KNDI Kandi Technolgies Group Inc

– Q3 revenue increased 345.4% yoy to $28.4 million –– Q3 JV Company sold 6,765 units of EV products, a 3576.6% increase yoy –– Q3 GAAP net income of $1.9 million compared to net loss of $0.6 million in the same period last year –

Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ:KNDI), today announced its financial results for the third quarter of 2017.

Third Quarter Highlights

• Total revenues were $28.4 million for the third quarter of 2017, an increase of 345.4% from total revenues of $6.4 million for the same period in 2016. 
• Electric Vehicle (“EV”) parts sales increased by 473.2%, to $27.0 million for the third quarter of 2017, compared with EV parts sales of $4.7 million for the same period in 2016. 
• Kandi Electric Vehicles Group Co., Ltd. (the "JV Company") sold 6,765 units of EV products, including 2,747 units of model K17 and 4,018 of model K12 for the third quarter of 2017 compared to 184 units sold in the same period last year;
• GAAP net income for the third quarter of 2017 was $1.9 million, or earnings of $0.04 per fully diluted share compared with GAAP net loss of $0.6 million, or loss of $0.01 per fully diluted share for the same period in 2016
• Non-GAAP adjusted net income1, which excludes stock award expenses and the change of the fair value of financial derivatives, was $3.0 million in the third quarter of 2017, compared with non-GAAP net loss of $1.8 million for the same period in 2016. Non-GAAP adjusted income per share1 was approximately $0.06 per fully diluted share for the third quarter of 2017, compared with Non-GAAP adjusted loss per share1 of $0.04 per fully diluted share for the same period in 2016.
• Working capital surplus was $45.3 million as of September 30, 2017. Cash, cash equivalents and restricted cash totaled $24.3 million as of September 30, 2017.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “We're pleased with our solid business performance in the third quarter. Our production and sales have increased significantly year over year as the JV Company has resumed normal production and sales of EV products. Due to confusion surrounding the reusable battery exchange model, our business had been heavily impacted since last year. We have been working diligently since then to overcome that difficult time in order to turn it into a great success.  This quarter represents a turning point and an exciting time for Kandi as the Company continues preparing for the tremendous opportunities available in the renewable energy industry. We remain confident in our ability to continue to successfully execute our long-term business plan and regain our leading market position in the EV industry in the near future.”

Net Revenues and Gross Profit

	3Q17			3Q16			Y-o-Y%
Net Revenues (US$million)	$	28.4		$	6.4		345.4	%
Gross Profit (US$million)	$	4.8		$	0.7		642.0	%
Gross Margin		17.0	%		10.2	%	-

Net revenues for the third quarter of 2017 increased by 345.4% compared to the same period last year. The increase in net revenue was mainly due to the increase in EV parts sales during this quarter. The selling price of our products for the three months ended September 30, 2017 decreased on average from the same period last year. The increase in revenues was primarily due to the increase in sales volume.

Operating Income (Loss)

	3Q17			3Q16			Y-o-Y%
Operating Expenses (US$million)	$	3.1		$	1.3		141.7	%
Operating Income (Loss) (US$million)	$	1.8		($	0.6	)	384.4	%
Operating Margin		6.2	%		(9.7	%)	-
Operating Income (Loss) (US$million) (Non-GAAP)	$	2.8		($	1.8	)	-

Total operating expenses in the third quarter of 2017 were $3.1 million, compared with $1.3 million in the same quarter of 2016. The increase in total operating expenses was due to increased G&A expenses, which were $2.2 million in this quarter compared with $0.4 million in the same quarter last year.

GAAP Net Income (Loss)

	3Q17		3Q16			Y-o-Y%
Net Income (Loss) (US$million)	$	1.9	($	0.6	)	438.9	%
Earnings (Loss) per Weighted Average Common Share	$	0.04	($	0.01	)	-
Earnings (Loss) per Weighted Average Diluted Share	$	0.04	($	0.01	)	-
Stock Award Expenses (Reversal) (US$million)	$	1.0	($	1.2	)	185.5	%
Change in the Fair Value of Financial Derivatives (US$million)		-		-		-
Non-GAAP Net Income (Loss) from Continuing Operations (US$million)	$	2.9	($	1.8	)	265.6	%

Net income was $1.9 million in the third quarter, compared with net loss of $0.6 million in the same quarter of 2016. The net income for this quarter was primarily attributable to significantly increased revenue and gross profits this period as compared to the same period of last year.

Non-GAAP net income was $2.9 million in the third quarter of 2017, an increase of $4.7 million compared to Non-GAAP net loss of $1.8 million in the same quarter of 2016. The increase in net income (non-GAAP) was primarily attributable to the significantly increased revenue and gross profits in the third quarter of 2017.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”) Financial Results

In the third quarter of 2017, the JV Company sold 6,765 units of EV products.

The condensed financial income statements of the JV Company in the first quarter are as set forth below:

	3Q17			3Q16			Y-o-Y%
Net Revenues (US$million)	$	86.2		$	11.7		637.3	%
Gross Income (US$million)	$	5.3		$	5.9		-11.1	%
Gross Margin		6.1	%		50.8	%	-
Net loss (US$million)	($	0.5	)	($	0.4	)	-12.6	%
% of Net revenue		-			-		-

Revenue for the JV Company was $86.2 million in the third quarter of 2017, an increase of 637.3% compared to the same quarter of 2016. Net loss was $0.5 million, a 12.6% decrease compared to the same quarter of 2016.

Kandi’s investments in the JV Company are accounted for using the equity method of accounting because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company’s losses of $0.2 million for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after-tax profit of the JV Company was $0.4 million for the third quarter of 2017.

Third Quarter 2017 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its second quarter 2017 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 9, 2017. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Mei Bing, Chief Financial Officer of the Company, will deliver prepared remarks to be followed by a question and answer session.  

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

• Toll-free dial-in number: +1-855-327-6838
• International dial-in number: + 1-604-235-2082
• Webcast and replay: http://public.viavid.com/index.php?id=127124

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

About Kandi Technologies Group, Inc. Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua, Zhejiang Province, is engaged in the research and development, manufacturing and sales of various vehicle products. Kandi has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") products (through its joint venture), EV parts and off-road vehicles. More information can be viewed at the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

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

Follow us on Twitter: @ Kandi_Group

Company Contact:

Ms. Kewa LuoKandi Technologies Group, Inc.Phone: 1-212-551-3610Email: IR@kandigroup.com

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
		September 30,2017				December 31,2016
Current assets
Cash and cash equivalents		$	3,560,510			$	12,235,921
Restricted cash			20,735,921				12,957,377
Short term investment			-				4,463,097
Accounts receivable			41,774,453				32,394,613
Inventories (net of provision for slow moving inventory of $574,165 and $415,797 as of September 30, 2017 and December 31, 2016, respectively			15,176,578				11,914,110
Notes receivable from JV Company and related party			1,542,147				400,239
Other receivables			238,577				66,064
Prepayments and prepaid expense			5,471,257				4,317,855
Due from employees			25,901				4,863
Advances to suppliers			14,536,366				38,250,818
Amount due from JV Company, net			136,632,901				136,536,159
Amount due from related party			6,437,261				10,484,816
TOTAL CURRENT ASSETS			246,131,872				264,025,932
LONG-TERM ASSETS
Property, Plant and equipment, net			12,962,632				15,194,442
Land use rights, net			12,045,926				11,775,720
Construction in progress			47,676,068				27,054,181
Deferred taxes assets			4,555,018				-
Long Term Investment			1,427,798				1,367,723
Investment in JV Company			67,087,803				77,453,014
Goodwill			322,591				322,591
Intangible assets			351,640				413,211
Advances to suppliers			27,695,209				33,819,419
Other long term assets			7,726,179				8,271,952
Amount due from JV Company, net			15,907,183				-
TOTAL Long-Term Assets			197,758,047				175,672,253
TOTAL ASSETS		$	443,889,919			$	439,698,185
CURRENT LIABILITIES
Accounts payables		$	131,047,418			$	115,870,051
Other payables and accrued expenses			6,523,693				4,835,952
Short-term loans			32,613,923				34,265,065
Customer deposits			125,411				41,671
Notes payable			26,212,569				14,797,325
Income tax payable			2,282,514				1,364,235
Due to employees			31,956				21,214
Deferred taxes liabilities			-				118,643
Deferred income			1,397,138				6,363,751
Loss contingency-litigation			601,178				-
Total Current Liabilities			200,835,800				177,677,907
LONG-TERM LIABILITIES
Long term bank loans			30,058,915				28,794,172
Deferred taxes liabilities			-				878,639
Total Long-Term Liabilities			30,058,915				29,672,811
TOTAL LIABILITIES			230,894,715				207,350,718
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 48,034,038 and 47,699,638 shares issued and outstanding at September 30,2017 and December 31,2016, respectively			48,034				47,700
Additional paid-in capital			233,409,326				227,911,477
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at September 30,2017 and December 31,2016, respectively)			(9,248,214	)			24,545,163
Accumulated other comprehensive loss			(11,213,942	)			(20,156,873	)
TOTAL STOCKHOLDERS’ EQUITY			212,995,204				232,347,467
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	443,889,919			$	439,698,185

 

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
		2017				2016				2017				2016
REVENUES FROM UNRELATED PARTY, NET			6,604,109				5,211,201			$	10,720,595			$	46,165,105
REVENUES FROM JV COMPANY AND RELATED PARTY, NET			21,749,790				1,155,179				49,233,156				66,076,536
REVENUES, NET			28,353,899				6,366,380				59,953,751				112,241,641
COST OF GOODS SOLD			23,522,406				5,715,211				50,697,990				96,417,337
GROSS PROFIT			4,831,493				651,169				9,255,761				15,824,304
OPERATING EXPENSES:
Research and development			657,851				522,806				26,569,624				1,222,967
Selling and marketing			216,351				374,102				976,913				1,150,880
General and administrative			2,196,201				373,411				12,074,147				18,031,487
Total Operating Expenses			3,070,403				1,270,319				39,620,684				20,405,334
INCOME (LOSS) FROM OPERATIONS			1,761,090				(619,150)				(30,364,923)				(4,581,030)
OTHER INCOME (EXPENSE):
Interest income			619,923				832,031				1,709,990				2,397,364
Interest expense			(598,523	)			(425,152)				(1,761,786)				(1,299,549)
Change in fair value of financial instruments			-				10,692				-				3,823,590
Government grants			474,950				594,323				5,804,561				2,292,180
Share of income (loss) after tax of JV			444,181				(299,538)				(13,455,786)				(203,375)
Other expense, net			(6,560	)			(106,299	)			143,617				202,878
Total other income (expense), net			933,971				606,057				(7,559,404)				7,213,088
INCOME (LOSS) BEFORE INCOME TAXES			2,695,061				(13,093)				(37,924,327)				2,632,058
INCOME TAX (EXPENSE) BENEFIT			(776,985	)			(552,848)				4,130,951				(316,399)
NET INCOME (LOSS)			1,918,076				(565,941)				(33,793,376)				2,315,659
OTHER COMPREHENSIVE INCOME(LOSS)
Foreign currency translation			4,032,652				(805,216	)			8,942,931				(6,433,480	)
COMPREHENSIVE INCOME (LOSS)		$	5,950,728			$	(1,371,157	)		$	(24,850,445	)		$	(4,117,821	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC			48,028,467				47,695,290				47,913,028				47,436,418
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED			48,028,467				47,695,290				47,913,028				47,436,418
NET INCOME (LOSS) PER SHARE, BASIC		$	0.04			$	(0.01	)		$	(0.71	)		$	0.05
NET INCOME(LOSS) PER SHARE, DILUTED		$	0.04			$	(0.01	)		$	(0.71	)		$	0.05

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
		September 30,2017				September 30,2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		$	(33,793,376	)		$	2,315,659
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			3,556,661				3,681,345
Assets Impairments			136,936				-
Deferred taxes			(5,596,103	)			(2,608,702	)
Change in fair value of financial instruments			-				(3,823,590	)
Share of loss after tax of JV Company			13,455,786				203,375
Stock Compensation cost			5,522,358				13,930,829
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) Decrease In:
Accounts receivable			(8,926,990	)			(48,534,492	)
Notes receivable			-				918,018
Notes receivable from JV Company and related party			4,923,967				-
Inventories			(2,814,129	)			1,802,780
Other receivables and other assets			754,661				(11,868,318	)
Due from employee			(10,766	)			17,718
Advances to supplier and Prepayments and prepaid expenses			23,878,150				(31,684,685	)
Advances to suppliers-Long term			(4,804,200	)			-
Amount due from JV Company			(33,071,177	)			(87,973,693	)
Amount due from JV Company-Long-term			(15,907,183	)			-
Due from related party			4,406,105				28,994,314
Increase (Decrease) In:
Accounts payable			53,078,541				106,924,655
Other payables and accrued liabilities			2,173,413				10,415,706
Notes payable			(3,933,839	)			(5,849,988	)
Customer deposits			80,057				(13,598	)
Income Tax payable			732,405				607,422
Deferred income			(5,127,455	)			-
Loss contingency-litigation			587,579				-
Net cash used in operating activities		$	(698,599	)		$	(22,545,245	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net			(420,037	)			(39,250	)
Purchases of construction in progress			(1,565,244	)			(4,236,301	)
Repayment of notes receivable			-				10,436,303
Restricted cash			5,875,786				-
Short Term Investment			4,553,734				1,592,024
Net cash provided by investing activities		$	8,444,239			$	7,752,776
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash			(12,922,105	)			1,519,477
Proceeds from short-term bank loans			24,854,574				-
Repayments of short-term bank loans			(27,939,362	)			-
Proceeds from notes payable			13,367,413				-
Repayment of notes payable			(14,060,961	)			-
Warrant exercise			-				434,666
Net cash (used) provided by financing activities		$	(16,700,441	)		$	1,954,143
NET DECREASE IN CASH AND CASH EQUIVALENTS			(8,954,801	)			(12,838,326	)
Effect of exchange rate changes on cash			279,390				(210,383	)
Cash and cash equivalents at beginning of year			12,235,921				16,738,559
CASH AND CASH EQUIVALENTS AT END OF PERIOD			3,560,510				3,689,850
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid			1,072,082				2,322,747
Interest paid			1,164,774				1,283,843
SUPPLEMENTAL NON-CASH DISCLOSURES:
Prepayment transferred to construction in progress			12,241,736				-
Purchase of construction in progress by accounts payable			6,244,120				-
Advances to suppliers-long term adjusted for other payable			1,057,152				-
Settlement of due from JV Company and related parties with notes receivable			39,197,964				46,791,213
Settlement of accounts receivables with notes receivable from unrelated parties			1,150,038				15,198,694
Assignment of notes receivable to supplier to settle accounts payable			34,325,141				61,497,480
Settlement of accounts payable with notes payables			15,149,150				5,187,040
Deferred tax change to other comprehensive income			52,266				-

1 Non-GAAP measures, including Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of fair value of financial derivatives and the effects of stock award expenses. We supply non- GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measure should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.