PROSPECTUS SUPPLEMENT
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Filed pursuant to Rule 424(b)(5)
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(To Prospectus dated April 19, 2013)
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File No. 333-188039
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606,000 Shares of Common Stock
90,900 Warrants to purchase
up to 90,900 Shares of Common Stock and 90,900 Shares of Common Stock underlying
the Warrants
Kandi Technologies Group, Inc.
Pursuant to this prospectus supplement and the accompanying
prospectus, we are offering to investors 606,000 shares of our common stock (the
Shares) together with 90,900 warrants to purchase an aggregate of 90,900
shares of Common Stock at an exercise price of
$
22.80 per share (the
Warrants). The Warrants have a term of eighteen months and are exercisable by
the holders at any time after the date of issuance. In connection with this
offering, we also issued, as additional compensation, to FT Global Capital,
Inc., our exclusive placement agent, Placement Agent warrants to purchase up to
36,360 shares of Common Stock, equivalent to 6% of the Shares, at an exercise
price of 125% of the purchase price of the Shares
(the Placement Agent
Warrants).
The Shares and Warrants will be sold together as a unit
consisting of one Share and a Warrant (to purchase 0.15 shares of our Common
Stock for each Share included in the unit). The negotiated purchase price per
unit will be $18.24. The Shares and the Warrants will be issued separately but
can only be purchased together in this offering. The shares of common stock
issuable from time to time pursuant to the exercise of the Warrants are also
being offered pursuant to this prospectus supplement and the accompanying
prospectus.
Our common stock trades on the NASDAQ Global Select Market
under the symbol KNDI. The last reported sale price of our common stock on the
NASDAQ Global Select Market on March 17, 2014 was $21.41 per share. There is no
established public trading market for the Warrants and we do not expect a market
to develop. In addition, we do not intend to apply for listing of the Warrants
on any national securities exchange. As of March 17, 2014, the aggregate market
value of our outstanding common stock held by non-affiliates was approximately
$572,221,238 based on 40,105,321 shares of outstanding common stock, of which
13,378,500 shares were held by affiliates as of such date, and a price of $21.41
per share, which was the last reported sale price of our common stock as quoted
on the NASDAQ Global Select Market on March 17, 2014.
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Per Unit
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Total
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Public offering price of units
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$
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18.24
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$
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11,053,440
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Placement agency fees*
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$
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1.09
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$
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660,540
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Proceeds, before other expenses, to us
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$
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17.15
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$
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10,392,900
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*Does not include Placement Agent Warrants or other additional
compensation received by the placement agent, including compensation for any
tail financing for the twelve month period following June 18, 2013 or
compensation issued to the Placement Agent upon exercise of the Warrants.
We have retained FT Global Capital, Inc. to act as exclusive
placement agent in connection with this offering. The placement agent has no
obligation to buy any of the securities from us or to arrange for the purchase
or sale of any specific number of dollar amount of securities. See Plan of
Distribution beginning on page S-9 of this prospectus supplement for more
information regarding these arrangements.
_____________________________________________
Investing in our securities involves a high degree of risk.
See the section entitled
Risk Factors
beginning on page
S-5 of this prospectus supplement and in the documents we incorporate by
reference in this prospectus supplement and the accompanying prospectus. In
addition, see
Risk Factors
in our Annual Report on Form
10-K for the year ended December 31, 2013, which has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
prospectus supplement and the accompanying prospectus. You should carefully
consider these risk factors, as well as the information contained in this
prospectus supplement and the accompanying prospectus, before you invest.
Neither the Securities and Exchange Commission (the SEC)
nor any state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus supplement
or the accompanying prospectus. Any representation to the contrary is a criminal
offense.
_____________________________________________
We estimate the total expenses of this offering, excluding the
placement agency fees and cost reimbursements, will be approximately $100,000.
Because there is no minimum offering amount required in this offering, the
actual offering amount, the placement agency fees and net proceeds to us, if
any, in this offering may be substantially less than the total offering amounts
set forth above. We are not required to sell any specific number or dollar
amount of the securities offered in this offering, but the placement agent will
use its reasonable efforts to arrange for the sale of all of the securities
offered. The closing of the sale of securities will take place on or before
March 24, 2014
.
The date of this prospectus supplement is March 19, 2014
TABLE OF CONTENTS
P
ROSPECTUS
S
UPPLEMENT
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PROSPECTUS SUPPLEMENT SUMMARY
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S-3
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RISK FACTORS
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S-5
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FORWARD-LOOKING STATEMENTS
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S-6
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USE OF PROCEEDS
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S-7
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DESCRIPTION OF SECURITIES
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S-7
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PLAN OF DISTRIBUTION
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S-9
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LEGAL MATTERS
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S-11
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EXPERTS
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S-11
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INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
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S-11
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WHERE YOU CAN FIND MORE INFORMATION
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S-11
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P
ROSPECTUS
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ABOUT THIS PROSPECTUS
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2
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THE COMPANY
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2
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RISK FACTORS
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3
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FORWARD-LOOKING STATEMENTS
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4
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USE OF PROCEEDS
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5
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DESCRIPTION OF CAPITAL STOCK
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5
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DESCRIPTION OF COMMON STOCK
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5
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DESCRIPTION OF PREFERRED STOCK
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6
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DESCRIPTION OF DEBT SECURITIES
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6
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DESCRIPTION OF WARRANTS
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8
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DESCRIPTION OF UNITS
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10
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INCOME TAX CONSIDERATIONS
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10
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PLAN OF DISTRIBUTION
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14
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LEGAL MATTERS
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15
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EXPERTS
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15
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INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
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16
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WHERE YOU CAN FIND MORE INFORMATION
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16
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S-1
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is a supplement to the accompanying
prospectus that is also a part of this document. This prospectus supplement and
the accompanying prospectus, dated April 19, 2013, are part of a registration
statement on Form S-3 (File No. 333-188039) that we filed with the Securities
and Exchange Commission, or the SEC, utilizing a shelf registration process.
Under this shelf registration process, we may offer and sell from time to time
in one or more offerings the securities described in the accompanying
prospectus.
This document is in two parts. The first part is this
prospectus supplement, which describes the securities we are offering and the
terms of the offering and also adds to and updates information contained in the
accompanying prospectus and the documents incorporated by reference into the
accompanying prospectus. The second part is the accompanying prospectus, which
provides more general information, some of which may not apply to the securities
offered by this prospectus supplement. Generally, when we refer to this
prospectus, we are referring to both documents combined. To the extent there
is a conflict between the information contained in this prospectus supplement,
on the one hand, and the information contained in the accompanying prospectus or
any document incorporated by reference therein, on the other hand, you should
rely on the information in this prospectus supplement. We urge you to carefully
read this prospectus supplement and the accompanying prospectus and any related
free writing prospectus, together with the information incorporated herein and
therein by reference as described under the heading Where You Can Find
Additional Information, before buying any of the securities being offered.
You should rely only on the information that we have provided
or incorporated by reference in this prospectus supplement and the accompanying
prospectus and any related free writing prospectus that we may authorize to be
provided to you. We have not, and the placement agents have not, authorized
anyone to provide you with different information. No other dealer, salesperson
or other person is authorized to give any information or to represent anything
not contained in this prospectus supplement and the accompanying prospectus or
any related free writing prospectus that we may authorize to be provided to you.
You must not rely on any unauthorized information or representation. This
prospectus supplement is an offer to sell only the securities offered hereby,
and only under circumstances and in jurisdictions where it is lawful to do so.
You should assume that the information in this prospectus supplement and the
accompanying prospectus or any related free writing prospectus is accurate only
as of the date on the front of the document and that any information we have
incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of this prospectus
supplement and the accompanying prospectus or any related free writing
prospectus, or any sale of a security.
This prospectus supplement contains summaries of certain
provisions contained in some of the documents described herein, but reference is
made to the actual documents for complete information. All of the summaries are
qualified in their entirety by the actual documents. Copies of some of the
documents referred to herein have been filed, will be filed or will be
incorporated by reference as exhibits to the registration statement of which
this prospectus supplement is a part, and you may obtain copies of those
documents as described below under the heading Where You Can Find More
Information.
S-2
PROSPECTUS SUPPLEMENT SUMMARY
This summary is not complete and does not contain all of the
information that you should consider before investing in the securities offered
by this prospectus. You should read this summary together with the entire
prospectus supplement and accompanying prospectus, including our risk factors
(as provided for herein and incorporated by reference), financial statements,
the notes to those financial statements and the other documents that are
incorporated by reference in this prospectus supplement, before making an
investment decision. You should carefully read the information described under
the heading Where You Can Find More Information. We have not authorized anyone
to provide you with information different from that contained in this
prospectus. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our securities.
Unless the context otherwise requires, the terms
KNDI, the Company, we, us, and our in this prospectus each refer to
Kandi Technologies Group, Inc., our subsidiaries, and our consolidated entities.
China and the PRC refer to the Peoples Republic of China.
The Company
We were incorporated under the laws of the State of Delaware on
March 31, 2004. On August 13, 2007, we changed our name from Stone Mountain
Resources, Inc. to Kandi Technologies, Corp. On December 21, 2012 we changed our
name from Kandi Technologies, Corp. to Kandi Technologies Group, Inc. to better
communicate our current organizational structure to the investment community,
our customers and business partners. Headquartered in the Zhejiang Province, we
are a producer and manufacturer of electrical vehicles, all-terrain vehicles,
go-karts, specialized utility vehicles and a variety of other specialty vehicles
for sale in the PRC and global markets.
Our Business
Our products include EVs, off-road vehicles (which include
ATVs, utility vehicles (UTVs), and go-karts), motorcycles and other automotive
products. We have adjusted our production line strategically and continue to
develop and manufacture new products in an effort to meet market demands and
better serve our customers
.
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Year Ended December
31
,
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2013
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2012
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Units
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Revenue
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Units
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Revenue
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All-terrain Vehicles (ATVs)
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18,295
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$
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10,407,858
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14,467
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$
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6,402,753
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Electric Vehicles (EVs)
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4,694
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46,619,203
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3,915
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19,034,936
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Go-Karts
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36,499
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33,187,877
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34,517
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30,794,415
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Utility Vehicles (UTVs)
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440
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1,155,221
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93
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319,014
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Three-Wheeled Motorcycles (TT)
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243
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383,760
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1,060
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1,272,898
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Refitted Cars
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39
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1,058,095
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115
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3,172,417
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Auto Generator
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51,588
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1,724,031
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93,881
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3,517,237
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Total
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111,798
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$
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94,536,045
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148,048
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$
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64,513,670
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Our current business is primarily conducted through our
wholly-owned subsidiaries, Continental Development Limited, including
Continental Development Limiteds wholly-owned subsidiary, Zhejiang Kandi
Vehicles Co., Ltd. (Kandi Vehicles), and the partial and wholly owned
subsidiaries of Kandi Vehicles: Jinhua Three Parties New Energy Vehicles Service
Co., Ltd., Jinhua Kandi New Energy Vehicles Co., Ltd., Yongkang Scrou Electric.
Co., Ltd. and Zhejiang Kandi Electric Vehicles Co., Ltd. (the JV Company). The
JV Company develops, manufactures and sells EVs and related products.
The economic impact of our participation in the JV Company is
reflected in its 50% ownership of the JV Company through its subsidiary Kandi
Vehicles.
All of our production and development efforts for whole cars of
EV is conducted through the JV Company, and revenue generated from the sale of
electric vehicles is received by the JV Company and then distributed pursuant our joint venture
agreement with Shanghai Maple Guorun Automobile Co., Ltd., a 99% owned
subsidiary of Geely Automobile Holdings Ltd.
S-3
Jinhua Three Parties New Energy Vehicles Service Co., Ltd. was
formed by a joint venture among the State Grid Power Corporation, Tianneng Power
International, Inc. and
Kandi Vehicles.
The joint
venture established the first Chinese electric super-mini automobile battery
replacement service provider. We, indirectly through Kandi Vehicles, own a 30%
ownership interest in Jinhua Three Parties New Energy Vehicles Service Co.,
Ltd.
Jinhua Kandi New Energy Vehicles Co., Ltd. was formed as a
joint venture between
Kandi Vehicles
and Mr. Xiaoming
Hu, our CEO and Chairman of our Board of Directors. Kandi New Energy Vehicles
Co., Ltd. was established to comply with Chinese regulations that provide that a
foreign investor can have no more than 50% ownership interest in an automobile
manufacturing company located in China whose primary objective is to sell
automobiles in China. In connection with complying with these regulations, Mr.
Hu, a Chinese citizen, and
Kandi Vehicles
, a foreign
investment entity, each own 50% of Kandi New Energy Vehicles Co., Ltd.
Kandi Vehicles
made its capital contribution in kind, and
Mr. Hu made his capital contribution in cash, using proceeds from a loan made by
Zhejiang
Kandi Vehicles.
Mr. Hus equity interest in Kandi New Energy Vehicles Co., Ltd.
has been placed in escrow and trust with
Kandi
Vehicles
. Therefore,
Kandi Vehicles
effectively controls 100% of Kandi New Energy Vehicles Co., Ltd. All of
the profits of Kandi New Energy Vehicles Co., Ltd. are distributed to
Kandi Vehicles
.
On April 25, 2012, we completed our acquisition of KO NGA
Investment Limited and its subsidiaries, K S Asia Limited Group Limited,
Yongkang K S Electric Limited and Yongkang Scrou Electric Co. (Yongkang
Scrou). Yongkang Scrou manufactures various auto generators. On June 29, 2012,
in connection with the completion of our internal reorganization, Yongkang Scrou
became a wholly owned subsidiary of the Company.
The Offering
Units offered by us
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606,000 units
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Common stock offered by us
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606,000 Shares
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Common stock to be outstanding after this offering
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(assuming no exercise of the warrants offered by us)
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40,711,321 shares
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Warrants offered by us
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90,900 Warrants to purchase an aggregate of 90,900 shares
of Common Stock at an exercise price of $22.80 per share. The Warrants
have a term of eighteen months and are exercisable by the holders at any
time after the date of issuance.
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This prospectus also relates to the offering of the
Shares of Common Stock issuable upon exercise of the Warrants.
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Use of proceeds
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We intend to use the net proceeds from this offering
solely for working capital and other general corporate purposes. There is
no assurance that any of the Warrants will ever be exercised for cash, if
at all. See Use of Proceeds on page S-7.
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Market for the Shares and Warrants
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Our common stock is quoted and traded on the NASDAQ
Global Select Market under the symbol KNDI. However, there is no
established public trading market for the Warrants, and we do not expect a
market to develop. In addition, we do not intend to apply to list the
Warrants on any securities exchange. The warrants are immediately
separable from the Shares being offered as part of the units.
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Risk factors
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You should read the Risk Factors section on page S-5 of this prospectus supplement, the Risk Factors section
on page 3 of the accompanying prospectus, and the Risk Factors section
in our Annual Report for the year ended December 31, 2013 on Form 10-K,
for a discussion of factors to consider before deciding to purchase our
securities.
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S-4
NASDAQ Global Select Market Trading Symbol
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KNDI
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The number of shares of Common Stock to be outstanding after
this offering (40,711,321) is based on the actual number of shares outstanding
as of March 17, 2014, which was 40,105,321 and does not include, as of that
date:
-
1,793,310 shares of Common Stock being held in reserve by the Company;
-
90,900 shares of Common Stock issuable upon the exercise of the Warrants
and the Placement Agent Warrants;
-
shares of our Common Stock available for future issuance under our 2008
Omnibus Long Term Incentive Plan, if any; or
-
shares of our Common Stock issuable upon exercise or conversion of our
warrants and/or options outstanding as of March 19, 2014.
Unless otherwise stated, outstanding share information
throughout this prospectus supplement excludes the above.
RISK FACTORS
An investment in our securities involves a high degree of risk.
Before making any investment decision, you should carefully consider the risk
factors set forth in this prospectus supplement, the accompanying prospectus and
the information incorporated by reference herein and therein, including under
the caption Risk Factors in our most recent annual report on Form 10-K and our
subsequent quarterly reports on Form 10-Q, which are incorporated by reference
in this prospectus, as well as in any applicable prospectus supplement, as
updated by our subsequent filings under the Securities Exchange Act of 1934, as
amended (the Exchange Act).
These risks could materially affect our business, results of
operation or financial condition and affect the value of our securities.
Additional risks and uncertainties that are not yet identified may also
materially harm our business, operating results and financial condition and
could result in a complete loss of your investment. You could lose all or part
of your investment. For more information, see Where You Can Find More
Information.
Risks Related to This Offering
Management will have broad discretion as to the use of
the proceeds from this offering, and we may not use the proceeds effectively.
Subject to certain limited exceptions set forth in the offering
documents, we have agreed to use the net proceeds from this offering solely for
general corporate purposes. Our management will have significant flexibility in
applying the net proceeds of this offering for general corporate purposes. You
will be relying on the judgment of our management with regard to the use of
these net proceeds, and subject to any agreed upon contractual restrictions
under the terms of the subscription agreements, you will not have the
opportunity, as part of your investment decision, to assess whether the proceeds
are being used appropriately. It is possible that the net proceeds will be
invested in a way that does not yield a favorable, or any, return for us. The
failure of our management to use such funds effectively could have a material
adverse effect on our business, financial condition, operating results and cash
flow.
You will experience immediate dilution in the book value
per share of the common stock you purchase.
Because the price per share of our Common Stock being offered
is higher than the book value per share of our Common Stock, you will suffer
substantial dilution in the net tangible book value of the common stock you
purchase in this offering. Based on an offering price of $18.24 per Share,
if you purchase the Shares offered in this offering, you will suffer immediate
and substantial dilution per Share in the net tangible book value of the common
stock.
S-5
There is no public market for the warrants to purchase
common stock in this offering.
There is no established public trading market for the Warrants
being sold in this offering, and we do not expect a market to develop. In
addition, we do not intend to apply to list the warrants on any securities
exchange. Without an active market, the liquidity of the warrants will be
limited.
Future sales or other dilution of our equity could
depress the market price of our Common Stock.
Sales of our Common Stock, preferred stock, warrants, debt
securities or any combination of the foregoing in the public market, or the
perception that such sales could occur, could negatively impact the price of our
Common Stock. We have a number of institutional and individual shareholders that
own significant blocks of our Common Stock. If one or more of these shareholders
were to sell large portions of their holdings in a relatively short time, for
liquidity or other reasons, the prevailing market price of our Common Stock
could be negatively affected.
In addition, the issuance of additional shares of our Common
Stock, securities convertible into or exercisable for our Common Stock, other
equity-linked securities, including preferred stock or warrants, debt securities
or any combination of the securities pursuant to this prospectus will dilute the
ownership interest of our common shareholders and could depress the market price
of our Common Stock and impair our ability to raise capital through the sale of
additional equity securities.
We may need to seek additional capital. If this additional
financing is obtained through the issuance of equity securities, debt
convertible into equity or options or warrants to acquire equity securities, our
existing shareholders could experience significant dilution upon the issuance,
conversion or exercise of such securities.
Holders of the Warrants will have no rights as common
stockholders until they acquire our Common Stock.
Until you acquire shares of our Common Stock upon exercise of
any of the Warrants, you will have no rights with respect to our Common Stock.
Upon exercise of any Warrants held, you will be entitled to exercise the rights
of a common stockholder only as to matters for which the record date occurs
after the exercise date.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, accompanying prospectus and the
documents that we have filed with the SEC that are incorporated by reference in
this prospectus supplement contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Exchange Act and may involve material
risks, assumptions and uncertainties. Forward-looking statements typically are
identified by the use of terms such as may, will, should, believe,
might, expect, anticipate, intend, plan, estimate, and similar
words, although some forward-looking statements are expressed differently.
Any forward looking statements contained in this prospectus
supplement, accompanying prospectus and the documents that we have filed with
the SEC that are incorporated by reference in this prospectus supplement are
only estimates or predictions of future events based on information currently
available to our management and managements current beliefs about the potential
outcome of future events. Whether these future events will occur as management
anticipates, whether we will achieve our business objectives, and whether our
revenues, operating results, or financial condition will improve in future
periods are subject to numerous risks. There are a number of important factors
that could cause actual results to differ materially from the results
anticipated by these forward-looking statements. These important factors include
those that we discuss under the heading Risk Factors and in other sections of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as
well as in our other reports filed from time to time with the SEC that are
incorporated by reference into this prospectus supplement and the accompanying
prospectus. You should read these factors and the other cautionary statements
made in this prospectus supplement, the accompanying prospectus and in the
documents we incorporate by reference into this prospectus supplement and the
accompanying prospectus as being applicable to all related forward-looking
statements wherever they appear in this prospectus supplement or the documents
we incorporate by reference into this prospectus supplement and the accompanying
prospectus. If one or more of these factors materialize, or if any underlying
assumptions prove incorrect, our actual results, performance or achievements may
vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by law.
S-6
USE OF PROCEEDS
We estimate that the net proceeds we will receive from this
offering will be approximately $10,292,900, after deducting estimated offering
expenses of approximately $760,540. We will not receive any proceeds from the
sale of common stock issuable upon exercise of the Warrants that we are offering
unless and until such Warrants are exercised. If all of the Warrants are fully
exercised for cash, we would receive additional aggregate proceeds of
$2,072,520.
We intend to use the net proceeds from this offering for
general corporate purposes and working capital, including for research and
development, general and administrative expenses, and potential ordinary course
acquisitions of technologies that complement our business. In the Securities
Purchase Agreement we have entered into with the institutional investors in this
offering, we have, subject to certain exceptions, specifically agreed not to use
the proceeds of this offering to satisfy any existing debt (other than ordinary
course trade payables), to redeem any of our outstanding securities, or to
settle any outstanding litigation.
We have not specifically identified the precise amounts we will
spend on each of these areas or the timing of these expenditures. The amounts
actually expended for each purpose may vary significantly depending upon
numerous factors, including assessments of potential market opportunities and
competitive developments. In addition, expenditures may also depend on the
establishment of new collaborative arrangements with other companies, the
availability of other financing, and other factors. Subject to any agreed upon
contractual restrictions under the terms of the purchase agreement, our
management will have some discretion in the application of the net proceeds from
this offering. Our stockholders may not agree with the manner in which our
management chooses to allocate and spend the net proceeds. Moreover, our
management may use the net proceeds for purposes that may not result in our
being profitable or increase our market value.
DESCRIPTION OF THE SECURITIES WE ARE OFFERING
In this offering, we are offering a maximum of 606,000 units,
which consists of 606,000 Shares and Warrants to purchase, in the aggregate, an
additional 90,900 shares of our Common Stock. This prospectus supplement also
relates to the offering of 90,900 shares of our Common Stock issuable upon
exercise, if any, of the Warrants.
The Shares and Warrants will be sold together as a unit
consisting of one Share and a Warrant (to purchase 0.15 shares of our Common
Stock for each Share included in the unit).
We are offering the units at a negotiated price of
$
18.24 per unit. Units will not be issued or certificated. The Shares and
the Warrants are immediately separable and will be issued separately.
Common Stock
A description of the Shares of Common Stock we are offering
pursuant to this prospectus supplement is set forth under the heading
Description of Common Stock, starting on page 5 of the accompanying
prospectus. As of March 17, 2014, we had 40,105,321 shares of outstanding Common
Stock.
Warrants
The material terms and provisions of the Warrants being
offered pursuant to this prospectus supplement and the accompanying prospectus
are summarized below. The summary is subject to, and qualified in its entirety
by, the form of warrant which will be provided to each investor in this offering
and will be filed as an exhibit to a Current Report on Form 8-K with the SEC in
connection with this offering.
The Warrants are exercisable for an aggregate of 90,900 shares
of Common Stock at an exercise price of
$
22.80 per share. The Warrants
have a term of eighteen months and are exercisable by the holders at any time
after the date of issuance.
The exercise price and the number of shares issuable upon
exercise of the Warrants are subject to an adjustment upon the occurrence of
certain events, including, but not limited to, stock splits or dividends,
business combinations, sale of assets, similar recapitalization transactions, or
other similar transactions. The exercise price the Warrants are also subject to an adjustment in the event that the Company issues
or is deemed to issue shares of Common Stock for less than the applicable
exercise price of such Warrants.
S-7
Holders of the Warrants may exercise their Warrants to purchase
shares of our Common Stock by delivering an exercise notice, appropriately
completed and duly signed. Payment of the exercise price for the number of
shares for which the warrant is being exercised is required to be delivered
within one trading day after exercise of a Warrant. In the event that the
registration statement relating to such warrant shares is not effective, a
holder of warrants will have the right to exercise its Warrants for a net number
of warrant shares pursuant to the cashless exercise procedures specified in the
Warrants. The Warrants may be exercised in whole or in part, and any portion of
a warrant not exercised prior to the termination date shall be and become void
and of no value. The absence of an effective registration statement or
applicable exemption from registration does not alleviate our obligation to
deliver Common Stock issuable upon exercise of a Warrant.
Upon the holders exercise of a Warrant, we will issue the
shares of common stock issuable upon exercise of such Warrant within three
trading days of our receipt of notice of exercise.
Underlying Shares
The shares of Common Stock issuable on exercise of the Warrants
will be, when issued in accordance with the Warrants, duly and validly
authorized, issued and fully paid and non-assessable. We will authorize and
reserve at least that number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon exercise of all outstanding Warrants.
Fundamental Transaction
If, at any time the Warrants are outstanding, we consummate any
fundamental transaction, as described in the Warrants and which generally
includes, but is not limited to the following: (i) any consolidation or merger
into another corporation, (ii) the consummation of a transaction whereby another
entity acquires more than 50% of our outstanding voting stock, (iii) or the sale
of all or substantially all of our assets, the successor entity must assume in
writing all of our obligations to the holders of the Warrants.
Additionally, in the event of a fundamental transaction, each
Warrant holder will have the right to require us, or our successor, to
repurchase its Warrants for an amount of cash equal to the Black-Scholes value
of the remaining unexercised portion of the Warrant.
Limitations on Exercise
The exercisability of the Warrants may be limited in certain
circumstances if, upon exercise, the holder or any of its affiliates would
beneficially own more than 4.99% of our Common Stock. Further, the
exercisability of the Warrants are subject to compliance with principal market
(NASDAQ) regulations.
No Stockholder Rights
The holder of a Warrant will not possess any rights as a
stockholder under the Warrant until the holder exercises such Warrant.
No Market for Warrants
There is no established public trading market for the Warrants,
and we do not expect a market to develop. We do not intend to apply to list the
Warrants on any securities exchange. Without an active market, the liquidity of
the Warrants will be limited. In addition, in the event our Common Stock price
does not exceed the per share exercise price of the Warrants during the period
when the Warrants are exercisable, the Warrants will not have any value.
S-8
PLAN OF DISTRIBUTION
Placement Agent Agreement
We have entered into a Placement Agent Agreement (the
Placement Agent Agreement), dated as of June 18, 2013, with FT Global Capital,
pursuant to which FT Global Capital agreed to act as our exclusive placement
agent in connection with this offering. The Placement Agent Agreement with FT
Global Capital was attached as Exhibit 10.2 to a Form 8-K, filed June 26, 2013.
The placement agent is not purchasing or selling any units
offered by this prospectus supplement, nor is it required to arrange the
purchase or sale of any specific number or dollar amount of the units, but the
placement agent has agreed to use its best efforts to arrange for the direct
sale of all of the securities in this offering pursuant to this prospectus
supplement and the accompanying prospectus. There is no requirement that any
minimum number of securities or dollar amount of units be sold in this offering
and there can be no assurance that we will sell all or any of the units being
offered. Therefore, we will enter into a purchase agreement directly with each
investor in connection with this offering and we may not sell the entire amount
of units offered pursuant to this prospectus supplement. We have agreed to
indemnify the placement agent and purchasers against liabilities under the
Securities Act and to contribute to payments that the placement agent may be
required to make in respect of such liabilities.
We entered into a Securities Purchase Agreement, dated as of
March 19, 2014 with the institutional investors purchasing the units being
issued pursuant to this offering. The Securities Purchase Agreement is included
as an exhibit to our Current Report on Form 8-K filed with the SEC in connection
with this offering. The closing of this offering will take place on or before
March 24, 2014, and the following will occur:
-
we will receive funds in the amount of the aggregate purchase price;
-
the placement agent will receive the placement agent fees and the
Placement Agent Warrants in accordance with the terms of the Placement Agent
Agreement; and
-
we will deliver the units, consisting of the Shares and the Warrants.
We have also agreed to indemnify the investors against certain
losses resulting from our breach of any of our representations, warranties, or
covenants under agreements with the purchasers as well as under certain other
circumstances described in the Securities Purchase Agreement.
In connection with this offering, the Placement Agent may
distribute this prospectus supplement and the accompanying prospectus
electronically.
The placement agent may be deemed to be an underwriter within
the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, or
the Securities Act, and any fees or commissions received by it and any profit
realized on the resale of securities sold by it while acting as principal might
be deemed to be underwriting discounts or commissions under the Securities Act.
As an underwriter, the placement agent would be required to comply with the
requirements of the Securities Act and the Exchange Act, including, without
limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and
Regulation M under the Exchange Act. These rules and regulations may limit the
timing of purchases and sales of shares of common stock and warrants by the
placement agent. Under these rules and regulations, the placement agent: (i) may
not engage in any stabilization activity in connection with our securities; and
(ii) may not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities, other than as permitted under the
Exchange Act, until it has completed its participation in the distribution.
Fees
In exchange for these placement agent services, we have agreed
to pay the placement agent upon the closing of this offering (i) a cash fee
equal to 6% of the aggregate purchase price of the units offered under this
prospectus supplement and accompanying prospectus; and (ii) to the extent
permitted pursuant to FINRA Rule 5110(f)(K), a cash fee equal to 6% of the cash
proceeds received from a cash exercise of the Warrants offered under this
prospectus supplement and accompanying prospectus. In addition, we agreed
to pay additional compensation in the form of warrants (the Placement Agent
Warrants) to purchase that number of shares which equals 6% of the aggregate
number of Shares included in the units sold in this offering at an exercise
price of 120% of the Share price. Under the Placement Agent Agreement, the
placement agent is also entitled to additional tail compensation for any
financings consummated within the twelve (12) month period following June 18,
2013 to the extent that such financing is provided to us by investors that the
Placement Agent had introduced to us. The Placement Agent Warrants issuable to
the placement agent shall generally be on the same terms and conditions as the
Warrants offered pursuant to this prospectus supplement, provided that the
exercise price shall be 125% of the Share price and the Placement Agent Warrants
shall not be exercisable for six months and shall be exercisable for eighteen
months thereafter.
S-9
Pursuant to FINRA Rule 5110(g), with limited exceptions,
neither the Placement Agent Warrants nor any shares issued upon exercise of the
Placement Agent Warrants shall be sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale, derivative, put, or
call transaction that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately following the date
of effectiveness or commencement of sales of this offering.
We have agreed to indemnify the placement agent and purchasers
against liabilities under the Securities Act and to contribute to payments that
the placement agent may be required to make in respect of such liabilities.
The following table shows the per unit and total placement
agent fees we will pay to the placement agent in connection with the sale of
units offered pursuant to this prospectus supplement assuming the purchase of
all of the units offered hereby:
|
|
Total
|
|
Aggregate Offering Price of units
|
$
|
11,053,440
|
|
Placement agency fees*
|
$
|
660,540
|
|
* Does not include Placement Agent Warrants or other additional
compensation received by the placement agent, including compensation for any
tail financing for the twelve month period following June 18, 2013 or
compensation that may be issued to the Placement Agent upon exercise of the
Warrants.
Because there is no minimum offering amount in this offering,
the actual total placement agent fees are not presently determinable and may be
substantially less than the maximum amount set forth above.
We estimate the total offering expenses of this offering that
will be payable by us, excluding the placement agent fees, will be approximately
$
100,000, which include legal and printing costs, various other fees and
reimbursement of the placement agents expenses. At the closing, our transfer
agent will credit the Shares to the respective accounts of the purchasers. We
will mail the Warrants directly to the purchasers at their respective addresses
set forth in the Securities Purchase Agreement.
The foregoing does not purport to be a complete statement of
the terms and conditions of the Placement Agent Agreement and the Securities
Purchase Agreement. Copies of the each have previously been included, or will be
included, as exhibits to our current reports on Form 8-K that have been or will
be filed with the SEC and incorporated by reference into the Registration
Statement of which this prospectus supplement forms a part.
S-10
LEGAL MATTERS
Selected legal matters with respect to the validity of the
securities offered by this prospectus supplement will be passed upon for us by
McKenna Long & Aldridge LLP. Certain legal matters will be passed upon for
the placement agent by Schiff Hardin LLP, Washington, DC.
EXPERTS
The consolidated financial statements of Kandi Technologies
Group, Inc. and its subsidiaries as of December 31, 2013 and 2012, and for each
of the years in the two-year period ended December 31, 2013, have been
incorporated by reference in this prospectus supplement and the accompanying
prospectus in reliance on the report of Albert Wong & Co., an independent
registered public accounting firm, and upon the authority of said firm as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3
under the Securities Act with respect to the securities we are offering under
this prospectus supplement. This prospectus supplement and the accompanying
prospectus do not contain all of the information set forth in the registration
statement and the exhibits to the registration statement.
For further information with respect to us and the securities
we are offering under this prospectus supplement, we refer you to the
registration statement and the exhibits and schedules filed as a part of the
registration statement. Statements contained in this prospectus supplement as to
the contents of any contract or any other document referred to are not
necessarily complete, and in each instance, we refer you to the copy of the
contract or other document filed as an exhibit to the registration statement.
Each of these statements is qualified in all respects by this reference. We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. Our SEC filings are available to the public over the Internet at
the SEC's website at http:/www.sec.gov. You may also read and copy any document
we file at the SEC's public reference room, 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room. Because our Common Stock is listed on
the NASDAQ Global Select Market , you may also inspect reports, proxy statements
and other information at the offices of the NASDAQ Global Select Market
Information found on our website is not part of this prospectus supplement or
any other report we file with or furnish to the Securities and Exchange
Commission.
IMPORTANT INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information
we file with them into this prospectus supplement. This means that we can
disclose important information about us and our financial condition to you by
referring you to another document filed separately with the SEC instead of
having to repeat the information in this prospectus supplement. The information
incorporated by reference is considered to be part of this prospectus supplement
and later information that we file with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act until this offering is completed:
-
our Annual Report on Form 10-K for the year ended December 31, 2013;
-
our Current Reports on Form 8-K filed on January 16, 2014, March 18, 2014
and March 19, 2014; and
-
the description of our Common Stock contained in the registration
statement on Form 8-A12B, dated March 17, 2008, File No. 001-33997, and any
other amendment or report filed for the purpose of updating such description.
Additionally, all reports and other documents subsequently
filed by us pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act
after the date of this prospectus supplement and prior to the termination or
completion of this offering, shall be deemed to be incorporated by reference in
this prospectus supplement and to be part hereof from the date of filing of such
reports and other documents. Any information that we subsequently file with the
SEC that is incorporated by reference as described above will automatically
update and supersede any previous information that is part of this prospectus
supplement.
S-11
You may request a copy of the filings incorporated herein by
reference, including exhibits to such documents that are specifically
incorporated by reference, at no cost, by writing or calling us at the following
address or telephone number:
Kandi Technologies Group, Inc
.
Jinhua City
Industrial Zone
Jinhua, Zhejiang Province
Peoples Republic of China
Post Code 321016
Attn: Zhu Xiaoying, Chief Financial Officer
+86-579-82239856
Statements contained in this prospectus as to the contents of
any contract or other documents are not necessarily complete, and in each
instance you are referred to the copy of the contract or other document filed as
an exhibit to the registration statement or incorporated herein, each such
statement being qualified in all respects by such reference and the exhibits and
schedules thereto.
S-12
PRELIMINARY PROSPECTUS
Kandi Technologies Group, Inc.
$60,000,000
Common Stock
Preferred Stock
Debt
Securities
Warrants
Units
__________________________________
We may offer from time to time shares of our common stock, par
value $0.001 (Common Stock), preferred stock, senior debt securities (which
may be convertible into or exchangeable for common stock), subordinated debt
securities (which may be convertible into or exchangeable for common stock),
warrants and units that include any of these securities. The aggregate initial
offering price of the securities sold under this prospectus will not exceed
$60,000,000. We will offer the securities in amounts, at prices and on terms to
be determined at the time of the offering.
Our Common Stock is quoted on the NASDAQ Global Market under
the symbol KNDI. As of April 17, 2013, the aggregate market value of our
outstanding Common Stock held by non-affiliates was approximately $73,464,636
based on 32,539,867 shares of outstanding Common Stock, of which 13,358,500
shares are held by affiliates, and a price of $3.83 per share, which was the
last reported sale price of our Common Stock as quoted on NASDAQ Global Market
on that date. As of the date of this prospectus, we have not offered any
securities during the past twelve months pursuant to General Instruction I.B.6
of Form S-3. You are urged to obtain current market quotations of our Common
Stock.
Each time we sell securities hereunder, we will attach a
supplement to this prospectus that contains specific information about the terms
of the offering, including the price at which we are offering the securities to
the public. The prospectus supplement may also add, update or change information
contained or incorporated in this prospectus. You should read this prospectus
and the applicable prospectus supplement carefully before you invest in our
securities.
The securities hereunder may be offered directly by us, through
agents designated from time to time by us or to or through underwriters or
dealers. If any agents, dealers or underwriters are involved in the sale of any
securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth, or will be
calculable from the information set forth, in the applicable prospectus
supplement. See the section entitled About This Prospectus for more
information.
__________________________________
Investing in our securities involves certain risks. See
Risk Factors
beginning on page 2 of this prospectus. In
addition, see
Risk Factors
in our Annual Report on Form
10-K for the year ended December 31, 2012, which has been filed with the Securities and
Exchange Commission and is incorporated by reference into this prospectus. You
should carefully read and consider these risk factors before you invest in our
securities.
__________________________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is April 19, 2013
.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
|
2
|
THE COMPANY
|
2
|
RISK FACTORS
|
3
|
FORWARD-LOOKING STATEMENTS
|
4
|
USE OF PROCEEDS
|
5
|
DESCRIPTION OF CAPITAL STOCK
|
5
|
DESCRIPTION OF COMMON STOCK
|
5
|
DESCRIPTION OF PREFERRED STOCK
|
6
|
DESCRIPTION OF DEBT
SECURITIES
|
6
|
DESCRIPTION OF WARRANTS
|
8
|
DESCRIPTION OF UNITS
|
10
|
INCOME TAX CONSIDERATIONS
|
10
|
PLAN OF DISTRIBUTION
|
14
|
LEGAL MATTERS
|
15
|
EXPERTS
|
15
|
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
|
16
|
WHERE YOU CAN FIND MORE
INFORMATION
|
16
|
The distribution of this prospectus may be restricted by law in
certain jurisdictions. You should inform yourself about and observe any of these
restrictions. If you are in a jurisdiction where offers to sell, or
solicitations of offers to purchase, the securities offered by this document are
unlawful, or if you are a person to whom it is unlawful to direct these types of
activities, then the offer presented in this prospectus does not extend to
you.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
the offering and the offered securities. This prospectus, together with
applicable prospectus supplements, any information incorporated by reference,
and any related free writing prospectuses we file with the SEC, includes all
material information relating to these offerings and securities. We may also
add, update or change in the prospectus supplement any of the information
contained in this prospectus or in the documents that we have incorporated by
reference into this prospectus, including without limitation, a discussion of
any risk factors or other special considerations that apply to these offerings
or securities or the specific plan of distribution.
We have not authorized anyone to give any information or make
any representation about us that is different from, or in addition to, that
contained in this prospectus, including in any of the materials that we have
incorporated by reference into this prospectus, any accompanying prospectus
supplement, and any free writing prospectus prepared or authorized by us.
Therefore, if anyone does give you information of this sort, you should not rely
on it as authorized by us. You should rely only on the information contained or
incorporated by reference in this prospectus and any accompanying prospectus
supplement.
You should not assume that the information contained in this
prospectus and any accompanying supplement to this prospectus is accurate on any
date subsequent to the date set forth on the front of the document or that any
information we have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference, even though this
prospectus and any accompanying supplement to this prospectus is delivered or
securities are sold on a later date.
Neither the delivery of this
prospectus, nor any sale made hereunder, shall under any circumstances create
any implication that there has been no change in our affairs since the date
hereof or that the information incorporated by reference herein is correct as of
any time subsequent to the date of such information.
1
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission, or the SEC, using a shelf
registration process. Under this shelf registration process, we may, from time
to time, offer and sell any combination of the securities described in this
prospectus in one or more offerings. The aggregate initial offering price of all
securities sold under this prospectus will not exceed $60,000,000.
This prospectus provides certain general information about the
securities that we may offer hereunder. Each time we sell securities, we will
provide a prospectus supplement that will contain specific information about the
terms of the offering and the offered securities. The prospectus supplement will
contain the specific information about the terms of the offering. In each
prospectus supplement, we will include the following information:
-
the number and type of securities that we propose to sell;
-
the public offering price;
-
the names of any underwriters, agents or dealers through or to which the
securities will be sold;
-
any compensation of those underwriters, agents or dealers;
-
any additional risk factors applicable to the securities or our business
and operations; and
-
any other material information about the offering and sale of the
securities.
In addition, the prospectus supplement may also add, update or
change the information contained or incorporated in this prospectus. The
prospectus supplement will supersede this prospectus to the extent it contains
information that is different from, or that conflicts with, the information
contained or incorporated in this prospectus. You should read and consider all
information contained in this prospectus and any accompanying prospectus
supplement in making your investment decision.
You should also read and
consider the information contained in the documents identified under the heading
Incorporation of Certain Documents by Reference and Where You Can Find More
Information in this prospectus
.
Unless the context otherwise requires, the terms KNDI, the
Company, we, us, and our in this prospectus each refer to Kandi
Technologies Group, Inc., our subsidiaries, and our consolidated entities.
China and the PRC refer to the Peoples Republic of China.
THE COMPANY
We were incorporated under the laws of the State of Delaware on
March 31, 2004. On August 13, 2007, we changed our name from Stone Mountain
Resources, Inc. to Kandi Technologies, Corp. On December 21, 2012, we changed
our name to Kandi Technologies Group, Inc. Headquartered in the Zhejiang
Province, we are one of Chinas leading producers and manufacturers of popular
off-road vehicles, including go-karts and a variety of other specialty vehicles,
including all-terrain vehicles and specialized utility vehicles for the PRC and
global export markets. In connection with our strategic objective of becoming a
world leader in electric vehicles manufacturing and related services, we have
increased our focus on fuel efficient vehicles, including all-electric vehicles,
with a particular focus on expanding our domestic market share in China.
Our Business
Our primary business is designing, developing, manufacturing,
and commercializing all-terrain vehicles (ATVs), go-karts, and specialized
automobiles, such as electric vehicles (EVs) for the PRC and the global
markets.
Our products include off-road vehicles (which include ATVs,
utility vehicles (UTVs), and go-karts), motorcycles, refitted cars and
super-mini-cars.
|
|
Year Ended December 31
,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Units
|
|
|
Revenue
|
|
|
Units
|
|
|
Revenue
|
|
ATVs
|
|
14,467 $
|
|
|
4,850,425
|
|
|
9,958 $
|
|
|
4,850,425
|
|
Super-Mini-Cars*
|
|
3,915
|
|
|
6,253,517
|
|
|
1,077
|
|
|
6,253,517
|
|
Go-Karts
|
|
34,517
|
|
|
22,923,669
|
|
|
25,757
|
|
|
22,923,669
|
|
UTVs
|
|
93
|
|
|
2,696,106
|
|
|
1,198
|
|
|
2,696,106
|
|
Three-Wheeled Motorcycles
|
|
1,060
|
|
|
1,592,770
|
|
|
782
|
|
|
1,592,770
|
|
Refitted Cars
|
|
115
|
|
|
1,860,661
|
|
|
70
|
|
|
1,860,661
|
|
Auto Generator
|
|
93,881
|
|
|
3,517,237
|
|
|
-
|
|
|
-
|
|
Total
|
|
148,048
|
|
$
|
64,513,760
|
|
|
38,842
|
|
$
|
40,177,148
|
|
*Includes both COCO and EV vehicles in 2011 and only EV
vehicles in 2012.
2
Our current business is primarily conducted through our
wholly-owned subsidiaries, Continental Development Limited, including
Continental Development Limiteds wholly-owned subsidiary, Zhejiang Kandi
Vehicles Co., Ltd., and Zhejiang Kandi Vehicles Co., Ltd.s subsidiaries, Jinhua
Three Parties New Energy Vehicles Service Co., Ltd., Jinhua Kandi New Energy
Vehicles Co., Ltd., Kandi Electric Vehicles (Changxing) Co., Ltd. and Yongkang
Scrou Electric. Co., Ltd.
Jinhua Three Parties New Energy Vehicles Service Co., Ltd. was
formed by a joint venture among the State Grid Power Corporation, Tianneng Power
International, Inc. and Zhejiang Kandi Vehicles Co., Ltd. The joint venture
established the first Chinese electric super-mini automobile battery replacement
service provider. We own a 30% ownership interest in Jinhua Three Parties New
Energy Vehicles Service Co., Ltd.
Jinhua Kandi New Energy Vehicles Co., Ltd. was formed as a
joint venture between Zhejiang Kandi Vehicles Co., Ltd. and Mr. Xiaoming Hu, our
CEO and Chairman of our Board of Directors. Kandi New Energy Vehicles Co., Ltd.
was established to comply with Chinese regulations that provide that a foreign
investor can have no more than 50% ownership interest in an automobile
manufacturing company located in China whose primary objective is to sell
automobiles in China. In connection with complying with these regulations, Mr.
Hu, a Chinese citizen, and Zhejiang Kandi Vehicles Co., Ltd., a foreign
investment entity, each own 50% of Kandi New Energy Vehicles Co., Ltd. Zhejiang
Kandi Vehicles Co., Ltd. made its capital contribution in kind, and Mr. Hu made
his capital contribution in cash, using proceeds from a loan made by Zhejiang
Kandi Vehicles Co., Ltd.
Mr. Hus equity interest in Kandi New Energy Vehicles Co., Ltd.
has been placed in escrow and trust with Zhejiang Kandi Vehicles Co., Ltd.
Therefore, Zhejiang Kandi Vehicles Co., Ltd. effectively controls 100% of Kandi
New Energy Vehicles Co., Ltd. All of the profits of Kandi New Energy Vehicles
Co., Ltd. will be distributed to Zhejiang Kandi Vehicles Co., Ltd.
On April 25 2012, we completed our acquisition of KO NGA
Investment Limited and its subsidiaries, K S Asia Limited Group Limited,
Yongkang K S Electric Limited and Yongkang Scrou Electric Co. (Yongkang
Scrou). Yongkang Scrou manufactures various auto generators. On June 29, 2012,
in connection with the completion our internal reorganization, Yongkang Scrou
became a wholly owned subsidiary of the Company.
In March 2013, Zhejiang Kandi Vehicles Co., Ltd. established
Kandi Electric Vehicles (Changxing) Co., Ltd. in Changxing (National) Economic
and Technological Development Zone to meet the requirements of the cooperation
agreement with Geely Automobile Holdings Ltd.
Our Corporate Information
We are headquartered in the Zhejiang Province in China. Our
principal executive offices are located at Jinhua City Industrial Zone, Jinhua,
Zhejiang Province, Peoples Republic of China, Post Code 321016, and our
telephone number at this location is +86-579-82239856. Our website address is
www.en.chinakandi.com. Information contained on our website is not incorporated
by reference into this prospectus and you should not consider information on our
website to be part of this prospectus.
RISK FACTORS
An investment in our securities involves a high degree of risk.
Before making any investment decision, you should carefully consider the risk
factors set forth below, under the caption Risk Factors in any applicable
prospectus supplement and under the caption Risk Factors in our most recent
annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q,
which are incorporated by reference in this prospectus, as well as in any
applicable prospectus supplement, as updated by our subsequent filings under the
Securities Exchange Act of 1934, as amended (the Exchange Act).
3
These risks could materially affect our business, results of
operation or financial condition and affect the value of our securities.
Additional risks and uncertainties that are not yet identified may also
materially harm our business, operating results and financial condition and
could result in a complete loss of your investment. You could lose all or part
of your investment. For more information, see Where You Can Find More
Information.
Risks Related to Our Securities and the Offering
Future sales or other dilution of our equity could
depress the market price of our Common Stock.
Sales of our Common Stock, preferred stock, warrants, debt
securities or any combination of the foregoing in the public market, or the
perception that such sales could occur, could negatively impact the price of our
Common Stock. We have a number of institutional and individual shareholders that
own significant blocks of our Common Stock. If one or more of these shareholders
were to sell large portions of their holdings in a relatively short time, for
liquidity or other reasons, the prevailing market price of our Common Stock
could be negatively affected.
In addition, the issuance of additional shares of our Common
Stock, securities convertible into or exercisable for our Common Stock, other
equity-linked securities, including preferred stock or warrants, debt securities
or any combination of the securities pursuant to this prospectus will dilute the
ownership interest of our common shareholders and could depress the market price
of our Common Stock and impair our ability to raise capital through the sale of
additional equity securities.
We may need to seek additional capital. If this additional
financing is obtained through the issuance of equity securities, debt
convertible into equity or options or warrants to acquire equity securities, our
existing shareholders could experience significant dilution upon the issuance,
conversion or exercise of such securities.
Our management will have broad discretion over the use of
the proceeds we receive from the sale our securities pursuant to this prospectus
and might not apply the proceeds in ways that increase the value of your
investment.
Our management will have broad discretion to use the net
proceeds from any offerings under this prospectus, and you will be relying on
the judgment of our management regarding the application of these proceeds.
Except as described in any prospectus supplement or in any related free writing
prospectus that we may authorize to be provided to you, the net proceeds
received by us from our sale of the securities described in this prospectus will
be added to our general funds and will be used for general corporate purposes.
Our management might not apply the net proceeds from offerings of our securities
in ways that increase the value of your investment and might not be able to
yield a significant return, if any, on any investment of such net proceeds. You
may not have the opportunity to influence our decisions on how to use such
proceeds.
FORWARD-LOOKING STATEMENTS
Some of the statements contained or incorporated by reference
in this prospectus may be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the Securities Act),
and Section 21E of the Exchange Act and may involve material risks, assumptions
and uncertainties. Forward-looking statements typically are identified by the
use of terms such as may, will, should, believe, might, expect,
anticipate, intend, plan, estimate and similar words, although some
forward-looking statements are expressed differently.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, these statements are not guarantees
of future performance and involve certain risks and uncertainties that are
difficult to predict and which may cause actual outcomes and results to differ
materially from what is expressed or forecasted in such forward-looking
statements. These forward-looking statements speak only as of the date on which
they are made and except as required by law, we undertake no obligation to
publicly release the results of any revision or update of these forward-looking
statements, whether as a result of new information, future events or otherwise.
If we do update or correct one or more forward-looking statements, you should
not conclude that we will make additional updates or corrections with respect
thereto or with respect to other forward-looking statements. A detailed
discussion of risks and uncertainties that could cause actual results and events
to differ materially from our forward-looking statements is included in our periodic reports filed
with the SEC and in the Risk Factors section of this prospectus.
4
USE OF PROCEEDS
Except as may be stated in the applicable prospectus
supplement, we intend to use the net proceeds we receive from the sale of the
securities offered by this prospectus for general corporate purposes, which may
include, among other things, repayment of debt, repurchases of common stock,
capital expenditures, the financing of possible acquisitions or business
expansions, increasing our working capital and the financing of ongoing
operating expenses and overhead.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of our capital stock and certain
provisions of our certificate of incorporation and bylaws. This summary does not
purport to be complete and is qualified in its entirety by the provisions of our
Certificate of Incorporation, as amended, our Amended and Restated Bylaws, and
applicable provisions of the Delaware General Corporation Law (the DGCL).
See Where You Can Find More Information elsewhere in this
prospectus for information on where you can obtain copies of our Certificate of
Incorporation and Amended and Restated Bylaws, which have been filed with and
are publicly available from the SEC
Our authorized capital stock consists of 100,000,000 shares of
Common Stock, par value $0.001, and 10,000,000 shares of preferred stock, par
value $0.001.
DESCRIPTION OF COMMON STOCK
As of April 17, 2013, there were 32,539,867 shares of our Common
Stock outstanding, held by approximately twenty-four stockholders of
record.
Our Common Stock is currently traded on the NASDAQ Global
Market under the symbol KNDI.
The holders of our Common Stock are entitled to one vote per
share on all matters submitted to a vote of our stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election. The holders of outstanding shares of Common
Stock are entitled to receive ratably any dividends declared by our board of
directors out of assets legally available. Upon our liquidation, dissolution or
winding up, holders of our Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preference of
any then outstanding shares of preferred stock. Holders of Common Stock have no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to our Common Stock. Corporate
Stock Transfer is the registrar and transfer agent of our Common Stock.
All issued and outstanding shares of Common Stock are fully
paid and nonassessable. Shares of our Common Stock that may be offered, from time to time, under this prospectus will be fully paid and nonassessable.
Delaware Anti-Takeover Provisions
We are subject to Section 203 of the Delaware General
Corporation Law, which prohibits a publicly-held Delaware corporation from
engaging in a business combination, except under certain circumstances, with
an interested stockholder for a period of three years following the date such
person became an interested stockholder unless:
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before such person became an interested stockholder, the
board of directors of the corporation approved either the business combination
or the transaction that resulted in the interested stockholder becoming an
interested stockholder;
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upon the consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding shares held by
directors who also are officers of the corporation and shares held by employee
stock plans; or
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at or following the time such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation authorized at a meeting of stockholders by the affirmative vote
of the holders of 66
2
/
3
% of the outstanding voting
stock of the corporation which is not owned by the interested stockholder.
The term interested stockholder generally is defined as a
person who, together with affiliates and associates, owns, or, within the three
years prior to the determination of interested stockholder status, owned, 15% or
more of a corporation's outstanding voting stock. The term business
combination includes mergers, asset or stock sales and other similar
transactions resulting in a financial benefit to an interested stockholder.
Section 203 makes it more difficult for an interested stockholder to effect
various business combinations with a corporation for a three-year period. The
existence of this provision would be expected to have an anti-takeover effect
with respect to transactions not approved in advance by our board of directors,
including discouraging attempts that might result in a premium over the market
price for the shares of common stock held by stockholders. Presently, we have
not opted out of this provision.
DESCRIPTION OF PREFERRED STOCK
As of April 17, 2013, no shares of preferred stock had been
issued or were outstanding.
Our board of directors has the authority to issue up to
10,000,000 shares of preferred stock in one or more series and to determine the
rights and preferences of the shares of any such series without stockholder
approval, none of which are outstanding. Our board of directors may issue
preferred stock in one or more series and has the authority to fix the
designation and powers, rights and preferences and the qualifications,
limitations, or restrictions with respect to each class or series of such class
without further vote or action by the stockholders, unless action is required by
applicable law or the rules of any stock exchange on which our securities may be
listed. The ability of our board of directors to issue preferred stock without
stockholder approval could have the effect of delaying, deferring or preventing
a change of control of us or the removal of existing management. Further, our
board of director may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of our Common Stock. Additionally, the issuance of preferred
stock may have the effect of decreasing the market price of our Common Stock.
We will file as an exhibit to the Registration Statement of
which this prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the form of any certificate of designation that
describes the terms of the series of preferred stock we are offering before the
issuance of that series of preferred stock. This description include, but not be
limited to, the following: (i) the title and stated value, (ii) the number of
shares we are offering, (iii) the liquidation preference per share, (iv) the
purchase price, (v) the dividend rate, period and payment date and method of
calculation for dividends, (vi) whether dividends will be cumulative or
non-cumulative and, if cumulative, the date from which dividends will
accumulate, (vii) the provisions for a sinking fund, if any, (viii) the
provisions for redemption or repurchase, if applicable, and any restrictions on
our ability to exercise those redemption and repurchase rights, (ix) whether the
preferred stock will be convertible into our Common Stock, and, if applicable,
the conversion price, or how it will be calculated, and the conversion period,
(x) whether the preferred stock will be exchangeable into debt securities, and,
if applicable, the exchange price, or how it will be calculated, and the
exchange period, (xi) voting rights, if any, of the preferred stock, (x)
preemptive rights, if any, (xi) restrictions on transfer, sale or other
assignment, if any, (xii) a discussion of any material United States federal
income tax considerations applicable to the preferred stock, (xiii) the relative
ranking and preferences of the preferred stock as to dividend rights and rights
if we liquidate, dissolve or wind up our affairs, (xiv) any limitations on the
issuance of any class or series of preferred stock ranking senior to or on a
parity with the series of preferred stock as to dividend rights and rights if we
liquidate, dissolve or wind up our affairs and (xv) any other specific terms,
preferences, rights or limitations of, or restrictions on, the preferred
stock.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities, in one or more series, as either
senior or subordinated debt or as senior or subordinated convertible debt. When
we offer to sell debt securities, we will describe the specific terms of any
debt securities offered from time to time in a supplement to this prospectus,
which may supplement or change the terms
outlined below. Senior debt securities will be issued under one or more senior indentures, dated as of a date prior to such issuance, between us and a trustee to be named in a prospectus supplement, as amended or supplemented from time to time. Any
subordinated debt securities will be issued under one or more subordinated indentures, dated as of a date prior to such issuance, between us and a trustee to be named in a prospectus supplement, as amended or supplemented from time to time. The
indentures will be subject to and governed by the Trust Indenture Act of 1939, as amended.
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Before we issue any debt securities, the form of indentures will be filed with the SEC and incorporated by reference as an exhibit to the registration statement of which this prospectus is a part or as an exhibit to a current report on Form 8-K. For
the complete terms of the debt securities, you should refer to the applicable prospectus supplement and the form of indentures for those particular debt securities. We encourage you to read the applicable prospectus supplement and the form of
indenture for those particular debt securities before you purchase any of our debt securities.
We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:
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the title;
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whether or not such debt securities are guaranteed;
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the principal amount being offered, and if a series, the total amount authorized and the total amount outstanding;
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any limit on the amount that may be issued;
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whether or not we will issue the series of debt securities in global form, the terms and who the depositary will be;
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the maturity date;
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the annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for
determining such dates;
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whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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the terms of the subordination of any series of subordinated debt;
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the place where payments will be payable;
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restrictions on transfer, sale or other assignment, if any;
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our right, if any, to defer payment of interest and the maximum length of any such deferral period;
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the date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the terms of those redemption provisions;
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the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or at the holders option to purchase, the series of debt securities and the
currency or currency unit in which the debt securities are payable;
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any restrictions our ability and/or the ability of our subsidiaries to:
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pay dividends and make distributions in respect of our capital stock and
the capital stock of our subsidiaries;
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redeem capital stock;
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place restrictions on our subsidiaries ability to pay dividends, make
distributions or transfer assets;
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make investments or other restricted payments;
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sell or otherwise dispose of assets;
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enter into sale-leaseback transactions;
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engage in transactions with stockholders and affiliates;
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issue or sell stock of our subsidiaries; or
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effect a consolidation or merger;
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whether the indenture will require us to maintain any interest coverage,
fixed charge, cash flow-based, asset-based or other financial ratios;
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a discussion of any material United States federal income tax
considerations applicable to the debt securities;
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information describing any book-entry features;
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provisions for a sinking fund purchase or other analogous fund, if any;
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the denominations in which we will issue the series of debt securities;
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the currency of payment of debt securities if other than U.S. dollars and
the manner of determining the equivalent amount in U.S. dollars; and
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any other specific terms, preferences, rights or limitations of, or
restrictions on, the debt securities, including any additional events of
default or covenants provided with respect to the debt securities, and any
terms that may be required by us or advisable under applicable laws or
regulations.
Conversion or Exchange Rights
We will set forth in the prospectus supplement the terms on
which a series of debt securities may be convertible into or exchangeable for
our Common Stock or our other securities. We will include provisions as to
whether conversion or exchange is mandatory, at the option of the holder or at
our option. We may include provisions pursuant to which the number of shares of
our Common Stock or our other securities that the holders of the series of debt
securities receive would be subject to adjustment.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of Common Stock,
preferred stock and/or debt securities in one or more series. We may issue
warrants independently or together with Common Stock, preferred stock and/or
debt securities, and the warrants may be attached to or separate from these
securities. While the terms summarized below will apply generally to any
warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement. The terms of
any warrants offered under a prospectus supplement may differ from the terms
described below.
We will file as exhibits to the Registration Statement of which
this prospectus is a part, or will incorporate by reference from reports that we
file with the SEC, the form of warrant agreement, including a form of warrant
certificate, that describes the terms of the particular series of warrants we
are offering before the issuance of the
related series of warrants. The following summaries of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety by reference to, all the provisions of the warrant agreement and warrant
certificate applicable to the particular series of warrants that we may offer under this prospectus. We urge you to read the applicable prospectus supplements related to the particular series of warrants that we may offer under this prospectus, as
well as any related free writing prospectuses, and the complete warrant agreements and warrant certificates that contain the terms of the warrants.
8
General
We will describe in the applicable prospectus supplement the terms of the series of warrants being offered, including:
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the offering price and aggregate number of warrants offered;
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the currency for which the warrants may be purchased;
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if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
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if applicable, the date on and after which the warrants and the related securities will be separately transferable;
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in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such
exercise;
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in the case of warrants to purchase Common Stock or preferred stock, the number of shares of Common Stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon
such exercise;
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants;
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the terms of any rights to redeem or call the warrants;
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any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the dates on which the right to exercise the warrants will commence and expire;
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the manner in which the warrant agreements and warrants may be modified;
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a discussion of any material or special United States federal income tax consequences of holding or exercising the warrants;
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the terms of the securities issuable upon exercise of the warrants; and
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
Before exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including:
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in the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or
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in the case of warrants to purchase Common Stock or preferred stock, the right to receive dividends, if any, or payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any.
9
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities
that we specify in the applicable prospectus supplement at the exercise price
that we describe in the applicable prospectus supplement. Holders of the
warrants may exercise the warrants at any time up to the specified time on the
expiration date that we set forth in the applicable prospectus supplement. After
the close of business on the expiration date, unexercised warrants will become
void.
Holders of the warrants may exercise the warrants by delivering
the warrant certificate representing the warrants to be exercised together with
specified information, and paying the required amount to the warrant agent in
immediately available funds, as provided in the applicable prospectus
supplement. We will set forth on the reverse side of the warrant certificate and
in the applicable prospectus supplement the information that the holder of the
warrant will be required to deliver to the warrant agent.
If fewer than all of the warrants represented by the warrant
certificate are exercised, then we will issue a new warrant certificate for the
remaining amount of warrants. If we so indicate in the applicable prospectus
supplement, holders of the warrants may surrender securities as all or part of
the exercise price for warrants.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may
issue, in one more series, units consisting of Common Stock, preferred stock,
debt securities and/or warrants for the purchase of Common Stock, preferred
stock and/or debt securities in any combination. The applicable prospectus
supplement will describe: .
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the securities comprising the units, including whether and under what
circumstances the securities comprising the units may be separately traded;
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the terms and conditions applicable to the units, including a description
of the terms of any applicable unit agreement governing the units; and
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a description of the provisions for the payment, settlement, transfer or
exchange of the units.
INCOME TAX CONSIDERATIONS
Material United States Federal Income Tax
Considerations
1
General
The following is a general summary of certain material U.S.
federal income tax consequences to U.S. holders (as defined below) relating to
the purchase, ownership and disposition of shares of our Common Stock. This
discussion assumes that an investor will hold each share of our Common Stock
purchased as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the Code). This discussion does not
address all aspects of U.S. federal income taxation that may be relevant to an
investor in light of that investors particular circumstances. In addition, this
discussion does not address (i) U.S. federal non-income tax laws, such as estate
or gift tax laws, (ii) state, local or non-U.S. tax consequences, or (iii) the
special tax rules that may apply to certain investors, including, without
limitation, banks, insurance companies, financial institutions, broker-dealers,
taxpayers that have elected mark-to-market accounting, taxpayers subject to the
alternative minimum tax provisions of the Code, tax-exempt entities, governments
or agencies or instrumentalities thereof, regulated investment companies, real
estate investment trusts, persons whose functional currency is not the U.S.
dollar, U.S. expatriates or former long-term residents of the United States,
investors that acquire, hold, or dispose of our Common Stock as part of a
straddle, hedge, wash sale, constructive sale or conversion transaction or other
integrated transaction, or persons that acquired our Common Stock pursuant to an
exercise of employee stock options, in connection with
employee stock incentive plans or otherwise as compensation. Additionally, this discussion does not consider the tax treatment of entities treated as partnerships or other pass-through entities for U.S. federal income tax purposes or of persons who
hold our Common Stock through such entities. The tax treatment of a partnership and each partner thereof will generally depend upon the status and activities of the partnership and such partner. Thus, partnerships, other pass-through entities and
persons holding our Common Stock through such entities should consult their own tax advisors.
________________________________
1
This section is limited to a general summary of
certain material U.S. federal income tax consequences to U.S. holders relating
to the purchase, ownership and disposition of shares of our
Common Stock
and is not applicable, and should not be relied upon, when considering an
investment in any of our other securities that may be offered hereunder.
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This discussion is based on current provisions of the Code, its legislative history, U.S. Treasury regulations promulgated under the Code, judicial opinions, and published rulings and procedures of the U.S. Internal Revenue Service
(IRS), all as in effect on the date of this prospectus. These authorities are subject to differing interpretations or to change, possibly with retroactive effect. We have not sought, and will not seek, any ruling from the IRS or any
opinion of counsel with respect to the tax consequences discussed below, and there can be no assurance that the IRS will not take a position contrary to the tax consequences discussed below or that any position taken by the IRS would not be
sustained.
As used in this discussion, the term U.S. person means a person that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) created or organized (or treated as created or organized) in or under the laws of the United States or of any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal
income taxation regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial
decisions of the trust. As used in this discussion, the term U.S. holder means a beneficial owner of our Common Stock that is a U.S. person, and the term non-U.S. holder means a beneficial owner of our Common Stock (other
than an entity that is treated as a partnership or other pass-through entity for U.S. federal income tax purposes) that is not a U.S. person.
U.S. Holders
Taxation of Distributions
A U.S. holder will be required to include in gross income as ordinary income the amount of any dividend paid on the shares of our Common Stock. A distribution on such shares will be treated as a dividend for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits generally will constitute a return of capital that will
be applied against and reduce (but not below zero) the U.S. holders adjusted tax basis in our Common Stock. Any remaining excess generally will be treated as gain from the sale or other disposition of the Common Stock and will be treated as
described under Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock below.
Dividends paid to a non-corporate U.S. holder in taxable years beginning on or after January 1, 2013 generally will be subject to a maximum tax rate of 20% provided certain holding period and other requirements are satisfied; in certain
circumstances the additional 3.8% Medicare tax (discussed below) may also apply. Dividends paid to U.S. holders that are corporations will be eligible for the dividends-received deduction if the U.S. holders meet certain holding period and other
applicable requirements.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock
In general, a U.S. holder must treat any gain or loss recognized upon a sale, taxable exchange, or other taxable disposition of our Common Stock as capital gain or loss. Any such capital gain or loss will be long-term capital gain or loss if the
U.S. holders holding period for the Common Stock so disposed of exceeds one year. In general, a U.S. holder will recognize gain or loss in an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of
any property received in such disposition and (ii) the U.S. holders adjusted tax basis in the Common Stock so disposed of. Long-term capital gain recognized by a non-corporate U.S. holder generally will be subject to a maximum tax rate of 20%
for tax years beginning on or after January 1, 2013. Such gains may also be subject to the additional 3.8% Medicare tax (discussed below). The deduction of capital losses is subject to various limitations.
11
Additional 3.8% Medicare Tax
For taxable years beginning after December 31, 2012, U.S. holders that are individuals, estates or trusts are required to pay an additional 3.8% Medicare contribution tax on unearned income, including, among other things, dividends on and capital
gains from the sale or other disposition of stock, subject to certain limitations and exceptions. U.S. holders should consult their tax advisors regarding the effect of this legislation on their ownership and disposition of our Common Stock.
Non-U.S. Holders
Taxation of Distributions
In general, any distribution we make to a non-U.S. holder of shares of our Common Stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute a dividend
for U.S. federal income tax purposes. Any dividend paid to a non-U.S. holder with respect to shares of our Common Stock that is not effectively connected with the non-U.S. holders conduct of a trade or business within the United States, as
described below, generally will be subject to U.S. federal withholding tax at a rate of 30 percent of the gross amount of the dividend, unless such non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax
treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN). Any distribution not constituting a dividend will constitute a return of capital that will be applied against and reduce (but not
below zero) the non-U.S. holders adjusted tax basis in its shares of our Common Stock. Any remaining excess generally will be treated as gain from the sale or other disposition of the Common Stock, which will be treated as described under
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock below.
Dividends we pay to a non-U.S. holder that are effectively connected with such non-U.S. holders conduct of a trade or business within the United States (and, if certain income tax treaties apply, are attributable to a U.S. permanent
establishment or fixed base maintained by the non-U.S. holder) generally will not be subject to U.S. withholding tax, provided such non-U.S. holder complies with certain certification and disclosure requirements (usually by providing an IRS Form
W-8ECI). Instead, such dividends generally will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate tax rates applicable to U.S. persons. If the non-U.S. holder is a corporation, dividends
that are effectively connected income may also be subject to a branch profits tax at a rate of 30 percent (or such lower rate as may be specified by an applicable income tax treaty).
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale, exchange or other disposition of our Common Stock, unless:
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the gain is effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a U.S. permanent establishment or fixed base maintained by the
non-U.S. holder);
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the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
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we are or have been a United States real property holding corporation (USRPHC) for U.S. federal income tax purposes at any time during the shorter of the five year period ending on the date of disposition or the non-U.S. holders
holding period for the Common Stock disposed of.
Unless an applicable tax treaty provides otherwise, gain described in the first and third bullet points above generally will be subject to U.S. federal income tax, net of certain deductions, at the same tax rates applicable to U.S. persons. Any
gains described in the first bullet point above of a non-U.S. holder that is a foreign corporation may also be subject to an additional branch profits tax at a 30 percent rate (or a lower applicable income tax treaty rate). Any U.S.
source capital gain of a non-U.S. holder described in the second bullet point above (which may be offset by U.S. source capital losses during the taxable year of the disposition) generally will be subject to a flat 30 percent U.S. federal income tax
(or a lower applicable income tax treaty rate).
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In connection with the third bullet point above, we generally will be classified as a USRPHC if (looking through certain subsidiaries) the fair market value of our United States real property interests equals or exceeds 50 percent of
the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. We believe that we currently are not a USRPHC, and we do
not anticipate becoming a USRPHC (although no assurance can be given that we will not become a USRPHC in the future). Even if we are a USRPHC, a non-U.S. holder will not be subject to U.S. federal income tax solely because of our status as a USRPHC
so long as our Common Stock is regularly traded on an established securities market, and such non-U.S. holder did not hold directly or indirectly more than 5% of our Common Stock at any time during the shorter of the five-year period
preceding the date of the disposition or the holders holding period. If a non-U.S. holder owned directly or indirectly more than 5% of our Common Stock at any time during the applicable period then any gain recognized by a Non-U.S. holder on
the sale or other disposition of our Common Stock would be treated as effectively connected with a U.S. trade or business and would be subject to U.S. federal income tax at applicable graduated U.S. federal income tax rates and in much the same
manner as applicable to U.S. persons.
Foreign Account Tax Compliance Act & Withholding
Withholding taxes may apply to certain types of payments made to foreign financial institutions (as specifically defined in the Code) and certain other non-United States entities. Specifically, a 30% withholding tax may be imposed on
dividends and gross proceeds from the sale, exchange or other disposition of, our Common Stock, unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign entity either certifies it does
not have any substantial United Stated owners or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from
these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the IRS requiring, among other things, that it undertake to identify
accounts held by certain United States persons or Untied States-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to non-compliant foreign financial institutions and certain other
holders.
The withholding provisions described above will generally apply to payments of dividends on our Common Stock made after December 31, 2013, and to payments of gross proceeds from a sale or other disposition of such stock made after December 31,
2016. Prospective investors should consult their tax advisors regarding the effect of such withholding taxes on their ownership and disposition of our Common Stock.
Information Reporting and Backup Withholding
We generally must report annually to the IRS and to each holder the amount of dividends and certain other distributions we pay to such holder on our Common Stock and the amount of tax, if any, withheld with respect to those distributions. In the
case of a non-U.S. holder, copies of the information returns reporting those distributions and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder is a resident under the provisions of an
applicable income tax treaty or agreement. Information reporting is also generally required with respect to proceeds from the sales and other dispositions of our Common Stock to or through the U.S. office (and in certain cases, the foreign office)
of a broker.
In addition, backup withholding of U.S. federal income tax, currently at a rate of 28 percent, generally will apply to distributions made on our Common Stock to, and the proceeds from sales and other dispositions of our Common Stock by, a
non-corporate U.S. holder who:
-
fails to provide an accurate taxpayer identification number;
-
is notified by the IRS that backup withholding is required; or
-
in certain circumstances, fails to comply with applicable certification requirements.
A non-U.S. holder generally may eliminate the requirement for information reporting (other than with respect to distributions, as described above) and backup withholding by providing certification of its foreign status, under penalties of perjury,
on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
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Backup withholding is not an additional tax. Rather, the amount
of any backup withholding will be allowed as a credit against a U.S. holders or
a non-U.S. holders U.S. federal income tax liability and may entitle such
holder to a refund, provided that certain required information is timely
furnished to the IRS. Holders are urged to consult their own tax advisors
regarding the application of backup withholding and the availability of and
procedure for obtaining an exemption from backup withholding in their particular
circumstances.
PLAN OF DISTRIBUTION
The securities covered by this prospectus may be offered and
sold from time to time pursuant to one or more of the following methods:
-
through agents;
-
to or through underwriters;
-
to or through broker-dealers (acting as agent or principal);
in at the
market offerings within the meaning of Rule 415(a)(4) of the Securities Act,
to or through a
-
market maker or into an existing trading market, on an exchange, or
otherwise;
-
directly to purchasers, through a specific bidding or auction process or
otherwise; or
-
through a combination of any such methods of sale.
Agents, underwriters or broker-dealers may be paid compensation
for offering and selling the securities. That compensation may be in the form of
discounts, concessions or commissions to be received from us, from the
purchasers of the securities or from both us and the purchasers. Any
underwriters, dealers, agents or other investors participating in the
distribution of the securities may be deemed to be underwriters, as that term
is defined in the Securities Act, and compensation and profits received by them
on sale of the securities may be deemed to be underwriting commissions, as that
term is defined in the rules promulgated under the Securities Act.
Each time securities are offered by this prospectus, the
prospectus supplement, if required, will set forth:
-
the name of any underwriter, dealer or agent involved in the offer and
sale of the securities;
-
the terms of the offering;
any discounts concessions or commissions and
other items constituting compensation received by the
-
underwriters, broker-dealers or agents;
-
any over-allotment option under which any underwriters may purchase
additional securities from us;
-
any initial public offering price;
The securities may be sold at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
relating to the prevailing market prices or at negotiated prices. The
distribution of securities may be effected from time to time in one or more
transactions, by means of one or more of the following transactions, which may
include cross or block trades:
-
transactions on the NASDAQ Global Market or
any other organized market where the securities may be traded;
14
-
in the over-the-counter market;
-
in negotiated transactions;
-
under delayed delivery contracts or other contractual commitments; or
-
a combination of such methods of sale.
If underwriters are used in a sale, securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions. Our securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. If an underwriter or
underwriters are used in the sale of securities, an underwriting agreement will
be executed with the underwriter or underwriters at the time an agreement for
the sale is reached. This prospectus and the prospectus supplement will be used
by the underwriters to resell the shares of our securities.
In compliance with the guidelines of the Financial Industry
Regulatory Authority, or FINRA, the aggregate maximum discount, commission or
agency fees or other items constituting underwriting compensation to be received
by any FINRA member or independent broker-dealer will not exceed 8% of the
offering proceeds from any offering pursuant to this prospectus and any
applicable prospectus supplement.
If 5% or more of the net proceeds of any offering of our
securities made under this prospectus will be received by a FINRA member
participating in the offering or affiliates or associated persons of such FINRA
member, the offering will be conducted in accordance with FINRA Rule 5121.
To comply with the securities laws of certain states, if
applicable, the securities offered by this prospectus will be offered and sold
in those states only through registered or licensed brokers or dealers.
Agents, underwriters and dealers may be entitled under
agreements entered into with us to indemnification by us against specified
liabilities, including liabilities incurred under the Securities Act, or to
contribution by us to payments they may be required to make in respect of such
liabilities. The prospectus supplement will describe the terms and conditions of
such indemnification or contribution. Some of the agents, underwriters or
dealers, or their respective affiliates may be customers of, engage in
transactions with or perform services for us in the ordinary course of business.
We will describe in the prospectus supplement naming the underwriter the nature
of any such relationship.
Certain persons participating in the offering may engage in
over-allotment, stabilizing transactions, short-covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act. We make no
representation or prediction as to the direction or magnitude of any effect that
such transactions may have on the price of the securities. For a description of
these activities, see the information under the heading Underwriting in the
applicable prospectus supplement.
LEGAL MATTERS
The validity of the securiies offered in this prospectus will
be passed upon for us by McKenna Long & Aldridge LLP.
EXPERTS
The consolidated financial statements of Kandi Technologies
Group, Inc. and its subsidiaries as of December 31, 2012 and 2011, and for each
of the years in the two-year period ended December 31, 2012, have been
incorporated by reference in the registration statement in reliance on the
report of Albert Wong & Co, an independent registered public accounting
firm, and upon the authority of said firm as experts in accounting and
auditing.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information
we file with them into this prospectus. This means that we can disclose
important information about us and our financial condition to you by referring
you to another document filed separately with the SEC instead of having to
repeat the information in this prospectus. The information incorporated by
reference is considered to be part of this prospectus and later information that
we file with the SEC will automatically update and supersede this information.
This prospectus incorporates by reference any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, between the date
of the initial registration statement and prior to effectiveness of the
registration statement and the documents listed below that we have previously
filed with the SEC:
-
our Annual Report on Form 10-K for the year ended December 31, 2012;
-
our Current Reports on Form 8-K filed on January 29, 2013, March 4, 2013
and March 25, 2013; and
-
the description of our Common Stock contained in the registration
statement on Form S-8, dated January 6, 2009, File No. 333-156582, and any
other amendment or report filed for the purpose of updating such description.
We also incorporate by reference all documents that we file
with the SEC on or after the effective time of this prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the sale of
all the securities registered hereunder or the termination of the registration
statement. Nothing in this prospectus shall be deemed to incorporate information
furnished but not filed with the SEC.
Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated by reference in this prospectus shall
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in the applicable prospectus
supplement or in any other subsequently filed document which also is or is
deemed to be incorporated by reference modifies or supersedes the statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
You may request a copy of the filings incorporated herein by
reference, including exhibits to such documents that are specifically
incorporated by reference, at no cost, by writing or calling us at the following
address or telephone number:
Kandi Technologies Group, Inc.
Jinhua City
Industrial Zone
Jinhua, Zhejiang Province
Peoples
Republic of China
Post Code 321016
Attn: Zhu Xiaoying,
Chief Financial Officer
+86-579-82239856
Statements contained in this prospectus as to the contents of
any contract or other documents are not necessarily complete, and in each
instance you are referred to the copy of the contract or other document filed as
an exhibit to the registration statement or incorporated herein, each such
statement being qualified in all respects by such reference and the exhibits and
schedules thereto.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3
that we filed with the SEC registering the securities that may be offered and
sold hereunder. The registration statement, including exhibits thereto, contains
additional relevant information about us and these securities that, as permitted
by the rules and regulations of the SEC, we have not included in this
prospectus. A copy of the Registration Statement can be obtained at the address
set forth below or at the SECs website as noted below. You should read the
registration statement, including any applicable prospectus supplement, for
further information about us and these securities.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's website at http:/www.sec.gov. You may also read
and copy any document we file at the SEC's public reference room, 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Because our Common
Stock is listed on the NASDAQ Global Market, you may also inspect reports, proxy
statements and other information at the offices of the NASDAQ Global Market.
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