8,433,767)  (5,631,867)  (22,883,126)
Other income, net  988,287   57,833   2,051,272   357,626 
TOTAL OTHER (EXPENSE) INCOME, NET  (1,848,380)  12,482,356   (3,451,050)  3,015,772 
                 
(LOSS) INCOME BEFORE INCOME TAXES  (4,226,202)  12,798,854   2,376,700   320,031 
                 
INCOME TAX BENEFIT (EXPENSE)  2,767,939   (709,413)  (1,354,563)  41,780 
                 
NET (LOSS) INCOME  (1,458,263)  12,089,441   1,022,137   361,811 
                 
OTHER COMPREHENSIVE INCOME (LOSS)                
Foreign currency translation adjustment  8,216,974   (8,531,043)  5,171,643   (8,042,604)
                 
COMPREHENSIVE INCOME (LOSS) $6,758,711  $3,558,398  $6,193,780  $(7,680,793)
                 
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED  54,112,981   52,613,642   53,282,066   52,332,260 
                 
NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED $(0.03) $0.23  $0.02  $0.01 

  

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
Condensed CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

  Number of
Outstanding
Shares
  Common
Stock
  Treasury
Stock
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Loss
  Total 
Balance, December 31, 2018  51,484,444  $51,484  $-  $254,989,657  $(9,497,009) $(19,921,258) $225,622,874 
Stock issuance and awards  1,096,397   1,097   -   3,387,379   -   -   3,388,476 
Net loss  -   -   -   -   (4,409,472)  -   (4,409,472)
Foreign currency translation  -   -   -   -   -   5,404,028   5,404,028 
Balance, March 31, 2019  52,580,841  $52,581  $-  $258,377,036  $(13,906,481) $(14,517,230) $230,005,906 
Stock issuance and awards  238,600   238   -   1,259,569   -   -   1,259,807 
Net loss  -   -   -   -   (7,318,158)  -   (7,318,158)
Foreign currency translation  -   -   -   -   -   (4,915,589)  (4,915,589)
Balance, June 30, 2019  52,819,441  $52,819  $-  $259,636,605  $(21,224,639) $(19,432,819) $219,031,966 
Stock issuance and awards  20,000   20   -   69,380   -   -   69,400 
Stock buyback  -   -   (2,477,965)  -   -   -   (2,477,965)
Commission in stock buyback  -   -   -   (14,615)  -   -   (14,615)
Net income          -   -   12,089,441   -   12,089,441 
Foreign currency translation  -   -   -   -   -   (8,531,043)  (8,531,043)
Balance, September 30, 2019  52,839,441  $52,839  $(2,477,965) $259,691,370  $(9,135,198) $(27,963,862) $220,167,184 


  Number of
Outstanding
Shares
  Common
Stock
  Treasury
Stock
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Loss
  Total 
Balance, December 31, 2019  52,839,441  $52,839  $(2,477,965) $259,691,370  $(16,685,736) $(22,723,581) $217,856,927 
Stock issuance and awards  10,000   10   -   22,290   -   -   22,300 
Net loss  -   -   -   -   (1,574,646)  -   (1,574,646)
Foreign currency translation  -   -   -   -   -   (3,523,065)  (3,523,065)
Balance, March 31, 2020  52,849,441  $52,849  $(2,477,965) $259,713,660  $(18,260,382) $(26,246,646) $212,781,516 
Stock issuance and awards  1,502,717   1,503   -   3,164,925   -   -   3,166,428 
Net income  -   -   -   -   4,055,043   -   4,055,043 
Foreign currency translation  -   -   -   -   -   477,734   477,734 
Balance, June 30, 2020  54,352,158  $54,352  $(2,477,965) $262,878,585  $(14,205,339) $(25,768,912) $220,480,721 
Stock issuance and awards  258,600   259   -   870,837   -   -   871,096 
Net loss  -   -   -   -   (1,458,263)  -   (1,458,263)
Foreign currency translation  -   -   -   -   -   8,216,974   8,216,974 
Reduction in the Affiliate Company’s equity  -   -   -   (3,144,213)  -   -   (3,144,213)
Balance, September 30, 2020  54,610,758  $54,611  $(2,477,965) $260,605,209  $(15,663,602) $(17,551,938) $224,966,315 

KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  Nine Months Ended 
  September 30,
2020
  September 30,
2019
 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $1,022,137  $361,811 
Adjustments to reconcile net income to net cash provided by operating activities        
Depreciation and amortization  6,078,070   6,443,422 
(Reversal) provision of allowance for doubtful accounts  (150,756)  15,366 
Deferred taxes  1,256,167   50,693 
Share of loss after tax of the Affiliate Company  5,631,867   22,883,126 
Gain from equity dilution in the Affiliate Company  -   (4,291,974)
Gain from sale of equity in the Affiliate Company  -   (20,574,217)
Gain on disposal of long-lived assets  (13,983,733)  - 
Change in fair value of contingent consideration  (1,794,000)  (694,000)
Stock based compensation expense  870,471   1,337,333 
         
Changes in operating assets and liabilities:        
Accounts receivable  18,165,084   (36,822,184)
Notes receivable  -   174,881 
Notes receivable from the Affiliate Company and related party  -   437,203 
Inventories  (1,830,827)  (14,768,603)
Other receivables and other assets  (5,226,968)  (7,746,801)
Prepayments and prepaid expenses  (84,089)  1,357,001 
Amount due from the Affiliate Company  4,178,477   30,549,072 
         
Increase (Decrease) In:        
Accounts payable  (15,642,931)  11,383,411 
Other payables and accrued liabilities  2,675,156   8,934,397 
Notes payable  (13,725,855)  (11,836,950)
Income tax payable  (804,238)  (1,803,574)
Net cash used in operating activities $(13,365,968) $(14,610,587)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property, plant and equipment, net  (383,568)  (955,670)
Payment for construction in progress  (1,604,427)  (18,491)
Proceeds from disposal of long-lived assets  51,872,829   - 
Loan to third party  (45,958,247)  (9,555,014)
Cash received from sales of equity in the Affiliate Company  42,321,385   32,061,558 
Net cash provided by investing activities $46,247,972  $21,532,383 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term loans  24,163,223   27,864,409 
Repayments of short-term loans  (50,042,178)  (26,261,331)
Repayments of long-term loans  (285,955)  (145,734)
Proceeds from long-term loans  394,116   - 
Repayments of loan from third party  -   (1,259,551)
Stock buyback with commission  -   (2,492,579)
Net cash used in financing activities $(25,770,794) $(2,294,786)
         
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH  7,111,210   4,627,010 
Effect of exchange rate changes  535,314   (928,440)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR  16,512,635   22,353,071 
         
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $24,159,159  $26,051,641 
-CASH AND CASH EQUIVALENTS AT END OF PERIOD  23,909,159   14,338,637 
-RESTRICTED CASH AT END OF PERIOD  250,000   11,713,004 
         
SUPPLEMENTARY CASH FLOW INFORMATION        
Income taxes paid $901,021  $1,711,101 
Interest paid $644,724  $1,304,062 
         
SUPPLEMENTAL NON-CASH DISCLOSURES:        
Decrease in investment in the Affiliate Company due to change in its equity $3,057,540  $- 
Notes receivable from unrelated parties for equity transfer payment $-  $43,137,369 
Common stock issued for settlement of payables related to acquisitions (see Note 20) $3,166,427  $3,357,425