Kandi Technologies Issues Chairman’s Letter to Shareholders
December 07 2020 - 9:15AM
Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the “Company” or
“Kandi”) today issued a letter to its shareholders from the
Chairman as below:
Dear Kandi Shareholder,
On November 30, 2020, a firm with an acknowledged short position
in Kandi stock issued a “research report” that leveled a series of
inaccurate allegations regarding Kandi and its management
team. The firm that issued the report is shorting our stock
and will profit if the stock price declines. In contrast, the
Company’s motive is to create value for all shareholders by
building a durable and profitable leader in a dynamic growth
industry. It is clear from this review that the report
contains a variety of misleading accusations that are either thinly
veiled assertions of opinion, or based on previously reported
historical events. As one example, they question the odds of
success of our ride-sharing initiative. Anyone, you included,
is free to assess the likelihood of success of our business
strategy. Merely asserting an opinion on our strategy proves
nothing about our trustworthiness. Assertions like this, we
will ignore. While the entire report lacks merit, the Company
and its management believe that it would be helpful to our
shareholders to address the inaccuracies that have received
significant press attention.
- By mischaracterizing certain documents from 2014, the report
insinuates that I participated in a scheme to inflate the price of
our stock during the reverse merger process. This is
inaccurate because, as the report acknowledges, neither I nor the
Company were ever charged with any such violations. This is
not new information and was previously disclosed in our regulatory
filings.
- The Company’s participation in Chinese government subsidy
programs through a joint venture (the “JV Company”) is well
documented in public filings. Contrary to the report’s
allegations, the JV Company properly received subsidy payments for
all electric vehicles sold prior to 2016 and the JV Company’s dual
production licenses were approved in August 2019. According to
government policy, any company that improperly participated in the
subsidy program would not receive any subsidy payments nor dual
production licenses.
- As with other aspects of the report, the Company’s
decision to change auditors was previously disclosed and resulted
from Kandi’s growth rather than any sort of alleged “fraud”.
For example, in 2019 we changed to an auditor that is subject to
inspection by the Public Company Accounting Oversight Board
(“PCOAB”). Our current auditor is a leader in providing
accounting services to Chinese companies listed in the United
States.
- The report’s assertions of “related party” transactions and
“fabricated sales” suffer from a number of defects:
- Chaoneng’s legal representative (Hu Yiheng) is not currently an
executive of Kandi as the report contends. In fact, Mr. Hu
Yiheng resigned from Kandi in April 2011 to start Chaoneng.
The report uses misleading quotes from an October 2010 article as
support for its contention that Mr. Hu Yiheng is still with
Kandi.
- When it was first established in 2011, Chaoneng rented office
space from Kandi and listed its landlord’s phone number
(0579-82239276) for business registration purposes. This is
not Chaoneng’s current telephone number.
- Chaoneng is located in the same industrial park complex as
Kandi, but not at the same address (as the report contends).
Chaoneng is the fourth building on the lot while Zhejiang Kandi
Smart Battery Swap Technology Co., Ltd (formerly Jinhua An Kao
Power Technology Co., Ltd) is located at the north side of the
first factory building. Chaoneng provides maintenance services to
vehicles manufactured by Kandi at that location. The reference to
“Kandi” in the signage refers to their services for Kandi vehicles,
not Kandi as a company. Kandi and Chaoneng are not related
parties.
- The report mistakenly contends that Massimo Motor Sports and
its owner David Shan are undisclosed related parties of
Kandi. Mr. Shan left SC Autosports (formally named Sportsman
Country) when Kandi acquired it in 2018 and no longer has any
affiliation with Kandi.
- Kuke was a subsidiary of Kandi until January 2008. In February
2008, Kuke was spun-off from Kandi and has been an independent
entity since that time. While Kuke has been the exclusive agent of
Kandi’s products in the United States since August 2015, Kandi
plans to end this exclusivity in 2021 based on the expected growth
in the United States of Kandi’s subsidiary SC Autosports.
- The report mistakenly contends that KANDI USA and JASS
MOTORSPORTS have the same address. KANDI USA closed in November
2015. There is no affiliation between Kandi USA and JASS
MOTORSPORTS.
- Finally, Kandi’s financial reports are audited, and care is
taken to properly record sales.
Accordingly, and contrary to the report’s allegations, we are
enthusiastic about the progress we made in 2020. Our ATV sales
achieved substantial growth, while unit sales of the Scrou-produced
balancing scooters should exceed 500,000 in 2020 and we expect
sales to exceed 3 million units in 2021. Prospects for EV
parts sales are strong. Our K23 and K27 EV models received the
required clearance from the United States Environmental Protection
Agency (EPA) via Certificates of Conformity. Our K27 model
recently met the safety regulations of the U.S. Department of
Transportation FMVSS 500 and is scheduled to be launched on the
market soon. Safety certification for the K23 is being
finalized and we anticipate customer deliveries in the first
quarter of 2021. The “300,000 government-accredited pure EV within
5 years rideshare” program has officially started in the city of
Shaoxing in Zhejiang province, and in the city of Haikou in Hainan
province. We strongly believe that the program will drive
sales growth of our EV and battery swap equipment in 2021. In
addition, our new 1 million plus square feet (100,000 square
meters) facility will be completed in January 2021 and is expected
to start production in the first quarter of 2021.
To conclude, we strongly believe that this report is laced with
innuendo and supposition, which are countered by our proven
prospects for future growth. Rest assured that we will
continue to operate with the highest standards in order to maximize
shareholder value.
Most sincerely,
Hu XiaomingChairman and Chief Executive OfficerKandi
Technologies Group
About Kandi Technologies Group, Inc.
Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua
Economic Development Zone, Zhejiang Province, is engaged in the
research, development, manufacturing, and sales of various
vehicular products. Kandi conducts its primary business operations
through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co.,
Ltd. ("Kandi Vehicles") and its subsidiaries including Zhejiang
Kandi Smart Battery Swap Technology Co., Ltd, SC Autosports, LLC
(d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the
United States and Fengsheng Automobile Technology Group Co., Ltd
(formerly known as Kandi Electric Vehicles Group Co., Ltd., the
“Affiliate Company”). Kandi Vehicles has established itself as one
of China's leading manufacturers of pure electric vehicle parts and
off-road vehicles.
In 2013, Kandi Vehicles and Geely Group, China's leading
automaker, jointly invested in the establishment of the Affiliate
Company in order to develop, manufacture and sell pure electric
vehicle ("EV") products. Geely Group (including its affiliate) and
Kandi Vehicles currently holds 78% and 22% of the equity interests
in the Affiliate Company, respectively. The Affiliate Company has
established itself as one of the driving forces in the development
and the manufacturing of pure EV products in China.
More information about KNDI is available on the Company's
corporate website at http://www.kandivehicle.com. The Company
routinely posts important information on its website.
Safe Harbor Statement
This press release contains certain statements that may include
"forward-looking statements." All statements other than statements
of historical fact included herein are "forward-looking
statements." These forward-looking statements are often identified
by the use of forward-looking terminology such as "believes,"
"expects" or similar expressions, involving known and unknown risks
and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. You should not
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including the risk factors discussed in the Company's
periodic reports that are filed with the Securities and Exchange
Commission and available on the SEC's website (http://www.sec.gov).
All forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their
entirety by these risk factors. Other than as required under the
applicable securities laws, the Company does not assume a duty to
update these forward-looking statements.
Follow us on Twitter: @ Kandi_Group
Contacts:
Kandi Technologies Group, Inc.Ms. Kewa Luo +1 (212) 551-3610
IR@kandigroup.com
The Blueshirt Group
Mr. Gary Dvorchak, CFA gary@blueshirtgroup.com
Ms. Susie Wang susie@blueshirtgroup.com
Kandi Technolgies (NASDAQ:KNDI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Kandi Technolgies (NASDAQ:KNDI)
Historical Stock Chart
From Apr 2023 to Apr 2024