EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Kandi Technologies Group, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Correction: Kandi Technologies Reports First Quarter
2016 Financial Results

JINHUA, CHINA-- (May 10, 2016) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), announced a correction to its press release issued on Tuesday, May 10, 2016 entitled, “Kandi Technologies Reports First Quarter 2016 Financial Results.”

In the press release issued at 7:00 am ET, “Amount due from JV Company, net”, “Land use rights, net”, “Construction in progress” were missing from Balance Sheets and “Due from related party” was missing from Statements of Cash Flows due to the table format adjustment. There are also cosmetic edits in the wording of certain entries in the financial statement tables.

The complete press release with corrected information is as follows:

JINHUA, CHINA-- (May 10, 2016) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the first quarter of 2016.

First Quarter Highlights

Total revenues grew 15.7% to $50.7 million for the first quarter of 2016, from $43.8 million for the same period of 2015.

Electric Vehicle (“EV”) parts sales increased 7.5% to $46.2 million for the first quarter of 2016, compared with $43.0 million in the same period of 2015.

GAAP net income for the first quarter of 2016 was $0.1 million, or $0.00 per fully diluted share, compared with $6.1 million, or $0.13 per fully diluted share in the same period of 2015.

Non-GAAP adjusted net income1, which excludes stock award expenses and changes in the fair value of financial derivatives, was $3.7 million in the first quarter of 2016, compared with $3.4 million of the same period of 2015. Non-GAAP adjusted earnings per share1 was approximately $0.08 per fully diluted share for the first quarter of 2016 compared with $0.07 per fully diluted share for the same quarter of 2015;

Working capital surplus was $72.5 million as of March 31, 2016. Cash, cash equivalents and restricted cash totaled $29.7 million as of March 31, 2016.

“In this quarter, various elements, including the newly approved product list from Ministry of Industrial and Information Technology of China (“MIIT”) for national subsidies and the subsequent pending of the list of vehicles entitled to purchase tax exemption from the National Tax Bureau heavily impacted the JV Company’s sales and also Kandi’s financial performance,” commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, “After confirming that four EV products of the JV Company were on the newly approved list which qualified for purchase tax exemption, the JV Company has started to sell EV products since April 2016. Although the JV Company has no sales in the first quarter, I believe it will catch up in the rest of the year and achieve the full year target. We expect to deliver 5,500-6,000 EV products in the second quarter and no less than 35,000 EVs for the full year. Out of our full year targets of 35,000 EVs, we anticipate 10,000 of them be used for our Micro Public Transportation Program while 25,000 EVs be allocated to the direct sales channel.”

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


“In 2016, the JV Company continues to develop more distribution channels and service stores to achieve the direct sales target of 25,000 or more EVs.” Mr. Hu Xiaoming commented further, “Till May 2016, the JV Company has establish 74 service stores countrywide to cover the main market in those important cities, some of which are shared with Geely’s distribution channel, such as Beijing, Shanghai, Nanjing, Suzhou, Haikou. Meanwhile, the JV Company also works with independent distributors closely and plans to establish the strategic partnership with 4-5 strategic distribution partners, including Pangda Automobiles Sales Group Inc., Henxing Automobiles Group Inc. and others.”

“Despite of the lack of EV products sales by our JV Company in this quarter, Kandi still has revenue growth of 15.7% during this quarter compared to the same period of 2015. However, our net profit has been significantly impacted by the JV Company’s net profit during the quarter.” added Mr. Wang Cheng, Chief Financial Officer of Kandi, “I believe we can achieve good financial performance in line with the revenue growth from the JV Company for the rest of the 2016.”

Net Revenues and Gross Profit

      1Q16 1Q15 Y-o-Y%
Net Revenues (US$mln) $50.7 $43.8 15.7%
Gross Profit (US$mln) $6.7 $6.4 5.5%
Gross Margin 13.3% 14.6% -

Net revenues for the first quarter increased 15.7% compared to the same period last year. The increase in net revenues was mainly due to the 7.5% EV parts sales growth and the EV products sales by the Company of $3.8 million on the EV products in the stock.

Operating Income (Loss)

1Q16 1Q15 Y-o-Y%
Operating Expenses (US$mln) $8.3 $4.5 85.5%
Operating Income (Loss) (US$mln) ($1.6) $1.9 -
Operating Margin -3.1% 4.4% -
Operating Income (Loss) (US$mln) (Non- GAAP) $5.3 $4.0 34.5%


Total operating expenses in the first quarter were $8.3 million, compared with $4.5 million in the same quarter of 2015. The increase in total operating expenses was due to the increased stock compensation expense, which was $6.9 million in this quarter, compared with $2.0 million in the same quarter last year. Excluding stock compensation expenses, operation expenses in the first quarter of 2016 were $1.4 million, compared with $2.4 million in the same quarter last year. The decrease was mainly due to research and development expenses savings of $0.4 million and the one-time legal expense $0.5 million occurred in 2015.

GAAP Net Income

1Q16 1Q15 Y-o-Y%
Net Income (Loss) (US$mln) $0.1 $6.1 -98.6%
Earnings per Weighted Average Common Share $0.00 $0.13 -
Earnings per Weighted Average Diluted Share $0.00 $0.13 -
Stock award expenses $6.9 $2.0 236.0%
Change of the fair value of financial derivatives ($3.3) ($4.8) -
Non-GAAP net income (loss) from continuing operations $3.7 $3.4 7.5%

Net income was $0.1 million in the first quarter, compared with $6.1 million in the same quarter of 2015. Net income was affected by significant increases in stock option expense amortization and the loss from the JV Company and also the change of the fair value of financial derivatives.

Non-GAAP net income was $3.7 million, a 7.5% increase in the first quarter of 2016 compared to $3.4 million in the same quarter of 2015. The increase in Non-GAAP net income was in line with the revenue growth in the quarter.

JV Company Financial Results

In the first quarter, the JV Company has no EV products sales, compared to 1,670 EV products sold in the same quarter of 2015. In this quarter, the newly approved product list from the MIIT for national subsidies and the subsequent pending for the list of vehicles entitled to purchase tax exemption from the National Tax Bureau heavily impacted the JV Company’s sales and also Kandi’s financial performance. After confirming that four EV products of the JV Company were on the newly approved list which qualified for the purchase tax exemption, the JV Company has started to sell EV products since April 2016.

The condensed financial income statement of the JV Company in the first quarter is as below:



      1Q16 1Q15 Y-o-Y%
Net Revenues (US$mln) ($0.5) $30.6 -101.6%
Gross Profit (US$mln) ($1.1) $8.0 -113.3%
Gross Margin - 26.1% -
Net Income ($8.1) $0.8 -
% of Net revenue - 2.6% -

There was no EV products sold by the JV Company in the first quarter and the negative amount was a small price discount occurred in this quarter.

Kandi’s investments in the JV Company are accounted for under the equity method of accounting, as Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company’s loss for $4.0 million for the this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after tax loss of the JV Company was $4.8 million for the first quarter of 2016.

Outlook

For the second quarter of 2016, Kandi expects net revenues to be in the range of $55 million to $57 million, with gross margin in the range of 12.5% to 13.5% . For the full year 2016, Kandi expects net revenues to be in the range of $270 million to $300 million.

The Company also expects the JV Company to deliver 5,500-6,000 EV products in the second quarter and a total of 35,000 or more EV products in the full year of 2016.

This outlook reflects the current view of the management, which is subject to change.

First Quarter of 2016 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. Eastern time) on May 10, 2016 (8:00 PM Beijing time on May 10, 2016). Mr. Hu Xiaoming, Chief Executive Officer and Mr. Wang Cheng (Henry), Chief Financial Officer, will deliver prepared remarks, followed by a question and answer session.

The dial-in details for the conference call are as follows:

Toll-free dial-in number: +1 855-327-6837
International dial-in number: +1 631-891-4304
Conference ID: 10001128
Webcast and replay: http://public.viavid.com/index.php?id=119454

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


About Kandi Technologies Group, Inc.

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

Safe Harbor 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 securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

Company Contact:

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

- Tables Below -


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

 

  March 31,     December 31,  

 

  2016     2015  

 

           

Current assets

           

Cash and cash equivalents

$  13,447,666   $  16,738,559  

Restricted cash

  16,277,051     16,172,009  

Short term investment

  3,100,391     1,613,727  

 

           

 

           

Accounts receivable

 

  40,867,698

    8,136,421  

Inventories (net of provision for slow moving inventory of
489,057 and 485,901 as of March 31, 2016 and December 31,
2015, respectively

  25,814,430     17,773,679  

Notes receivable

  11,276,387     13,033,315  

Other receivables

  487,077     332,922  

Prepayments and prepaid expense

  353,628     181,534  

Due from employees

  105,868     34,434  

Advances to suppliers

  348,761     71,794  

Amount due from JV Company, net

  92,789,649     76,172,471  

Amount due from related party

  5,585,613     40,606,162  

Deferred taxes assets

  744,910     -  

 

           

TOTAL CURRENT ASSETS

211,199,129 190,867,027

 

           

LONG-TERM ASSETS

           

Plant and equipment, net

  19,539,908     20,525,126  

Land use rights, net

  12,934,208     12,935,121  

Construction in progress

  54,750,430     54,368,753  

Long Term Investment

  1,472,686     1,463,182  

Investment in JV Company

  86,034,442     90,337,899  

Goodwill

  322,591     322,591  

Intangible assets

  474,782     495,306  

Other long term assets

  155,020     154,019  

 

           

TOTAL Long-Term Assets

175,684,067 180,601,997

 

           

TOTAL ASSETS

$  386,883,196   $  371,469,024  
             

CURRENT LIABILITIES

           

Accounts payables

$  91,647,247   $  73,957,969  

Other payables and accrued expenses

  1,678,011     9,544,909  

Short-term loans

  36,894,649     36,656,553  

Customer deposits

  149,688     94,026  

Notes payable

  5,968,252     3,850,478  

Income tax payable

  1,822,276     624,276  

Due to employees

  11,944     9,423  

Deferred taxes liabilities

  -     2,374,924  

Financial derivate - liability

  537,250     3,823,590  

Deferred income

  -     13,726  

 

           

Total Current Liabilities

  138,709,317     130,949,874  

 

           

LONG-TERM LIABILITIES

           

Deferred taxes liabilities

  312,693     1,593,582  

Financial derivate - liability

  -     -  

Total Long-Term Liabilities

  312,693     1,593,582  

 

           

TOTAL LIABILITIES

  139,022,010     132,543,456  

 

           

STOCKHOLDER'S EQUITY

           

Common stock, $0.001 par value; 100,000,000 shares
authorized; 47,019,638 and 46,964,855 shares issued and
outstanding at March 31,2016 and December 31,2015,
respectively

  47,020     46,965  

Additional paid-in capital

  219,886,837     212,564,334  

Retained earnings (the restricted portion is $4,172,324 and
$4,172,324 at March 31,2016 and December 31,2015,
respectively)

  31,144,340     31,055,919  

Accumulated other comprehensive loss

  (3,217,011 )   (4,741,650 )

 

           

TOTAL STOCKHOLDERS' EQUITY

  247,861,186     238,925,568  

 

           

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 386,883,196   $  371,469,024  

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

 

  Three Months Ended  

 

  March 31,     March 31,  

 

  2016     2015  

 

           

REVENUES, NET

$  50,657,893   $  43,781,086  

 

           

COST OF GOODS SOLD

  43,939,795     37,410,353  

 

           

GROSS PROFIT

  6,718,098     6,370,733  

 

           

OPERATING EXPENSES:

           

Research and development

  205,968     571,020  

Selling and marketing

  46,335     113,895  

General and administrative

  8,032,882     3,780,648  

Total Operating Expenses

  8,285,185     4,465,563  

 

           

INCOME(LOSS) FROM OPERATIONS

  (1,567,087 )   1,905,170  

 

           

OTHER INCOME(EXPENSE):

           

Interest income

  780,181     590,480  

Interest expense

  (442,079 )   (598,591 )

Change in fair value of financial instruments

  3,286,340     4,750,300  

Government grants

  194,473     -  

Share of profit after tax of JV

  (4,822,470 )   469,356  

Other income, net

  22,387     23,847  

Total other income (loss), net

  (981,168 )   5,235,392  

 

           

INCOME BEFORE INCOME TAXES

  (2,548,255 )   7,140,562  

 

           

INCOME TAX BENEFIT (EXPENSE)

  2,636,675     (1,008,909 )

 

           

NET INCOME

  88,420     6,131,653  

 

           

OTHER COMPREHENSIVE INCOME

           

Foreign currency translation

  1,524,639     493,211  

 

           

COMPREHENSIVE INCOME

$  1,613,059   $  6,624,864  

 

           

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC

  47,009,834     46,281,299  

WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED

  47,027,744     46,397,993  

 

           

NET INCOME PER SHARE, BASIC

$  0.00   $  0.13  

NET INCOME PER SHARE, DILUTED

$  0.00   $  0.13  

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

 

  Three Months Ended  

 

  March 31, 2016     March 31, 2015  

 

           

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net income

$  88,420   $ 6,131,653  

Adjustments to reconcile net income to net cash provided by operating activities

       

Depreciation and amortization

  1,223,243     1,479,384  

Deferred taxes

  (4,397,828 )   -  

Change in fair value of financial instruments

  (3,286,340 )   (4,750,300 )

Share of profit after tax of JV Company

  4,822,470     (469,356 )

Stock Compensation cost

  6,887,892     2,049,683  

 

           

Changes in operating assets and liabilities, net of effects of acquisition:

       

(Increase) Decrease In:

           

Accounts receivable

  (32,225,627 )   (12,844,602 )

Inventories

  (7,815,491 )   (11,246,265 )

Other receivables

  (144,118 )   (65,602 )

Due from employee

  (67,798 )   (10,225 )

Prepayments and prepaid expenses

  (441,602 )   (527,687 )

Amount due from JV Company

  (15,899,018 )   (19,570,708 )

 

           

Increase (Decrease) In:

           

Accounts payable

  16,975,799     31,915,168  

Other payables and accrued liabilities

  (7,875,311 )   (1,438,571 )

Customer deposits

  54,289     1,365  

Income Tax payable

  1,165,635     (130,488 )

Due from related party

  34,781,767     -  

Net cash used in operating activities

$  (6,153,618 ) $  (9,476,551 )

 

           

CASH FLOWS FROM INVESTING ACTIVITIES:

           

Purchases of plant and equipment, net

  (29,696 )   (233,343 )

Disposal of land use rights and other intangible assets

  13,767     -  

Purchases of construction in progress

  (28,140 )   (39,266 )

Issuance of notes receivable

  (614,592 )   (4,225,884 )

Repayment of notes receivable

  2,430,657     2,584,147  

Short Term Investment

  (1,455,727 )   -  

Net cash provided by (used in) investing activities

$  316,269   $  (1,914,346 )

 

           

CASH FLOWS FROM FINANCING ACTIVITIES:

           

 Restricted cash

  -     (12,366,201 )

 Proceeds from short-term bank loans

  -     6,338,475  

 Proceeds from notes payable

  2,063,766     6,663,525  

 Warrant exercise

  434,666     -  

Net cash provided by financing activities

$ 2,498,432   $  635,799  

 

           

NET INCREASE IN CASH AND CASH EQUIVALENTS

  (3,338,917 )   (10,755,098 )

Effect of exchange rate changes on cash

  48,024     11,296  

Cash and cash equivalents at beginning of year

  16,738,559     26,379,460  

 

           

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  13,447,666     15,635,658  

 

           

SUPPLEMENTARY CASH FLOW INFORMATION

           

Income taxes paid

  595,518     1,139,397  

Interest paid

  445,176     577,874