Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the second quarter of 2020.

Second Quarter Highlights

  • Total revenues were $19.4 million for the second quarter of 2020, a decrease of 19.5% from total revenues of $24.1 million for the same period in 2019.             
  • Electric Vehicle (“EV”) parts sales decreased by 34.1%, to $12.5 million for the second quarter of 2020, compared with EV parts sales of $19.0 million for the same period in 2019. 
  • Revenues from sales of off-road vehicles increased by 27.3%, to $6.6 million for the second quarter of 2020, compared with revenues from sales of off-road vehicles of $5.2 million for the same period in 2019.
  • Gross margin for the second quarter of 2020 was 18.2%, compared to 17.4% for the same period of 2019.
  • Net income for the second quarter of 2020 was $4.1 million, or $0.08 earnings per fully diluted share, compared with net loss of $7.3 million, or $0.14 loss per fully diluted share for the same period in 2019.
  • Working capital was $75.6 million as of June 30, 2020. Cash, cash equivalents and restricted cash totaled $6.7 million as of June 30, 2020.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “Our second quarter results were satisfactory. After the pandemic in China was effectively contained, Kandi fully resumed production and actively pushed the business forward.  The COVID-19 situation significantly decreased consumer demand, yet we contained the revenue decline, improved gross margin, and achieved $4.1 million in profit.  We made meaningful progress in preparing for the online car-hailing business, the launch of which is planned for Hainan soon. Our first fully automatic intelligent battery swapping equipment was delivered to the rideshare operator in Hainan on August 2.  Installation has been completed, and trial operations will commence.  For the first time, battery swapping stations are classified as ‘infrastructure construction’ based on the Government Work Report delivered by Premier Li Keqiang during the 2020 NPC.  As such, we believe that our fully automatic smart replacement system will be favored by the market and drive sales of our electric vehicles.  Furthermore, our affiliate company Fengsheng Automotive successively launched two exciting new pure electric SUVs and multi-purpose passenger vehicles and will continue to launch more pure electric vehicle models to meet the diversified travel needs of users.”Mr. Hu discussed the U.S. opportunity: “While maintaining growth of off-road vehicles, our American wholly-owned subsidiary has also prepared to launch sales of pure EVs in the United States.  A live virtual event will occur on August 18 to officially kick-off pre-sales, which will be a key milestone in the Company’s history.  As a technology innovator, Kandi is committed to provide high quality products with great performance and affordable price.”“As a pioneer in the electric vehicle industry and inventor of the ‘vehicle/battery separation’ swap model, Kandi is well-positioned to benefit from growing demand for EVs.  The market potential of online car hailing in China is huge, and with government support for the battery swapping model, we are confident that Kandi will gain market share in China’s EV industry in the near future.” Mr. Hu concluded.

Net Revenues and Gross Profit

  2Q20   2Q19   Y-o-Y
Net Revenues (US$million) $ 19.4   $ 24.1   -19.5 %
Gross Profit (US$million) $ 3.5   $ 4.2   -15.8 %
Gross Margin   18.2 %   17.4 % -  

Net revenues for the second quarter of 2020 decreased by 19.5% compared to the same period last year. The decrease in revenue was mainly due to lower sales of EV parts. Due to the outbreak of COVID-19 in China, the demand for EV parts from customers was significantly affected during the first half of 2020.

Income (Loss) from Operations

  2Q20   2Q19   Y-o-Y %
Total Operating Income (Expenses) (US$million) $ 8.1   ($ 7.2 ) -213.0 %
Income (Loss) from Operations (US$million) $ 11.6   ($ 3.0 ) -493.5 %
Operating Margin   59.8 %   -12.2 % -  

Total operating income in the second quarter of 2020 were $8.1 million, compared with $7.2 million of total operating expenses in the same quarter of 2019. The increase in total operating income was mainly due to the gain on disposal of long-live asset related to the real estate repurchase agreement of our Jinhua Facility’s relocation which was $13.9 incurred during the second quarter of 2020.

Net Income (Loss)

  2Q20   2Q19   Y-o-Y %
Net  Income (Loss) (US$million) $ 4.1   ($ 7.3 ) -155.4 %
Earnings (loss)  per Weighted Average Common Share $ 0.08   ($ 0.14 ) -  
Earnings (loss)  per Weighted Average Diluted Share $ 0.08   ($ 0.14 ) -  

Net income was $4.1 million in the second quarter of 2020, compared with net loss of $7.3 million in the same quarter of 2019. The decrease in loss was primarily due to the gain on disposal of long-live asset which was related to the real estate repurchase agreement of our Jinhua Facility’s relocation.

Financial Condition

As of June 30, 2020, the Company had cash and cash equivalents of $3.5 million, restricted cash of $3.2 million, working capital of $75.6 million; compared to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019.

As of June 30, 2020, our accounts receivable was $60.0 million, compared to $61.2 million as of December 31, 2019.

For the first half of 2020, cash used in operating activities was $34.3 million, as compared to cash used in operating activities of $33.1 million for the same period last year.

Second Quarter 2020 Conference Call DetailsThe Company will conduct a conference call and live webcast to discuss its second quarter 2020 financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on August 10, 2019. Management will deliver prepared remarks to be followed by a question and answer session.  

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

  • Toll-free dial-in number: +1-877-407-3982
  • International dial-in number: + 1-201-493-6780
  • Webcast and replay: http://public.viavid.com/index.php?id=1441129

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

About Kandi Technologies Group, Inc.

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

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

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

Safe Harbor Statement

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

Follow us on Twitter: @ Kandi_Group

For More Information:

Kandi Technologies Group, Inc.

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

The Blueshirt Group

U.S.:Mr. Gary DvorchakEmail: gary@blueshirtgroup.com

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

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

(UNAUDITED)

    June 30, 2020     December 31, 2019  
    (UNAUDITED)        
Current assets            
Cash and cash equivalents   $ 3,457,498     $ 5,490,557  
Restricted cash     3,221,053       11,022,078  
Accounts receivable (net of allowance for doubtful accounts of $251,012 and $254,665 as of June 30, 2020 and December 31, 2019, respectively)     60,020,455       61,181,849  
Inventories     28,245,267       27,736,566  
Notes receivable     -       42,487,225  
Other receivables     42,661,342       5,019,971  
Prepayments and prepaid expense     10,407,572       10,615,063  
Amount due from the Affiliate Company, net     20,107,347       31,330,763  
Other current assets     13,283,400       688,364  
TOTAL CURRENT ASSETS     181,403,934       195,572,436  
                 
LONG-TERM ASSETS                
Property, plant and equipment, net     69,907,964       74,407,858  
Intangible assets     3,298,384       3,654,772  
Land use rights, net     8,765,196       11,272,815  
Investment in the Affiliate Company     42,490,448       47,228,614  
Goodwill     27,962,871       28,270,400  
Other long term assets     10,529,348       10,811,501  
TOTAL Long-Term Assets     162,954,211       175,645,960  
                 
TOTAL ASSETS   $ 344,358,145     $ 371,218,396  
                 
CURRENT LIABILITIES                
Accounts payable   $ 59,656,133     $ 72,093,940  
Other payables and accrued expenses     4,239,760       6,078,041  
Short-term loans     -       25,980,364  
Notes payable     2,971,053       10,765,344  
Income tax payable     2,901,610       1,796,601  
Advance receipts     18,497,676       -  
Long term loans - current portion     16,128,576       13,779,641  
Other current liability     1,421,364       1,379,808  
Total Current Liabilities     105,816,172       131,873,739  
                 
LONG-TERM LIABILITIES                
Long term loans     11,712,415       14,353,792  
Deferred taxes liability     3,448,922       1,362,786  
Contingent consideration liability     2,334,000       5,197,000  
Other long-term liability     565,915       574,152  
Total Long-Term Liabilities     18,061,252       21,487,730  
                 
TOTAL LIABILITIES     123,877,424       153,361,469  
                 
STOCKHOLDER’S EQUITY                
Common stock, $0.001 par value; 100,000,000 shares authorized; 56,273,102 and 56,263,102 shares issued and 54,352,158 and 52,839,441 outstanding at June 30,2020 and December 31,2019, respectively     54,352       52,839  
Less: Treasury stock (487,155 shares with average price of $5.09 at June 30,2020 and December 31,2019, respectively )     (2,477,965 )     (2,477,965 )
Additional paid-in capital     262,878,585       259,691,370  
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at June 30,2020 and December 31,2019, respectively)     (14,205,339 )     (16,685,736 )
Accumulated other comprehensive loss     (25,768,912 )     (22,723,581 )
TOTAL STOCKHOLDERS’ EQUITY     220,480,721       217,856,927  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 344,358,145     $ 371,218,396  
 
 
 

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

             
    Three Months Ended     Six Months Ended  
    June 30, 2020     June 30, 2019     June 30, 2020     June 30, 2019  
                         
REVENUES FROM UNRELATED PARTY, NET   $ 19,436,120     $ 20,056,696     $ 25,808,544     $ 36,391,659  
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTY, NET     956       4,089,534       956       5,823,031  
                                 
REVENUES, NET     19,437,076       24,146,230       25,809,500       42,214,690  
                                 
COST OF GOODS SOLD     (15,900,298 )     (19,944,076 )     (21,105,463 )     (34,876,099 )
                                 
GROSS PROFIT     3,536,778       4,202,154       4,704,037       7,338,591  
                                 
OPERATING INCOME (EXPENSES):                                
Research and development     (1,149,901 )     (632,590 )     (1,790,141 )     (1,170,023 )
Selling and marketing     (763,666 )     (899,478 )     (1,641,972 )     (1,517,481 )
General and administrative     (3,907,191 )     (5,623,798 )     (6,973,926 )     (7,663,326 )
Gain on disposal of long-live asset     13,907,574       -       13,907,574       -  
Total Operating Income (Expenses)     8,086,816       (7,155,866 )     3,501,535       (10,350,830 )
                                 
INCOME (LOSS) FROM OPERATIONS     11,623,594       (2,953,712 )     8,205,572       (3,012,239 )
                                 
OTHER INCOME (EXPENSES):                                
Interest income     221,792       97,814       560,736       350,218  
Interest expense     (1,123,056 )     (429,355 )     (2,105,990 )     (868,538 )
Change in fair value of contingent consideration     (929,000 )     548,000       2,863,000       637,000  
Government grants     86,799       175,319       97,898       223,043  
Gain from equity dilution in the Affiliate Company     -       (24,131 )     -       4,341,259  
Share of loss after tax of the Affiliate Company     (2,978,529 )     (4,500,201 )     (4,081,299 )     (14,449,359 )
Other income (expenses), net     1,043,335       (174,597 )     1,062,985       299,793  
Total other expenses, net     (3,678,659 )     (4,307,151 )     (1,602,670 )     (9,466,584 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES     7,944,935       (7,260,863 )     6,602,902       (12,478,823 )
                                 
INCOME TAX (EXPENSE) BENEFIT     (3,889,889 )     (57,295 )     (4,122,502 )     751,193  
                                 
NET INCOME (LOSS)     4,055,046       (7,318,158 )     2,480,400       (11,727,630 )
                                 
OTHER COMPREHENSIVE INCOME (LOSS)                                
Foreign currency translation     477,734       (4,915,589 )     (3,045,331 )     488,439  
                                 
COMPREHENSIVE INCOME (LOSS)   $ 4,532,780     $ (12,233,747 )   $ (564,931 )   $ (11,239,191 )
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC     53,369,602       52,806,331       52,862,043       52,189,237  
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED     53,369,602       52,806,331       52,862,043       52,189,237  
                                 
NET INCOME (LOSS) PER SHARE, BASIC   $ 0.08     $ (0.14 )   $ 0.05     $ (0.22 )
NET INCOME (LOSS) PER SHARE, DILUTED   $ 0.08     $ (0.14 )   $ 0.05     $ (0.22 )
                                 
                                 
                                 

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

 
    Number of Outstanding Shares     Common Stock     Treasury Stock     Additional Paid-in Capital     Accumulated Deficit     Accumulated Other Comprehensive Income     Total  
Balance, December 31, 2018     51,484,444     $ 51,484     $  -     $ 254,989,657     $ (9,497,009 )   $ (19,921,258 )   $ 225,622,874  
Stock issuance and award     1,096,397       1,097       -       3,387,379       -       -       3,388,476  
Net income (loss)     -       -       -       -       (4,409,472 )     -       (4,409,472 )
Foreign currency translation     -       -       -       -       -       5,404,028       5,404,028  
                                                         
Balance, March 31, 2019     52,580,841     $ 52,581     $ -     $ 258,377,036     $ (13,906,481 )   $ (14,517,230 )   $ 230,005,906  
Stock issuance and award     238,600       238               1,259,569                       1,259,807  
Net income (loss)                                     (7,318,158 )             (7,318,158 )
Foreign currency translation                                             (4,915,589 )     (4,915,589 )
                                                         
Balance, June 30, 2019     52,819,441       52,819       -       259,636,605       (21,224,639 )     (19,432,819 )     219,031,966  
    Number of Outstanding Shares     Common Stock     Treasury Stock     Additional Paid-in Capital     Accumulated Deficit     Accumulated Other Comprehensive Income     Total  
Balance, December 31, 2019     52,839,441     $ 52,839     $ (2,477,965 )   $ 259,691,370     $ (16,685,736 )   $ (22,723,581 )   $ 217,856,927  
Stock issuance and award     10,000       10       -       22,290       -       -       22,300  
Net income (loss)     -       -       -       -       (1,574,646 )     -       (1,574,646 )
Foreign currency translation     -       -       -       -       -       (3,523,065 )     (3,523,065 )
                                                         
Balance, March 31, 2020     52,849,441     $ 52,849     $ (2,477,965 )   $ 259,713,660     $ (18,260,382 )   $ (26,246,646 )   $ 212,781,516  
Stock issuance and award     1,502,717       1,503       -       3,164,925       -       -       3,166,428  
Net income (loss)     -       -       -       -       4,055,043       -       4,055,043  
Foreign currency translation     -       -       -       -       -       477,734       477,734  
                                                         
Balance, June 30, 2020     54,352,158       54,352       (2,477,965 )     262,878,585       (14,205,339 )     (25,768,912 )     220,480,721  
 
 
 

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

             
    June 30, 2020     June 30, 2019  
             
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income (loss)   $ 2,480,400     $ (11,727,630 )
Adjustments to reconcile net income to net cash provided by operating activities                
Depreciation and amortization     4,022,676       4,376,097  
Impairments     (148,054 )     59,799  
Allowance for doubtful accounts     -       15,543  
Deferred taxes     2,089,505       51,275  
Share of loss after tax of the Affiliate Company     4,081,299       14,449,359  
Gain from equity dilution in the Affiliate Company     -       (4,341,259 )
Gain on disposal of long-live asset     (13,907,574 )     -  
Change in fair value of contingent consideration     (2,863,000 )     (637,000 )
Stock compensation cost     847,546       1,314,408  
                 
Changes in operating assets and liabilities:                
(Increase) Decrease In:                
Accounts receivable     (1,431,388 )     (16,560,338 )
Notes receivable     -       250,593  
Notes receivable from the Affiliate Company and related party     -       442,223  
Inventories     (743,483 )     (7,093,904 )
Other receivables and other assets     (11,248,701 )     (6,258,341 )
Advances to supplier and prepayments and prepaid expenses     (12,586,777 )     708,825  
Amount due from the Affiliate Company     4,129,516       (4,128,506 )
                 
Increase (Decrease) In:                
Accounts payable     (282,560 )     387,505  
Other payables and accrued liabilities     736,715       7,868,402  
Notes payable     (10,664,922 )     (10,161,233 )
Income tax payable     1,161,312       (2,134,722 )
Net cash used in by operating activities   $ (34,327,490 )   $ (33,118,904 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchases of property, plant and equipment, net     (59,670 )     (512,707 )
Proceeds from disposal of long-live asset     34,696,547       -  
Cash received from equity sale in the Affiliate Company     15,641,886       -  
Advance receipts of equity transfer     -       14,740,783  
Net cash provided by investing activities   $ 50,278,763     $ 14,228,076  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from short-term loans     24,031,625       17,541,532  
Repayments of short-term loans     (49,769,638 )     (15,920,046 )
Proceeds from long-term loans     394,116       -  
Repayments of long-term loans     (284,398 )     (147,408 )
Net cash (used in) provided by financing activities   $ (25,628,295 )   $ 1,474,078  
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH     (9,677,022 )     (17,416,750 )
Effect of exchange rate changes on cash     (157,062 )     246,604  
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR     16,512,635       22,353,071  
                 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD     6,678,551       5,182,925  
-CASH AND CASH EQUIVALENTS AT END OF PERIOD     3,457,498       3,608,933  
-RESTRICTED CASH AT END OF PERIOD     3,221,053       1,573,992  
                 
SUPPLEMENTARY CASH FLOW INFORMATION                
Income taxes paid     870,082       1,199,807  
Interest paid     641,213       868,538  
                 
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