UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2023
or
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______to______
Commission File Number 001-33997
KANDI TECHNOLOGIES GROUP,
INC.
(Exact name of registrant as specified in charter)
Delaware |
|
90-0363723 |
(State
or other jurisdiction of |
|
(I.R.S. Employer |
incorporation or organization) |
|
Identification No.) |
|
|
|
Jinhua New Energy Vehicle
Town
Jinhua, Zhejiang Province
People’s Republic of China |
|
321016 |
(Address of principal executive
offices) |
|
(Zip
Code) |
(86 - 579)
82239856
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
|
Trading Symbol(s) |
|
Name of each exchange on
which registered |
Common
Stock |
|
KNDI |
|
NASDAQ
Global Select Market |
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See
definitions of “large accelerated filer,” “accelerated filer”
“smaller reporting company” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of May 4, 2023, the registrant had 77,678,730 shares of common
stock issued and 74,190,171 shares of common stock outstanding, par
value $0.001 per share.
TABLE OF CONTENTS
PART I — FINANCIAL
INFORMATION
Item 1. Financial Statements.
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
March 31,
2023 |
|
|
December 31,
2022 |
|
|
|
(Unaudited) |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
75,133,544 |
|
|
$ |
84,063,717 |
|
Restricted cash |
|
|
62,949,702 |
|
|
|
66,976,554 |
|
Certificate of deposit |
|
|
100,484,949 |
|
|
|
81,191,191 |
|
Accounts receivable (net of allowance for doubtful accounts of
$2,295,570 and $2,285,386 as of March 31, 2023 and December 31,
2022, respectively) |
|
|
28,275,773 |
|
|
|
38,150,876 |
|
Inventories |
|
|
47,303,083 |
|
|
|
40,475,366 |
|
Notes receivable |
|
|
291,202 |
|
|
|
434,461 |
|
Other receivables |
|
|
8,940,359 |
|
|
|
11,912,615 |
|
Prepayments and prepaid expense |
|
|
3,227,740 |
|
|
|
2,970,261 |
|
Advances to suppliers |
|
|
1,049,800 |
|
|
|
3,147,932 |
|
TOTAL CURRENT ASSETS |
|
|
327,656,152 |
|
|
|
329,322,973 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
95,606,862 |
|
|
|
97,168,753 |
|
Intangible assets, net |
|
|
7,631,452 |
|
|
|
7,994,112 |
|
Land use rights, net |
|
|
2,901,166 |
|
|
|
2,909,950 |
|
Construction in progress |
|
|
232,485 |
|
|
|
199,837 |
|
Deferred tax assets |
|
|
1,432,527 |
|
|
|
1,432,527 |
|
Long-term investment |
|
|
145,630 |
|
|
|
144,984 |
|
Goodwill |
|
|
33,301,291 |
|
|
|
33,178,229 |
|
Other long-term assets |
|
|
10,568,944 |
|
|
|
10,630,911 |
|
TOTAL NON-CURRENT ASSETS |
|
|
151,820,357 |
|
|
|
153,659,303 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
479,476,509 |
|
|
$ |
482,982,276 |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
31,681,798 |
|
|
$ |
35,321,262 |
|
Other payables and accrued expenses |
|
|
11,696,505 |
|
|
|
14,131,414 |
|
Short-term loans |
|
|
4,210,589 |
|
|
|
5,569,154 |
|
Notes payable |
|
|
20,047,569 |
|
|
|
19,123,476 |
|
Income tax payable |
|
|
850,729 |
|
|
|
1,270,617 |
|
Other current liabilities |
|
|
6,024,221 |
|
|
|
6,089,925 |
|
TOTAL CURRENT LIABILITIES |
|
|
74,511,411 |
|
|
|
81,505,848 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Deferred taxes liability |
|
|
1,378,372 |
|
|
|
1,378,372 |
|
Contingent consideration liability |
|
|
2,164,000 |
|
|
|
1,803,000 |
|
Other long-term liabilities |
|
|
548,418 |
|
|
|
602,085 |
|
TOTAL NON-CURRENT LIABILITIES |
|
|
4,090,790 |
|
|
|
3,783,457 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
78,602,201 |
|
|
|
85,289,305 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 100,000,000 shares authorized;
77,678,730 and 77,668,730 shares issued and 74,190,171 and
74,180,171 outstanding at March 31,2023 and December 31,2022,
respectively |
|
|
77,679 |
|
|
|
77,669 |
|
Less:
Treasury stock (3,488,559 shares with average price of $2.81 at
both March 31,2023 and December 31,2022 ) |
|
|
(9,807,820 |
) |
|
|
(9,807,820 |
) |
Additional paid-in capital |
|
|
452,376,828 |
|
|
|
451,373,645 |
|
Accumulated deficit (the restricted portion is $4,422,033 and
$4,422,033 at March 31, 2023 and December 31, 2022,
respectively) |
|
|
(16,368,875 |
) |
|
|
(16,339,765 |
) |
Accumulated other comprehensive loss |
|
|
(26,750,552 |
) |
|
|
(28,333,239 |
) |
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS’ EQUITY |
|
|
399,527,260 |
|
|
|
396,970,490 |
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
1,347,048 |
|
|
|
722,481 |
|
TOTAL STOCKHOLDERS’ EQUITY |
|
|
400,874,308 |
|
|
|
397,692,971 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
479,476,509 |
|
|
$ |
482,982,276 |
|
See accompanying notes to condensed consolidated financial
statements
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
|
Three Months Ended |
|
|
|
March
31,
2023 |
|
|
March
31,
2022 |
|
|
|
|
|
|
|
|
REVENUES FROM UNRELATED PARTIES, NET |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
REVENUES FROM THE FORMER AFFILIATE COMPANY AND RELATED PARTIES,
NET |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
REVENUES, NET |
|
|
22,862,108 |
|
|
|
24,891,404 |
|
|
|
|
|
|
|
|
|
|
COST OF GOODS SOLD |
|
|
(14,832,878 |
) |
|
|
(22,504,241 |
) |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
8,029,230 |
|
|
|
2,387,163 |
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
Research and development |
|
|
(878,980 |
) |
|
|
(1,140,586 |
) |
Selling and marketing |
|
|
(1,827,729 |
) |
|
|
(1,193,699 |
) |
General and administrative |
|
|
(7,559,452 |
) |
|
|
(5,756,531 |
) |
TOTAL OPERATING EXPENSE |
|
|
(10,266,161 |
) |
|
|
(8,090,816 |
) |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
(2,236,931 |
) |
|
|
(5,703,653 |
) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
Interest income |
|
|
2,100,343 |
|
|
|
1,222,304 |
|
Interest expense |
|
|
(173,370 |
) |
|
|
(148,144 |
) |
Change in fair value of contingent consideration |
|
|
(361,000 |
) |
|
|
2,690,000 |
|
Government grants |
|
|
620,404 |
|
|
|
244,098 |
|
Other income, net |
|
|
266,465 |
|
|
|
43,782 |
|
TOTAL OTHER INCOME, NET |
|
|
2,452,842 |
|
|
|
4,052,040 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
|
215,911 |
|
|
|
(1,651,613 |
) |
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT |
|
|
379,546 |
|
|
|
32,600 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
|
595,457 |
|
|
|
(1,619,013 |
) |
|
|
|
|
|
|
|
|
|
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING
INTERESTS |
|
|
624,567 |
|
|
|
(2,957 |
) |
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO KANDI TECHNOLOGIES GROUP, INC.
STOCKHOLDERS |
|
|
(29,110 |
) |
|
|
(1,616,056 |
) |
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
1,582,687 |
|
|
|
1,009,811 |
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME (LOSS) |
|
$ |
2,178,144 |
|
|
$ |
(609,202 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING BASIC |
|
|
74,186,504 |
|
|
|
76,289,846 |
|
WEIGHTED
AVERAGE SHARES OUTSTANDING DILUTED |
|
|
75,095,595 |
|
|
|
76,289,846 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE, BASIC |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
NET INCOME (LOSS) PER SHARE, DILUTED |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
See accompanying notes to condensed consolidated financial
statements
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
|
|
Number
of
Outstanding
Shares |
|
|
Common
Stock |
|
|
Treasury
Stock |
|
|
Additional
Paid-in
Capital |
|
|
Accumulated
Earning
(Deficit) |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Non-controlling
interests |
|
|
Total |
|
Balance, December 31, 2021 |
|
|
77,385,130 |
|
|
$ |
77,385 |
|
|
$ |
(2,392,203 |
) |
|
$ |
449,479,461 |
|
|
$ |
(4,216,102 |
) |
|
$ |
251,786 |
|
|
$ |
-
|
|
|
$ |
443,200,327 |
|
Stock issuance and award |
|
|
25,000 |
|
|
|
25 |
|
|
|
-
|
|
|
|
92,925 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
92,950 |
|
Stock buyback |
|
|
- |
|
|
|
-
|
|
|
|
(1,570,324 |
) |
|
|
(13,236 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,583,560 |
) |
Capital contribution from shareholder |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,198,398 |
|
|
|
1,198,398 |
|
Net loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,616,056 |
) |
|
|
-
|
|
|
|
(2,957 |
) |
|
|
(1,619,013 |
) |
Foreign currency translation |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,009,811 |
|
|
|
-
|
|
|
|
1,009,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
|
77,410,130 |
|
|
$ |
77,410 |
|
|
$ |
(3,962,527 |
) |
|
$ |
449,559,150 |
|
|
$ |
(5,832,158 |
) |
|
$ |
1,261,597 |
|
|
$ |
1,195,441 |
|
|
$ |
442,298,913 |
|
|
|
Number
of
Outstanding
Shares |
|
|
Common
Stock |
|
|
Treasury
Stock |
|
|
Additional
Paid-in
Capital |
|
|
Accumulated
Earning
(Deficit) |
|
|
Accumulated
Other
Comprehensive
Income |
|
|
Non-controlling
interests |
|
|
Total |
|
Balance, December 31, 2022 |
|
|
77,668,730 |
|
|
$ |
77,669 |
|
|
$ |
(9,807,820 |
) |
|
$ |
451,373,645 |
|
|
$ |
(16,339,765 |
) |
|
$ |
(28,333,239 |
) |
|
$ |
722,481 |
|
|
$ |
397,692,971 |
|
Stock issuance and award |
|
|
10,000 |
|
|
|
10 |
|
|
|
-
|
|
|
|
22,290 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,300 |
|
Stock based compensation |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
980,893 |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
980,893 |
|
Net income (loss) |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(29,110 |
) |
|
|
-
|
|
|
|
624,567 |
|
|
|
595,457 |
|
Foreign currency translation |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,582,687 |
|
|
|
-
|
|
|
|
1,582,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2023 |
|
|
77,678,730 |
|
|
$ |
77,679 |
|
|
$ |
(9,807,820 |
) |
|
$ |
452,376,828 |
|
|
$ |
(16,368,875 |
) |
|
$ |
(26,750,552 |
) |
|
$ |
1,347,048 |
|
|
$ |
400,874,308 |
|
See accompanying notes to condensed consolidated financial
statements.
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Three Months Ended |
|
|
|
March
31,
2023 |
|
|
March
31,
2022 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income (loss) |
|
$ |
595,457 |
|
|
$ |
(1,619,013 |
) |
Adjustments to reconcile net (loss) income to net cash provided by
operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,051,089 |
|
|
|
3,294,499 |
|
Provision (reversal) of allowance for doubtful accounts |
|
|
-
|
|
|
|
4,389 |
|
Change in fair value of contingent consideration |
|
|
361,000 |
|
|
|
(2,690,000 |
) |
Stock award and stock based compensation expense |
|
|
1,003,818 |
|
|
|
22,925 |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
6,275,418 |
|
|
|
5,197,268 |
|
Notes receivable |
|
|
358,114 |
|
|
|
1,965,596 |
|
Inventories |
|
|
(6,750,531 |
) |
|
|
2,498,914 |
|
Other receivables and other assets |
|
|
3,108,680 |
|
|
|
(790,486 |
) |
Advances to supplier and prepayments and prepaid expenses |
|
|
1,865,040 |
|
|
|
1,425,684 |
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) In: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
6,097,620 |
|
|
|
3,088,095 |
|
Other payables and accrued liabilities |
|
|
(2,752,663 |
) |
|
|
(1,688,414 |
) |
Notes payable |
|
|
(5,413,459 |
) |
|
|
(4,401,457 |
) |
Income tax payable |
|
|
(437,385 |
) |
|
|
(119,559 |
) |
Net cash provided by operating activities |
|
$ |
7,362,198 |
|
|
$ |
6,188,441 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment, net |
|
|
(562,717 |
) |
|
|
(709,881 |
) |
Payment for construction in progress |
|
|
(72,188 |
) |
|
|
(246,971 |
) |
Certificate of deposit |
|
|
(19,001,959 |
) |
|
|
(15,759,448 |
) |
Net cash used in investing activities |
|
$ |
(19,636,864 |
) |
|
$ |
(16,716,300 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from short-term loans |
|
|
5,040,000 |
|
|
|
500,000 |
|
Repayments of short-term loans |
|
|
(6,398,565 |
) |
|
|
-
|
|
Contribution from non-controlling shareholder |
|
|
-
|
|
|
|
803,732 |
|
Purchase of treasury stock |
|
|
-
|
|
|
|
(1,583,561 |
) |
Net cash used in by financing activities |
|
$ |
(1,358,565 |
) |
|
$ |
(279,829 |
) |
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
$ |
(13,633,231 |
) |
|
$ |
(10,807,688 |
) |
Effect of exchange rate changes |
|
$ |
676,206 |
|
|
$ |
352,415 |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF
YEAR |
|
$ |
151,040,271 |
|
|
$ |
168,676,007 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
|
$ |
138,083,246 |
|
|
$ |
158,220,734 |
|
-CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
|
75,133,544 |
|
|
|
99,997,938 |
|
-RESTRICTED CASH AT END OF PERIOD |
|
|
62,949,702 |
|
|
|
58,222,796 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
17,433 |
|
|
$ |
5,496 |
|
Interest paid |
|
$ |
99,960 |
|
|
$ |
37,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-CASH DISCLOSURES: |
|
|
|
|
|
|
|
|
Contribution from non-controlling shareholder by inventories, fixed
assets and intangible assets |
|
$ |
-
|
|
|
$ |
393,986 |
|
See accompanying notes to condensed consolidated financial
statements
NOTE 1 - ORGANIZATION
AND PRINCIPAL ACTIVITIES
Kandi Technologies Group, Inc. (“Kandi Technologies”) was
incorporated under the laws of the State of Delaware on March 31,
2004. As used herein, the terms “Company” or “Kandi” refer to Kandi
Technologies and its operating subsidiaries, as described
below.
Headquartered in Jinhua City, Zhejiang Province, People’s Republic
of China (“China” or “PRC”), the Company is one of China’s leading
producers and manufacturers of electric vehicle (“EV”) products, EV
parts, and off-road vehicles for sale in the Chinese and the global
markets. The Company conducts its primary business operations
through its wholly-owned subsidiaries, Zhejiang Kandi Vehicles Co.,
Ltd. (“Kandi Vehicles”), Kandi Vehicles’ wholly and partially-owned
subsidiaries, and SC Autosports, LLC (“SC Autosports”, d/b/a Kandi
America) and its wholly-owned subsidiary, Kandi America Investment,
LLC (“Kandi Investment”). In March 2021, Zhejiang Kandi Vehicles
Co., Ltd. changed its name to Zhejiang Kandi Technologies Group
Co., Ltd. (“Zhejiang Kandi Technologies”).
The Company’s organizational chart as of the date of this report is
as follows:

NOTE 2 -
LIQUIDITY
The Company had working capital of $253,144,741 as of March
31, 2023, an increase of $5,327,616 from the working capital
of $247,817,125 as of December 31, 2022. As of March 31,
2023 and December 31, 2022, the Company’s cash and cash equivalents
were $75,133,544 and $84,063,717, respectively, and the
Company’s restricted cash was $62,949,702 and $66,976,554,
respectively. As of March 31, 2023 and December 31, 2022, the
Company had multiple certificates of deposit with a total amount of
$100,484,949 and $81,191,191, respectively. These certificates of
deposit have an annual interest rate from 3.10%
to 3.99% which can be transferred when necessary without any
penalty or any loss of interest and principal.
Although the Company expects that most of its outstanding trade
receivables from customers will be collected in the next twelve
months, there are uncertainties with respect to the timing in
collecting these receivables.
The Company’s primary need for liquidity stems from its need to
fund working capital requirements of the Company’s businesses, its
capital expenditures and its general operations, including debt
repayment. The Company has historically financed its operations
through short-term commercial bank loans from Chinese banks, as
well as its ongoing operating activities by using funds from
operations, external credit or financing
arrangements. Currently the Company has sufficient cash in
hand to meet the existing operational needs, but the credit
line is retained and can be utilized timely when the Company has
special capital needs. The PRC subsidiaries do not have any
short-term bank loans and the US subsidiaries have $4.2
million short-term bank loans outstanding as of March 31,
2023.
NOTE 3 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”) for interim information, and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the
Securities and Exchange Commission (“SEC”). Accordingly, they do
not include all of the information and notes required by U.S. GAAP
for annual financial statements. In management’s opinion, the
interim financial statements reflect all normal adjustments that
are necessary to provide a fair presentation of the financial
results for the interim periods presented. Operating results for
interim periods are not necessarily indicative of results that may
be expected for an entire fiscal year. The condensed consolidated
balance sheet as of December 31, 2022 has been derived from
the audited consolidated financial statements as of such date. For
a more complete understanding of the Company’s business, financial
position, operating results, cash flows, risk factors and other
matters, please refer to its Annual Report on Form 10-K for the
fiscal year ended December 31, 2022 (the “2022 Form 10-K”)
filed with SEC on March 16, 2023.
NOTE 4 - PRINCIPLES OF CONSOLIDATION
The Company’s condensed consolidated financial statements reflect
the accounts of the Company and its ownership interests in the
following subsidiaries:
|
(1) |
Continental Development Limited (“Continental”),
a wholly-owned subsidiary of the Company, incorporated under the
laws of Hong Kong; |
|
(2) |
Zhejiang Kandi Technologies, a wholly-owned
subsidiary of Continental, incorporated under the laws of the
PRC; |
|
(3) |
Kandi
New Energy Vehicle Co. Ltd. (“Kandi New Energy”), formerly,
a 50%-owned subsidiary of Zhejiang Kandi Technologies (Mr. Hu
Xiaoming owned the other 50%), incorporated under the laws of
the PRC. Pursuant to agreements executed in January 2011, Mr. Hu
Xiaoming contracted with Zhejiang Kandi Technologies for the
operation and management of Kandi New Energy and put his shares of
Kandi New Energy into escrow. As a result, Zhejiang Kandi
Technologies was entitled to 100% of the economic benefits,
voting rights and residual interests of Kandi New Energy. Effective
March 14, 2022, Mr. Hu Xiaoming transferred his 50% equity
interests of Kandi New Energy to Zhejiang Kandi Technologies. As a
result, Kandi New Energy has become a wholly-owned subsidiary of
Zhejiang Kandi Technologies; |
|
(4) |
Kandi
Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”), a
subsidiary 55% owned by Kandi New Energy and 45% owned by
Zhejiang Kandi Technologies, incorporated under the laws of the
PRC; |
|
(5) |
Zhejiang Kandi Smart Battery Swap Technology Co.,
Ltd (“Kandi Smart Battery Swap”), a wholly-owned subsidiary of
Zhejiang Kandi Technologies, incorporated under the laws of the
PRC; |
|
(6) |
Yongkang Scrou Electric Co, Ltd. (“Yongkang
Scrou”), a wholly-owned subsidiary of Kandi Smart Battery Swap,
incorporated under the laws of the PRC; |
|
(7) |
SC
Autosports (d/b/a Kandi America), a wholly-owned subsidiary of the
Company formed under the laws of the State of Texas. |
|
(8) |
China
Battery Exchange (Zhejiang) Technology Co., Ltd. (“China Battery
Exchange”), a wholly-owned subsidiary of Zhejiang Kandi
Technologies, and its subsidiaries, incorporated under the laws of
the PRC; |
|
(9) |
Kandi
America Investment, LLC (“Kandi Investment”), a wholly-owned
subsidiary of SC Autosports formed under the laws of the State of
Texas, USA; |
|
(10) |
Jiangxi Province Huiyi New Energy Co., Ltd.
(“Jiangxi Huiyi”) and its subsidiaries, a wholly-owned subsidiary
of Zhejiang Kandi Technologies, incorporated under the laws of the
PRC; and |
|
|
|
|
(11) |
Hainan Kandi Holding New Energy Technology Co.,
Ltd. (“Hainan Kandi Holding”), a subsidiary of Kandi Hainan,
incorporated under the laws of the PRC; Kandi Hainan owns 66.7% and
a non-affiliate, Jiangsu Xingchi owns 33.3% of Hainan
Kandi Holding. Consequently, effective February 15, 2022,
non-controlling interests of an aggregate of 33.3% of the equity
interests of Hainan Kandi Holding held by an entity are presented
in the consolidated balance sheets, separately from equity
attributable to the shareholders of the Company. Non-controlling
interest in the results of the Company are presented on the
consolidated statement of operations as an allocation of the total
income or loss for the period between non-controlling interest
holders and the shareholders of the Company. |
NOTE 5 - USE OF ESTIMATES
The preparation of the unaudited condensed consolidated financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, and related disclosures of contingent
assets and liabilities at the balance sheet date, and the reported
revenues and expenses during the reported period in the unaudited
condensed consolidated financial statements and accompanying notes.
Significant accounting estimates reflected in the Company’s
unaudited condensed consolidated financial statements primarily
include, but are not limited to, allowances for doubtful accounts,
lower of cost and net realizable value of inventory, assessment for
impairment of long-lived assets and intangible assets, valuation of
deferred tax assets, change in fair value of contingent
consideration, determination of share-based compensation expenses
as well as fair value of stock warrants.
Management bases the estimates on historical experience and on
various other assumptions that are believed to be reasonable, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities. Actual results could
differ from these estimates.
NOTE 6 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are detailed in “Note 6 -
Summary of Significant Accounting Policies” of the Company’s 2022
Form 10-K.
NOTE 7 - NEW ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Adopted
In October 2021, the FASB issued ASU 2021-08, “Business
Combinations (Topic 805) – Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers”, which requires
that an acquirer recognize and measure contract assets and contract
liabilities acquired in a business combination in accordance with
Topic 606, as if it had originated the contracts. Prior to this
ASU, an acquirer generally recognizes contract assets acquired and
contract liabilities assumed that arose from contracts with
customers at fair value on the acquisition date. The ASU is
effective for fiscal years beginning after December 15, 2022, with
early adoption permitted. The ASU is applied prospectively to
business combinations occurring on or after the effective date of
the amendment (or if adopted early as of an interim period, as of
the beginning of the fiscal year that includes the interim period
of early application). The Company has adopted this accounting
pronouncement from January 1, 2023, and there was no material
impact on its consolidated financial statements from the
adoption.
NOTE 8
- CONCENTRATIONS
(a) Customers
For the three-month period ended March 31, 2023 and 2022, the
Company’s major customers, each of whom accounted for more than 10%
of the Company’s consolidated revenue, were as follows:
|
|
Sales |
|
|
Trade Receivable |
|
|
|
Three
Months |
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
March
31, |
|
|
March
31, |
|
|
December 31, |
|
Major Customers |
|
2023 |
|
|
2023 |
|
|
2022 |
|
Customer A |
|
|
62 |
% |
|
|
-
|
|
|
|
1 |
% |
|
|
Sales |
|
|
Trade Receivable |
|
|
|
Three
Months |
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
March
31, |
|
|
March
31, |
|
|
December 31, |
|
Major Customers |
|
2022 |
|
|
2022 |
|
|
2021 |
|
Customer B |
|
|
13 |
% |
|
|
8 |
% |
|
|
-
|
|
Customer C |
|
|
10 |
% |
|
|
3 |
% |
|
|
2 |
% |
Customer D |
|
|
10 |
% |
|
|
-
|
|
|
|
-
|
|
(b) Suppliers
For the three-month period ended March 31, 2023, there were no
suppliers that accounted for more than 10% of the Company’s
total purchases. For the three-month period ended March 31, 2022,
the Company’s material suppliers, each of whom accounted for more
than 10% of the Company’s total purchases, were as
follows:
|
|
Purchases |
|
|
Accounts Payable |
|
|
|
Three Months |
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
March 31, |
|
|
March 31, |
|
|
December 31, |
|
Major Suppliers |
|
2022 |
|
|
2022 |
|
|
2021 |
|
ODES USA,
Inc. |
|
|
26 |
% |
|
|
2 |
% |
|
|
1 |
|
Hunan Jinfuli New Energy Co.,
Ltd |
|
|
15 |
% |
|
|
9 |
% |
|
|
8 |
% |
Zhejiang Kandi Supply Chain
Management Co., Ltd. |
|
|
11 |
% |
|
|
14 |
% |
|
|
11 |
% |
NOTE 9 - EARNINGS
(LOSS) PER SHARE
The Company calculates earnings (loss) per share in accordance with
ASC 260, Earnings Per Share, which requires a dual presentation of
basic and diluted earnings (loss) per share. Basic earnings (loss)
per share are computed using the weighted average number of shares
outstanding during the reporting period. Diluted earnings (loss)
per share represents basic earnings (loss) per share adjusted to
include the potentially dilutive effect of outstanding stock
options and warrants (using treasury stock method).
Due to the average market price of the common stock during the
period being below the exercise price of certain options and
warrants, approximately 900,000 options and 8,131,332
warrants were excluded from the calculation of diluted earnings per
share, for the three-month ended March 31, 2023. On September
7, 2022, the Compensation Committee of the Board of Directors of
the Company approved the grant of 5,000,000 stock options, at an
exercise price of $2.07 per share. There were dilutive effects of
909,091 shares for the three-month period ended March 31, 2023.
Due to the average market price of the common stock during the
period below the exercise price of the options,
approximately 900,000 options and 8,131,332 warrants were
excluded from the calculation of diluted earnings per share, for
the three-month period ended March 31, 2022.
NOTE 10 - ACCOUNTS
RECEIVABLE
Accounts receivable are summarized as follows:
|
|
March
31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Accounts receivable |
|
$ |
30,571,343 |
|
|
$ |
40,436,262 |
|
Less: allowance
for doubtful accounts |
|
|
(2,295,570 |
) |
|
|
(2,285,386 |
) |
Accounts
receivable, net |
|
$ |
28,275,773 |
|
|
$ |
38,150,876 |
|
The following table sets forth the movement of provision for
doubtful accounts:
|
|
Allowance
for Doubtful
Accounts |
|
BALANCE AT DECEMBER 31, 2021 |
|
$ |
3,053,277 |
|
Provision |
|
|
456,974 |
|
Recovery |
|
|
(999,775 |
) |
Exchange rate
difference |
|
|
(225,090 |
) |
BALANCE AT
DECEMBER 31, 2022 |
|
$ |
2,285,386 |
|
Exchange rate
difference |
|
|
10,184 |
|
BALANCE AT
MARCH 31, 2023 |
|
$ |
2,295,570 |
|
NOTE 11
- INVENTORIES
Inventories are summarized as follows:
|
|
March
31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Raw material |
|
$ |
6,871,757 |
|
|
$ |
6,551,450 |
|
Work-in-progress |
|
|
7,662,294 |
|
|
|
4,114,550 |
|
Finished goods
* |
|
|
32,769,032 |
|
|
|
29,809,366 |
|
Inventories |
|
$ |
47,303,083 |
|
|
$ |
40,475,366 |
|
|
* |
As of
March 31, 2023, approximately $22.8 million of inventory of
off-roads and EVs held by SC Autosports were pledged as collateral
for the $2,000,000 short-term loan. |
NOTE 12 - PROPERTY, PLANT AND EQUIPMENT, NET
Property, plants and equipment as of March 31, 2023 and December
31, 2022, consisted of the following:
|
|
March
31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
At cost: |
|
|
|
|
|
|
Buildings |
|
$ |
49,916,484 |
|
|
$ |
49,239,626 |
|
Machinery and equipment |
|
|
76,311,324 |
|
|
|
77,845,979 |
|
Office equipment |
|
|
1,543,757 |
|
|
|
1,528,135 |
|
Motor vehicles and other transport
equipment |
|
|
1,818,895 |
|
|
|
1,810,825 |
|
Molds and
others |
|
|
12,972,967 |
|
|
|
10,983,573 |
|
|
|
|
142,563,427 |
|
|
|
141,408,138 |
|
Less :
Accumulated depreciation |
|
|
(46,956,565 |
) |
|
|
(44,239,385 |
) |
Property, plant
and equipment, net |
|
$ |
95,606,862 |
|
|
$ |
97,168,753 |
|
The Company’s Jinhua factory completed the relocation to a new
industrial park in April 2021. The new location covers an area of
more than 57,000 square meters and a construction area of more than
98,000 square meters. The Company’s off-road vehicles, EV battery
packs, electric scooters battery packs, smart battery swap system
and some EV parts are manufactured in the Jinhua factory. The
Company’s Jinhua factory owns the above production facilities.
The Company’s EV products, EV parts and electrical
off-road vehicles, including Neighborhood EVs (“NEVs”), pure
electric utility vehicles (“UTV”), pure electric golf cart and EV
parts are manufactured in the Hainan factory. The Company’s Hainan
factory expects to have production capacity with an annual output
(three shifts) of 100,000 units of various models of EV products,
EV parts and electrical off-road vehicles and owns the above
facilities. Currently, the environmental protection, planning, fire
protection, conservation of water and soil, and drainage of the
Hainan factory have all passed the acceptance inspection, and are
currently undergoing the archive acceptance. The Hainan factory is
ready for formal production.
Depreciation expenses for the three months ended March 31, 2023 and
2022 were $2,578,224 and $2,701,507, respectively.
NOTE 13 - INTANGIBLE ASSETS
Intangible assets include acquired other intangibles of trade name,
customer relations, patent and technology recorded at estimated
fair values in accordance with purchase accounting guidelines for
acquisitions.
The following table provides the gross carrying value and
accumulated amortization for each major class of our intangible
assets, other than goodwill:
|
|
Remaining |
|
March 31, |
|
|
December 31, |
|
|
|
useful life |
|
2023 |
|
|
2022 |
|
Gross carrying amount: |
|
|
|
|
|
|
|
|
Patent |
|
2.25-3.92 years |
|
$ |
4,960,775 |
|
|
|
4,938,765 |
|
Technology |
|
3.75-5.75 years |
|
|
7,405,304 |
|
|
|
10,003,915 |
|
|
|
|
|
|
12,366,079 |
|
|
|
14,942,680 |
|
Less : Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
Patent |
|
|
|
$ |
(2,911,819 |
) |
|
|
(2,744,024 |
) |
Technology |
|
|
|
|
(1,822,808 |
) |
|
|
(1,573,079 |
) |
|
|
|
|
|
(4,734,627 |
) |
|
|
(4,317,103 |
) |
Less :
impairment for intangible assets |
|
|
|
|
-
|
|
|
|
(2,631,465 |
) |
Intangible
assets, net |
|
|
|
$ |
7,631,452 |
|
|
$ |
7,994,112 |
|
The aggregate amortization expenses for those intangible assets
that continue to be amortized is reflected in amortization of
intangible assets in the Unaudited Condensed Consolidated
Statements of Income and Comprehensive Income and were $399,757 and
$514,169 for the three months ended March 31, 2023 and 2022,
respectively.
Amortization expenses for the next five years and thereafter are as
follows:
Nine months ended December
31, 2023 |
|
$ |
1,199,271 |
|
Years ended December 31, |
|
|
|
|
2024 |
|
|
1,599,030 |
|
2025 |
|
|
1,536,217 |
|
2026 |
|
|
1,326,047 |
|
2027 |
|
|
1,017,076 |
|
Thereafter |
|
|
953,811 |
|
Total |
|
$ |
7,631,452 |
|
NOTE 14 - LAND USE RIGHTS, NET
The Company’s land use rights consist of the following:
|
|
March
31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Cost of land use
rights |
|
$ |
3,826,186 |
|
|
$ |
3,809,211 |
|
Less:
Accumulated amortization |
|
|
(925,020 |
) |
|
|
(899,261 |
) |
Land use rights,
net |
|
$ |
2,901,166 |
|
|
$ |
2,909,950 |
|
The amortization expenses for the three months ended March 31, 2023
and 2022, were $21,831 and $23,538, respectively.
Amortization expenses for the next five years and thereafter are as
follows:
Nine months ended December
31, 2023 |
|
$ |
65,494 |
|
Years ended December 31, |
|
|
|
|
2024 |
|
|
87,326 |
|
2025 |
|
|
87,326 |
|
2026 |
|
|
87,326 |
|
2027 |
|
|
87,326 |
|
Thereafter |
|
|
2,486,368 |
|
Total |
|
$ |
2,901,166 |
|
NOTE 15 - OTHER LONG TERM ASSETS
Other long term assets as of March 31, 2023 and December 31, 2022,
consisted of the following:
|
|
March
31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Prepayments for land use
right (i) |
|
$ |
3,913,260 |
|
|
|
3,917,226 |
|
Right - of - use asset (ii) |
|
|
6,325,177 |
|
|
|
6,383,824 |
|
Others |
|
|
330,507 |
|
|
|
329,861 |
|
Total other
long-term asset |
|
$ |
10,568,944 |
|
|
$ |
10,630,911 |
|
(i) |
As
of March 31, 2023 and December 31, 2022, the Company’s other
long term assets included net value of prepayments for land use
right of Hainan facility of $3,913,260 and $3,917,226,
respectively. As of March 31, 2023, the land use right of Hainan
was not recognized since the land certificate is still in process.
The amortization expense for the three months ended March 31, 2023
and 2022 were $21,502 and $23,183, respectively. |
(ii) |
As
of March 31, 2023 and December 31, 2022, the Company’s
operating lease right-of-use assets in other long term assets
included net value of land use right of Jinhua facility acquired in
October 2020 and Jiangxi facility acquired in October 2021 of
$5,693,446 and $5,697,720, respectively, as well as the amount
of $631,731 and $686,104 related to the lease of Hangzhou office
starting January 1, 2022, respectively. The amortization expense of
land use right of Jinhua facility and Jiangxi facility for the
three months ended March 31, 2023 and 2022 were $29,775 and
$32,102, respectively. |
NOTE 16 - TAXES
(a) Corporation Income Tax
Pursuant to the tax laws and regulations of the PRC, the Company’s
applicable corporate income tax (“CIT”) rate is 25%. However,
Zhejiang Kandi Technologies, Kandi Smart Battery Swap, Jiangxi
Huiyi and Kandi Hainan qualify as High and New Technology
Enterprise (“HNTE”) companies in the PRC, and are entitled to a
reduced income tax rate of 15% for the years presented. A HNTE
Certificate is valid for three years. An entity may re-apply for an
HNTE certificate when the prior certificate expires. Historically,
Zhejiang Kandi Technologies, Kandi Smart Battery Swap, Jiangxi
Huiyi have successfully re-applied for such certificates when their
prior certificates expired. Kandi Hainan has been qualified as a
HNTE since 2020. Therefore, it will apply for its first renewal
when eligible. Additionally, Hainan Kandi Holding also has an
income tax rate of 15% due to its local preferred tax rate in
Hainan Free Trade Port. The applicable CIT rate of each of the
Company’s other subsidiaries, Kandi New Energy, Yongkang Scrou,
China Battery Exchange and its subsidiaries is 25%.
The Company’s provision or benefit from income taxes for interim
periods is determined using an estimate of the Company’s annual
effective tax rate, adjusted for discrete items, if any, that are
taken into account in the relevant period. Each quarter the Company
updates its estimate of the annual effective tax rate, and if its
estimated tax rate changes, management makes a cumulative
adjustment. For 2023, the Company’s effective tax rate is favorably
affected by a super-deduction for qualified research and
development costs and adversely affected by non-deductible expenses
such as stock rewards for non-US employees, and part of
entertainment expenses. The Company records valuation allowances
against the deferred tax assets associated with losses and other
timing differences for which we may not realize a related tax
benefit. After combining research and development tax credits
of 25% on certain qualified research and development expenses, the
Company’s effective tax rate for the three months ended March 31,
2023 and 2022 was a tax benefit of 175.79% on a reported income
before taxes of approximately $0.2 million, a tax benefit of 1.97%
on a reported loss before taxes of approximately $1.7 million,
respectively.
The quarterly tax provision, and the quarterly estimate of the
Company’s annual effective tax rate, is subject to significant
variation due to several factors, including variability in
accurately predicting the Company’s pre-tax and taxable income and
loss, acquisitions (including integrations) and investments,
changes in its stock price, changes in its deferred tax assets and
liabilities and their valuation, return to provision true-up,
foreign currency gains (losses), changes in regulations and
interpretations related to tax, accounting, and other areas.
Additionally, the Company’s effective tax rate can be volatile
based on the amount of pre-tax income or loss. The income tax
provision for the three months ended March 31, 2023 and 2022 was
tax benefit of $379,546 and tax benefit of $32,600,
respectively.
Under ASC 740 guidance relating to uncertain tax positions, which
addresses the determination of whether tax benefits claimed or
expected to be claimed on a tax return should be recorded in the
financial statements, the Company may recognize the tax benefit
from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate settlement. ASC 740 also provides guidance on
de-recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures. As of March 31, 2023, the Company did not have any
liability for unrecognized tax benefits. The Company files income
tax returns with the U.S. Internal Revenue Services (“IRS”) and
those states where the Company has operations. The Company is
subject to U.S. federal or state income tax examinations by the IRS
and relevant state tax authorities. During the periods open to
examination, the Company has net operating loss carry forwards
(“NOLs”) for U.S. federal and state tax purposes that have
attributes from closed periods. Since these NOLs may be utilized in
future periods, they remain subject to examination. The Company
also files certain tax returns in the PRC. As of March 31, 2023,
the Company was not aware of any pending income tax examinations by
U.S. or PRC tax authorities. The Company records interest and
penalties on uncertain tax provisions as income tax expense. As of
March 31, 2023, the Company has no accrued interest or penalties
related to uncertain tax positions.
The tax effected aggregate Net Operating Loss (“NOL”) was $8.5
million and $6.2 million in tax year 2022 and 2021, which were
deriving from entities in the PRC, Hong Kong and U.S. Some of the
NOLs will start to expire from 2026 if they are not used. The
cumulative NOL in the PRC can be carried forward for five years in
general, and ten years for entities qualify High and New Technology
Enterprise (“HNTE”) treatment, which is $0.6 million and $7.9
million respectfully, to offset future net profits for income tax
purposes.
(b) Tax Holiday Effect
For the three months ended March 31, 2023 and 2022, the PRC CIT
rate was 25%. Certain subsidiaries of the Company are entitled to
tax exemptions (tax holidays) for the three months ended March 31,
2023 and 2022.
The combined effects of income tax expense exemptions and
reductions available to the Company for the three months ended
March 31, 2023 and 2022 are as follows:
|
|
Three
Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Tax benefit (holiday)
credit |
|
$ |
433,950 |
|
|
$ |
154,097 |
|
Basic net income per share effect |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
NOTE 17 - LEASES AND RIGHT-OF-USE-ASSETS
During October 2020, land use right of gross value of $3.5 million
was acquired from the government as the new site of Jinhua
Facility’s relocation as per the Repurchase Agreement. On October
31, 2021, the Company acquired $2.8 million of land use rights
through the acquisition of Jiangxi Huiyi. This land use rights was
wholly prepaid.
The Company has entered into a lease for Hangzhou office, with a
term of 48 months from January 1, 2022 to December 31, 2025. The
Company recorded operating lease assets and operating lease
liabilities on January 1, 2022, with a remaining lease term of 48
months and discount rate of 3.70%. The annual lease payment for
2022 was prepaid as of January 1, 2022. The Company has paid the
first year of lease and deposit amount of $262,309.
The Company also elected to apply the short-term lease exception
for lease arrangements with a lease term of 12 months or less at
commencement. Lease terms used to compute the present value of
lease payments do not include any option to extend, renew or
terminate the lease that the Company is not able to reasonably
certain to exercise upon the lease inception. Accordingly,
operating lease right-of-use assets and liabilities do not include
leases with a lease term of 12 months or less.
As of March 31, 2023, the Company’s operating lease right-of-use
assets (grouped in other long-term assets on the balance sheet) was
$6,325,177 and lease liability was $622,156 (grouped in other
current liabilities and other long-term liabilities on the balance
sheet). For the three months ended March 31, 2023 and 2022, the
Company’s operating lease expense were $87,417 and $94,250,
respectively.
Supplemental information related to operating leases was as
follows:
|
|
Three
Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Cash payments for
operating leases |
|
$ |
29,775 |
|
|
$ |
94,250 |
|
Maturities of lease liabilities as of March 31, 2023 were as
follow:
Maturity of Lease Liabilities: |
|
Lease payable |
|
Years ended December 31,
2023 |
|
$ |
163,018 |
|
2024 |
|
|
225,399 |
|
2025 |
|
|
233,739 |
|
NOTE 18 - CONTINGENT CONSIDERATION LIABILITY
On October 31, 2021, the Company completed the acquisition of 100%
of the equity of Jiangxi Huiyi. The Company paid approximately RMB
50 million (approximately $7.9 million) at the closing of the
transaction using cash on hand and may be required to pay future
consideration of up to an additional 2,576,310 shares of common
stock, or the total make good shares, upon the achievement of
certain net income-based milestones in the next three years. Due to
the latest COVID-19 outbreak and extended lockdown in some areas in
China, in June 2022, the Company agreed with the original
shareholders of Jiangxi Huiyi (the “Transferors”) to revise the
conditions of the annual profit target and extension of evaluation
period for the first year. Pursuant to the supplementary agreement,
the Transferors have the right to obtain 858,770 KNDI shares in
each of the below-mentioned periods, provided that Jiangxi Huiyi
achieves a net income of 1) RMB 8 million yuan or more during the
period from July 1, 2021 to September 30, 2022 (“Period I”); 2) RMB
15 million yuan or more during the period from October 1, 2022 to
September 30, 2023 (“Period II”); 3) RMB 15 million yuan or more
during the period from October 1, 2023 to September 30, 2024
(“Period III”). If the net income of Jiangxi Huiyi fails to reach
the respective target number in any of the three periods, the
shares that the Transferors are entitled to obtain in that period
will be adjusted accordingly: 1) if the difference between the net
income in each Period and its Target Number is less than or
equivalent to 20% of its Target Number (RMB 8 Million in Period I
or RMB 15 Million in Period II or Period III), the transferee or
KNDI has right to directly subtract 171,754 KNDI shares from the
total make good shares, and the Transferor are entitled to obtain
687,016 KNDI shares; 2) if the difference between the net income in
each Period and its Target Number (RMB 8 Million in Period I or RMB
15 Million in Period II or Period III) is more than 20% of its
Target Number but less than 40% of its Target Number, the
transferee or KNDI has the right to directly subtract 343,508 KNDI
shares from the total make good shares, and the Transferors have
the right to obtain 515,262 KNDI shares; 3) if the difference
between the net income in each Period and its Target Number (RMB 8
Million in Period I or RMB 15 Million in Period II or Period III)
is greater than or equal to 40% of its Target Number, the
transferee of KNDI has the right to directly subtract 858,770 KNDI
shares from the total make good shares, and the Transferors will
not have the right to obtain any shares in such year. For the
period from July 1, 2021 to September 30, 2022, Jiangxi Huiyi
achieved its net profit target. Accordingly, the Transferors will
receive 858,770 shares of Kandi’s restrictive common stock as part
of the purchase price.
The Company recorded contingent consideration liability of the
estimated fair value of the contingent consideration the Company
currently expects to pay to the KSBS Shareholders and Jiangxi
Huiyi’s former members upon the achievement of certain milestones.
The fair value of the contingent consideration liability associated
with remaining shares of restrictive common stock was estimated by
using the Monte Carlo simulation method, which took into account
all possible scenarios. This fair value measurement is classified
as Level 3 within the fair value hierarchy prescribed by ASC Topic
820, Fair Value Measurement and Disclosures. In accordance with ASC
Topic 805, Business Combinations, the Company will re-measure this
liability each reporting period and record changes in the fair
value through a separate line item within the Company’s
consolidated statements of income.
As of March 31, 2023 and December 31, 2022, the Company’s
contingent consideration liability to former members of Jiangxi
Huiyi was $2,164,000 and $1,803,000, respectively.
NOTE 19 - STOCK OPTIONS
On September 7, 2022, the Compensation Committee of the Board of
Directors of the Company approved the grant of stock options to
purchase 5,000,000 shares of the Company’s common stock, at an
exercise price of $2.07 per share, to the Company’s senior
employees. The stock options will vest ratably over three years on
October 7, 2023, October 7, 2024 and October 7, 2025, respectively,
and expire on the tenth anniversary of the grant date. The Company
valued the stock options at $$6,704,829 and has amortized the stock
compensation expense using the graded vesting method over the
service period from September 7, 2022, through October 7, 2025. The
value of the stock options was estimated using the Binomial Tree
Model with an expected volatility of 79.83%, an expected life of 10
years, a risk-free interest rate of 3.27% and an expected dividend
yield of 0.00%. There were $980,893 and $0 in stock compensation
expenses associated with stock options booked for the three months
ended March 31, 2023 and 2022, respectively.
NOTE 20 - STOCK AWARD
In connection with the appointment of Mr. Henry Yu as a member of
the Board of Directors (the “Board”), the Board authorized the
Company to compensate Mr. Henry Yu with 5,000 shares of
Company’s restricted common stock every six months as compensation,
beginning in July 2011.
As compensation for Mr. Jerry Lewin’s services as a member of the
Board, the Board authorized the Company to compensate Mr. Jerry
Lewin with 5,000 shares of Company’s restricted common
stock every six months, beginning in August 2011.
As compensation for Ms. Kewa Luo’s services as the Company’s
investor relation officer, the Board authorized the Company to
compensate Ms. Kewa Luo with 2,500 shares of the
Company’s common stock every three months, beginning in September
2013.
On May 15, 2020, the Board appointed Mr. Jehn Ming Lim as the Chief
Financial Officer. Mr. Lim was entitled to
receive 6,000 shares of the common stock annually, which
shall be issuable evenly on each six-month anniversary hereof.
On January 10, 2023, the Board appointed Dr. Xueqin Dong as the
Chief Executive Officer, Dr. Dong was entitled to
receive 20,000 shares of the common stock.
The fair value of stock awards with service condition is determined
based on the closing price of the common stock on the date the
shares are granted. The compensation costs for awards of common
stock are recognized over the requisite service period.
On December 30, 2013, the Board approved a proposal (as submitted
by the Compensation Committee) of an award (the “Board’s
Pre-Approved Award Grant Sub-Plan under the 2008 Plan”) for certain
executives and other key employees. The fair value of each award
granted under the 2008 Plan is determined based on the closing
price of the Company’s stock on the date of grant of such award. On
September 26, 2016, the Board approved to terminate the previous
Board’s Pre-Approved Award Grant Sub-Plan under the 2008 Plan and
adopted a new plan to grant the total number of shares of common
stock of the stock award for selected executives and key
employees 250,000 shares of common stock for each fiscal
year. On April 18, 2018, the Company
granted 238,600 shares of common stock to certain
management members and employees as compensation for their past
services under the 2008 Plan. On April 30, 2019, the Company
granted 238,600 shares of common stock to certain
management members and employees as compensation for their past
services under the 2008 Plan. On May 9, 2020, the Company
granted 238,600 shares of common stock to certain
management members and employees as compensation for their past
services under the 2008 Plan. On April 30, 2021, the Company
granted 238,600 shares of common stock to certain
management members and employees as compensation for their past
services under the 2008 Plan. On May 10, 2022, the Company
granted 238,600 shares of common stock to certain
management members and employees as compensation for their past
services under the 2008 Plan.
On March 13, 2023 (the “Signing Date”), Kandi Technologies
Group, Inc., a Delaware corporation (the “Company”), entered into
an Equity Incentive Agreement (the “Equity Incentive Agreement”)
with Pan Guoqing (the “Receiving Party”), who is the presentative
of the project management team of the project of crossover golf
carts of Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi EV
Hainan”), a wholly owned subsidiary of the Company organized under
the laws of the People’s Republic of China. The Receiving Party was
originally the management team of golf crossover project of Hainan
Kandi Holding New Energy Technology Co., Ltd. (“Hainan Kandi
Holding”), a company organized under the laws of the People’s
Republic of China. The Receiving Party has agreed to be employed as
management team of Kandi EV Hainan, responsible for the operation
of the golf crossover project of Kandi EV Hainan, and stop
production and operation of Hainan Kandi Holding’s business. An
English translated copy of the Equity Incentive Agreement is filed
as an exhibit and incorporated by reference in its entirety to this
report.
Pursuant to the Equity Incentive Agreement, for the next
three calendar years ending in December 31, 2025 (the “Incentive
Period”), the Company will provide equity incentives to the
Receiving Party, subject to the Receiving Party meeting certain
performance milestones in its role as the management team of the
golf crossover project (the “Crossover Project”) of Kandi EV
Hainan. The performance milestones are measured in terms of the net
profit of the Crossover Project after deducting relevant operating
costs and income taxes, excluding various incentives, allowances
and rebates, among others, and shall be audited and confirmed by
the third party auditor designated by the granting party, or the
Company. The net profit target (the “Net Profit Target”) for
the Incentive Period is RMB 150 million (approximately
$21,719,613), with an annual net profit target (the “Annual Net
Profit Target”) of RMB 50 million (approximately $7,239,871).
Should the Receiving Party meet or exceed the Net Profit Target
over the Incentive Period, the Company will issue to the Receiving
Party as incentive compensation up to a maximum of 5,957,811 shares
(the “Maximum Incentive Shares”) of the Company’s common stock (the
“Incentive Shares”). The amount of Incentive Shares issued within
each calendar year of the Incentive Period is adjusted based on the
net profit of the Crossover Project within that calendar year. If
the net profit of every of the three calendar years is below 60% of
the Annual Net Profit Target, the Receiving Party will receive no
Incentive Shares. If the net profit of every of the three calendar
years is at or above the Annual Net Profit Target, the Receiving
Party will receive the Maximum Incentive Shares, with higher
performance resulting in receiving the Incentive Shares earlier. If
the net profit of every of the three calendar years fall between
60% of the Annual Net Profit Target and the Annual Net Profit
Target, the Receiving Party will receive an amount of Incentive
Shares below the Maximum Incentive Shares.
The Receiving Party has no relationship to the Company other
than as described above. The Equity Incentive Agreement is subject
to the Company’s approval.
For the three months ended March 31, 2023 and 2022, the Company
recognized $22,925 and $22,925 of employee stock award expenses for
stock compensation and annual incentive award under the 2008 Plan
paid to Board members, management and consultants under General and
Administrative Expenses, respectively.
NOTE 21 - COMMITMENTS AND CONTINGENCIES
Guarantees and pledged collateral for bank loans to other
parties
(1) |
Guarantees for bank loans |
On March 15, 2013, the Company entered into a guarantee contract to
serve as the guarantor of Nanlong Group Co., Ltd. (“NGCL”) for
NGCL’s $2,912,607 (RMB 20 million) loan from Shanghai Pudong
Development Bank Jinhua Branch, for a term from March 15, 2013 to
March 15, 2016. NGCL is not related to the Company. Under this
guarantee contract, the Company agreed to assume joint liability as
the loan guarantor. In April 2017, Shanghai Pudong Development Bank
filed a lawsuit against NGCL, the Company and ten other parties in
Zhejiang Province People’s Court in Yongkang City, alleging NGCL
defaulted on a bank loan borrowed from Shanghai Pudong Development
Bank for a principal amount of approximately $2.9 million and
demanded that the guarantor bear the liability for compensation. On
May 27, 2017, a judicial mediation took place in Yongkang City and
parties reached a settlement in mediation, in which the plaintiff
agreed NGCL would repay the loan principal and interest in
installments. The settlement was executed starting from May 2019.
If there were an event of default that NGCL could not repay the
loan, the Company may be obligated to bear the liability of
defaulted amount. According to the current financial situation of
NGCL, the Company does not expect it will incur any losses in
connection with this matter.
(2) |
Pledged collateral for bank loans for which the
parties other than the Company are the borrowers. |
As of March 31, 2023 and December 31, 2022, none of the Company’s
land use rights or plants and equipment was pledged as collateral
securing bank loans for which the parties other than the Company
are the borrowers.
Litigation
Beginning in March 2017, putative shareholder class actions were
filed against Kandi Technologies Group, Inc. (“Kandi”) and certain
of its current and former directors and officers in the United
States District Court for the Central District of California and
the United States District Court for the Southern District of New
York. The complaints generally alleged violations of the federal
securities laws based on Kandi’s disclosure in March 2017 that its
financial statements for the years 2014, 2015 and the first three
quarters of 2016 would need to be restated, and sought damages on
behalf of putative classes of shareholders who purchased or
acquired Kandi’s securities prior to March 13, 2017. Kandi moved to
dismiss the remaining cases, all of which were pending in the New
York federal court, that motion was granted in September 2019, and
the time to appeal has run. In June 2020, a similar but separate
putative securities class action was filed against Kandi and
certain of its current and former directors and officers in
California federal court. This action was transferred to the New
York federal court in September 2020, Kandi moved to dismiss in
March 2021, and that motion was granted in October 2021. The
plaintiff in this case subsequently filed an amended complaint,
Kandi moved to dismiss that complaint in January 2022, and the
motion was granted in part and denied in part in September 2022.
Discovery is ongoing as to the remaining claims and defendants.
Beginning in May 2017, purported shareholder derivative actions
based on the same underlying events described above were filed
against certain current and former directors of Kandi in the United
States District Court for the Southern District of New York. The
New York federal court confirmed the voluntary dismissal of these
actions in April 2019.
In October 2017, a shareholder filed a books and records action
against the Company in the Delaware Court of Chancery pursuant to 8
Del. C. Section 220 seeking the production of certain documents
generally relating to the same underlying items described above as
well as attorney’s fees (the
“Section 220 Litigation”). On September 28, 2018, the parties,
through their respective counsel, agreed to dismiss the Section 220
Litigation with prejudice and with each party bearing its own
attorney’s fees, costs, and expenses, thereby concluding the
action. In February 2019, this same shareholder commenced a
derivative action against certain current and former directors of
Kandi in the Delaware Court of Chancery. A motion to dismiss this
derivative action was filed in May 2019 and that motion was denied
on April 27, 2020. Discovery is ongoing.
Separately, in connection with allegations of misconduct identified
in pre-suit demands made by putative shareholders of Kandi, Kandi
formed a Special Litigation Committee (“SLC”) and retained a
Delaware law firm as independent counsel to the SLC to aid in the
SLC’s investigation of, and to ultimately report on, the
allegations of misconduct set forth in the pre-suit demands. The
SLC recommended to Kandi’s board of directors in June 2020 that the
SLC be dissolved in light of the ongoing derivative action pending
in the Delaware Court of Chancery, and this recommendation was
adopted by the board in August 2020.
In December 2020, a putative securities class action was filed
against Kandi and certain of its current officers in the United
States District Court for the Eastern District of New York. The
complaint generally alleges violations of the federal securities
laws based on claims made in a report issued by Hindenburg Research
in November 2020, and seeks damages on behalf of a putative class
of shareholders who purchased or acquired Kandi’s securities prior
to March 15, 2019. Kandi moved to dismiss in February 2022, and
that motion remains pending.
While the Company believes that the claims in these litigations are
without merit and will defend itself vigorously, the Company is
unable to estimate the possible loss, if any, associated with these
litigations. The ultimate outcome of any litigation is uncertain
and the outcome of these matters, whether favorable or unfavorable,
could have a negative impact on the Company’s financial condition
or results of operations due to defense costs, diversion of
management resources and other factors. Defending litigation can be
costly, and adverse results in the litigations could result in
substantial monetary judgments. No assurance can be made that
litigation will not have a material adverse effect on the Company’s
future financial position.
NOTE 22 - SEGMENT REPORTING
The Company has one operating segment. The Company’s
revenue and long-lived assets are primarily derived from and
located in China and the US. The Company does not have
manufacturing operations outside of China.
The following table sets forth disaggregation of revenue:
|
|
Three Months Ended
March 31 |
|
|
|
2023 |
|
|
2022 |
|
|
|
Sales
Revenue |
|
|
Sales
Revenue |
|
Primary geographical markets |
|
|
|
|
|
|
U.S. and other countries/areas |
|
$ |
20,717,818 |
|
|
$ |
10,736,375 |
|
China |
|
|
2,144,290 |
|
|
|
14,155,029 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
|
|
|
|
|
|
|
|
|
Major products |
|
|
|
|
|
|
|
|
EV
parts |
|
$ |
27,365 |
|
|
$ |
3,667,778 |
|
EV
products |
|
|
-
|
|
|
|
339,955 |
|
Off-road vehicles and associated parts |
|
|
20,786,134 |
|
|
|
10,713,741 |
|
Electric Scooters, Electric Self-Balancing Scooters and associated
parts |
|
|
145,991 |
|
|
|
2,127,365 |
|
Battery exchange equipment and Battery exchange service |
|
|
97,683 |
|
|
|
25,511 |
|
Lithium-ion cells |
|
|
1,804,935 |
|
|
|
8,017,054 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition |
|
|
|
|
|
|
|
|
Products transferred at a point in time |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
This report contains forward-looking statements within the meaning
of the federal securities laws that relate to future events or our
future financial performance. In some cases, you can identify
forward-looking statements by terminologies, such as “may,” “will,”
“should,” “could,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “project,” “predict,” “intend,” “potential” or
“continue” or the negative of such terms or other comparable
terminologies, although not all forward-looking statements contain
such terms.
In addition, these forward-looking statements include, but are not
limited to, statements regarding implementing our business
strategy; development and marketing of our products; our estimates
of future revenue and profitability; our expectations regarding
future expenses, including research and development, sales and
marketing, manufacturing and general and administrative expenses;
difficulty or inability to raise additional financing, if needed,
on terms acceptable to us; our estimates regarding our capital
requirements and our needs for additional financing; attracting and
retaining customers and employees; sources of revenue and
anticipated revenue; and competition in our market.
Forward-looking statements are only predictions. Although we
believe that the expectations reflected in these forward-looking
statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. All of our
forward-looking information is subject to risks and uncertainties
that could cause actual results to differ materially from the
results expected. Although it is not possible to identify all
factors, these risks and uncertainties include the risk factors and
the timing of any of those risk factors described in the 2022 Form
10-K and those set forth from time to time in our other filings
with the SEC. These documents are available on the SEC’s Electronic
Data Gathering and Analysis Retrieval System at
http://www.sec.gov.
Critical Accounting Policies and Estimates
The preparation of the condensed consolidated financial statements
in conformity with U.S. GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, as
of the date of the financial statements, and the reported amounts
of revenue and expenses during the reported period. If these
estimates differ significantly from actual results, the impact to
the condensed consolidated financial statements may be material.
There have been no material changes in our critical accounting
policies and estimates from those disclosed in on the 2022 Form
10-K. Please refer to Part II, Item 7 of such a report for a
discussion of our critical accounting policies and estimates.
Overview
For the three months ended March 31, 2023, the Company recognized
total revenue of $22,862,108 as compared to $24,891,404 for the
same period of 2022, a decrease of $2,029,296 or 8.2%. For the
three months ended March 31, 2023, we recorded $8,029,230 of
gross profit, an increase of $5,642,067 or 236.4% from $2,387,163
for the same period of 2022. Gross margin for the three months
ended March 31, 2023, was 35.1%, compared to 9.6% for the same
period of 2022. We recorded a net income of $595,457 for the three
months ended March 31, 2023, compared to a net loss of $1,619,013
in the same period of 2022, an increase of $2,214,470.
Thanks to our business strategy adjustment, we made considerable
progress in electric off-road vehicles, despite the resurgences of
COVID-19 in 2022, which has been causing frequent lockdowns in many
cities and severe disruption of supply chain. Now with the global
trend of “fuel to electrification” of off-road vehicles becoming
more and more obvious, we have successfully developed electric
crossover golf carts and put them on the market in batches, which
have been favored by users. Next, we will successively launch
various electric off-road vehicles, including electric crossover
golf carts and electric UTVs. With the successively introduction of
new products, we are confident to achieve sustained growth in the
field of the pure electric off-road vehicles. As for our EV
business, due to the fact that the Chinese EV market has not
entered a healthy and orderly development stage, currently the
Company will continue to operate in small-scale, and join back as
appropriate when the EV market of China entered a healthy and
orderly development stage.
Results of Operations
Comparison of the Three Months Ended March 31, 2023 and
2022
The following table sets forth the amounts and percentage to
revenue of certain items in our condensed consolidated statements
of operations and comprehensive income (loss) for the three months
ended March 31, 2023 and 2022.
|
|
Three Months Ended |
|
|
|
March
31,
2023 |
|
|
% of
Revenue |
|
|
March
31,
2022 |
|
|
% of
Revenue |
|
|
Change
in
Amount |
|
|
Change
in
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES FROM UNRELATED PARTIES, NET |
|
$ |
22,862,108 |
|
|
|
100.0 |
% |
|
$ |
24,891,404 |
|
|
|
100.0 |
% |
|
|
(2,029,296 |
) |
|
|
(8.2 |
)% |
REVENUES FROM THE FORMER AFFILIATE COMPANY AND RELATED PARTIES,
NET |
|
|
- |
|
|
|
0.0 |
% |
|
|
- |
|
|
|
0.0 |
% |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES, NET |
|
|
22,862,108 |
|
|
|
100.0 |
% |
|
|
24,891,404 |
|
|
|
100.0 |
% |
|
|
(2,029,296 |
) |
|
|
(8.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF GOODS SOLD |
|
|
(14,832,878 |
) |
|
|
(64.9 |
%) |
|
|
(22,504,241 |
) |
|
|
(90.4 |
%) |
|
|
7,671,363 |
|
|
|
(34.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
8,029,230 |
|
|
|
35.1 |
% |
|
|
2,387,163 |
|
|
|
9.6 |
% |
|
|
5,642,067 |
|
|
|
236.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
(878,980 |
) |
|
|
(3.8 |
%) |
|
|
(1,140,586 |
) |
|
|
(4.6 |
%) |
|
|
261,606 |
|
|
|
(22.9 |
)% |
Selling and marketing |
|
|
(1,827,729 |
) |
|
|
(8.0 |
%) |
|
|
(1,193,699 |
) |
|
|
(4.8 |
%) |
|
|
(634,030 |
) |
|
|
53.1 |
% |
General and administrative |
|
|
(7,559,452 |
) |
|
|
(33.1 |
%) |
|
|
(5,756,531 |
) |
|
|
(23.1 |
%) |
|
|
(1,802,921 |
) |
|
|
31.3 |
% |
TOTAL OPERATING EXPENSE |
|
|
(10,266,161 |
) |
|
|
(44.9 |
%) |
|
|
(8,090,816 |
) |
|
|
(32.5 |
%) |
|
|
(2,175,345 |
) |
|
|
26.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
(2,236,931 |
) |
|
|
(9.8 |
%) |
|
|
(5,703,653 |
) |
|
|
(22.9 |
%) |
|
|
3,466,722 |
|
|
|
(60.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
2,100,343 |
|
|
|
9.2 |
% |
|
|
1,222,304 |
|
|
|
4.9 |
% |
|
|
878,039 |
|
|
|
71.8 |
% |
Interest expense |
|
|
(173,370 |
) |
|
|
(0.8 |
%) |
|
|
(148,144 |
) |
|
|
(0.6 |
%) |
|
|
(25,226 |
) |
|
|
17.0 |
% |
Change in fair value of contingent consideration |
|
|
(361,000 |
) |
|
|
(1.6 |
%) |
|
|
2,690,000 |
|
|
|
10.8 |
% |
|
|
(3,051,000 |
) |
|
|
(113.4 |
)% |
Government grants |
|
|
620,404 |
|
|
|
2.7 |
% |
|
|
244,098 |
|
|
|
1.0 |
% |
|
|
376,306 |
|
|
|
154.2 |
% |
Other income, net |
|
|
266,465 |
|
|
|
1.2 |
% |
|
|
43,782 |
|
|
|
0.2 |
% |
|
|
222,683 |
|
|
|
508.6 |
% |
TOTAL OTHER INCOME, NET |
|
|
2,452,842 |
|
|
|
10.7 |
% |
|
|
4,052,040 |
|
|
|
16.3 |
% |
|
|
(1,599,198 |
) |
|
|
(39.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
|
215,911 |
|
|
|
0.9 |
% |
|
|
(1,651,613 |
) |
|
|
(6.6 |
%) |
|
|
1,867,524 |
|
|
|
(113.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT |
|
|
379,546 |
|
|
|
1.7 |
% |
|
|
32,600 |
|
|
|
0.1 |
% |
|
|
346,946 |
|
|
|
1064.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
|
595,457 |
|
|
|
2.6 |
% |
|
|
(1,619,013 |
) |
|
|
(6.5 |
%) |
|
|
2,214,470 |
|
|
|
(136.8 |
)% |
(a) Revenue
For the three months ended March 31, 2023, Zhejiang Kandi
Technologies, its subsidiaries and SC Autosports’ revenue was
$22,862,108 compared to $24,891,404 for the same period of 2022,
representing a decrease of $2,029,296 or 8.2%.
The following table summarizes Zhejiang Kandi Technologies, its
subsidiaries and SC Autosports’ revenues by product types for
the three months ended March 31, 2023 and 2022:
|
|
Three Months Ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
Sales |
|
|
Sales |
|
EV parts |
|
$ |
27,365 |
|
|
$ |
3,667,778 |
|
EV products |
|
|
- |
|
|
|
339,955 |
|
Off-road vehicles and associated
parts |
|
|
20,786,134 |
|
|
|
10,713,741 |
|
Electric Scooters, Electric
Self-Balancing Scooters and associated parts |
|
|
145,991 |
|
|
|
2,127,365 |
|
Battery exchange equipment and Battery
exchange service |
|
|
97,683 |
|
|
|
25,511 |
|
Lithium-ion
cells |
|
|
1,804,935 |
|
|
|
8,017,054 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
EV Parts
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies, its subsidiaries and SC Autosports’ revenues
from the sales of EV parts were $27,365, representing a decrease of
$3,640,413 or 99.3% from $3,667,778 for the same quarter of 2022.
The decrease was primarily due to the reduced demand from the
market during the three months ended March 31, 2023. In addition,
due to the large demand from the US market, the Company has been
focusing on the production of off-road vehicles, especially
crossover golf carts, which could bring in better profit
margin.
Zhejiang Kandi Technologies, its subsidiaries and SC
Autosports’ revenue for the three months ended March 31, 2023
primarily consisted of revenue from the sales of battery packs,
body parts, EV controllers, air conditioning units and other auto
parts for use in the manufacturing of EV products. These sales
accounted for 0.1% of total sales.
EV Products
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies, its subsidiaries and SC Autosports’ revenue from
the sale of EV Products was $0, representing a decrease of 100%
from $339,955 for the same quarter of 2022. The decrease was
primarily due to less demand from the market for our EV products.
In addition, due to the large demand from the US market, the
Company has been focusing on the production of off-road vehicles,
especially crossover golf carts, which could bring in better profit
margin.
Zhejiang Kandi Technologies, its subsidiaries and SC
Autosports’ EV Products business line accounted for 0% of the total
net revenue for the three months ended March 31, 2023.
Off-Road Vehicles and
Associated Parts
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies, its subsidiaries and SC Autosports’ revenue from
the sales of off-road vehicles and associated parts, including go
karts, all-terrain vehicles (“ATVs”) and others, were $20,786,134,
representing an increase of $10,072,393 or 94.0% from $10,713,741,
for the same quarter of 2022. The increase was primarily because of
the increasing sales of our crossover golf carts in US market
during the three months ended March 31, 2023.
Zhejiang Kandi Technologies, its subsidiaries and SC
Autosports’ off-road vehicles business line accounted for
approximately 90.9% of the total net revenue for the three months
ended March 31, 2023.
Electric Scooters, Electric
Self-Balancing Scooters and associated parts
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies and its subsidiaries’ revenue from the sales of
electric scooters, electric self-balancing scooters and associated
parts, were $145,991, representing a decrease of $1,981,374 or
93.1% from $2,127,365, for the same quarter of 2022. The decrease
was primarily due to the fact that the Company has been focusing on
the production of off-road vehicles, especially crossover golf
carts, which could bring in better profit margin due to the demand
from the US market.
Zhejiang Kandi Technologies and its subsidiaries’ electric
scooters, electric self-balancing scooters and associated parts
business line accounted for approximately 0.6% of the total net
revenue for the three months ended March 31, 2023.
Battery Exchange Equipment
and Battery Exchange Service
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies and its subsidiaries’ revenue from the sale of battery
exchange equipment and battery exchange service was
$97,683, representing an increase of $72,172 or 282.9% from
$25,511 for the same period of 2022, due to increase of
demands from the car-hailing platforms.
Zhejiang Kandi Technologies and its subsidiaries’ sale of battery
exchange equipment and battery exchange service business line
accounted for approximately 0.4% of the total net revenue for the
three months ended March 31, 2023.
Lithium-ion
cells
During the three months ended March 31, 2023, Zhejiang Kandi
Technologies and its subsidiaries’ revenue from the sale of
Lithium-ion cells was $1,804,935, representing a decrease of
$6,212,119 or 77.5% from $8,017,054, for the same quarter of 2022.
The decrease was primarily due to less demand from the market.
Zhejiang Kandi Technologies and its subsidiaries’ sale of
lithium-ion cells business line accounted for approximately 7.9% of
the total net revenue for the three months ended March 31,
2023.
The following table shows the breakdown of Zhejiang Kandi
Technologies, its subsidiaries and SC Autosports’ net
revenues:
|
|
Three Months Ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
Sales
Revenue |
|
|
Sales
Revenue |
|
Primary geographical markets |
|
|
|
|
|
|
U.S. and other
countries/areas |
|
$ |
20,717,818 |
|
|
$ |
10,736,375 |
|
China |
|
|
2,144,290 |
|
|
|
14,155,029 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
|
|
|
|
|
|
|
|
|
Major
products |
|
|
|
|
|
|
|
|
EV parts |
|
$ |
27,365 |
|
|
$ |
3,667,778 |
|
EV products |
|
|
- |
|
|
|
339,955 |
|
Off-road vehicles and associated
parts |
|
|
20,786,134 |
|
|
|
10,713,741 |
|
Electric Scooters, Electric
Self-Balancing Scooters and associated parts |
|
|
145,991 |
|
|
|
2,127,365 |
|
Battery exchange equipment and Battery
exchange service |
|
|
97,683 |
|
|
|
25,511 |
|
Lithium-ion
cells |
|
|
1,804,935 |
|
|
|
8,017,054 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
|
|
|
|
|
|
|
|
|
Timing of
revenue recognition |
|
|
|
|
|
|
|
|
Products
transferred at a point in time |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
Total |
|
$ |
22,862,108 |
|
|
$ |
24,891,404 |
|
(b) Cost of goods sold
Cost of goods sold was $14,832,878 during the three months ended
March 31, 2023, representing a decrease of $7,671,363, or 34.1%,
compared to $22,504,241 for the same period of 2022. The decrease
was primarily due to the corresponding decrease in sales. Please
refer to the Gross Profit section below for product margin
analysis.
(c) Gross profit
Zhejiang Kandi Technologies, its subsidiaries and SC
Autosports’ margins by product for the three months ended March 31,
2023 and 2022 are as set forth below:
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
Sales |
|
|
Cost |
|
|
Gross
Profit |
|
|
Margin
% |
|
|
Sales |
|
|
Cost |
|
|
Gross
Profit |
|
|
Margin
% |
|
EV parts |
|
$ |
27,365 |
|
|
|
35,366 |
|
|
|
(8,001 |
) |
|
|
-29.2 |
% |
|
$ |
3,667,778 |
|
|
|
3,328,203 |
|
|
|
339,575 |
|
|
|
9.3 |
% |
EV
products |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
339,955 |
|
|
|
319,715 |
|
|
|
20,240 |
|
|
|
6.0 |
% |
Off-road vehicles and associated parts |
|
|
20,786,134 |
|
|
|
12,657,151 |
|
|
|
8,128,983 |
|
|
|
39.1 |
% |
|
|
10,713,741 |
|
|
|
9,288,200 |
|
|
|
1,425,541 |
|
|
|
13.3 |
% |
Electric Scooters, Electric Self-Balancing Scooters and associated
parts |
|
|
145,991 |
|
|
|
144,230 |
|
|
|
1,761 |
|
|
|
1.2 |
% |
|
|
2,127,365 |
|
|
|
1,855,115 |
|
|
|
272,250 |
|
|
|
12.8 |
% |
Battery exchange equipment and Battery exchange service |
|
|
97,683 |
|
|
|
67,053 |
|
|
|
30,630 |
|
|
|
31.4 |
% |
|
|
25,511 |
|
|
|
31,720 |
|
|
|
(6,209 |
) |
|
|
-24.3 |
% |
Lithium-ion cells |
|
|
1,804,935 |
|
|
|
1,929,078 |
|
|
|
(124,143 |
) |
|
|
-6.9 |
% |
|
|
8,017,054 |
|
|
|
7,681,288 |
|
|
|
335,766 |
|
|
|
4.2 |
% |
Total |
|
$ |
22,862,108 |
|
|
|
14,832,878 |
|
|
|
8,029,230 |
|
|
|
35.1 |
% |
|
$ |
24,891,404 |
|
|
|
22,504,241 |
|
|
|
2,387,163 |
|
|
|
9.6 |
% |
Gross profit for the first quarter of 2023 increased 236.4% to
$8,029,230, compared to $2,387,163 for the same period last year.
This was primarily attributable to product mix with higher
concentration to our off-road vehicles, especially crossover golf
carts, that brought us with significantly higher gross margin.
Higher gross profit was resulted despite less sales was generated
in this period. Consequently, our gross margin increased to 35.1%
compared to 9.6% for the same period of 2022.
(d) Research and development
Research and development expenses, including materials, labor,
equipment depreciation, design, testing, inspection, and other
related expenses, totaled $878,980 for the first quarter of 2023, a
decrease of $261,606 or 22.9% compared to $1,140,586 for the same
period in 2022. The decrease was mainly due to less research and
development projects were being carried out in the current
period.
(e) Sales and marketing
Selling and distribution expenses were $1,827,729 for the first
quarter of 2023, compared to $1,193,699 for the same period in
2022, representing an increase of $634,030 or 53.1%. The increase
was mainly due to higher commission offered for the sales of
off-road vehicles, as well as higher shipping and related expenses
incurred due to larger volume of exports to the US market.
(f) General and administrative expenses
General and administrative expenses were $7,559,452 for the first
quarter of 2023, compared to $5,756,531 for the same period in
2022, representing an increase of $1,802,921 or 31.3%. For the
three months ended March 31, 2023, general and administrative
expenses included $1,003,818 as expenses for common stock awards
and stock options to employees and Board members, compared to
$22,925 of common stock awards and stock options expenses for the
same period in 2022. Besides stock compensation expense, our net
general and administrative expenses for the three months ended
March 31, 2023 were $6,555,634, representing an increase of
$822,028, from $5,733,606 for the same period in 2022, which was
largely due to expansion of the employees headcount as well as
increase in storage fee resulted from the increase of inventories
kept in US.
(g) Interest income
Interest income was $2,100,343 for the first quarter of 2023,
representing an increase of $878,039 or 71.8% compared to
$1,222,304 for the same period of last year. The increase was
primarily attributable to the increased interest earned on
increased certificate of deposit compared to the same period in
2022.
(h) Interest expenses
Interest expenses were $173,370 in the first quarter of 2023,
representing an increase of $25,226 or 17.0% compared to $148,144
for the same period of last year. The increase was primarily due to
interest expenses related to increased short-term loans of the
Company compared to the same period in 2022.
(i) Change in fair value of contingent consideration
For the first quarter of 2023, the loss related to changes in the
fair value of contingent consideration was $361,000, a decrease of
$3,051,000 or 113.4% compared to gain related to changes in the
fair value of contingent consideration of $2,690,000 for the same
period in 2022, which was mainly due to the adjustment of the fair
value of the contingent consideration liability associated with the
remaining shares of restrictive common stock (Please refer to NOTE
18 – CONTINGENT CONSIDERATION LIABILITY). The fair value of the
contingent consideration liability was estimated at each reporting
date by using the Monte Carlo simulation method, which took into
account all possible scenarios.
(j) Government grants
Government grants were $620,404 for the first quarter of 2023,
compared to $244,098 for the same quarter last year, representing
an increase of $376,306, or 154.2%, which was primarily due to
grants from Jinhua and Hainan local government in the first quarter
of 2023.
(k) Other income, net
Net other income was $266,465 for the first quarter of 2023,
representing an increase of $222,683 or 508.6% compared to net
other income of $43,782 for the same period of last year, which was
largely due to disposal of obsolete materials during the current
period.
(l) Income Taxes
In accordance with the relevant Chinese tax laws and regulations,
the applicable corporate income tax rate of our Chinese
subsidiaries is 25%. However, four of our subsidiaries, including
Zhejiang Kandi Technologies, Kandi Smart Battery Swap, Kandi Hainan
and Jiangxi Huiyi are qualified as high technology companies in
China and are therefore entitled to a reduced corporate income tax
rate of 15%. Additionally, Hainan Kandi Holding also has an income
tax rate of 15% due to its local preferred tax rate in Hainan Free
Trade Port.
Each of our other subsidiaries, Kandi New Energy, Yongkang Scrou,
China Battery Exchange and its subsidiaries has an applicable
corporate income tax rate of 25%.
Our actual effective income tax rate for the first quarter of 2023
was a tax benefit of 175.79% on a reported income before taxes
of approximately $0.2 million, compared to a tax benefit of
1.97% on a reported loss before taxes of approximately $1.7 million
for the same period of last year.
(m) Net income (loss)
Net income was $595,457 for the first quarter of 2023, representing
an increase of $2,214,470 compared to net loss of $1,619,013 for
the same period in 2022. The increase of net income was primarily
attributable to the increase in gross profit resulted from a higher
concentration of sales from off-road vehicles with larger gross
margin.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
|
|
Three Months Ended |
|
|
|
March
31,
2023 |
|
|
March
31,
2022 |
|
Net cash provided by operating activities |
|
$ |
7,362,198 |
|
|
$ |
6,188,441 |
|
Net
cash used in investing activities |
|
$ |
(19,636,864 |
) |
|
$ |
(16,716,300 |
) |
Net
cash used in by financing activities |
|
$ |
(1,358,565 |
) |
|
$ |
(279,829 |
) |
NET
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
|
$ |
(13,633,231 |
) |
|
$ |
(10,807,688 |
) |
Effect of
exchange rate changes |
|
$ |
676,206 |
|
|
$ |
352,415 |
|
CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR |
|
$ |
151,040,271 |
|
|
$ |
168,676,007 |
|
CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD |
|
$ |
138,083,246 |
|
|
$ |
158,220,734 |
|
For the first quarter of 2023, cash derived from operating
activities was $7,362,198, as compared to cash derived from
operating activities of $6,188,441 for the same period last year.
Our operating cash inflows include cash received primarily from
sales of our EV parts, off-road vehicles, electric Scooters,
electric self-balancing scooters and associated parts and
lithium-ion cells. These cash inflows are offset largely by cash
paid primarily to our suppliers for production materials and parts
used in our manufacturing process, operation expenses, employee
compensation, and interest expenses of our financings. The major
operating activities that provided cash for the first quarter of
2023 were a decrease of accounts receivable of $6,275,418 and an
increase of accounts payable of $6,097,620. The major operating
activity that used cash for first quarter of 2023 was an increase
of inventories of $6,750,531 and a decrease of notes payable of
$5,413,459.
For the first quarter of 2023, cash used in investing activities
was $19,636,864, as compared to cash used in investing activities
of $16,716,300 for the same period in 2022. The major investing
activity that used cash for first quarter of 2023 was an increase
of certificate of deposit of $19,001,959.
For the first quarter of 2023, cash used in financing activities
was $1,358,565, as compared to cash used in financing activities of
$279,829 for the same period in 2022. The major financing
activities that provided cash for first quarter of 2023 were
proceeds from short-term bank loans of $5,040,000. The major
financing activities that used cash for first quarter of 2023 were
repayments of short-term loans of $6,398,565.
Working
Capital
We had a working capital of $253,144,741 as of March 31, 2023,
which reflects an increase of $5,327,616 from a working capital of
$247,817,125 as of December 31, 2022.
Contractual Obligations and Off-balance Sheet
Arrangements
Guarantees and pledged collateral for third party bank
loans
For the discussion of guarantees and pledged collateral for third
party bank loans, please refer to Note 21 – COMMITMENTS AND
CONTINGENCIES under Notes to Condensed Consolidated Financial
Statements.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
This item is not applicable to us.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have evaluated, under the supervision of our Chief Executive
Officer (“CEO”) and our Chief Financial Officer (“CFO”), the
effectiveness of disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”) as of March 31, 2023.
Based on this evaluation, our CEO and CFO concluded that as of the
end of the period covered by this report, our disclosure controls
and procedures were effective.
Disclosure controls and procedures are controls and procedures that
are designed to ensure that information required to be disclosed in
our reports filed or submitted under the Exchange Act (a) is
recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms and (b) is
accumulated and communicated to management, including our CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure. Our management recognizes that any controls and
procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving their objectives and
management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Our
disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objectives as described
above.
Changes in Internal Control over Financial Reporting
There was no change to our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the period covered by this
report that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company is involved in legal matters arising
in the ordinary course of business. Except as set forth in Note 21
- COMMITMENTS AND CONTINGENCIES under Notes to Condensed
Consolidated Financial Statements, our management is currently not
aware of any legal matters or pending litigation that would have a
significant effect on the Company’s results of operation of
financial statements. Furthermore, the Company is not aware of any
other legal matters in which any director, officer, or any owner of
record or beneficial owner of more than five percent of any class
of voting securities of the Company, or any affiliate of any such
director, officer, affiliate of the Company, or security holder, is
a party adverse to the Company or has a material adverse interest
to the Company. For the detailed discussion of our legal
proceedings, please refer to Note 21 - COMMITMENTS AND
CONTINGENCIES under Notes to Condensed Consolidated Financial
Statements, which is incorporated by reference herein.
Item 6. Exhibits
† |
Exhibits filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: May 10,
2023 |
By: |
/s/ Dong
Xueqin |
|
|
Dong
Xueqin |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
Date: May 10, 2023 |
By: |
/s/ Jehn Ming
Lim |
|
|
Jehn
Ming Lim |
|
|
Chief
Financial Officer |
|
|
(Principal Financial Officer and
Principal |
|
|
Accounting Officer) |
30
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