10-Q

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 June 30, 2017

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 City Industrial Zone
Jinhua, Zhejiang Province
People’s Republic of China
Post Code 321016
(Address of principal executive offices)

(86 - 579) 82239856
(Registrant’s telephone number, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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. (Check one):

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
(Do not check if a 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 August 3, 2017, the registrant had issued and outstanding 48,021,538 shares of common stock, par value $0.001 per share.

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016	1
	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) – Three Months and Six Months Ended June 30, 2017 and 2016	2
	Condensed Consolidated Statements of Cash Flows (unaudited) –Six Months Ended June 30, 2017 and 2016	3
	Notes to the Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	63
Item 4.	Controls and Procedures	65
PART II — OTHER INFORMATION
Item 1.	Legal proceedings	66
Item 1A.	Risk Factors	67
Item 6.	Exhibits	68

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

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

(UNAUDITED)

	June 30, 2017			December 31, 2016
Current assets
Cash and cash equivalents	$	7,407,032		$	12,235,921
Restricted cash		22,708,654			12,957,377
Short term investment		-			4,463,097
Accounts receivable		34,964,666			32,394,613
Inventories (net of provision for slow moving inventory of $465,096 and $415,797 as of June 30, 2017 and December 31, 2016, respectively		13,427,455			11,914,110
Notes receivable from JV Company and related party		-			400,239
Other receivables		1,185,804			66,064
Prepayments and prepaid expense		4,319,890			4,317,855
Due from employees		33,076			4,863
Advances to suppliers		15,009,973			38,250,818
Amount due from JV Company, net		138,908,557			136,536,159
Amount due from related party		10,742,243			10,484,816
TOTAL CURRENT ASSETS		248,707,350			264,025,932
LONG-TERM ASSETS
Property, Plant and equipment, net		13,533,421			15,194,442
Land use rights, net		11,903,213			11,775,720
Construction in progress		43,655,614			27,054,181
Deferred taxes assets		4,394,192			-
Long Term Investment		1,401,304			1,367,723
Investment in JV Company		65,258,976			77,453,014
Goodwill		322,591			322,591
Intangible assets		372,163			413,211
Advances to suppliers		29,972,701			33,819,419
Other long term assets		7,880,223			8,271,952
TOTAL Long-Term Assets		178,694,398			175,672,253
TOTAL ASSETS	$	427,401,748		$	439,698,185
CURRENT LIABILITIES
Accounts payables	$	111,356,483		$	115,870,051
Other payables and accrued expenses		5,269,999			4,835,952
Short-term loans		32,008,732			34,265,065
Customer deposits		177,328			41,671
Notes payable		37,289,011			14,797,325
Income tax payable		1,435,646			1,364,235
Due to employees		26,156			21,214
Deferred taxes liabilities		-			118,643
Deferred income		1,371,213			6,363,751
Loss contingency-litigation		2,950,114			-
Total Current Liabilities		191,884,682			177,677,907
LONG-TERM LIABILITIES
Long term bank loans		29,501,136			28,794,172
Deferred taxes liabilities		-			878,639
Total Long-Term Liabilities		29,501,136			29,672,811
TOTAL LIABILITIES		221,385,818			207,350,718
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized;  48,021,538 and 47,699,638 shares issued and outstanding at June 30,2017 and December 31,2016, respectively		48,022			47,700
Additional paid-in capital		232,380,792			227,911,477
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at June 30,2017 and December 31, 2016, respectively)		(11,166,290	)		24,545,163
Accumulated other comprehensive income (loss)		(15,246,594	)		(20,156,873	)
TOTAL STOCKHOLDERS' EQUITY		206,015,930			232,347,467
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	427,401,748		$	439,698,185

See accompanying notes to condensed consolidated financial statements

1 

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

	Three Months Ended						Six Months Ended
	June 30,  2017			June 30, 2016			June 30, 2017			June 30,  2016
REVENUES FROM UNRELATED PARTY, NET	$	1,153,555		$	6,979,488		$	4,116,486		$	40,953,904
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		26,171,724			48,237,880			27,483,366			64,921,357
REVENUES, NET		27,325,279			55,217,368			31,599,852			105,875,261
COST OF GOODS SOLD		23,568,343			46,762,331			27,175,584			90,702,126
GROSS PROFIT		3,756,936			8,455,037			4,424,268			15,173,135
OPERATING EXPENSES:
Research and development		5,142,041			494,193			25,911,773			700,161
Selling and marketing		402,253			730,443			760,562			776,778
General and administrative		1,558,652			9,625,194			9,877,946			17,658,076
Total Operating Expenses		7,102,946			10,849,830			36,550,281			19,135,015
LOSS FROM OPERATIONS		(3,346,010	)		(2,394,793	)		(32,126,013	)		(3,961,880	)
OTHER INCOME (EXPENSE):
Interest income		559,425			785,152			1,090,067			1,565,333
Interest expense		(548,810	)		(432,318	)		(1,163,263	)		(874,397	)
Change in fair value of financial instruments		0			526,558			0			3,812,898
Government grants		262,137			1,503,384			5,329,611			1,697,857
Share of (loss) profit after tax of JV		(8,738,254	)		4,918,633			(13,899,967	)		96,163
Other income, net		121,556			286,790			150,177			309,177
Total other (expense) income, net		(8,343,946	)		7,588,199			(8,493,375	)		6,607,031
(LOSS) INCOME BEFORE INCOME TAXES		(11,689,956	)		5,193,406			(40,619,388	)		2,645,151
INCOME TAX BENEFIT (EXPENSE)		131,939			(2,400,226	)		4,907,936			236,449
NET (LOSS) INCOME		(11,558,017	)		2,793,180			(35,711,452	)		2,881,600
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Foreign currency translation		3,118,462			(7,152,903	)		4,910,278			(5,628,264	)
COMPREHENSIVE LOSS	$	(8,439,555	)	$	(4,359,723	)	$	(30,801,174	)	$	(2,746,664	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC		47,974,974			47,601,286			47,854,351			47,305,560
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED		47,974,974			47,601,286			47,854,351			47,311,584
NET (LOSS) INCOME PER SHARE, BASIC	$	(0.24	)	$	0.06		$	(0.75	)	$	0.06
NET (LOSS) INCOME PER SHARE, DILUTED	$	(0.24	)	$	0.06		$	(0.75	)	$	0.06

See accompanying notes to condensed consolidated financial statements

2 

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

	Six months Ended
	June 30, 2017			June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(35,711,452	)	$	2,881,600
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		2,334,776			2,458,160
Assets Impairments		38,548			-
Deferred taxes		(5,415,959	)		(4,645,415	)
Change in fair value of financial instruments		-			(3,812,898	)
Share of loss after tax of JV Company		13,899,967			(96,163	)
Stock Compensation cost		4,493,187			15,134,658
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) Decrease In:
Accounts receivable		(2,826,433	)		(45,728,877	)
Notes receivable		-			229,449
Notes receivable from JV Company and related party		4,875,795			-
Inventories		(1,242,422	)		9,189,542
Other receivables and other assets		(498,376	)		(9,424,711	)
Due from employee		(23,344	)		(56,998	)
Advances to supplier and Prepayments and prepaid expenses		23,946,781			(12,953,797	)
Advances to suppliers-Long term		(4,099,879	)		-
Amount due from JV Company		(21,853,571	)		(84,064,780	)
Due from related party		-			29,188,707
Increase (Decrease) In:
Accounts payable		25,017,146			92,266,667
Other payables and accrued liabilities		127,252			6,009,203
Notes payable		(2,731,692	)		(3,824,162	)
Customer deposits		132,765			154,168
Income Tax payable		(31,314	)		3,363,489
Deferred income		(5,077,291	)		-
Loss contingency-litigation		2,909,151			-
Net cash used in operating activities	$	(1,736,365	)	$	(3,732,158	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net		(128,509	)		(37,554	)
Disposal of land use rights and other intangible assets		-			13,775
Purchases of construction in progress		(1,029,516	)		(1,356,866	)
Repayment of notes receivable		-			4,953,787
Short Term Investment		4,509,183			1,602,698
Net cash provided by investing activities	$	3,351,158		$	5,175,840
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash		(9,302,161	)		1,300,215
Proceeds from short-term bank loans		13,963,923			-
Repayments of short-term bank loans		(17,018,531	)		-
Proceeds from notes payable		5,713,368			-
Warrant exercise		-			434,666
Net cash (used in) provided by financing activities	$	(6,643,401	)	$	1,734,881
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(5,028,608	)		3,178,563
Effect of exchange rate changes on cash		199,530			(383,266	)
Cash and cash equivalents at beginning of year		12,235,921			16,738,559
CASH AND CASH EQUIVALENTS AT END OF PERIOD		7,406,843			19,533,856
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		1,001,501			1,051,032
Interest paid		742,958			877,496
SUPPLEMENTAL NON-CASH DISCLOSURES:
Prepayment transferred to Construction in progress		8,712,000			-
Acquisition of Construction in progress by Accounts Payable		5,974,383			-
Settlement of due from JV Company and related parties with notes receivable		22,819,847			34,866,384
Settlement of accounts receivables with notes receivable from unrelated parties		1,076,386			12,714,237
Assignment of notes receivable to supplier to settle accounts payable		19,424,810			49,046,178
Settlement of accounts payable with notes payables		18,839,444			4,796,570
Deferred tax change to other comprehensive income		24,486			-

See accompanying notes to condensed consolidated financial statements

3 

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. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007, and on December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in Jinhua City, Zhejiang Province, People’s Republic of China, the Company is one of the People’s Republic of China’s (“China”) leading producers and manufacturers of electric vehicle (“EV”) products, EV parts, and off-road vehicles for sale in China and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partially and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

4 

Operating Subsidiaries:

Pursuant to agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests (100% of profits and losses) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”). Kandi New Energy currently holds battery pack production licensing rights and supplies battery packs to the JV Company (as such term is defined below). In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electric products to the JV Company.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company and all products are manufactured by its subsidiaries. In an effort to improve the JV Company’s development, Zhejiang Geely Holding Group, the parent company of Geely, became the JV Company’s -shareholder on October 26, 2016, through its purchase of the 50% equity of the JV Company held by Shanghai Guorun at a premium price (a price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years). On May 19, 2017, due to business development, Geely Holding entrusted Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged its 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee because Geely Holding provides 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, generally referred to as the Micro Public Transportation (“MPT”) program. The Company, through Kandi Vehicles, has 9.5% ownership interest in the Service Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

5 

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. JiHeKang is engaged in the car sales business. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun, pursuant to which the JV Company acquired a 100% ownership interest in Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu. Kandi Jiangsu is mainly engaged in EV research and development, manufacturing, and sales.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. Puma Investment provides investment and consulting services. The JV Company has a 50% ownership interest in Puma Investment(the other 50% is owned by Zuozhongyou Electric Vehicles Service (Hangzhou) Co.,Ltd., a subsidiary of the Service Company), and the Company, indirectly through the JV Company, has a 25% economic interest in Puma Investment. The other 50% ownership interest is held by the Service Company.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (the “JiHeKang Service Company”) was formed by the JV Company. The JiHeKang Service Company focuses on after-market services for EV products. The JV Company has a 100% ownership interest in the JiHeKang Service Company, and the Company, indirectly through the JV Company, has a 50% economic interest in the JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) was renamed Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”). Kandi Hainan was originally formed in Wanning City in Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013, and was transferred to Haikou City in January 2016. Kandi Vehicles has a 90% ownership interest in Kandi Hainan, and Kandi New Energy has the remaining 10% ownership interest. In fact, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests (100% of the profits and losses) of Kandi Hainan as Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

6 

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”), which is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Since Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd.(“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

The Company’s primary business operations are designing, developing, manufacturing and commercializing EV products, EV parts and off-road vehicles. As part of its strategic objective of becoming a leading manufacturer of EV products (through the JV Company) and related services, the Company has increased its focus on pure EV-related products, with a particular emphasis on expanding its market share in China.

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $56,822,668 as of June 30, 2017, a decrease of $29,525,357 from $86,348,025 as of December 31, 2016. As of June 30, 2017, the Company had credit lines from commercial banks of $31,713,721. Although the Company expects the most of the Company’s outstanding trade receivables from its customers will be collected in next twelve months, there are uncertainties about the timing in collecting these receivables, especially the receivables due from the JV Company because the most of them are indirectly impacted by the timely receiving of government subsidies. Since the amount due from the JV Company accounts for the majority of the Company’s outstanding receivables and the Company can’t control the timing of the receiving of government subsidies, the Company believes that its internally-generated cash flows may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve months. However, the Company believes its access to existing financing sources and its good credit will enable it to meet its obligations and fund its ongoing operations. As of the date of this report, the Company has refinanced more than 75% of its current short-term loans with the banks and expects to maintain approximately current debt level for the next twelve months given the Company’s current financial position and business development needs. 

7 

The Company has historically financed its operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest on a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. The Company believes this practice has been ongoing year after year and that short-term bank loans remain available on normal trade terms if needed.

NOTE 3 – BASIS OF PRESENTATION

The Company maintains its general ledger and journals using the accrual method of accounting for financial reporting purposes. The Company’s financial statements and notes are the representations of the Company’s management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States and have been consistently applied in the Company’s presentation of its financial statements.

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The Company’s 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) Kandi Vehicles, a wholly-owned subsidiary of Continental;

(3) Kandi New Energy, a 50%-owned subsidiary of Kandi Vehicles (Mr. Hu Xiaoming owns the other 50%). Pursuant to agreements executed in January 2011, Mr. Hu Xiaoming contracted with Kandi Vehicles for the operation and management of Kandi New Energy and put his shares of Kandi New Energy into escrow. As a result, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy;

(4) Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles; and

(5) Kandi Hainan, a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles. 

8 

Equity Method Investees

The Company’s consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as follows:

(1) The JV Company, a 50% owned subsidiary of Kandi Vehicles;

(2) Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing;

(3) Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua;

(4) JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang;

(5) Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai;

(6) Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu;

(7) The JiHeKang Service Company, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in the JiHeKang Service Company.

(8) Tianjin BoHaiWan, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan;

(9) Changxing Maintenance, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance;

(10) Liuchuang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

All intra-entity profits and losses with regards to the Company’s equity method investees have been eliminated.

9 

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

NOTE 6 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

10 

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $37,289,011 and $14,797,325 at June 30, 2017 and December 31, 2016, respectively.

Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at June 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of June 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of June 30, 2017, and December 31, 2016, the Company’s restricted cash was $22,708,654 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $11,800,454 with Hangzhou Bank Jinhua Branch, of which $5,900,227 will mature on September 29, 2017, and the remainder will mature on October 29, 2017.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

11 

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of June 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with its certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed the issuing of the subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it will allow them to have sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EV sold in 2015 and 2016 by the JV Company are eligible for receiving the subsidies and Chinese government has a good record on paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of June 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserve any allowance for doubtful accounts if it becomes necessary.

(f) Notes receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of June 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $0 and $400,239, respectively, which notes receivable typically mature within six months.

12 

(g) Advances to Suppliers

Advance to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of June 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,806,230 left in Advance to Suppliers in current assets and $18,983,323 left in Advance to Suppliers in long-term assets as of June 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,044,012 of interest expenses have been capitalized for CIP as of June 30, 2017.

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

13 

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $5,142,041 and $494,193 for the three months ended June 30, 2017 and 2016, respectively. Research and development expenses were $25,911,773 and $700,161 for the six months ended June 30, 2017 and 2016, respectively.

14 

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $262,137 and $1,503,384 in grants from the Chinese government. For the six months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,329,611 and $1,697,857 in grants from the Chinese government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	June 30,	December 31,	June 30,
	2017	2016	2016
Period end RMB : USD exchange rate	6.779400	6.945850	6.646140
Average RMB : USD exchange rate	6.874859	6.645200	6.537380

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

15 

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended June 30, 2017 and June 30, 2016, were $1,994,993 and $4,998,817, respectively. The stock-based option expenses for the six months ended June 30, 2017 and June 30, 2016, were $3,128,512 and $11,108,483, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of June 30, 2017 and June 30, 2016, the Company determined that its goodwill was not impaired.

16 

(u) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of June 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended June 30, 2017 and June 30, 2016, respectively. The amortization expenses for intangible assets were $41,048 and $41,048 for the six months ended June 30, 2017 and June 30, 2016, respectively.

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

17 

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for the Company in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month periods ended June 30, 2017 and June 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		94	%		76	%		40	%		53	%

18 

For the six-month periods ended June 30, 2017 and June 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		86	%		52	%		40	%		53	%

Trade receivable includes accounts receivable, amount due from the JV Company net of loans to the JV Company, and amount due from other related parties.

(b) Suppliers

For the three-month periods ended June 30, 2017 and June 30, 2016, 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			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		22	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		12	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		13	%		-			6	%		-

19 

For the six-month periods ended June 30, 2017 and June 30, 2016, 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
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		25	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		22	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		12	%		-			6	%		-

NOTE 9 – EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended June 30, 2017 and June 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. For the six months ended June 30, 2017 and June 30, 2016, the average number of potentially dilutive common shares was 0 and 6,024, respectively. The potential dilutive common shares as at the six months ended June 30, 2017 and June 30, 2016, were 4,400,000 and 5,106,395 shares respectively.

 The following is the calculation of earnings per share for the three-month periods ended June 30, 2017 and 2016:

	For three months ended
	June 30,
	2017			2016
Net income	$	(11,558,017	)	$	2,793,180
Weighted average shares used in basic computation		47,974,974			47,601,286
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,974,974			47,601,286
Earnings per share:
Basic	$	(0.24	)	$	0.06
Diluted	$	(0.24	)	$	0.06

20 

The following is the calculation of earnings per share for the six-month periods ended June 30, 2017 and 2016:

	For six months ended
	June 30,
	2017			2016
Net income	$	(35,711,452	)	$	2,881,600
Weighted average shares used in basic computation		47,854,351			47,305,560
Dilutive shares		-			6,024
Weighted average shares used in diluted computation		47,854,351			47,311,584
Earnings per share:
Basic	$	(0.75	)	$	0.06
Diluted	$	(0.75	)	$	0.06

NOTE 10 – ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

	June 30,		December 31,
	2017		2016
Accounts receivable	$	34,964,666	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	34,964,666	$	32,394,613

21 

NOTE 11 – INVENTORIES

Inventories are summarized as follows:

	June 30,			December 31,
	2017			2016
Raw material	$	4,594,174		$	2,529,149
Work-in-progress		4,108,073			1,786,087
Finished goods		5,190,304			8,014,671
Total inventories		13,892,551			12,329,907
Less: provision for slowing moving inventories		(465,096	)		(415,797	)
Inventories, net	$	13,427,455		$	11,914,110

NOTE 12 – NOTES RECEIVABLE

Notes receivable from the JV Company and related parties as of June 30, 2017, and December 31, 2016, are summarized as follows:

	June 30,		December 31,
	2017		2016
Bank acceptance notes		-		400,239
Total notes receivable	$	-	$	400,239

Details of notes receivable from the JV Company and related parties as of December 31, 2016, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

22 

NOTE 13 – PLANTS AND EQUIPMENT

Plants and equipment as of June 30, 2017 and December 31, 2016, consisted of the following:

	June 30,			December 31,
	2017			2016
At cost:
Buildings	$	13,296,092		$	12,977,465
Machinery and equipment		7,328,252			8,585,666
Office equipment		494,476			475,162
Motor vehicles		360,991			321,207
Molds		27,177,509			26,463,472
		48,657,320			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,270,277	)	$	(3,948,909	)
Machinery and equipment		(6,865,730	)		(8,107,884	)
Office equipment		(256,922	)		(216,226	)
Motor vehicles		(283,853	)		(274,197	)
Molds		(23,395,655	)		(21,031,086	)
		(35,072,437	)		(33,578,302	)
Less: provision for impairment for fixed assets		(51,462	)		(50,228	)
Plant and equipment, net	$	13,533,421		$	15,194,442

As of June 30, 2017 and December 31, 2016, the net book value of plants and equipment pledged as collateral for bank loans was $8,875,078 and $8,875,111, respectively.

Depreciation expenses for the three months ended June 30, 2017 and June 30, 2016 were $1,071,612 and $1,130,545, respectively. Depreciation expenses for the six months ended June 30, 2017 and June 30, 2016 were $2,134,346 and $2,263,277, respectively.

NOTE 14 – LAND USE RIGHTS

The Company’s land use rights as of June 30, 2017 and December 31, 2016, consisted of the following:

	June 30,			December 31,
	2017			2016
Cost of land use rights	$	14,630,896		$	14,280,282
Less: Accumulated amortization		(2,727,683	)		(2,504,562	)
Land use rights, net	$	11,903,213		$	11,775,720

23 

As of June 30, 2017, and December 31, 2016, the net book value of land use rights pledged as collateral for the Company’s bank loans was $8,752,429 and $8,660,097, respectively. Also see Note 16.

The amortization expenses for the three months ended June 30, 2017 and June 30, 2016, were $79,845 and $83,849, respectively. The amortization expenses for the six months ended June 30, 2017 and June 30, 2016, were $159,383 and $153,836, respectively. Amortization expenses for the next five years and thereafter is as follows:

2017(Six Months)	$	159,383
2018		318,766
2019		318,766
2020		318,766
2021		318,766
Thereafter		10,468,766
Total	$	11,903,213

NOTE 15 – CONSTRUCTION-IN-PROGRESS

Hainan Facility

In April 2013, the Company signed an agreement with the Wanning city government in Hainan Province to invest a total of RMB 1 billion to establish a factory in Wanning to manufacture 100,000 EVs annually. Also in 2013, the Company contracted with an unrelated third party supplier, Nanjing Shangtong, to purchase a production line in connection with the manufacturing facility and to help develop a new EV model. In January 2016, the Hainan Province government implemented a development plan to centralize manufacturing in certain designated industry parks. As a result, the Wanning facility was relocated from Wanning city to the Haikou city high-tech zone. Based on our agreement with the government, all the expenses and lost assets resulting from the relocation were compensated for by the local government. As a result of the relocation, the contracts to build the manufacturing facility had to be revised in terms of total contract amount, technical requirements, completion milestones and others for the new construction site in Haikou. Because of this change, part of the construction-in-progress previously recorded was transferred back to the advances to suppliers in accordance with the revised contract terms and technical requirements. The Hainan facility construction improvement is currently underway. The Company started to assemble the prototype model in the end of July and plans to send it to National Testing Center for inspection in the coming months. Once the prototype passes the inspection, the Company will launch the trial production thereafter.

No depreciation is provided for CIP until such time as the Hainan facility is completed and placed into operation.

24 

The contractual obligations under CIP of the Company as of June 30, 2017 are as follows:

	Total in CIP as of		Estimate		Total
Project	June 30,		to		contract
	2017		complete		amount
Kandi Hainan facility	$	43,655,614	$	38,671,989	$	82,327,603
Total	$	43,655,614	$	38,671,989	$	82,327,603

As of June 30, 2017, and December 31, 2016, the Company had CIP amounting to $43,655,614 and $27,054,181, respectively.

$536,068 and $0 of interest expense has been capitalized for CIP for three months ended June 30, 2017 and 2016, respectively. $1,044,012 and $0 of interest expense has been capitalized for CIP for six months ended June 30, 2017 and 2016, respectively.

NOTE 16 – SHORT -TERM AND LONG-TERM BANK LOANS

Short-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, , secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife,and guaranteed by company's subsidiaries. Also see Note 13 and Note 14.		10,325,398		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 12, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,198,277		7,025,778
Interest rate 4.35% per annum, due July 3, 2017, paid off on July 3, 2017 and the new due date is July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,649,910		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,540,136		-
Loans from Individual Third Party
Interest rate 12% per annum		295,011		-
	$	32,008,732		34,265,065

25 

Long-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		29,501,136		28,794,172
Total:	$	29,501,136		28,794,172

The interest expense of short-term and long-term bank loans for the three months ended June 30, 2017, and 2016 was $548,810 and $432,318, respectively. The interest expense of short-term and long-term bank loans for the six months ended June 30, 2017, and 2016 was $1,163,263 and $874,397, respectively.

As of June 30, 2017, the aggregate amount of short-term and long-term loans guaranteed by various third parties was $0.

NOTE 17 – NOTES PAYABLE

By issuing bank notes payable rather than paying cash to suppliers, the Company can defer payments until the bank notes payable are due. Depending on bank requirements, the Company may need to deposit restricted cash in banks to back up the bank notes payable, while the restricted cash deposited in the banks will generate interest income.

A bank acceptance note is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker’s acceptance specifies the amount of the funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit. $10,844,399 and $3,279,656 were held as collateral for the notes payable as of June 30, 2017, and December 31, 2016, respectively.

As is common business practice in the PRC, the Company issues notes payable to its suppliers as settlement for accounts payable.

The Company’s notes payable also include the borrowing from the third party.

26 

Notes payable for June 30, 2017 and December 31, 2016 were summarized as follows:

	June 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due July 6, 2017		1,180,045		-
Due September 23, 2017		8,850,341		-
Due October 21, 2017		803,906		-
Due November 2, 2017		6,637,756		-
Due November 4, 2017		885,034		-
Due December 6, 2017		885,034		-
Due December 22, 2017		91,731		-
Due June 21, 2018		360,893		-
Other Notes Payable:
Due May 6, 2017		-		11,517,669
Due May 6, 2019		17,594,271
Total	$	37,289,011	$	14,797,325

NOTE 18 – 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, Kandi Vehicles qualifies as a High and New Technology Enterprise (“HNTE”) company in the PRC, and is entitled to pay a reduced income tax rate of 15% for the years presented, which reduced rate will expire in 2017. An entity may re-apply for an HNTE certificate when the prior certificate expires. Historically, Kandi Vehicles has successfully re-applied for such certificates when the its prior certificates expired. The applicable CIT rate of each of the Company’s three other subsidiaries, Kandi New Energy, Yongkang Scrou and Kandi Hainan, the JV Company and its subsidiaries, and the Service Company is 25%.

After combining research and development tax credits of 25% on certain qualified research and development expenses, the Company’s final effective tax rate for June 30, 2017, and 2016 was 12.08% and -8.94%, respectively. The effective tax rates for each of the periods mentioned above are disclosed in the summary table of income tax expenses for June 30, 2017 and 2016.

Effective January 1, 2007, the Company adopted the guidance in ASC 740 related to uncertain tax positions. The guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

27 

Under ASC 740, 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 June 30, 2017, 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 for years after 2006. 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 June 30, 2017, 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 June 30, 2017, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax for six months ended June 30, 2017, due to a net operating loss in 2016 and an accumulated net operating loss carry forward from prior years in the United States.

Income tax expenses for the three months and six months ended June 30, 2017 and 2016 are summarized as follows:

	For Three Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	2,647,813
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(639,962	)		(247,587	)
Income tax expense (benefit)	$	(131,939	)	$	2,400,226

28 

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	4,408,966
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,415,959	)		(4,645,415	)
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

The Company’s income tax expenses differ from the “expected” tax expenses for six months ended June 30, 2017 and 2016 (computed by applying the U.S. Federal Income Tax rate of 34% and the PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(10,154,847	)	$	661,288
Effect of differing tax rates in different jurisdictions		(446,896	)		(1,207,759	)
Non-taxable income		-			(24,041	)
Non-deductible expenses①		2,086,777			2,068
Research and development super-deduction		(19,195	)		(74,248	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,717,207			(135,630	)
Addition to valuation allowance		1,688,376			3,269,327
Other		(46,932	)		-
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

① It's mainly due to share of (loss) in JV Company and its subsidiaries.

29 

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30,			December 31,
	2017			2016
Deferred tax assets:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation	$	-		$	-
Expense k		522,909			72,742
Depreciation		205,704			230,156
Loss carried forward		32,618,384			27,218,934
less: valuation allowance		(27,337,091	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,009,906			701,021
Deferred tax liabilities:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation		-			-
Expense l		1,615,714			1,698,303
Depreciation		-			-
Other		-			-
Accumulated other comprehensive gain		-			-
Total deferred tax liability		1,615,714			1,698,303
Net deferred tax assets (liabilities)	$	4,394,192		$	(997,282	)

k It's provision for impairment inventory, fixed assets and loss contingency-litigation.

l It's due to the difference of tax basis and GAAP basis of other long term assets.

As of June 30, 2017, the aggregate NOLs incurred in 2013 through 2017 of $80.40 million deriving from entities in the U.S. will expire in varying amount between 2018 and 2022. The aggregate NOLs in 2016 through 2017 of $21.27 million deriving from entities in the PRC will expire in varying amount between 2021 and 2022. As of December 31, 2016, the aggregate NOLs incurred in 2012 through 2016 of $78.88 million deriving from entities in the U.S. will expire in varying amount between 2017 and 2021. The aggregate NOLs incurred in 2016 of $2.12 million deriving from entities in the PRC will expire in 2021.The cumulative net loss in the PRC and U.S. can be carried forward for five years, to offset future net profits for income tax purposes. The cumulative net loss in Hong Kong can be carried forward without an expiration date.

30 

Income (loss) before income taxes from PRC and non-PRC sources for the six months ended June 30, 2017 and 2016 are summarized as follows:

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(35,612,423	)	$	14,295,017
Non-PRC		(5,006,965	)		(11,649,866	)
Total	$	(40,619,388	)	$	2,645,151

Net change in the valuation allowance of deferred tax assets are summarized as follows:

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016	$	26,820,811
Additions-change to tax expense		1,688,376
Deduction-expired of loss carried forward ④		(1,172,096	)
Balance at June 30,2017	$	27,337,091

④It's due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

(b) Tax Holiday Effect

For the six months ended June 30, 2017, and 2016, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax exemptions (tax holidays) for the six months ended June 30, 2017 and 2016.

The combined effects of income tax expense exemptions and reductions available to the Company for the six months ended June 30, 2017 and 2016 are as follows:

	For Six Months Ended
	June 30,
	2017		2016
Tax benefit (holiday) credit	$	19,195	$	209,878
Basic net income per share effect	$	0.000	$	0.004

31 

NOTE 19 – STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of the Company’s common stock, at an exercise price of $9.72 per share, to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015, through May 29, 2018. The value of the stock options was estimated using the Black Scholes Model with an expected volatility of 90%, an expected life of 10 years, a risk-free interest rate of 2.23% and an expected dividend yield of 0.00%. There were $3,128,512 in stock compensation expenses associated with stock options booked for the six months ended June 30, 2017.

The following is a summary of the stock option activities of the Company:

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of June 30, 2017	4,400,000		$	9.72

The fair value of each of the options to purchase 4,900,000 shares of common stock issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

As of June 30, 2017 and December 31, 2016, all the warrants had been exercised and the derivative liability relating to the warrants issued to the investors and a placement agent was $0.

32 

NOTE 20 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company’s restricted common stock every six months, beginning in July 2011.

As compensation for Mr. Jerry Lewin’s service as a member of the Board, the Board authorized the Company to provide 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 service as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company’s common stock every six months, beginning in September 2013.

In November 2016, the Company entered into a three-year employment agreement with Mr. Mei Bing, who is now the Company’s Chief Financial Officer. Under the agreement, Mr. Mei Bing is entitled to receive an aggregate of 10,000 shares of common stock each year, vested in four equal quarterly installments of 2,500 shares.

The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are approved by the Board for grant. The compensation costs for awards of common stock are recognized over the requisite service period of three or six months.

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, comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “2008 Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount based on the modification to 2013’s proposal in 2014. Any such increase in the grant would be subject to the total number of shares available under the 2008 Plan, and the Company’s Board and shareholders will need to approve any increase in the number of shares reserved under the 2008 Plan if all the shares originally reserved are granted. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the 2008 Plan at its annual meeting. 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 reduce the total number of shares of common stock of the stock award for selected executives and key employees from 335,000 shares of common stock to 250,000 shares of common stock for each fiscal year, with the other terms remaining the same. On February 13, 2017, the Board authorized the Company to grant 246,900 shares of common shares to certain management members as compensation for their past services under the 2008 Plan.

33 

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. Stock-based compensation expenses are calculated based on grant date fair value and number of awards expected to be earned at the end of each quarter and recognized in the quarter. In subsequent periods, stock-based compensation expenses are adjusted based on grant date fair value and the change of number of awards expected to be earned. Final stock-based compensation expenses for the year are calculated based on grant date fair value and number of awards earned for the year and recognized at the end of year.

For the three months ended June 30, 2017 and 2016, the Company recognized $2,016,043 and $8,269,691 of employee stock award expenses under General and Administrative Expenses, respectively. For the six months ended June 30, 2017 and 2016, the Company recognized $4,493,187 and $15,157,583 of employee stock award expenses under General and Administrative Expenses, respectively.

NOTE 21 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of our intangible assets, other than goodwill:

	Remaining	June 30,			December 31,
	useful life	2017			2016
Gross carrying amount:
Trade name	4 years	$	492,235		$	492,235
Customer relations	4 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(262,188	)	$	(236,815	)
Customer relations			(161,970	)		(146,295	)
			(424,158	)		(383,110	)
Intangible assets, net		$	372,163		$	413,211

The aggregate amortization expenses for those intangible assets that continue to be amortized is reflected in amortization of intangible assets were $20,524 and $20,524 for the three months ended June 30, 2017 and 2016, $41,048 and $41,048 for the six months ended June 30, 2017 and 2016, respectively.

34 

Amortization expenses for the next five years and thereafter are as follows:

2017 (six months)	$	41,048
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,735
Total	$	372,163

NOTE 22 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income in such investees, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss in such investees, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has a 50% ownership interest in the JV Company. In order to improve JV Company’s development, Zhejiang Geely Holding Group (“Geely Holding”), the parent company of Geely, became the shareholder of the JV Company on October 26, 2016, by purchasing the 50% in the JV Company held by Shanghai Guorun at a purchase price exceeding the cash amount of the aggregate of the original investment and past shared profits. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company now has a 50% indirect economic interest in Kandi Changxing through its 50% ownership interest in the JV Company. On May 19, 2017, due to business development, Geely Holding entrusted Mr. Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged its 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee because Geely Holding provides 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

35 

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% of the ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is now a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd., and in August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership in the Service Company.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has a 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang Service Company.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

36 

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”). Tianjin BoHaiWan is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Because Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd. (“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

As of June 30, 2017, the JV Company consolidated its interests in the following entities on its financial statements: (1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company. As a result, the Company’s consolidated net income for the six months ended June 30, 2017, and 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

	Three months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	18,650,533		$	111,767,049
Gross (loss)income		(1,487,979	)		14,663,818
Net (loss)income		(14,577,384	)		8,626,568
Company’s equity in net (loss) income of JV	$	(7,288,692	)	$	4,313,284

37 

	Six months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	19,928,152		$	111,271,482
Gross (loss) profit		(1,824,736	)		13,601,171
Net (loss) income		(25,185,112	)		558,120
Company’s equity in net (loss) income of JV	$	(12,592,556	)	$	279,060

	June 30,		December 31,
	2017		2016
Condensed balance sheet information:
Current assets	$	575,007,161	$	514,958,008
Noncurrent assets		176,042,414		177,563,800
Total assets	$	751,049,575	$	692,521,808
Current liabilities		576,715,978		505,356,626
Noncurrent liabilities		40,711,567		31,817,560
Equity		133,622,030		155,347,622
Total liabilities and equity	$	751,049,575	$	692,521,808

For the six months ended June 30, 2017, and 2016, the JV Company’s revenues were derived primarily from the sales of EV products in China. Because the Company has a 50% ownership interest in the JV Company and accounted for its investments in the JV Company under the equity method of accounting, the Company did not consolidate the JV Company’s financial results, but rather included equity income from the JV Company during such periods.

Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

38 

The Company’s equity method investments in the JV Company as of June 30, 2017 and December 31, 2016 are as follows:

	June 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss		(12,592,556	)		(7,077,789	)
Intercompany transaction elimination		(1,530,488	)		(230,787	)
Year 2016 unrealized profit realized		223,077			1,066
Exchange difference		1,705,929			(5,577,376	)
Investment in JV Company, end of the period	$	65,258,976		$	77,453,013

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended June 30, 2017, were $26,171,724 or 96% of the Company’s total revenue, a decrease of 44.9% from the same quarter last year. Sales to the Company’s customers, the JV Company and its subsidiaries, for the six months ended June 30, 2017, were $27,483,366 or 87% of the Company’s total revenue, a decrease of 54.9% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.

The breakdown of sales to the JV Company and its subsidiaries is as follows:

	Three Months ended
	June 30,
	2017		2016
JV Company	$	25,715,753	$	41,919,634
Kandi Changxing		60,810		1,657,335
Kandi Shanghai		33,841		3,766,230
Kandi Jinhua		-		(5,197	)
Kandi Jiangsu		361,320		130,813
Total sales to JV	$	26,171,724	$	47,468,815

	Six Months ended
	June 30,
	2017		2016
JV Company	$	27,027,395	$	55,005,270
Kandi Changxing		60,810		1,817,932
Kandi Shanghai		33,841		3,924,432
Kandi Jinhua		-		47,067
Kandi Jiangsu		361,320		149,089
Total sales to JV	$	27,483,366	$	60,943,790

39 

As of June 30, 2017 and December 31, 2016, the amount due from the JV Company and its subsidiaries, was $139,801,316 and $136,536,725, respectively, of which the majority were balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	821,277	$	281,657
Kandi Changxing		16,841,443		16,359,721
Kandi Jinhua		5,174,527		5,050,525
Kandi Jiangsu		767,495		352,587
JV Company		116,196,574		114,492,235
Consolidated JV	$	139,801,316	$	136,536,725

As of June 30, 2017 and December 31, 2016, the amount due to the JV Company and its subsidiaries, was $892,759 and $566, respectively, of which the majority were balances with Kandi Changxing and Kandi Shanghai. The breakdown is as below:

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	660,643	$	-
Kandi Changxing		232,116		566
Consolidated JV	$	892,759	$	566

The amounts due from the JV Company include six short-term loans in the total amount of $43,514,175 that Kandi Vehicles lent to the JV Company. Each such loan carries an annual interest rate of 4.35%.

NOTE 23 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for bank loans to other parties

As of June 30, 2017, and December 31, 2016, the Company provided guarantees for the following parties:

(1) Guarantees for bank loans

40 

	June 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang industrial Co., Ltd.		4,277,665		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		47,939,345		46,790,530
Total	$	52,217,010	$	53,845,102

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 loan in the amount of $2,902,534 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang City against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation was taken place at court in Yongkang City on May 27, 2017 and the plaintiff agreed NGCL to repay the loan principal and interest plus legal expenses in installments. As of June 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter is remote.

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,277,665 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 to order ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $2.9 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of June 30, 2017, the Company has an accrued liability of approximately $2.9 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. On August 1, 2017, the first installment of RMB 5 million or approximately $0.73 million was paid to Ping An Bank and ZSICL will reimburse the Company for the same amount according to the agreement. The Company expects the likelihood of incurring losses in connection with this matter is low.

41 

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $36,876,420 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to September 14, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,062,926 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on July 21, 2017.

All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of June 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

Contingencies

As of June 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

	June 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	2,950,114	$	-
Total	$	2,950,114	$	-

Litigation

Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. 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 allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 will need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. We believe that the claims are without merit and intend to defend against these lawsuits vigorously. We are unable to estimate the possible loss, if any, associated with these lawsuits.

Beginning in May 2017, a purported shareholder derivative actions based on the same underlying events described above was were filed against certain current and former directors of Kandi in the United States District Court for the Southern District of New York. We believe that the claims are without merit and intend to defend against this lawsuit vigorously. We are unable to estimate the possible loss, if any, associated with this these lawsuits.

42 

NOTE 24 – SEGMENT REPORTING

The Company has one operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in China. The Company only has manufacturing operations in China.

The following table sets forth revenues by geographic area:

	Three Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		886,374		3	%		992,662		2	%
China		26,438,905		97	%		54,224,706		98	%
Total		27,325,279		100	%		55,217,368		100	%

	Six Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		2,402,538		8	%		1,614,384		2	%
China		29,197,314		92	%		104,260,877		98	%
Total		31,599,852		100	%		105,875,261		100	%

NOTE 25 – Related Party Transactions

The Board must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the three months ended June 30, 2017 and 2016:

	Three Months ended
	June 30,
	2017		2016
Service Company		-		769,065
Total	$	-		769,065

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the six months ended June 30, 2017 and 2016:

	Six Months ended
	June 30,
	2017		2016
Service Company		-		3,977,568
Total	$	-		3,977,568

The details for amounts due from related parties (other than the JV Company and its subsidiaries) as of June 30, 2017 and December 31, 2016 were as below:

	June 30,		December 31,
	2017		2016
Service Company		10,742,243		10,484,816
Total due from related party (other than the JV Company and its subsidiaries)	$	10,742,243		10,484,816

The Company has a 9.5% ownership interest in the Service Company and Mr.Hu, Chairman and CEO of the Company, has a 13% ownership interest in the Service Company. The main transactions between the Company and the Service Company are purchases by the Service Company of batteries and EV parts.

For transactions with the JV Company, please refer to Note 22.

43 

 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 terminology, 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 terminology, 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 our Annual Report on Form 10-K for the year ended December 31, 2016 and those set forth from time to time in our other filings with the Securities and Exchange Commission (“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

This section should be read together with the Summary of Significant Accounting Policies in the attached consolidated financial statements included in this report.

Estimates affecting accounts receivable and inventories

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect our reporting of assets and liabilities (and contingent assets and liabilities). These estimates are particularly significant where they affect the reported net realizable value of our accounts receivable and inventories.

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in the period when a loss is probable based on an assessment of specific factors, such as troubled collection, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. We had an allowance for doubtful accounts of $0 as of June 30, 2017 and December 31, 2016, in accordance with our management's judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserve any allowance for doubtful accounts if it becomes necessary.

Inventory is stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs. There was a $465,096 and $415,797 of decline in net realizable value of inventory as of June 30, 2017 and December 31, 2016, respectively, due to our provision for slow moving inventory.

Although we believe that there is little likelihood that actual results will differ materially from our current estimates, if customer demand for our products decreases significantly in the near future, or if the financial condition of our customers deteriorates in the near future, we could realize significant write downs for slow-moving inventories or uncollectible accounts receivable.

44 

Policy affecting recognition of revenue

Our revenue recognition policy plays a key role in our consolidated financial statements. Revenues represent the invoiced value of goods sold, recognized upon the shipment of goods to customers, and revenues are recognized when all of the following criteria are met:

1.	Persuasive evidence of an arrangement exists;
2.	Delivery has occurred or services have been rendered;
3.	The seller's price to the buyer is fixed or determinable; and
4.	Collectability is reasonably assured.

Our revenue recognition policies for our EV products (through the JV Company), EV parts and legacy products, including ATVs, go-karts and other products are the same: When the products are delivered, the associated risk of loss is deemed transferred, and we recognize revenue at that time.

Policy affecting options, warrants and convertible notes

Our stock option cost is recorded in accordance with ASC 718 and ASC 505. The fair value of stock options is estimated using the Black-Scholes -Merton model. Our expected volatility assumption is based on the historical volatility of our stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Stock option expense recognition is based on awards expected to vest. There were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

Warranty Liability

Our products that are exported out of China to foreign countries are subject to legal and regulatory requirements with which we are not familiar. The development of warranty policies for the exported products in each of these countries would be virtually impossible and prohibitively expensive. Therefore, we provide price incentives and free parts to our customers and in exchange, our customers establish appropriate warranty policies and assume warranty responsibilities.

Consequently, warranty issues are taken into consideration during price negotiations for our products. Free parts are delivered along with the products, and when products are sold, the related parts are recorded as cost of goods sold. Due to the reliability of our products, we have been able to maintain this warranty policy and we have not had any product liability attributed to our products.

For the EV products that we sell in China, we provide a three year or 50,000 kilometer manufacturer warranty. This warranty affects the Company through our participation and investment in the JV Company, which manufactures the EV products.

45 

Results of Operations

Overview

We are one of the leading manufacturers of EV products (through the JV Company), EV parts and off- road vehicles in China. For the six months ended June 30, 2017, we recognized total revenue of $31,599,852 as compared to $105,875,261 for the six months ended June 30, 2016, a decrease of $74,275,409, or 70.2%. Although we resumed normal production in May 2017, the significant decrease in revenue was primarily due to weak EV parts demand for the most part of the first half year from the JV Company and its subsidiaries because of the overruling and re-announcement of the MIIT’s (as such term is defined below) directory of recommended models of new energy vehicles as a result of the PRC government’s new subsidy policies effective as of January 1, 2017, as well as the extended delays of subsidy payments for EVs manufactured in previous years resulting from the Chinese government’s industry-wide subsidy review in 2016, which resulted in temporary difficulties for the JV Company to increase production. Our primary source of revenue is from the sale of our EV parts, which accounted for 91.4% of our total revenue in the six months ended June 30, 2017. For the six months ended June 30, our EV parts revenues were $28,867,714, a decrease of $71,136,764, or 71.1%, as compared to our EV parts revenues of $100,004,478 for the six months ended June 30, 2016. Our off-road vehicle revenue increased $640,971 from the year ago period, or 30.7%, to $2,732,138 for the six months ended June 30, 2017 as compared to the same period a year ago, mainly as a result of organic growth. For the six months ended June 30, 2017, we recorded $4,424,268 of gross profits, a decrease of 70.8% from the same period of 2016, primarily due to the decrease of revenue from the sale of EV parts. Gross margin for the six months ended June 30, 2017, was 14.0%, a slight decrease from 14.3% from the six months ended June 30, 2016. We recorded a net loss of $35,711,452 for the six months ended June 30, 2017, compared to net income of $2,881,600 in the same period of 2016, largely due to net loss from the JV Company of $13,899,967, significantly increased research and development (“R&D”) costs of $25,911,773 to develop a new EV model to prepare the Company for business growth in the coming years, an accrued contingent loss of approximately $2.9 million for a litigation case as well as decreased profits this period. Excluding the effects of stock award expenses, which were $4,493,187 and $15,157,583 for the six months ended June 30, 2017, and 2016, respectively, and the change of the fair value of financial derivatives, which were $0 and a gain of $3,812,898 for the six months ended June 30, 2017, and 2016, respectively, our net loss (non-GAAP) was $31,218,265 for the six months ended June 30, 2017, as compared to net income (non-GAAP) of $14,226,285 for the six months ended June 30, 2016, a decrease of $45,444,550 or 319.4%.

The Hainan facility construction improvement is currently underway. The Company started to assemble the prototype model in the end of July and plans to send it to National Testing Center for inspection in the coming months. Once the prototype passes the inspection, the Company will launch the trial production thereafter. This facility is expected to have an annual manufacturing capacity of 100,000 EV products when fully operational. During the first half year of 2017, we increased our R&D efforts on the design and development of the new EV model K23, which is a mid-tier pure electric vehicle designed to manufacture in Hainan facility for our targeted market with innovative built in technology and state-of-the-art body and interior designs to meet the preferences and demands of today’s educated customers. In November 2016, we filed an application of patent for exterior design of EV model K23 with the Chinese government. On July 14, 2017, this patent application was approved by the State Intellectual Property Office and the patent was granted to us. We expect this new model will be well received by the public and will become a new revenue growth engine for our business going forward.

In July 2017, the Kandi model K17A was included as a new recommended model vehicle in the Ministry of Industry and Information Technology of the People’s Republic of China’s (the “MIIT”) Directory of Recommended Models for Energy Saving and New Energy Vehicle Demonstration and Promotion (the “Sixth Annual Directory of New Energy Vehicles”) in the MIIT’s third public announcement of 2017. In addition, according to the Chinese government’s regulations of financial subsidy policy adjustment for recommended models for energy saving and new energy vehicle demonstration and promotion, new energy passenger vehicles are required to incorporate enhanced battery power systems with increased energy density quality of higher than 120 wh/kg in order to receive 110% of the central government subsidy for such vehicles. Three of the JV Company’s EV models, K12, K10D, and K17A have successfully achieved this standard after receiving technology upgrades. As a result, all three of these models are eligible to receive 110% subsidies from the central government, which will contribute to the Company’s continued development in the second half of 2017.

46 

Comparison of the Three Months Ended June 30, 2017 and 2016

The following table sets forth the amounts and percentage relationship to revenue of certain items in our condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended June 30, 2017 and 2016.

	Three Months Ended
	June 30, 2017			% of Revenue			June 30, 2016			% of Revenue			Change in Amount			Change in %
REVENUES FROM UNRELATED PARTY, NET		1,153,555			4.2	%		6,979,488			12.6	%		(5,825,933	)		(83.5	%)
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		26,171,724			95.8	%		48,237,880			87.4	%		(22,066,156	)		(45.7	%)
REVENUES, NET		27,325,279						55,217,368						(27,892,089	)		(50.5	%)
COST OF GOODS SOLD		23,568,343			86.3	%		46,762,331			84.7	%		(23,193,988	)		(49.6	%)
GROSS PROFIT		3,756,936			13.7	%		8,455,037			15.3	%		(4,698,101	)		(55.6	%)
OPERATING EXPENSES:
Research and development		5,142,041			18.8	%		494,193			0.9	%		4,647,848			940.5	%
Selling and marketing		402,253			1.5	%		730,443			1.3	%		(328,190	)		(44.9	%)
General and administrative		1,558,652			5.7	%		9,625,194			17.4	%		(8,066,542	)		(83.8	%)
Total Operating Expenses		7,102,946			26.0	%		10,849,830			19.6	%		(3,746,884	)		(34.5	%)
LOSS FROM OPERATIONS		(3,346,010	)		(12.2	%)		(2,394,793	)		(4.3	%)		(951,217	)		39.7	%
OTHER INCOME (EXPENSE):
Interest income		559,425			2.0	%		785,152			1.4	%		(225,727	)		(28.7	%)
Interest expense		(548,810	)		(2.0	%)		(432,318	)		(0.8	%)		(116,492	)		26.9	%
Change in fair value of financial instruments		0			0.0	%		526,558			1.0	%		(526,558	)		(100.0	%)
Government grants		262,137			1.0	%		1,503,384			2.7	%		(1,241,247	)		(82.6	%)
Share of loss after tax of JV		(8,738,254	)		(32.0	%)		4,918,633			8.9	%		(13,656,887	)		(277.7	%)
Other income (expense), net		121,556			0.4	%		286,790			0.5	%		(165,234	)		(57.6	%)
Total other expense, net		(8,343,946	)		(30.5	%)		7,588,199			13.7	%		(15,932,145	)		(210.0	%)
(LOSS) INCOME BEFORE INCOME TAXES		(11,689,956	)		(42.8	%)		5,193,406			9.4	%		(16,883,362	)		(325.1	%)
INCOME TAX BENEFIT		131,939			0.5	%		(2,400,226	)		(4.3	%)		2,532,165			(105.5	%)
NET (LOSS) INCOME		(11,558,017	)		(42.3	%)		2,793,180			5.1	%		(14,351,197	)		(513.8	%)

(a) Revenue

For the three months ended June 30, 2017, our revenue was $27,325,279 compared to $55,217,368 for the same period of 2016, a decrease of $27,892,089 or 50.5%. Our products include EV parts and off-road vehicles, including ATVs, utility vehicles, go-karts, and others. The decrease in revenue was mainly due to the decrease in EV parts sales during this quarter. The selling prices of our products for the three months ended June 30, 2017 decreased on average from the same period last year. The decrease in revenues was primarily due to this decrease in sales volume.

The following table summarizes our revenues by product types for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,
	2017		2016
	Sales		Sales
EV parts	$	26,202,818	$	53,823,619
Off-road vehicles		1,122,461		1,393,749
Total	$	27,325,279	$	55,217,368

47 

EV Parts

Among our total revenues during the three months ended June 30, 2017, approximately $26,202,818, or 95.9%, resulted from the sale of EV parts. We started our EV parts business in 2014, and revenue from EV parts in the second quarter of 2017 decreased $27,620,801 or 51.3% compared to the second quarter of 2016. Our EV parts sales primarily consisted of the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, which accounted for 95.9% of total sales. Among total sales for the three months ended June 30, 2017, approximately 65.5% were related to the sale of battery packs. In compliance with the regulation of the Chinese auto industry, we hold the necessary production licenses to manufacture the battery packs exclusively used in EV products manufactured by the JV Company. Besides the sale of battery packs, approximately 11.2% of total sales were related to sales of EV controllers, approximately 9.2% of the total sales were related to sales of air conditioning units, and approximately 7.8% of total sales were related to sales of EV drive motors.

During the three months ended June 30, 2017 and 2016, our revenues from the sale of EV parts to the JV Company and its subsidiaries accounted for approximately 96% and 86% of our total net revenue for the quarter, respectively. The EV parts we sold were used in manufacturing pure EV products by the JV Company’s subsidiaries.

During the three months ended June 30, 2017 and 2016, our revenue from the sale of EV parts to the Service Company was 0.0% and 1.4% of total sales, respectively. The Service Company purchased the battery packs for speed upgrades and other EV parts for repair and maintenance.

Off-Road Vehicles

Among our total revenues during the three months ended June 30, 2017, approximately $1,122,461, or 4.1%, resulted from the sale of off-road vehicles. The off-road vehicles revenue decreased $271,289, or 19.5% compared to the same period of 2016.

(b) Cost of goods sold

Cost of goods sold was $23,568,343 during the three months ended June 30, 2017, representing a decrease of $23,193,988, or 49.6%, compared to that of the same period of 2016. The decrease was primarily due to the corresponding decrease in sales resulting from weak demand for our EV parts by the JV Company.

48 

(c) Gross profit

The margins by products for the three months ended June 30, 2017 and 2016 are as below:

	Three Months Ended June 30,
	2017									2016
	Sales		Cost		Gross Profit		Margin %			Sales		Cost		Gross Profit		Margin %
EV parts	$	26,202,818		22,606,828		3,595,990		13.7	%	$	53,823,619		45,518,502		8,305,117		15.4	%
Off-road vehicles		1,122,461		961,515		160,946		14.3	%		1,393,749		1,243,829		149,920		10.8	%
Total	$	27,325,279		23,568,343		3,756,936		13.7	%	$	55,217,368		46,762,331		8,455,037		15.3	%

Gross profit for the second quarter of 2017 decreased 55.6% to $3,756,936, compared to $8,455,037 for the same period last year. This was primarily attributable to the sales decrease. Our gross margin decreased to 13.7% compared to 15.3% for the same period of 2016. The decrease in our gross margin was mainly due to the decreased selling prices of battery to the JV Company in the three months ended June 30, 2017 and increased manufacturing overhead per unit because of decreased sales volume offset by decreased raw material purchase prices during the period and the increased gross margin of off -road vehicles from export sales.

(d) Research and development

R&D expenses were $5,142,041 for the second quarter of 2017, an increase of $4,647,848 or 940.5% compared to the same period of last year. This increase was primarily due to significantly increased R&D expenses related to the development of a new EV model at Hainan facility for the three months ended June 30, 2017. For the three months ended June 30, 2017 and 2016, approximately 94.1% and 0% of our R&D expenses were spent on the research and development of a new EV product model at Hainan facility, respectively, and the rest was spent on other various EV and off-road vehicles R&D projects.

(e) Sales and marketing expenses

Selling and marketing expenses were $402,253 for the second quarter of 2017, compared to $730,443 for the same period last year, a decrease of $328,190 or 44.9%. This decrease was primarily attributable to the decreased shipping costs due to decreased sales and decreased amortization of product maintenance expenses for batteries during this period, which expenses will be amortized over the next eight years.

49 

(f) General and administrative expenses

General and administrative expenses were $1,558,652 for the second quarter of 2017, compared to $9,625,194 for the same period of last year, a decrease of $8,066,542 or 83.8%. For the three months ended June 30, 2017, general and administrative expenses included $2,016,043 in expenses for common stock awards to employees and consultants, compared to $8,269,691 for the same period in 2016. General and administrative expenses for the three months ended June 30, 2017 also included an adjustment of approximately $1.7 million of expense reduction to a previously accrued contingent loss in connection with a litigation (See note 23 for the reduced contingent loss related to the ZSICL bank loan). Excluding stock compensation expense, our net general and administrative expenses for the three months ended June 30, 2017 were $-457,391, a decrease of $1,812,894, or 133.7%, from $1,355,503 for the same period of 2016.

(g) Government grants

Government grants were $262,137 for the second quarter of 2017, compared to $1,503,384 for the same quarter last year, representing a decrease of $1,241,247, or 82.6%, which was mainly due to the receipt of the government allowance for Kandi Hainan relocation of $1,421,976 last year.

(h) Interest income

Interest income was $559,425 for the second quarter of 2017, a decrease of $225,727 or 28.7% compared to the same period of last year. This decrease was primarily attributable to decreased interest rates on loans to the JV Company. The interest rate was reduced to 4.35% in 2017 from 8.7% in 2016 although the loan amount increased from the same quarter last year. In addition, we had interest income from a loan to a third party in the second quarter last year but we didn’t have such loan in the second quarter of 2017.

(i) Interest expenses

Interest expenses were $548,810 in the second quarter of 2017, an increase of $116,492 or 26.9% compared to the same period of last year. This increase was primarily due to the additional interest expenses associated with the note payable to a third party although the overall loan interest rates decreased in general in the second quarter of 2017 as compared to that of the same period last year. Of the interest expenses, $1,054, and $0 were discounts associated with the settlement of bank acceptance notes for the three months ended June 30, 2017 and 2016, respectively.

(j) Change in fair value of financial instruments

For the second quarter of 2017, the gain or loss related to changes in the fair value of derivative liability relating to the warrants issued to the investors and a placement agent was $0, a decrease of $526,558 from the same period of last year, which was mainly the result of all remaining unexercised warrants expired as of June 30, 2017.

50 

(k) Share of loss after tax of the JV Company

For the second quarter of 2017, the JV Company’s net sales were $18,650,533, gross loss was $1,487,979, and net loss was $14,577,384. We accounted for our investments in the JV Company under the equity method of accounting because we have a 50% ownership interest in the JV Company. As a result, we recorded 50% of the JV Company’s loss for $7,288,692 for the second quarter of 2017. After eliminating intra-entity profits and losses, our share of the after tax losses of the JV Company was $8,738,254 for the second quarter of 2017, an increase of loss of $13,656,887 compared to the same period of last year. The increase of the JV Company’s losses was because significantly decreased EV sales and profits during the second quarter of 2017 due to the re-announcement of the MIIT’s directory of recommended models of new energy vehicles as a result of new government’s subsidy policies effective as of January 1, 2017 as well as the extended delays of subsidy payments for EVs manufactured in previous years, which resulted in temporary difficulties for the JV Company to increase production although the JV Company resumed normal production in May this year.

During the second quarter of 2017, the JV Company sold 365 units of EV products as compared to 7,200 units of EV products sold in the same period of last year.

(l) Other income, net

Net other income was $121,556 for the second quarter of 2017, a decrease of $165,234 or 57.6% compared to the same period of last year, which was largely due to increased rental income last year.

(m) Net income (loss) from continuing operation

Net loss was $11,558,017 for the second quarter of 2017, a negative change of $14,351,197 compared to net income $2,793,180 for the same period of last year. The negative change was primarily attributable to losses from the JV Company and significantly increased R&D expenses. Excluding the effects of stock compensation expenses, which were $2,016,043 and $8,269,691 for the second quarter of 2017 and 2016, respectively, and the change of the fair value of financial derivatives which was $0 and a loss of $526,558 for the three months ended June 30, 2017 and 2016, respectively, our non-GAAP net loss was $9,541,974 for the three months ended June 30, 2017 as compared to non-GAAP net income $10,536,313 for the same period of 2016, a negative change of $20,078,287, or 190.6%. The decrease in net income (non-GAAP) was primarily attributable to the JV Company’s net losses, and significantly increased R&D expenses made in an effort to prepare the Company for future business growth.

We make reference to certain non-GAAP financial measure, i.e., the adjusted net income. Management believes that such adjusted financial results are useful to investors in evaluating our operating performance because they present meaningful measures of corporate performance. See the non-GAAP reconciliation table below. 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.

	Three Months Ended
	June 30,
	2017			2016
GAAP net (loss) income from continuing operations	$	(11,558,017	)	$	2,793,180
Stock award expenses		2,016,043			8,269,691
Change of the fair value of financial derivatives		-			(526,558	)
Non-GAAP net income from continuing operations	$	(9,541,974	)	$	10,536,313

51 

Comparison of the Six Months Ended June 30, 2017 and 2016

The following table sets forth the amounts and percentage relationship to revenue of certain items in our condensed consolidated statements of income (loss) and comprehensive income (loss) for the six months ended June 30, 2017 and 2016.

	Six Months Ended
	June 30, 2017			% of Revenue			June 30, 2016			% of Revenue			Change in Amount			Change in %
REVENUES FROM UNRELATED PARTY, NET	$	4,116,486			13.0	%	$	40,953,904			38.7	%		(36,837,418	)		(89.9	%)
REVENUES FROM JV COMPANY AND RELATED PARTY, NET		27,483,366			87.0	%		64,921,357			61.3	%		(37,437,991	)		(57.7	%)
REVENUES, NET		31,599,852			100.0	%		105,875,261			100.0	%		(74,275,409	)		(70.2	%)
COST OF GOODS SOLD		27,175,584			86.0	%		90,702,126			85.7	%		(63,526,542	)		(70.0	%)
GROSS PROFIT		4,424,268			14.0	%		15,173,135			14.3	%		(10,748,867	)		(70.8	%)
OPERATING EXPENSES:
Research and development		25,911,773			82.0	%		700,161			0.7	%		25,211,612			3600.8	%
Selling and marketing		760,562			2.4	%		776,778			0.7	%		(16,216	)		(2.1	%)
General and administrative		9,877,946			31.3	%		17,658,076			16.7	%		(7,780,130	)		(44.1	%)
Total Operating Expenses		36,550,281			115.7	%		19,135,015			18.1	%		17,415,266			91.0	%
LOSS FROM OPERATIONS		(32,126,013	)		(101.7	%)		(3,961,880	)		(3.7	%)		(28,164,133	)		710.9	%
OTHER INCOME (EXPENSE):
Interest income		1,090,067			3.4	%		1,565,333			1.5	%		(475,266	)		(30.4	%)
Interest expense		(1,163,263	)		(3.7	%)		(874,397	)		(0.8	%)		(288,866	)		33.0	%
Change in fair value of financial instruments		0			0.0	%		3,812,898			3.6	%		(3,812,898	)		(100.0	%)
Government grants		5,329,611			16.9	%		1,697,857			1.6	%		3,631,754			213.9	%
Share of loss after tax of JV		(13,899,967	)		(44.0	%)		96,163			0.1	%		(13,996,130	)		(14554.6	%)
Other income, net		150,177			0.5	%		309,177			0.3	%		(159,000	)		(51.4	%)
Total other expense, net		(8,493,375	)		(26.9	%)		6,607,031			6.2	%		(15,100,406	)		(228.6	%)
(LOSS) INCOME BEFORE INCOME TAXES		(40,619,388	)		(128.5	%)		2,645,151			2.5	%		(43,264,539	)		(1635.6	%)
INCOME TAX BENEFIT		4,907,936			15.5	%		236,449			0.2	%		4,671,487			1975.7	%
NET (LOSS) INCOME		(35,711,452	)		(113.0	%)		2,881,600			2.7	%		(38,593,052	)		(1339.3	%)

52 

(a) Revenue

For the six months ended June 30, 2017, our revenue was $31,599,852 compared to $105,875,261 for the same period of 2016, a decrease of $74,275,409 or 70.2%. Our products include EV parts and off-road vehicles, including ATVs, utility vehicles, go-karts, and others. The decrease in revenue was mainly due to the significant decrease in EV parts sales during this period. The selling prices of our products for the six months ended June 30, 2017 decreased on average from the same period last year. The decrease in revenue was primarily due to the decrease in sales volume.

The following table summarizes our revenues by product types for the six months ended June 30, 2017 and 2016:

	Six Months Ended June 30,
	2017		2016
	Sales		Sales
EV parts	$	28,867,714	$	100,004,478
EV products				3,779,616
Off-road vehicles		2,732,138		2,091,167
Total	$	31,599,852	$	105,875,261

EV Parts

Among our total revenues during the six months ended June 30, 2017, approximately $28,867,714, or 91.4%, resulted from the sale of EV parts. We started our EV parts business in 2014, and revenue from EV parts decreased $71,136,764 or 71.1% compared to the first half year of 2016. Our EV parts sales primarily consisted of the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, which accounted for 91.4% of total sales. Among total sales for the six months ended June 30, 2017, approximately 62.0% were related to the sale of battery packs. In compliance with the regulation of the Chinese auto industry, we hold the necessary production licenses to manufacture the battery packs exclusively used in EV products manufactured by the JV Company. Besides the sale of battery packs, approximately 12.2% of total sales were related to sales of EV controllers, approximately 8.3% of the total sales were related to sales of air conditioning units, and approximately 6.8% of total sales were related to sales of EV drive motors.

During the six months ended June 30, 2017 and 2016, our revenues from the sale of EV parts to the JV Company and its subsidiaries accounted for approximately 87% and 58% of our total net revenue for the period, respectively. The EV parts we sold were used in manufacturing pure EV products by the JV Company’s subsidiaries.

During the six months ended June 30, 2017 and 2016, our revenue from the sale of EV parts to the Service Company was 0.0% and 3.8% of total sales, respectively. The Service Company purchased the battery packs for speed upgrades and other EV parts for repair and maintenance.

Off-Road Vehicles

Among our total revenues during the six months ended June 30, 2017, approximately $2,732,138, or 8.6%, resulted from the sale of off-road vehicles. The off-road vehicles revenue increased $640,971, or 30.7% compared to the same period of 2016, mainly due to its organic growth.

(b) Cost of goods sold

Cost of goods sold was $27,175,584 during the six months ended June 30, 2017, representing a decrease of $63,526,542, or 70.0%, compared to that of the same period of 2016. The decrease was primarily due to the corresponding decrease in sales resulting from weak demand for our EV parts by the JV Company.

53 

(c) Gross profit

The margins by products for the six months ended June 30, 2017 and 2016 are as below:

	Six Months Ended June 30,
	2017									2016
	Sales		Cost		Gross Profit		Margin %			Sales		Cost		Gross Profit		Margin %
EV parts	$	28,867,714		24,797,448		4,070,266		14.1	%	$	100,004,478		85,140,184		14,864,294		14.9	%
EV products		-				-		-			3,779,616		3,690,797		88,819		2.3	%
Off-road vehicles		2,732,138		2,378,137		354,002		13.0	%		2,091,167		1,871,145		220,022		10.5	%
Total	$	31,599,852		27,175,584		4,424,268		14.0	%	$	105,875,261		90,702,126		15,173,135		14.3	%

Gross profit for the first half year of 2017 decreased 70.8% to $4,424,268, compared to $15,173,135 for the same period last year. This was primarily attributable to the sales decrease. Our gross margin decreased to 14.0% compared to 14.3% for the same period of 2016. The decrease in our gross margin was mainly due to the decreased selling prices of battery to the JV Company in the six months ended June 30, 2017 and increased manufacturing overhead per unit because of decreased sales volume offset by decreased raw material purchase prices during the period and the increased gross margin of off-road vehicles from export sales.

(d) Research and development

R&D expenses were $25,911,773 for the first half year of 2017, an increase of $25,211,612 or 3600.8% compared to the same period of last year. This increase was primarily due to significantly increased R&D expenses related to the development of a new EV model at Hainan facility for the six months ended June 30, 2017. For the six months ended June 30, 2017 and 2016, approximately 98.0% and 0% of our research and development expenses were spent on the R&D of a new EV product model at Hainan facility, respectively, and the rest was spent on other various EV and off-road vehicles R&D projects.

(e) Sales and marketing expenses

Selling and marketing expenses were $760,562 for the first half year of 2017, compared to $776,778 for the same period last year, a decrease of $16,216 or 2.1%. This slight decrease was primarily attributable to the decreased shipping costs due to the decreased sales this period offset by the increased amortization of product maintenance expenses for batteries during this period.

54 

(f) General and administrative expenses

General and administrative expenses were $9,877,946 for the first half year of 2017, compared to $17,658,076 for the same period of last year, a decrease of $7,780,130 or 44.1%. For the six months ended June 30, 2017, general and administrative expenses included $4,493,187 in expenses for common stock awards to employees and consultants, compared to $15,157,583 for the same period in 2016. Excluding stock compensation expense, our net general and administrative expenses for the six months ended June 30, 2017 were $5,384,759, an increase of $2,884,266, or 115.3%, from $2,500,493 for the same period of 2016. The increase was largely due to the contingent loss of approximately $2.9 million accrued in connection with a litigation.

(g) Government grants

Government grants were $5,329,611 for the first half year of 2017, compared to $1,697,857 for the same quarter last year, representing an increase of $3,631,754, or 213.9%, which was primarily due to subsidies we received from the Hainan provincial government to assist our development of a new EV model.

(h) Interest income

Interest income was $1,090,067 for the first half year of 2017, a decrease of $475,266 or 30.4% compared to the same period of last year. This decrease was primarily attributable to decreased interest rates on loans to the JV Company. The interest rate was reduced to 4.35% in 2017 from 8.7% in 2016 although the loan amount increased from the same period last year. In addition, we had interest income from a loan to a third party in the first half year of last year but we didn’t have such loan in the first half year of 2017.

(i) Interest expenses

Interest expenses were $1,163,263 in the first half year of 2017, an increase of $288,866 or 33.0% compared to the same period of last year. This increase was primarily due to the additional interest expenses associated with the note payable to a third party although the overall loan interest rates decreased in general in the first half year of 2017 as compared to that of the same period last year. Of the interest expenses, $61,583 and $0 were discounts associated with the settlement of bank acceptance notes for the six months ended June 30, 2017 and 2016, respectively.

(j) Change in fair value of financial instruments

For the first half year of 2017, the gain or loss related to changes in the fair value of derivative liability relating to the warrants issued to the investors and a placement agent was $0, a decrease of $3,812,898 to the same period of last year, which was mainly the result of all remaining unexercised warrants expiring as of June 30, 2017.

55 

(k) Share of loss after tax of the JV Company

For the first half year of 2017, the JV Company’s net sales were $19,928,152, gross loss was $1,824,736, and net loss was $25,185,112. We accounted for our investments in the JV Company under the equity method of accounting because we have a 50% ownership interest in the JV Company. As a result, we recorded 50% of the JV Company’s loss for $12,592,556 for the first half year of 2017. After eliminating intra-entity profits and losses, our share of the after tax losses of the JV Company was $13,899,967 for the first half year of 2017, an increase of loss of $13,996,130 compared to the same period of last year. The increase of the JV Company’s loss was primarily due to the decreased EV product sales in the first half year of 2017 because of the re-announcement of the MIIT’s directory of recommended models of new energy vehicles as a result of new government’s subsidy policies effective as of January 1, 2017 as well as the extended delays of subsidy payments for EVs manufactured in previous years, which resulted in temporary difficulties for the JV Company to increase or maintain production.

During the first half year of 2017, the JV Company sold 365 units of EV products, including 50 units of K11 and 315 units of K17 as compared to a total of 7,200 units of EV products sold by the JV Company in the same period of last year.

(l) Other income, net

Net other income was $150,177 for the first half year of 2017, a decrease of $159,000 or 51.4% compared to the same period of last year.

(m) Net income (loss) from continuing operation

Net loss was $35,711,452 for the first half year of 2017, a negative change of $38,593,052 compared to net income $2,881,600 for the same period of last year. The negative change was primarily attributable to significantly decreased sales and gross profits, losses from the JV Company and significantly increased R&D expenses. Excluding the effects of stock compensation expenses, which were $4,493,187 and $15,157,583 for the first half year of 2017 and 2016, respectively, and the change of the fair value of financial derivatives which was $0 and a loss of $3,812,898 for the first half year of 2017 and 2016, respectively, our non-GAAP net loss was $31,218,265 for the six months ended June 30, 2017 as compared to non-GAAP net income $14,226,285 for the same period of 2016, a negative change of $45,444,550, or 319.4%. The decrease in net income (non-GAAP) was primarily attributable to the decrease in revenue and gross profits, the JV Company’s net losses, and significantly increased R&D expenses made in an effort to prepare the Company for future business growth.

56 

We make reference to certain non-GAAP financial measure, i.e., the adjusted net income. Management believes that such adjusted financial results are useful to investors in evaluating our operating performance because they present meaningful measures of corporate performance. See the non-GAAP reconciliation table below. 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.

	Six Months Ended
	June 30,
	2017			2016
GAAP net (loss) income from continuing operations	$	(35,711,452	)	$	2,881,600
Stock award expenses		4,493,187			15,157,583
Change of the fair value of financial derivatives		-			(3,812,898	)
Non-GAAP net (loss) income from continuing operations	$	(31,218,265	)	$	14,226,285

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

For the first half year of 2017, cash used in operating activities was $1,736,365 as compared to $3,732,158 for the same period of last year. Our operating cash inflows include cash received primarily from sales of our EV parts and off-road vehicles. These cash inflows are offset largely by cash paid to our suppliers for production materials and parts used in our manufacturing process, operation expenses, employee compensation, and interest expenses on our financings. The major operating activities that provided cash for the first half year of 2017 were a decrease in advances to suppliers and prepayments and prepaid expenses of $23,946,781 and an increase in accounts payable of $25,017,146 . The major operating activities that used cash for first half year of 2017 were net losses of $35,711,452 and an increase in accounts due from the JV Company of $21,853,571.

For the first half year of 2017, cash provided by investing activities was $3,351,158, as compared to $5,175,840 for the same period of last year. The major investing activity that provided cash for the first half year of 2017 was the decrease in short term investments of $4,509,183. The major investing activities that used cash for first half year of 2017 were $1,029,516 of purchases of construction in progress.

For the first half year of 2017, cash used in financing activities was $6,643,401, as compared to cash provided by financing activities of $1,734,881 for the same period of last year. The major financing activities that provided cash for the first half year of 2017 were proceeds from notes payable of $5,713,368 and proceeds from short-term bank loans of $13,963,923. The major financing activities that used cash for first half year of 2017 were $17,018,531 of repayments of short-term bank loans and $9,302,161 of increase in restricted cash for issuing notes payables.

57 

Working Capital

We had a working capital surplus of $56,822,668 at June 30, 2017, compared to $86,348,025 as of December 31, 2016.

We have historically financed our operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest in a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. We believe this practice has been ongoing year after year and that short-term bank loans will be available with normal trade terms if needed.

Capital Requirements and Capital Provided

Capital requirements and capital provided for the six months ended June 30, 2017 were as follows:

	Six Months Ended
	June 30, 2017
	(In Thousands)
Capital requirements
Purchase of plant and equipment	$	129
Purchase of construction in progress		1,030
Repayments of short-term bank loans		17,019
Increase in restricted cash		9,302
Internal cash used in operations		1,736
Total capital Requirements	$	29,216
Capital provided
Proceeds from short-term bank loan		13,964
Proceeds from notes payable		5,713
Repayments of short term investment		4,509
Decrease in cash		4,829
Total capital provided	$	29,015

The difference between capital provided and capital required is caused by the effect of exchange rate changes over the past three months.

58 

Contractual Obligations and Off-balance Sheet Arrangements

Contractual Obligations

The following table summarizes our contractual obligations:

Contractual obligations	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
R&D Obligations	$	8,850,341		-		8,850,341		-		-
Hainan Obligations	$	15,930,613		-		15,930,613		-		-
Loans from Haikou Rural Credit Cooperative	$	29,501,136		-		-		29,501,136		-
Total	$	54,282,090		-		24,780,954		29,501,136		-

To build the Hainan facility, the Company signed contracts with Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) to purchase a production line and develop a new EV model. As of June 30, 2017, the total revised contractual amount with Nanjing Shangtong was RMB 912,000,000 or approximately $135 million, of which RMB 744,000,000 or approximately $110 million has been paid and RMB168,000,000 or approximately $25 million of remaining payments are outstanding as contractual obligations.

Short-term and long-term loans:

Short-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, , secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife, also guaranteed by the Company's subsidiaries. Also see Note 13 and Note 14.		10,325,398		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 12, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,198,277		7,025,778
Interest rate 4.35% per annum, due July 3, 2017, paid off on July 3, 2017 and the new due date is July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,649,910		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,540,136		-
Loans from Individual Third Party
Interest rate 12% per annum		295,011		-
	$	32,008,732		34,265,065

59 

Long-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		29,501,136		28,794,172
	$	29,501,136		28,794,172

Notes payable:

	June 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due July 6, 2017		1,180,045		-
Due September 23, 2017		8,850,341		-
Due October 21, 2017		803,906		-
Due November 2, 2017		6,637,756		-
Due November 4, 2017		885,034		-
Due December 6, 2017		885,034		-
Due December 22, 2017		91,731		-
Due June 21, 2018		360,893		-
Other Notes Payable:
Due May 6, 2017		-		11,517,668
Due May 6, 2019		17,594,271		-
Total	$	37,289,011	$	14,797,325

Guarantees and pledged collateral for third party bank loans

As of June 30, 2017 and December 31, 2016, we provided guarantees for the following third parties:

(1) Guarantees for bank loans

	June 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.		4,277,665		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		47,939,345		46,790,530
Total	$	52,217,010	$	53,845,102

60 

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 loan in the amount of $2,902,534 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein.. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang city against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation was taken place at court in Yongkang city on May 27, 2017 and the plaintiff agreed NGCL to repay the loan principal and interest plus legal expenses in installments. As of June 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter is remote.

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,277,665 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 to order ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company shall pay Ping An Bank RMB 20 million or approximately $2.9 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of June 30, 2017, the Company has an accrued liability of approximately $2.9 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. On August 1, 2017, the first installment of RMB 5 million or approximately $0.73 million was paid to Ping An Bank and ZSICL will reimburse the Company for the same amount according to the agreement. The Company expects the likelihood of incurring losses in connection with this matter is low. 

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $36,876,420 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to September 14, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

61 

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,062,926 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loans were paid off on July 21, 2017

All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of June 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

Contingencies

As of June 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	2,950,114	$	-
Total	$	2,950,114	$	-

Recent Development Activities:

On April 18, 2017, Mr. Yao Zhenhua, Chairman of Shenzhen Baoneng Investment Group (“Baoneng”), came to Hangzhou to visit the JV Company with more than 10 people. Mr. Li Shufu, Chairman of Geely, Mr. Yang Jian, Vice Chairman of Geely, and Mr. Hu Xiaoming, Chairman of the Company welcomed them. Baoneng and the Company discussed on future cooperation. On April 27, 2017, Hu Xiaoming, and Mr. Yang Jian went to Shenzhen and had a return visit to Baoneng.

On July 14, 2017, we announced that the Geely Global Hawk electric vehicle (“EV”) model SMA7001BEV25 (the Kandi Model K17A), developed by the JV Company, has been included as a new recommended model vehicle in the MIIT’s Sixth Annual Directory of New Energy Vehicles in the MIIT’s third public announcement of 2017. According to the Ministry of Finance, the Ministry of Science and Technology, the MIIT, and the National Development and Reform Commission’s (the "Four Ministries") Notice of Financial Subsidy Policy Adjustment for Recommended Models for Energy Saving and New Energy Vehicle Demonstration and Promotion, new energy passenger vehicles are required to incorporate enhanced battery power systems with increased energy density quality of higher than 120wh/kg in order to receive 110% of the central government subsidy for such vehicles. Three of the JV Company’s EV models - SMA7000BEV05(K12), SMA7000EV06(K10D), and SMA7001BEV25(K17A) - have successfully achieved this standard after receiving technology upgrades. As a result, all three of these models are eligible to receive a 110% subsidy from the central government. We believe the approval of these three models will contribute to the Company’s continued development in the second half of 2017. 

62 

On July 15, 2017, Mr. Hu Xiaoming, our Chairman and his delegate group were invited to Suzhou, Jiangsu to visit Golden Concord Holdings Limited ("GCL"). Chairman of board of GCL, Mr. Zhu Gongshan and other company executives welcomed Chairman Hu and the two sides conducted in-depth communication on future cooperation. On July 27, 2017, Mr. Zhu Gongshan, went to Hangzhou and made a return visit to the JV Company with more than 10 people. The two sides had further communication for future cooperation and reached many consensuses.

On July 26, 2017, Mr. Dai Qiwen, Vice President of TUNGHSU Group came to Hangzhou to visit the JV Company and discussed potential cooperation with Mr. Hu Xiaoming, our Chairman. On August 1, 2017, Chairman Hu and his group were invited to Beijing to made a return visit to TUNGHSU Group. Both sides were looking forward to working closely together in the field of pure electric vehicles.

From August 3, 2017, through August 5, 2017, the JV Company unveiled its new model "Global Hawk K17AS" at the Global New Energy Vehicle Expo Conference - Future Auto Show (the "GNEV EXPO"), held at the Shanghai New International Expo Centre. The theme of this year's exhibition, "Redefine the Automobile, Redefine Going Places," is a call to action to transform electric vehicles by increasing electrification, "smart" features, lightweight design, and car-sharing. The unveiling of the Global Hawk K17AS will underline the company’s radical vision of engineering a connection to the future, and as a major exhibitor at the GNEV EXPO, the JV Company's advanced products stand out among other presenters advocating the concept of Smart Life and Networked World.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange Rate Risk

While our reporting currency is the U.S. dollar, to date the majority of our revenues and costs are denominated in RMB and a significant portion of our assets and liabilities are denominated in RMB. As a result, we are exposed to foreign exchange risk because our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues and assets as expressed in our U.S. dollar financial statements will decline. Since 2005, China reformed its exchange rate regime and the RMB is no longer pegged to the U.S. dollar. In 2010, the People’s Bank of China decided to move to further reform the RMB exchange rate regime to enhance the flexibility of the RMB exchange rate. Starting August 11, 2015, the RMB changed its trend of appreciation and began to depreciate as compared to the U.S. dollar. In the long term, the RMB may appreciate or depreciate more significantly in value against the U.S. dollar or other foreign currencies, depending on the market supply and demand with reference to a basket of currencies.

While the Chinese RMB is freely convertible under the current account, it remains strictly regulated in the capital account. Chinese authorities have expressed their willingness to allow the RMB to be fully convertible in the near future.

63 

To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure. Accordingly, we may incur economic losses in the future due to foreign exchange rate fluctuations, which could have a negative impact on our financial condition and results of operations.

Interest Rate Risk

We had cash, cash equivalents and restricted cash totaling $30.1 million and notes receivable from JV Company and related parties of $0 million as of June 30, 2017. Cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. As of June 30, 2017, we had $32.0 million of short-term bank loans and $29.5 million of long-term loans outstanding, which are fixed rate instruments. Our exposure to interest rate risk primarily relates to the interest income generated from cash held in bank deposits and notes receivable, and interest expenses generated from short-term bank loans. We believe that we do not have any material exposure to changes in fair value as a result of changes in interest rates due to the short term nature of our cash equivalents. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.

Inflation Rate Risk

According to the National Bureau of Statistics of China, the Consumer Price Index (CPI), a main gauge of inflation, rose 1.5 percent year on year in June 2017, the same as in May and remaining below 2 percent for five consecutive months. China's producer price index (PPI), which measures costs for goods at the factory gate, rose 5.5 percent year on year in June. Economists expect PPI will continue to moderate in the coming months while core consumer inflation, or CPI excluding food and energy, will likely improve. China's monetary policy in 2017 is set to be "prudent and neutral" to keep appropriate liquidity levels and avoid large injections. The steady price data reinforced views about stabilization in the world's second-largest economy.  

Economic and Political Risks

Our operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment in China and foreign currency exchange. Our performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

64 

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 June 30, 2017. 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 not effective.

Disclosure controls and procedures are controls and other 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.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 which we filed with the SEC on March 16, 2017, our management concluded that, as of December 31, 2016, material weaknesses existed in our internal control over financial reporting which affected the effectiveness of our disclosure controls and procedures.

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.

During the second quarter of 2017, the Company, under the supervision of the Board’s Audit Committee, continued to implement its remediation plans. The management together with the Company’s internal control department completed a review of the Company’s internal control over financial reporting.

i. We completed a thorough review of the key personnel positions related to financial reporting to ensure that the areas of responsibilities are properly matched to the staff competencies, there are sufficient competent resources available to handle the works, and that the lines of communication and processes are as effective as possible;

ii. We also completed a thorough review of the processes and procedures in the Company’s financial reporting related to the areas where the material weaknesses existed to ensure the related controls in our current accounting practices such as consolidation process, conversion and development of U.S. GAAP based financial statements process and internal review process is sufficient and effective, related procedures in our accounting manual is updated and related documentation for internal control over financial reporting is complete.

We are in the process of implementing and intend to fully implement our remediation plans that were disclosed in our Annual Report on Form 10-K that was filed on March 16, 2017 to address the material weaknesses and will conduct quarterly assessments of the state of the Company’s financial reporting measures and systems, as a whole.

65 

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 below, 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 or financial statements.

In August 2016, Ping An Bank Yiwu Branch (“Ping An Bank”) filed a suit against Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”), the Company, and three other parties in Zhejiang Province People’s Court in Yiwu City, alleging ZSICL defaulted on a bank loan borrowed from Pin An Bank for a principal amount of RMB 29 million or approximately $4.2 million (the “Principal”), for which the Company is a guarantor along with other three parties (please refer to Note 23 of the notes to our condensed consolidated financial statements contained in this report). On December 25, 2016, the court ruled that ZSICL should repay Ping An Bank the Principal and associated interest remaining on the bank loan within 10 days once the adjudication is effective; and the Company and other three parties, acted as guarantors, have joint liability for this bank loan. ZSICL and the Company appealed the ruling results on February 6, 2017 and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $2.9 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of June 30, 2017, the Company has an accrued liability of approximately $2.9 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. On August 1, 2017, the first installment of RMB 5 million or approximately $0.73 million was paid to Ping An Bank and ZSICL will reimburse the Company for the same amount according to the agreement. The Company expects the likelihood of incurring losses in connection with this matter is low.

Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. 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 allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 will need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. We believe that the claims are without merit and intend to defend against these lawsuits vigorously. We are unable to estimate the possible loss, if any, associated with these lawsuits.

66 

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. We believe that the claims are without merit and intend to defend against this lawsuit vigorously. We are unable to estimate the possible loss, if any, associated with these lawsuits.

In April 2017, Shanghai Pudong Development Bank filed a suit against Nanlong Group Co., Ltd. (“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, for which the Company is a guarantor along with ten other guarantors (please refer to Note 23 of the notes to our condensed consolidated financial statements contained in this report). On May 27, 2017, a judicial mediation took place in Yongkang City and a mediation settlement reached in court, which the plaintiff agreed NGCL to repay the loan principal and interest plus legal expenses in installments. As of June 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter is remote.

Other than the above described legal proceedings, 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. No provision has been made in the consolidated financial statements for the above contingencies related to the shareholder class actions.

Item 1A. Risk Factors.

Given material weaknesses were found in our internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on our internal controls over financial reporting in their annual reports.

As disclosed in our Annual Report on Form 10-K filed with the SEC on March 16, 2017, management observed material weaknesses relating to our 2015 and 2014 financial statements that resulted in the addition of separate audited financial statements of the JV Company, the correction in accounting for income taxes and the reclassification of financial statement line items and related financial disclosures.

Although we have taken measures to remediate the material weaknesses, we cannot provide assurance that we will not fail to achieve and maintain an effective internal control environment on an ongoing basis, which may cause investors to lose confidence in our reported financial information and have a material adverse effect on the price of our common stock.

67 

Changes to the government’s subsidy support policies and further delays in subsidy payments may have negative impacts on our operations.

The newly announced central government subsidy support policies effective as of January 1, 2017, call for a 20% reduction in central government subsidies per car in 2017 from the 2016 level and total local government subsidy match to be not more than 50% of total central government subsidies per car. The reduction of subsidies from both the central government and local governments will inevitably increase the costs to the consumers to purchase our JV Company’s EVs if our JV Company cannot lower sale prices to compensate consumers for the subsidy reductions, which may cause temporary pressure for the JV Company to expand its EV sales. The change in subsidy payment methods in 2017 from paid in advance to paid post-sale and any further delay in releasing subsidy payments for the EVs manufactured and sold in the prior years might also cause delays in collection of accounts receivable from our business partners, which will temporarily increase the pressure on our working capital for continuing operations. The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, financial condition, operating results and prospects.

Item 6. Exhibits

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Definitions Linkbase Document.

68 

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: August 9, 2017	By:	/s/ Hu Xiaoming
		Hu Xiaoming
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 9, 2017	By:	/s/ Mei Bing
		Mei Bing
		Chief Financial Officer
		(Principal Financial Officer and
		Principal Accounting Officer)

69

EX-31.1

Exhibit 31.1

Certification Pursuant to 
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, Hu Xiaoming, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kandi Technologies Group, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

/s/ Hu Xiaoming

Hu Xiaoming

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Pursuant to 
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, Mei Bing, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kandi Technologies Group, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2017

/s/ Mei Bing

Mei Bing 

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the “Report”) of Kandi Technologies Group, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof, we, Hu Xiaoming, President and Chief Executive Officer, and Mei Bing, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Hu Xiaoming

Hu Xiaoming

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Mei Bing

Mei Bing 

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

August 9, 2017

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 03, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Kandi Technologies Group, Inc.
Entity Central Index Key	0001316517
Trading Symbol	KNDI
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		48,021,538

XML

Condensed Consolidated Balance Sheet (Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 7,407,032	$ 12,235,921
Restricted cash	22,708,654	12,957,377
Short term investment		4,463,097
Accounts receivable	34,964,666	32,394,613
Inventories (net of provision for slow moving inventory of $465,096 and $415,797 as of June 30, 2017 and December 31, 2016, respectively	13,427,455	11,914,110
Notes receivable from JV Company and related party		400,239
Other receivables	1,185,804	66,064
Prepayments and prepaid expense	4,319,890	4,317,855
Due from employees	33,076	4,863
Advances to suppliers	15,009,973	38,250,818
Amount due from JV Company, net	138,908,557	136,536,159
Amount due from related party	10,742,243	10,484,816
TOTAL CURRENT ASSETS	248,707,350	264,025,932
LONG-TERM ASSETS
Property, Plant and equipment, net	13,533,421	15,194,442
Land use rights, net	11,903,213	11,775,720
Construction in progress	43,655,614	27,054,181
Deferred taxes assets	4,394,192
Long Term Investment	1,401,304	1,367,723
Investment in JV Company	65,258,976	77,453,014
Goodwill	322,591	322,591
Intangible assets	372,163	413,211
Advances to suppliers	29,972,701	33,819,419
Other long term assets	7,880,223	8,271,952
TOTAL Long-Term Assets	178,694,398	175,672,253
TOTAL ASSETS	427,401,748	439,698,185
CURRENT LIABILITIES
Accounts payables	111,356,483	115,870,051
Other payables and accrued expenses	5,269,999	4,835,952
Short-term loans	32,008,732	34,265,065
Customer deposits	177,328	41,671
Notes payable	37,289,011	14,797,325
Income tax payable	1,435,646	1,364,235
Due to employees	26,156	21,214
Deferred taxes liabilities		118,643
Deferred income	1,371,213	6,363,751
Loss contingency-litigation	2,950,114
Total Current Liabilities	191,884,682	177,677,907
LONG-TERM LIABILITIES
Long term bank loans	29,501,136	28,794,172
Deferred taxes liabilities		878,639
Total Long-Term Liabilities	29,501,136	29,672,811
TOTAL LIABILITIES	221,385,818	207,350,718
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 48,021,538 and 47,699,638 shares issued and outstanding at June 30,2017 and December 31,2016, respectively	48,022	47,700
Additional paid-in capital	232,380,792	227,911,477
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at June 30,2017 and December 31,2016, respectively)	(11,166,290)	24,545,163
Accumulated other comprehensive income (loss)	(15,246,594)	(20,156,873)
TOTAL STOCKHOLDERS' EQUITY	206,015,930	232,347,467
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 427,401,748	$ 439,698,185

XML

Condensed Consolidated Balance Sheet (Parenthetical) (Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Net of provision for slow moving inventory	$ 465,096	$ 415,797
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	48,021,538	47,699,638
Common stock, shares outstanding	48,021,538	47,699,638
Restricted retained earnings	$ 4,217,753	$ 4,219,808

XML

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income (Loss) [Abstract]
REVENUES FROM UNRELATED PARTY, NET	$ 1,153,555	$ 6,979,488	$ 4,116,486	$ 40,953,904
REVENUES FROM JV COMPANY AND RELATED PARTY, NET	26,171,724	48,237,880	27,483,366	64,921,357
REVENUES, NET	27,325,279	55,217,368	31,599,852	105,875,261
COST OF GOODS SOLD	23,568,343	46,762,331	27,175,584	90,702,126
GROSS PROFIT	3,756,936	8,455,037	4,424,268	15,173,135
OPERATING EXPENSES:
Research and development	5,142,041	494,193	25,911,773	700,161
Selling and marketing	402,253	730,443	760,562	776,778
General and administrative	1,558,652	9,625,194	9,877,946	17,658,076
Total Operating Expenses	7,102,946	10,849,830	36,550,281	19,135,015
LOSS FROM OPERATIONS	(3,346,010)	(2,394,793)	(32,126,013)	(3,961,880)
OTHER INCOME (EXPENSE):
Interest income	559,425	785,152	1,090,067	1,565,333
Interest expense	(548,810)	(432,318)	(1,163,263)	(874,397)
Change in fair value of financial instruments	0	526,558	0	3,812,898
Government grants	262,137	1,503,384	5,329,611	1,697,857
Share of (loss) profit after tax of JV	(8,738,254)	4,918,633	(13,899,967)	96,163
Other income, net	121,556	286,790	150,177	309,177
Total other (expense) income, net	(8,343,946)	7,588,199	(8,493,375)	6,607,031
(LOSS) INCOME BEFORE INCOME TAXES	(11,689,956)	5,193,406	(40,619,388)	2,645,151
INCOME TAX BENEFIT (EXPENSE)	131,939	(2,400,226)	4,907,936	236,449
NET (LOSS) INCOME	(11,558,017)	2,793,180	(35,711,452)	2,881,600
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Foreign currency translation	3,118,462	(7,152,903)	4,910,278	(5,628,264)
COMPREHENSIVE LOSS	$ (8,439,555)	$ (4,359,723)	$ (30,801,174)	$ (2,746,664)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC	47,974,974	47,601,286	47,854,351	47,305,560
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED	47,974,974	47,601,286	47,854,351	47,311,584
NET (LOSS) INCOME PER SHARE, BASIC	$ (0.24)	$ 0.06	$ (0.75)	$ 0.06
NET (LOSS) INCOME PER SHARE, DILUTED	$ (0.24)	$ 0.06	$ (0.75)	$ 0.06

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (35,711,452)	$ 2,881,600
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	2,334,776	2,458,160
Assets Impairments	38,548
Deferred taxes	(5,415,959)	(4,645,415)
Change in fair value of financial instruments		(3,812,898)
Share of loss after tax of JV Company	13,899,967	(96,163)
Stock Compensation cost	4,493,187	15,134,658
(Increase) Decrease In:
Accounts receivable	(2,826,433)	(45,728,877)
Notes receivable		229,449
Notes receivable from JV Company and related party	4,875,795
Inventories	(1,242,422)	9,189,542
Other receivables and other assets	(498,376)	(9,424,711)
Due from employee	(23,344)	(56,998)
Advances to supplier and Prepayments and prepaid expenses	23,946,781	(12,953,797)
Advances to suppliers-Long term	(4,099,879)
Amount due from JV Company	(21,853,571)	(84,064,780)
Due from related party		29,188,707
Increase (Decrease) In:
Accounts payable	25,017,146	92,266,667
Other payables and accrued liabilities	127,252	6,009,203
Notes payable	(2,731,692)	(3,824,162)
Customer deposits	132,765	154,168
Income Tax payable	(31,314)	3,363,489
Deferred income	(5,077,291)
Loss contingency-litigation	2,909,151
Net cash used in operating activities	(1,736,365)	(3,732,158)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net	(128,509)	(37,554)
Disposal of land use rights and other intangible assets		13,775
Purchases of construction in progress	(1,029,516)	(1,356,866)
Repayment of notes receivable		4,953,787
Short Term Investment	4,509,183	1,602,698
Net cash provided by investing activities	3,351,158	5,175,840
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash	(9,302,161)	1,300,215
Proceeds from short-term bank loans	13,963,923
Repayments of short-term bank loans	(17,018,531)
Proceeds from notes payable	5,713,368
Warrant exercise		434,666
Net cash (used in) provided by financing activities	(6,643,401)	1,734,881
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(5,028,608)	3,178,563
Effect of exchange rate changes on cash	199,530	(383,266)
Cash and cash equivalents at beginning of year	12,235,921	16,738,559
CASH AND CASH EQUIVALENTS AT END OF PERIOD	7,407,032	19,533,856
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	1,001,501	1,051,032
Interest paid	742,958	877,496
SUPPLEMENTAL NON-CASH DISCLOSURES:
Prepayment transferred to Construction in progress	8,712,000
Acquisition of Construction in progress by Accounts Payable	5,974,383
Settlement of due from JV Company and related parties with notes receivable	22,819,847	34,866,384
Settlement of accounts receivables with notes receivable from unrelated parties	1,076,386	12,714,237
Assignment of notes receivable to supplier to settle accounts payable	19,424,810	49,046,178
Settlement of accounts payable with notes payables	18,839,444	4,796,570
Deferred tax change to other comprehensive income	$ 24,486

XML

Organization and Principal Activities

6 Months Ended

Jun. 30, 2017

Organization and Principal Activities

ORGANIZATION AND PRINCIPAL ACTIVITIES

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. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007, and on December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in Jinhua City, Zhejiang Province, People’s Republic of China, the Company is one of the People’s Republic of China’s (“China”) leading producers and manufacturers of electric vehicle (“EV”) products, EV parts, and off-road vehicles for sale in China and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partially and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

Operating Subsidiaries:

Pursuant to agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests (100% of profits and losses) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”). Kandi New Energy currently holds battery pack production licensing rights and supplies battery packs to the JV Company (as such term is defined below). In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electric products to the JV Company.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company and all products are manufactured by its subsidiaries. In an effort to improve the JV Company’s development, Zhejiang Geely Holding Group, the parent company of Geely, became the JV Company’s -shareholder on October 26, 2016, through its purchase of the 50% equity of the JV Company held by Shanghai Guorun at a premium price (a price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years). On May 19, 2017, due to business development, Geely Holding entrusted Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged its 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee because Geely Holding provides 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, generally referred to as the Micro Public Transportation (“MPT”) program. The Company, through Kandi Vehicles, has 9.5% ownership interest in the Service Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. JiHeKang is engaged in the car sales business. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun, pursuant to which the JV Company acquired a 100% ownership interest in Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu. Kandi Jiangsu is mainly engaged in EV research and development, manufacturing, and sales.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. Puma Investment provides investment and consulting services. The JV Company has a 50% ownership interest in Puma Investment(the other 50% is owned by Zuozhongyou Electric Vehicles Service (Hangzhou) Co.,Ltd., a subsidiary of the Service Company), and the Company, indirectly through the JV Company, has a 25% economic interest in Puma Investment. The other 50% ownership interest is held by the Service Company.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (the “JiHeKang Service Company”) was formed by the JV Company. The JiHeKang Service Company focuses on after-market services for EV products. The JV Company has a 100% ownership interest in the JiHeKang Service Company, and the Company, indirectly through the JV Company, has a 50% economic interest in the JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) was renamed Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”). Kandi Hainan was originally formed in Wanning City in Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013, and was transferred to Haikou City in January 2016. Kandi Vehicles has a 90% ownership interest in Kandi Hainan, and Kandi New Energy has the remaining 10% ownership interest. In fact, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests (100% of the profits and losses) of Kandi Hainan as Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”), which is engaged in the car sales business. Since JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Since Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd.(“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

The Company’s primary business operations are designing, developing, manufacturing and commercializing EV products, EV parts and off-road vehicles. As part of its strategic objective of becoming a leading manufacturer of EV products (through the JV Company) and related services, the Company has increased its focus on pure EV-related products, with a particular emphasis on expanding its market share in China.

XML

Liquidity

6 Months Ended

Jun. 30, 2017

Liquidity [Abstract]

LIQUIDITY

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $56,822,668 as of June 30, 2017, a decrease of $29,525,357 from $86,348,025 as of December 31, 2016. As of June 30, 2017, the Company had credit lines from commercial banks of $31,713,721. Although the Company expects the most of the Company’s outstanding trade receivables from its customers will be collected in next twelve months, there are uncertainties about the timing in collecting these receivables, especially the receivables due from the JV Company because the most of them are indirectly impacted by the timely receiving of government subsidies. Since the amount due from the JV Company accounts for the majority of the Company’s outstanding receivables and the Company can’t control the timing of the receiving of government subsidies, the Company believes that its internally-generated cash flows may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve months. However, the Company believes its access to existing financing sources and its good credit will enable it to meet its obligations and fund its ongoing operations. As of the date of this report, the Company has refinanced more than 75% of its current short-term loans with the banks and expects to maintain approximately current debt level for the next twelve months given the Company’s current financial position and business development needs. 

The Company has historically financed its operations through short-term commercial bank loans from Chinese banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest on a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. The Company believes this practice has been ongoing year after year and that short-term bank loans remain available on normal trade terms if needed.

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2017

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 3 – BASIS OF PRESENTATION

The Company maintains its general ledger and journals using the accrual method of accounting for financial reporting purposes. The Company’s financial statements and notes are the representations of the Company’s management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States and have been consistently applied in the Company’s presentation of its financial statements.

XML

Principles of Consolidation

6 Months Ended

Jun. 30, 2017

Principles of Consolidation [Abstract]

PRINCIPLES OF CONSOLIDATION

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The Company’s 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) Kandi Vehicles, a wholly-owned subsidiary of Continental;

(3) Kandi New Energy, a 50%-owned subsidiary of Kandi Vehicles (Mr. Hu Xiaoming owns the other 50%). Pursuant to agreements executed in January 2011, Mr. Hu Xiaoming contracted with Kandi Vehicles for the operation and management of Kandi New Energy and put his shares of Kandi New Energy into escrow. As a result, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy;

(4) Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles; and

(5) Kandi Hainan, a subsidiary 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles. 

Equity Method Investees

The Company’s consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as follows:

(1) The JV Company, a 50% owned subsidiary of Kandi Vehicles;

(2) Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing;

(3) Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua;

(4) JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang;

(5) Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai;

(6) Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu;

(7) The JiHeKang Service Company, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in the JiHeKang Service Company.

(8) Tianjin BoHaiWan, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan;

(9) Changxing Maintenance, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance;

(10) Liuchuang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

All intra-entity profits and losses with regards to the Company’s equity method investees have been eliminated.

XML

Use of Estimates

6 Months Ended

Jun. 30, 2017

Use of Estimates [Abstract]

USE OF ESTIMATES

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 6 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $37,289,011 and $14,797,325 at June 30, 2017 and December 31, 2016, respectively.

Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at June 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of June 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of June 30, 2017, and December 31, 2016, the Company’s restricted cash was $22,708,654 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $11,800,454 with Hangzhou Bank Jinhua Branch, of which $5,900,227 will mature on September 29, 2017, and the remainder will mature on October 29, 2017.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of June 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with its certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed the issuing of the subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it will allow them to have sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EV sold in 2015 and 2016 by the JV Company are eligible for receiving the subsidies and Chinese government has a good record on paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of June 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserve any allowance for doubtful accounts if it becomes necessary.

(f) Notes receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of June 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $0 and $400,239, respectively, which notes receivable typically mature within six months.

(g) Advances to Suppliers

Advance to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of June 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,806,230 left in Advance to Suppliers in current assets and $18,983,323 left in Advance to Suppliers in long-term assets as of June 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,044,012 of interest expenses have been capitalized for CIP as of June 30, 2017.

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $5,142,041 and $494,193 for the three months ended June 30, 2017 and 2016, respectively. Research and development expenses were $25,911,773 and $700,161 for the six months ended June 30, 2017 and 2016, respectively.

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $262,137 and $1,503,384 in grants from the Chinese government. For the six months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,329,611 and $1,697,857 in grants from the Chinese government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	June 30,	December 31,	June 30,
	2017	2016	2016
Period end RMB : USD exchange rate	6.779400	6.945850	6.646140
Average RMB : USD exchange rate	6.874859	6.645200	6.537380

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended June 30, 2017 and June 30, 2016, were $1,994,993 and $4,998,817, respectively. The stock-based option expenses for the six months ended June 30, 2017 and June 30, 2016, were $3,128,512 and $11,108,483, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of June 30, 2017 and June 30, 2016, the Company determined that its goodwill was not impaired.

(u) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of June 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended June 30, 2017 and June 30, 2016, respectively. The amortization expenses for intangible assets were $41,048 and $41,048 for the six months ended June 30, 2017 and June 30, 2016, respectively.

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

XML

New Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

New Accounting Pronouncements [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that the Company has adopted or may be required to adopt in the future are summarized below:

In January 2017, the FASB issued ASU No. 2017-1 “Topic 805, Business Combinations: Clarifying the Definition of a Business”. The amendments in this update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update affect all reporting entities that must determine whether they have acquired or sold a business. Public business entities should apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for the Company in the first quarter of 2020 on a prospective basis, and early adoption is permitted. The Company does not expect the adoption of ASU 2017-1 to have a material impact on its consolidated financial statements.

XML

Concentrations

6 Months Ended

Jun. 30, 2017

Concentrations [Abstract]

CONCENTRATIONS

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month periods ended June 30, 2017 and June 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		94	%		76	%		40	%		53	%

For the six-month periods ended June 30, 2017 and June 30, 2016, the Company’s major customer, who accounted for more than 10% of the Company’s consolidated revenue, was as follows:

	Sales						Trade Receivable
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		86	%		52	%		40	%		53	%

Trade receivable includes accounts receivable, amount due from the JV Company net of loans to the JV Company, and amount due from other related parties.

(b) Suppliers

For the three-month periods ended June 30, 2017 and June 30, 2016, 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			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		22	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		12	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		13	%		-			6	%		-

For the six-month periods ended June 30, 2017 and June 30, 2016, 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
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		25	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		22	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		12	%		-			6	%		-

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 9 – EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended June 30, 2017 and June 30, 2016, the average number of potentially dilutive common shares was 0 and 0, respectively. For the six months ended June 30, 2017 and June 30, 2016, the average number of potentially dilutive common shares was 0 and 6,024, respectively. The potential dilutive common shares as at the six months ended June 30, 2017 and June 30, 2016, were 4,400,000 and 5,106,395 shares respectively.

 The following is the calculation of earnings per share for the three-month periods ended June 30, 2017 and 2016:

	For three months ended
	June 30,
	2017			2016
Net income	$	(11,558,017	)	$	2,793,180
Weighted average shares used in basic computation		47,974,974			47,601,286
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,974,974			47,601,286
Earnings per share:
Basic	$	(0.24	)	$	0.06
Diluted	$	(0.24	)	$	0.06

The following is the calculation of earnings per share for the six-month periods ended June 30, 2017 and 2016:

	For six months ended
	June 30,
	2017			2016
Net income	$	(35,711,452	)	$	2,881,600
Weighted average shares used in basic computation		47,854,351			47,305,560
Dilutive shares		-			6,024
Weighted average shares used in diluted computation		47,854,351			47,311,584
Earnings per share:
Basic	$	(0.75	)	$	0.06
Diluted	$	(0.75	)	$	0.06

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

ACCOUNTS RECEIVABLE

NOTE 10 – ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

	June 30,		December 31,
	2017		2016
Accounts receivable	$	34,964,666	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	34,964,666	$	32,394,613

XML

Inventories

6 Months Ended

Jun. 30, 2017

Inventories [Abstract]

INVENTORIES

NOTE 11 – INVENTORIES

Inventories are summarized as follows:

	June 30,			December 31,
	2017			2016
Raw material	$	4,594,174		$	2,529,149
Work-in-progress		4,108,073			1,786,087
Finished goods		5,190,304			8,014,671
Total inventories		13,892,551			12,329,907
Less: provision for slowing moving inventories		(465,096	)		(415,797	)
Inventories, net	$	13,427,455		$	11,914,110

XML

Notes Receivable

6 Months Ended

Jun. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

NOTES RECEIVABLE

NOTE 12 – NOTES RECEIVABLE

Notes receivable from the JV Company and related parties as of June 30, 2017, and December 31, 2016, are summarized as follows:

	June 30,		December 31,
	2017		2016
Bank acceptance notes		-		400,239
Total notes receivable	$	-	$	400,239

Details of notes receivable from the JV Company and related parties as of December 31, 2016, are as set forth below:

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

XML

Plants and Equipment

6 Months Ended

Jun. 30, 2017

Plants and Equipment [Abstract]

PLANTS AND EQUIPMENT

NOTE 13 – PLANTS AND EQUIPMENT

Plants and equipment as of June 30, 2017 and December 31, 2016, consisted of the following:

	June 30,			December 31,
	2017			2016
At cost:
Buildings	$	13,296,092		$	12,977,465
Machinery and equipment		7,328,252			8,585,666
Office equipment		494,476			475,162
Motor vehicles		360,991			321,207
Molds		27,177,509			26,463,472
		48,657,320			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,270,277	)	$	(3,948,909	)
Machinery and equipment		(6,865,730	)		(8,107,884	)
Office equipment		(256,922	)		(216,226	)
Motor vehicles		(283,853	)		(274,197	)
Molds		(23,395,655	)		(21,031,086	)
		(35,072,437	)		(33,578,302	)
Less: provision for impairment for fixed assets		(51,462	)		(50,228	)
Plant and equipment, net	$	13,533,421		$	15,194,442

As of June 30, 2017 and December 31, 2016, the net book value of plants and equipment pledged as collateral for bank loans was $8,875,078 and $8,875,111, respectively.

Depreciation expenses for the three months ended June 30, 2017 and June 30, 2016 were $1,071,612 and $1,130,545, respectively. Depreciation expenses for the six months ended June 30, 2017 and June 30, 2016 were $2,134,346 and $2,263,277, respectively.

XML

Land Use Rights

6 Months Ended

Jun. 30, 2017

Land Use Rights [Abstract]

LAND USE RIGHTS

NOTE 14 – LAND USE RIGHTS

The Company’s land use rights as of June 30, 2017 and December 31, 2016, consisted of the following:

	June 30,			December 31,
	2017			2016
Cost of land use rights	$	14,630,896		$	14,280,282
Less: Accumulated amortization		(2,727,683	)		(2,504,562	)
Land use rights, net	$	11,903,213		$	11,775,720

As of June 30, 2017, and December 31, 2016, the net book value of land use rights pledged as collateral for the Company’s bank loans was $8,752,429 and $8,660,097, respectively. Also see Note 16.

The amortization expenses for the three months ended June 30, 2017 and June 30, 2016, were $79,845 and $83,849, respectively. The amortization expenses for the six months ended June 30, 2017 and June 30, 2016, were $159,383 and $153,836, respectively. Amortization expenses for the next five years and thereafter is as follows:

2017(Six Months)	$	159,383
2018		318,766
2019		318,766
2020		318,766
2021		318,766
Thereafter		10,468,766
Total	$	11,903,213

XML

Construction-in-Progress

6 Months Ended

Jun. 30, 2017

Construction-in-Progress [Abstract]

CONSTRUCTION-IN-PROGRESS

NOTE 15 – CONSTRUCTION-IN-PROGRESS

Hainan Facility

In April 2013, the Company signed an agreement with the Wanning city government in Hainan Province to invest a total of RMB 1 billion to establish a factory in Wanning to manufacture 100,000 EVs annually. Also in 2013, the Company contracted with an unrelated third party supplier, Nanjing Shangtong, to purchase a production line in connection with the manufacturing facility and to help develop a new EV model. In January 2016, the Hainan Province government implemented a development plan to centralize manufacturing in certain designated industry parks. As a result, the Wanning facility was relocated from Wanning city to the Haikou city high-tech zone. Based on our agreement with the government, all the expenses and lost assets resulting from the relocation were compensated for by the local government. As a result of the relocation, the contracts to build the manufacturing facility had to be revised in terms of total contract amount, technical requirements, completion milestones and others for the new construction site in Haikou. Because of this change, part of the construction-in-progress previously recorded was transferred back to the advances to suppliers in accordance with the revised contract terms and technical requirements. The Hainan facility construction improvement is currently underway. The Company started to assemble the prototype model in the end of July and plans to send it to National Testing Center for inspection in the coming months. Once the prototype passes the inspection, the Company will launch the trial production thereafter.

No depreciation is provided for CIP until such time as the Hainan facility is completed and placed into operation.

The contractual obligations under CIP of the Company as of June 30, 2017 are as follows:

	Total in CIP as of		Estimate		Total
Project	June 30,		to		contract
	2017		complete		amount
Kandi Hainan facility	$	43,655,614	$	38,671,989	$	82,327,603
Total	$	43,655,614	$	38,671,989	$	82,327,603

As of June 30, 2017, and December 31, 2016, the Company had CIP amounting to $43,655,614 and $27,054,181, respectively.

$536,068 and $0 of interest expense has been capitalized for CIP for three months ended June 30, 2017 and 2016, respectively. $1,044,012 and $0 of interest expense has been capitalized for CIP for six months ended June 30, 2017 and 2016, respectively.

XML

Short -Term and Long-Term Bank Loans

6 Months Ended

Jun. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

SHORT -TERM AND LONG-TERM BANK LOANS

NOTE 16 – SHORT -TERM AND LONG-TERM BANK LOANS

Short-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, , secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife,and guaranteed by company's subsidiaries. Also see Note 13 and Note 14.		10,325,398		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 12, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,198,277		7,025,778
Interest rate 4.35% per annum, due July 3, 2017, paid off on July 3, 2017 and the new due date is July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,649,910		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,540,136		-
Loans from Individual Third Party
Interest rate 12% per annum		295,011		-
	$	32,008,732		34,265,065

Long-term loans are summarized as follows:

	June 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		29,501,136		28,794,172
Total:	$	29,501,136		28,794,172

The interest expense of short-term and long-term bank loans for the three months ended June 30, 2017, and 2016 was $548,810 and $432,318, respectively. The interest expense of short-term and long-term bank loans for the six months ended June 30, 2017, and 2016 was $1,163,263 and $874,397, respectively.

As of June 30, 2017, the aggregate amount of short-term and long-term loans guaranteed by various third parties was $0.

XML

Notes Payable

6 Months Ended

Jun. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

NOTES PAYABLE

NOTE 17 – NOTES PAYABLE

By issuing bank notes payable rather than paying cash to suppliers, the Company can defer payments until the bank notes payable are due. Depending on bank requirements, the Company may need to deposit restricted cash in banks to back up the bank notes payable, while the restricted cash deposited in the banks will generate interest income.

A bank acceptance note is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker’s acceptance specifies the amount of the funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit. $10,844,399 and $3,279,656 were held as collateral for the notes payable as of June 30, 2017, and December 31, 2016, respectively.

As is common business practice in the PRC, the Company issues notes payable to its suppliers as settlement for accounts payable.

The Company’s notes payable also include the borrowing from the third party.

Notes payable for June 30, 2017 and December 31, 2016 were summarized as follows:

	June 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due July 6, 2017		1,180,045		-
Due September 23, 2017		8,850,341		-
Due October 21, 2017		803,906		-
Due November 2, 2017		6,637,756		-
Due November 4, 2017		885,034		-
Due December 6, 2017		885,034		-
Due December 22, 2017		91,731		-
Due June 21, 2018		360,893		-
Other Notes Payable:
Due May 6, 2017		-		11,517,669
Due May 6, 2019		17,594,271
Total	$	37,289,011	$	14,797,325

XML

Taxes

6 Months Ended

Jun. 30, 2017

Taxes [Abstract]

TAXES

NOTE 18 – 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, Kandi Vehicles qualifies as a High and New Technology Enterprise (“HNTE”) company in the PRC, and is entitled to pay a reduced income tax rate of 15% for the years presented, which reduced rate will expire in 2017. An entity may re-apply for an HNTE certificate when the prior certificate expires. Historically, Kandi Vehicles has successfully re-applied for such certificates when the its prior certificates expired. The applicable CIT rate of each of the Company’s three other subsidiaries, Kandi New Energy, Yongkang Scrou and Kandi Hainan, the JV Company and its subsidiaries, and the Service Company is 25%.

After combining research and development tax credits of 25% on certain qualified research and development expenses, the Company’s final effective tax rate for June 30, 2017, and 2016 was 12.08% and -8.94%, respectively. The effective tax rates for each of the periods mentioned above are disclosed in the summary table of income tax expenses for June 30, 2017 and 2016.

Effective January 1, 2007, the Company adopted the guidance in ASC 740 related to uncertain tax positions. The guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, 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 June 30, 2017, 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 for years after 2006. 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 June 30, 2017, 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 June 30, 2017, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax for six months ended June 30, 2017, due to a net operating loss in 2016 and an accumulated net operating loss carry forward from prior years in the United States.

Income tax expenses for the three months and six months ended June 30, 2017 and 2016 are summarized as follows:

	For Three Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	2,647,813
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(639,962	)		(247,587	)
Income tax expense (benefit)	$	(131,939	)	$	2,400,226

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	4,408,966
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,415,959	)		(4,645,415	)
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

The Company’s income tax expenses differ from the “expected” tax expenses for six months ended June 30, 2017 and 2016 (computed by applying the U.S. Federal Income Tax rate of 34% and the PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(10,154,847	)	$	661,288
Effect of differing tax rates in different jurisdictions		(446,896	)		(1,207,759	)
Non-taxable income		-			(24,041	)
Non-deductible expenses①		2,086,777			2,068
Research and development super-deduction		(19,195	)		(74,248	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,717,207			(135,630	)
Addition to valuation allowance		1,688,376			3,269,327
Other		(46,932	)		-
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

① It's mainly due to share of (loss) in JV Company and its subsidiaries.

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30,			December 31,
	2017			2016
Deferred tax assets:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation	$	-		$	-
Expense k		522,909			72,742
Depreciation		205,704			230,156
Loss carried forward		32,618,384			27,218,934
less: valuation allowance		(27,337,091	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,009,906			701,021
Deferred tax liabilities:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation		-			-
Expense l		1,615,714			1,698,303
Depreciation		-			-
Other		-			-
Accumulated other comprehensive gain		-			-
Total deferred tax liability		1,615,714			1,698,303
Net deferred tax assets (liabilities)	$	4,394,192		$	(997,282	)

k It's provision for impairment inventory, fixed assets and loss contingency-litigation.

l It's due to the difference of tax basis and GAAP basis of other long term assets.

As of June 30, 2017, the aggregate NOLs incurred in 2013 through 2017 of $80.40 million deriving from entities in the U.S. will expire in varying amount between 2018 and 2022. The aggregate NOLs in 2016 through 2017 of $21.27 million deriving from entities in the PRC will expire in varying amount between 2021 and 2022. As of December 31, 2016, the aggregate NOLs incurred in 2012 through 2016 of $78.88 million deriving from entities in the U.S. will expire in varying amount between 2017 and 2021. The aggregate NOLs incurred in 2016 of $2.12 million deriving from entities in the PRC will expire in 2021.The cumulative net loss in the PRC and U.S. can be carried forward for five years, to offset future net profits for income tax purposes. The cumulative net loss in Hong Kong can be carried forward without an expiration date.

Income (loss) before income taxes from PRC and non-PRC sources for the six months ended June 30, 2017 and 2016 are summarized as follows:

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(35,612,423	)	$	14,295,017
Non-PRC		(5,006,965	)		(11,649,866	)
Total	$	(40,619,388	)	$	2,645,151

Net change in the valuation allowance of deferred tax assets are summarized as follows:

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016	$	26,820,811
Additions-change to tax expense		1,688,376
Deduction-expired of loss carried forward ④		(1,172,096	)
Balance at June 30,2017	$	27,337,091

④It's due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

(b) Tax Holiday Effect

For the six months ended June 30, 2017, and 2016, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax exemptions (tax holidays) for the six months ended June 30, 2017 and 2016.

The combined effects of income tax expense exemptions and reductions available to the Company for the six months ended June 30, 2017 and 2016 are as follows:

	For Six Months Ended
	June 30,
	2017		2016
Tax benefit (holiday) credit	$	19,195	$	209,878
Basic net income per share effect	$	0.000	$	0.004

XML

Stock Options and Warrants

6 Months Ended

Jun. 30, 2017

Stock Options and Warrants [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 19 – STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of the Company’s common stock, at an exercise price of $9.72 per share, to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015, through May 29, 2018. The value of the stock options was estimated using the Black Scholes Model with an expected volatility of 90%, an expected life of 10 years, a risk-free interest rate of 2.23% and an expected dividend yield of 0.00%. There were $3,128,512 in stock compensation expenses associated with stock options booked for the six months ended June 30, 2017.

The following is a summary of the stock option activities of the Company:

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of June 30, 2017	4,400,000		$	9.72

The fair value of each of the options to purchase 4,900,000 shares of common stock issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

As of June 30, 2017 and December 31, 2016, all the warrants had been exercised and the derivative liability relating to the warrants issued to the investors and a placement agent was $0.

XML

Stock Award

6 Months Ended

Jun. 30, 2017

Stock Award [Abstract]

STOCK AWARD

NOTE 20 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company’s restricted common stock every six months, beginning in July 2011.

As compensation for Mr. Jerry Lewin’s service as a member of the Board, the Board authorized the Company to provide 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 service as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company’s common stock every six months, beginning in September 2013.

In November 2016, the Company entered into a three-year employment agreement with Mr. Mei Bing, who is now the Company’s Chief Financial Officer. Under the agreement, Mr. Mei Bing is entitled to receive an aggregate of 10,000 shares of common stock each year, vested in four equal quarterly installments of 2,500 shares.

The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are approved by the Board for grant. The compensation costs for awards of common stock are recognized over the requisite service period of three or six months.

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, comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “2008 Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount based on the modification to 2013’s proposal in 2014. Any such increase in the grant would be subject to the total number of shares available under the 2008 Plan, and the Company’s Board and shareholders will need to approve any increase in the number of shares reserved under the 2008 Plan if all the shares originally reserved are granted. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the 2008 Plan at its annual meeting. 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 reduce the total number of shares of common stock of the stock award for selected executives and key employees from 335,000 shares of common stock to 250,000 shares of common stock for each fiscal year, with the other terms remaining the same. On February 13, 2017, the Board authorized the Company to grant 246,900 shares of common shares to certain management members as compensation for their past services under the 2008 Plan.

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. Stock-based compensation expenses are calculated based on grant date fair value and number of awards expected to be earned at the end of each quarter and recognized in the quarter. In subsequent periods, stock-based compensation expenses are adjusted based on grant date fair value and the change of number of awards expected to be earned. Final stock-based compensation expenses for the year are calculated based on grant date fair value and number of awards earned for the year and recognized at the end of year.

For the three months ended June 30, 2017 and 2016, the Company recognized $2,016,043 and $8,269,691 of employee stock award expenses under General and Administrative Expenses, respectively. For the six months ended June 30, 2017 and 2016, the Company recognized $4,493,187 and $15,157,583 of employee stock award expenses under General and Administrative Expenses, respectively.

XML

Intangible Assets

6 Months Ended

Jun. 30, 2017

Intangible Assets [Abstract]

INTANGIBLE ASSETS

NOTE 21 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of our intangible assets, other than goodwill:

	Remaining	June 30,			December 31,
	useful life	2017			2016
Gross carrying amount:
Trade name	4 years	$	492,235		$	492,235
Customer relations	4 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(262,188	)	$	(236,815	)
Customer relations			(161,970	)		(146,295	)
			(424,158	)		(383,110	)
Intangible assets, net		$	372,163		$	413,211

The aggregate amortization expenses for those intangible assets that continue to be amortized is reflected in amortization of intangible assets were $20,524 and $20,524 for the three months ended June 30, 2017 and 2016, $41,048 and $41,048 for the six months ended June 30, 2017 and 2016, respectively.

Amortization expenses for the next five years and thereafter are as follows:

2017 (six months)	$	41,048
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,735
Total	$	372,163

XML

Summarized Information of Equity Method Investment in the JV Company

6 Months Ended

Jun. 30, 2017

Summarized Information Of Equity Method Investments [Abstract]

SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

NOTE 22 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income in such investees, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss in such investees, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has a 50% ownership interest in the JV Company. In order to improve JV Company’s development, Zhejiang Geely Holding Group (“Geely Holding”), the parent company of Geely, became the shareholder of the JV Company on October 26, 2016, by purchasing the 50% in the JV Company held by Shanghai Guorun at a purchase price exceeding the cash amount of the aggregate of the original investment and past shared profits. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company now has a 50% indirect economic interest in Kandi Changxing through its 50% ownership interest in the JV Company. On May 19, 2017, due to business development, Geely Holding entrusted Mr. Hu Xiaoming, Chairman of the Board of the JV Company, to hold 19% equity of the JV Company from its 50% holding of the JV Company on behalf of Geely Holding as a nominal holder. On the same day, Geely Holding transferred its remaining 31% equity in the JV Company to Geely Group (Ningbo) Ltd., a company wholly owned by Li Shufu, Chairman of the Board of Geely Holding. On May 25, 2017, Mr. Hu pledged its 19% equity in the JV Company held on behalf of Geely Holding to Geely Holding. On June 30, 2017, due to the JV Company’s operational needs, Kandi Vehicle pledged its 50% equity in the JV Company to Geely Holding as counter-guarantee because Geely Holding provides 100% guarantee on the JV Company’s borrowings. Despite of the pledge, guarantee and counter-guarantee arrangements stated above, there is no change in control with respect to the 50% ownership held by each shareholder of the JV Company.

In November 2013, Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% of the ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is now a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Shanghai.

In January 2014, Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has a 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jiangsu.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd., and in August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership in the Service Company.

In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has a 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has a 25% economic interest in Puma Investment.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has a 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in JiHeKang Service Company.

In August 2016, Jiangsu JiDian Electric Vehicle Sales Co., Ltd. (“Jiangsu JiDian”) was formed by JiHeKang. Jiangsu JiDian is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Jiangsu JiDian, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Jiangsu JiDian.

In October 2016, JiHeKang acquired Tianjin BoHaiWan Vehicle Sales Co., Ltd. (“Tianjin BoHaiWan”). Tianjin BoHaiWan is engaged in the car sales business. Because JiHeKang is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Tianjin BoHaiWan, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Tianjin BoHaiWan.

In November 2016, Changxing Kandi Vehicle Maintenance Co., Ltd. (“Changxing Maintenance”) was formed by Kandi Changxing. Changxing Maintenance is engaged in the car repair and maintenance business. Because Kandi Changxing is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Changxing Maintenance, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Changxing Maintenance.

In March 2017, Hangzhou Liuchuang Electric Vehicle Technology Co., Ltd. (“Liuchuang”) was formed by Kandi Jiangsu. Since Kandi Jiangsu is 100% owned by the JV Company, the JV Company has a 100% ownership interest in Liuchuang, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Liuchuang.

In April 2017, in order to promote business development, Kandi Jinhua, JiHeKang, and JiHeKang Service Company were reorganized to become subsidiaries of Kandi Jiangsu. As the JV Company has a 100% ownership interest in Kandi Jiangsu, the JV Company has 100% ownership interests in Kandi Jinhua, JiHeKang, and JiHeKang Service Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has a 50% economic interest in Kandi Jinhua, JiHeKang, and JiHeKang Service Company.

As of June 30, 2017, the JV Company consolidated its interests in the following entities on its financial statements: (1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company. As a result, the Company’s consolidated net income for the six months ended June 30, 2017, and 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

	Three months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	18,650,533		$	111,767,049
Gross (loss)income		(1,487,979	)		14,663,818
Net (loss)income		(14,577,384	)		8,626,568
Company’s equity in net (loss) income of JV	$	(7,288,692	)	$	4,313,284

	Six months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	19,928,152		$	111,271,482
Gross (loss) profit		(1,824,736	)		13,601,171
Net (loss) income		(25,185,112	)		558,120
Company’s equity in net (loss) income of JV	$	(12,592,556	)	$	279,060

	June 30,		December 31,
	2017		2016
Condensed balance sheet information:
Current assets	$	575,007,161	$	514,958,008
Noncurrent assets		176,042,414		177,563,800
Total assets	$	751,049,575	$	692,521,808
Current liabilities		576,715,978		505,356,626
Noncurrent liabilities		40,711,567		31,817,560
Equity		133,622,030		155,347,622
Total liabilities and equity	$	751,049,575	$	692,521,808

For the six months ended June 30, 2017, and 2016, the JV Company’s revenues were derived primarily from the sales of EV products in China. Because the Company has a 50% ownership interest in the JV Company and accounted for its investments in the JV Company under the equity method of accounting, the Company did not consolidate the JV Company’s financial results, but rather included equity income from the JV Company during such periods.

Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

The Company’s equity method investments in the JV Company as of June 30, 2017 and December 31, 2016 are as follows:

	June 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss		(12,592,556	)		(7,077,789	)
Intercompany transaction elimination		(1,530,488	)		(230,787	)
Year 2016 unrealized profit realized		223,077			1,066
Exchange difference		1,705,929			(5,577,376	)
Investment in JV Company, end of the period	$	65,258,976		$	77,453,013

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended June 30, 2017, were $26,171,724 or 96% of the Company’s total revenue, a decrease of 44.9% from the same quarter last year. Sales to the Company’s customers, the JV Company and its subsidiaries, for the six months ended June 30, 2017, were $27,483,366 or 87% of the Company’s total revenue, a decrease of 54.9% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.

The breakdown of sales to the JV Company and its subsidiaries is as follows:

	Three Months ended
	June 30,
	2017		2016
JV Company	$	25,715,753	$	41,919,634
Kandi Changxing		60,810		1,657,335
Kandi Shanghai		33,841		3,766,230
Kandi Jinhua		-		(5,197	)
Kandi Jiangsu		361,320		130,813
Total sales to JV	$	26,171,724	$	47,468,815

	Six Months ended
	June 30,
	2017		2016
JV Company	$	27,027,395	$	55,005,270
Kandi Changxing		60,810		1,817,932
Kandi Shanghai		33,841		3,924,432
Kandi Jinhua		-		47,067
Kandi Jiangsu		361,320		149,089
Total sales to JV	$	27,483,366	$	60,943,790

As of June 30, 2017 and December 31, 2016, the amount due from the JV Company and its subsidiaries, was $139,801,316 and $136,536,725, respectively, of which the majority were balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	821,277	$	281,657
Kandi Changxing		16,841,443		16,359,721
Kandi Jinhua		5,174,527		5,050,525
Kandi Jiangsu		767,495		352,587
JV Company		116,196,574		114,492,235
Consolidated JV	$	139,801,316	$	136,536,725

As of June 30, 2017 and December 31, 2016, the amount due to the JV Company and its subsidiaries, was $892,759 and $566, respectively, of which the majority were balances with Kandi Changxing and Kandi Shanghai. The breakdown is as below:

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	660,643	$	-
Kandi Changxing		232,116		566
Consolidated JV	$	892,759	$	566

The amounts due from the JV Company include six short-term loans in the total amount of $43,514,175 that Kandi Vehicles lent to the JV Company. Each such loan carries an annual interest rate of 4.35%.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 23 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for bank loans to other parties

As of June 30, 2017, and December 31, 2016, the Company provided guarantees for the following parties:

(1) Guarantees for bank loans

	June 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang industrial Co., Ltd.		4,277,665		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		47,939,345		46,790,530
Total	$	52,217,010	$	53,845,102

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 loan in the amount of $2,902,534 from Shanghai Pudong Development Bank Jinhua Branch, with a related loan period of March 15, 2013, to March 15, 2016. NGCL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein. Because NGCL defaulted on the loan principal and interest, Shanghai Pudong Development Bank brought a lawsuit to the People’s Court of Zhejiang Province in Yongkang City against NGCL, the Company and ten other guarantors in April, 2017. A judicial mediation was taken place at court in Yongkang City on May 27, 2017 and the plaintiff agreed NGCL to repay the loan principal and interest plus legal expenses in installments. As of June 30, 2017, according to the enterprise credit report issued by the Credit Center of People’s Bank of China (PBOC) or the central bank of the People’s Republic of China, the Company’s guarantee for NGCL’s loan has been removed. The Company expects the likelihood of incurring losses in connection with this matter is remote.

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) for a bank loan in the amount of $4,277,665 from Ping An Bank, with a related loan period of September 29, 2015, to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all the obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein. Because ZSICL defaulted on the loan interest, Ping An Bank brought a lawsuit against ZSICL, the Company and three other parties, and a court ruling was issued in December 2016 to order ZSICL to repay the principal and interest of the bank loan to Ping An Bank, with the Company and three other parties assuming joint liability for the default. ZSICL and the Company appealed the ruling results on February 6, 2017, and the court rejected the appeal on March 29, 2017. On July 31, 2017, the Company and Ping An Bank reached an agreement to settle this case. According to the agreement, the Company will pay Ping An Bank RMB 20 million or approximately $2.9 million in four installments before October 31, 2017 to release the Company from the guarantor liability for this default. As of June 30, 2017, the Company has an accrued liability of approximately $2.9 million for the estimated contingent loss in connection with this matter. According to the Company’s agreement with ZSICL, ZSICL agreed to reimburse all the Company’s losses due to ZSICL’s default on the loan principal and interests. On August 1, 2017, the first installment of RMB 5 million or approximately $0.73 million was paid to Ping An Bank and ZSICL will reimburse the Company for the same amount according to the agreement. The Company expects the likelihood of incurring losses in connection with this matter is low.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $36,876,420 from China Import & Export Bank with a related loan period of December 14, 2015, to December 13, 2016, which was extended to September 14, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

On July 20, 2016, the Company entered into a guarantee contract to serve as the guarantor for the JV Company for bank loans in the aggregate amount of $11,062,926 from Bank of China, with a related loan period of July 20, 2016 to July 19, 2017. Under this guarantee contract, the Company agreed to perform all the obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein. The loan was paid off on July 21, 2017.

All guarantee periods are two years from the date of expiration of the debt performance under the principal loan contracts.

(2) Pledged collateral for bank loans to other parties.

As of June 30, 2017 and December 31, 2016, none of the Company’s land use rights or plants and equipment were pledged as collateral securing bank loans to other parties.

Contingencies

As of June 30, 2017 and December 31, 2016, our loss contingencies are summarized as follow:

	June 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	2,950,114	$	-
Total	$	2,950,114	$	-

Litigation

Beginning in March 2017, putative shareholder class actions were filed against Kandi Technologies Group, Inc. 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 allege violations of the federal securities laws based Kandi’s disclosure in March 2017 that its financial statements for the years 2014, 2015 and the first three quarters of 2016 will need to be restated, and seek damages on behalf of putative classes of shareholders who purchased or acquired Kandi’s securities prior to March 13, 2017. We believe that the claims are without merit and intend to defend against these lawsuits vigorously. We are unable to estimate the possible loss, if any, associated with these lawsuits.

Beginning in May 2017, a purported shareholder derivative actions based on the same underlying events described above was were filed against certain current and former directors of Kandi in the United States District Court for the Southern District of New York. We believe that the claims are without merit and intend to defend against this lawsuit vigorously. We are unable to estimate the possible loss, if any, associated with this these lawsuits.

XML

Segment Reporting

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 24 – SEGMENT REPORTING

The Company has one operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in China. The Company only has manufacturing operations in China.

The following table sets forth revenues by geographic area:

	Three Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		886,374		3	%		992,662		2	%
China		26,438,905		97	%		54,224,706		98	%
Total		27,325,279		100	%		55,217,368		100	%

	Six Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		2,402,538		8	%		1,614,384		2	%
China		29,197,314		92	%		104,260,877		98	%
Total		31,599,852		100	%		105,875,261		100	%

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 25 – Related Party Transactions

The Board must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the three months ended June 30, 2017 and 2016:

	Three Months ended
	June 30,
	2017		2016
Service Company		-		769,065
Total	$	-		769,065

The following table lists sales to related parties (other than the JV Company and its subsidiaries) for the six months ended June 30, 2017 and 2016:

	Six Months ended
	June 30,
	2017		2016
Service Company		-		3,977,568
Total	$	-		3,977,568

The details for amounts due from related parties (other than the JV Company and its subsidiaries) as of June 30, 2017 and December 31, 2016 were as below:

	June 30,		December 31,
	2017		2016
Service Company		10,742,243		10,484,816
Total due from related party (other than the JV Company and its subsidiaries)	$	10,742,243		10,484,816

The Company has a 9.5% ownership interest in the Service Company and Mr.Hu, Chairman and CEO of the Company, has a 13% ownership interest in the Service Company. The main transactions between the Company and the Service Company are purchases by the Service Company of batteries and EV parts.

For transactions with the JV Company, please refer to Note 22.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Economic and Political Risks

(a) Economic and Political Risks

The Company’s operations are conducted in China. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, and by the general state of the Chinese economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Fair Value of Financial Instruments

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other payables and accrued liabilities, and notes payable approximate fair value because of the short-term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles. As the carrying amounts are reasonable estimates of fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as Level 2 instruments due to the fact that the inputs to valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $37,289,011 and $14,797,325 at June 30, 2017 and December 31, 2016, respectively.

Warrants, which are accounted for as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $0 at June 30, 2017 and December 31, 2016, respectively. Also see Note 6(t).

Cash and Cash Equivalents

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of June 30, 2017, and December 31, 2016, includes time deposits on account for earning interest income. As of June 30, 2017, and December 31, 2016, the Company’s restricted cash was $22,708,654 and $12,957,377, which includes a one-year Certificate of Time Deposit (CD) of $11,800,454 with Hangzhou Bank Jinhua Branch, of which $5,900,227 will mature on September 29, 2017, and the remainder will mature on October 29, 2017.

Inventories

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

Accounts Receivable and Due from the JV Company and Related Parties

(e) Accounts Receivable and Due from the JV Company and Related Parties

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded for periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive collection efforts. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item.

As of June 30, 2017, and December 31, 2016, credit terms with the Company’s customers were typically 210 to 720 days after delivery. The Company extended credit terms with its certain customers, mainly the JV Company whose outstanding balance has already exceeded the originally granted credit terms to a much longer period because of delayed subsidy payments for EVs sold by the JV Company from the Chinese government. Because of the industry-wide subsidy review, the Chinese government temporarily delayed the issuing of the subsidy payments for the EVs sold in 2015 and 2016, which negatively impacted the JV Company’s cash flow position and caused its delay in repaying the Company. By extending the credit term to maximum 720 days, it will allow them to have sufficient time to repay the Company when the government resumes the subsidy payments. According to the government’s subsidy policies, the EV sold in 2015 and 2016 by the JV Company are eligible for receiving the subsidies and Chinese government has a good record on paying subsidies. Therefore, the Company believes the issues associated with the outstanding receivables due from the JV Company is timing rather than collectability. Since the collectability is reasonably assured, as of June 30, 2017, and December 31, 2016, the Company had no allowance for doubtful accounts, as per the Company management’s judgment based on their best knowledge. The Company conducts quarterly assessments of the state of the Company’s outstanding receivables and reserve any allowance for doubtful accounts if it becomes necessary.

Notes receivable

(f) Notes receivable

Notes receivable represent short-term loans to third parties with maximum terms of six months. Interest income is recognized according to each agreement between a borrower and the Company on an accrual basis. For notes receivable with banks, the interest rates are determined by banks. For notes receivable with other parties, the interest rates are based on agreements between the parties. If notes receivable are paid back, that transaction will be recognized in the relevant year. If notes receivable are not paid back, or are written off, that transaction will be recognized in the relevant year if default is probable, reasonably assured, and the loss can be reasonably estimated. The Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions, the Company provides an accrual for the related foreclosure and litigation expenses. The Company also receives notes receivable from the JV Company and other parties to settle accounts receivable. If the Company decides to discount notes receivable for the purpose of receiving immediate cash, the current discount rate is approximately in the range of 4.80% to 5.00% annually. As of June 30, 2017 and December 31, 2016, the Company had notes receivable from JV Company and other related parties of $0 and $400,239, respectively, which notes receivable typically mature within six months.

Advances to Suppliers

(g) Advances to Suppliers

Advance to suppliers represent cash paid in advance to suppliers, and include advances to raw material suppliers, mold manufacturers, and equipment suppliers.

As of June 30, 2017, the Company had made a total advance payments of RMB744 million (approximately $110 million) to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) as an advance to purchase a production line and develop a new EV model for Kandi Hainan. Nanjing Shangtong is a total solution contractor for Kandi Hainan and provides all the equipment and EV product design and research services used by Kandi Hainan. After transferred to construction in progress and expensed for R&D purposes, the Company had $14,806,230 left in Advance to Suppliers in current assets and $18,983,323 left in Advance to Suppliers in long-term assets as of June 30, 2017.

Advances for raw material purchases are typically settled within two months of the Company’s receipt of the raw materials. Prepayment is offset against the purchase price after the equipment or materials are delivered.

Property, Plants and Equipment

(h) Property, Plants and Equipment

Property, plants and equipment are carried at cost less accumulated depreciation. Depreciation is calculated over the asset’s estimated useful life using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the statements of income. The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

Construction in Progress

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction and the acquisition costs of buildings or machinery. Capitalization of these costs ceases, and construction in progress is transferred to plants and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided for until the assets are completed and ready for their intended use. $1,044,012 of interest expenses have been capitalized for CIP as of June 30, 2017.

Land Use Rights

(j) Land Use Rights

According to Chinese law, land in China is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the Chinese government grants the user a “land use right” to use the land. The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.

Accounting for the Impairment of Long-Lived Assets

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for disposal costs.

The Company recognized no impairment loss during the reporting period.

Revenue Recognition

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

● Persuasive evidence of an arrangement exists;

● Delivery has occurred or services have been rendered;

● The seller’s price to the buyer is fixed or determinable; and

● Collectability is reasonably assured.

The Company recognized revenue when the products and the risks they carry are transferred to the other party.

Research and Development

(m) Research and Development

Expenditures relating to the development of new products and processes, including improvements to existing products, are expensed as incurred. Research and development expenses were $5,142,041 and $494,193 for the three months ended June 30, 2017 and 2016, respectively. Research and development expenses were $25,911,773 and $700,161 for the six months ended June 30, 2017 and 2016, respectively.

Government Grants

(n) Government Grants

Grants and subsidies received from the Chinese government are recognized when the proceeds are received or collectible and related milestones have been reached and all contingencies have been resolved.

For the three months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $262,137 and $1,503,384 in grants from the Chinese government. For the six months ended June 30, 2017 and 2016, respectively, the Company’s subsidiaries recognized $5,329,611 and $1,697,857 in grants from the Chinese government.

Income Taxes

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the Company management’s best estimate of the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization will be uncertain.

Foreign Currency Translation

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http:// www.ofx.com

	June 30,	December 31,	June 30,
	2017	2016	2016
Period end RMB : USD exchange rate	6.779400	6.945850	6.646140
Average RMB : USD exchange rate	6.874859	6.645200	6.537380

Comprehensive Income

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

Segments

(r) Segments

In accordance with ASC 280-10, Segment Reporting, the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by the Company’s chief operating decision makers, the Company has only one operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

Stock Option Expenses

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of stock option expenses is based on awards expected to vest. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended June 30, 2017 and June 30, 2016, were $1,994,993 and $4,998,817, respectively. The stock-based option expenses for the six months ended June 30, 2017 and June 30, 2016, were $3,128,512 and $11,108,483, respectively. See Note 19. There were no forfeitures estimated during the reporting period.

Goodwill

(t) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of June 30, 2017 and June 30, 2016, the Company determined that its goodwill was not impaired.

Intangible assets

(u) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of June 30, 2017. The amortization expenses for intangible assets were $20,524 and $20,524 for the three months ended June 30, 2017 and June 30, 2016, respectively. The amortization expenses for intangible assets were $41,048 and $41,048 for the six months ended June 30, 2017 and June 30, 2016, respectively.

Accounting for Sale of Common Stock and Warrants

(v) Accounting for Sale of Common Stock and Warrants

Gross proceeds are first allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

Consolidation of variable interest entities

(w) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, or VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of this company, thereby enabling the Company, through Kandi Vehicles, to receive a majority of its respective expected residual returns.

Additionally, because Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of Kandi New Energy. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the contractual agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

XML

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of estimated useful lives

Buildings	30 years
Machinery and equipment	10 years
Office equipment	5 years
Motor vehicles	5 years
Molds	5 years

Schedule of average foreign currency exchange rate

	June 30,	December 31,	June 30,
	2017	2016	2016
Period end RMB : USD exchange rate	6.779400	6.945850	6.646140
Average RMB : USD exchange rate	6.874859	6.645200	6.537380

XML

Concentrations (Tables)

6 Months Ended

Jun. 30, 2017

Customers [Member]

Concentration Risk [Line Items]

Schedule of concentration percentage

	Sales						Trade Receivable
	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		94	%		76	%		40	%		53	%

	Sales						Trade Receivable
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Customers	2017			2016			2017			2016
Kandi Electric Vehicles Group Co., Ltd.		86	%		52	%		40	%		53	%

Suppliers [Member]

Concentration Risk [Line Items]

Schedule of concentration percentage

	Purchases						Accounts Payable
	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		22	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		12	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		13	%		-			6	%		-

	Purchases						Accounts Payable
	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,			June 30,			December 31,
Major Suppliers	2017			2016			2017			2016
Dongguan Chuangming Battery Technology Co., Ltd.		25	%		47	%		14	%		22	%
Zhejiang Tianneng Energy Technology Co., Ltd.		17	%		22	%		13	%		15	%
Zhuhai Enpower Electrical Co., Ltd.		12	%		-			6	%		-

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of earnings per share

	For three months ended
	June 30,
	2017			2016
Net income	$	(11,558,017	)	$	2,793,180
Weighted average shares used in basic computation		47,974,974			47,601,286
Dilutive shares		-			-
Weighted average shares used in diluted computation		47,974,974			47,601,286
Earnings per share:
Basic	$	(0.24	)	$	0.06
Diluted	$	(0.24	)	$	0.06

	For six months ended
	June 30,
	2017			2016
Net income	$	(35,711,452	)	$	2,881,600
Weighted average shares used in basic computation		47,854,351			47,305,560
Dilutive shares		-			6,024
Weighted average shares used in diluted computation		47,854,351			47,311,584
Earnings per share:
Basic	$	(0.75	)	$	0.06
Diluted	$	(0.75	)	$	0.06

XML

Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

Schedule of accounts receivable

	June 30,		December 31,
	2017		2016
Accounts receivable	$	34,964,666	$	32,394,613
Less: Provision for doubtful debts		-		-
Accounts receivable, net	$	34,964,666	$	32,394,613

XML

Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Inventories [Abstract]

Summary of Inventories

	June 30,			December 31,
	2017			2016
Raw material	$	4,594,174		$	2,529,149
Work-in-progress		4,108,073			1,786,087
Finished goods		5,190,304			8,014,671
Total inventories		13,892,551			12,329,907
Less: provision for slowing moving inventories		(465,096	)		(415,797	)
Inventories, net	$	13,427,455		$	11,914,110

XML

Notes Receivable (Tables)

6 Months Ended

Jun. 30, 2017

Accounts Receivable/Notes Receivable [Abstract]

Schedule of notes receivable

	June 30,		December 31,
	2017		2016
Bank acceptance notes		-		400,239
Total notes receivable	$	-	$	400,239

Schedule of details of notes receivable

Index	Amount ($)		Counter party	Relationship	Nature	Manner of settlement
1		400,239	Kandi Shanghai	Subsidiary of the JV Company	Payments for sales	Not due

XML

Plants and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Plants and Equipment [Abstract]

Schedule of plants and equipment

	June 30,			December 31,
	2017			2016
At cost:
Buildings	$	13,296,092		$	12,977,465
Machinery and equipment		7,328,252			8,585,666
Office equipment		494,476			475,162
Motor vehicles		360,991			321,207
Molds		27,177,509			26,463,472
		48,657,320			48,822,972
Less : Accumulated depreciation
Buildings	$	(4,270,277	)	$	(3,948,909	)
Machinery and equipment		(6,865,730	)		(8,107,884	)
Office equipment		(256,922	)		(216,226	)
Motor vehicles		(283,853	)		(274,197	)
Molds		(23,395,655	)		(21,031,086	)
		(35,072,437	)		(33,578,302	)
Less: provision for impairment for fixed assets		(51,462	)		(50,228	)
Plant and equipment, net	$	13,533,421		$	15,194,442

XML

Land Use Rights (Tables)

6 Months Ended

Jun. 30, 2017

Land Use Rights [Abstract]

Schedule of land use rights

	June 30,			December 31,
	2017			2016
Cost of land use rights	$	14,630,896		$	14,280,282
Less: Accumulated amortization		(2,727,683	)		(2,504,562	)
Land use rights, net	$	11,903,213		$	11,775,720

Schedule of amortization expense

2017(Six Months)	$	159,383
2018		318,766
2019		318,766
2020		318,766
2021		318,766
Thereafter		10,468,766
Total	$	11,903,213

XML

Construction-in-Progress (Tables)

6 Months Ended

Jun. 30, 2017

Construction-in-Progress [Abstract]

Schedule of contractual obligations under CIP

	Total in CIP as of		Estimate		Total
Project	June 30,		to		contract
	2017		complete		amount
Kandi Hainan facility	$	43,655,614	$	38,671,989	$	82,327,603
Total	$	43,655,614	$	38,671,989	$	82,327,603

XML

Short -Term and Long-Term Bank Loans (Tables)

6 Months Ended

Jun. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

Schedule of short-term debt

	June 30,		December 31,
	2017		2016
Loans from China Ever-bright Bank
Interest rate 5.22% per annum, due on April 25, 2018, , secured by the assets of Kandi Vehicle, guaranteed by Mr. Hu Xiaoming and his wife,and guaranteed by company's subsidiaries. Also see Note 13 and Note 14.		10,325,398		11,229,727
Loans from Hangzhou Bank
Interest rate 4.35% per annum, due on October 12, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		7,198,277		7,025,778
Interest rate 4.35% per annum, due July 3, 2017, paid off on July 3, 2017 and the new due date is July 4, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		10,649,910		10,394,696
Interest rate 4.35% per annum, paid off on March 23, 2017, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		-		5,614,864
Interest rate 4.35% per annum, due March 26, 2018, secured by the assets of Kandi Vehicle. Also see Note 13 and Note 14.		3,540,136		-
Loans from Individual Third Party
Interest rate 12% per annum		295,011		-
	$	32,008,732		34,265,065

Schedule of long-term debt

	June 30,		December 31,
	2017		2016
Loans from Haikou Rural Credit Cooperative
Interest rate 7% per annum, due on December 12, 2021, guaranteed by Kandi Vehicle and Kandi New Energy.		29,501,136		28,794,172
Total:	$	29,501,136		28,794,172

XML

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2017

Short -Term and Long-Term Bank Loans / Notes payable [Abstract]

Summary of notes payable

	June 30,		December 31,
	2017		2016
Bank acceptance notes:	$		$
Due March 22, 2017		-		400,239
Due March 29, 2017		-		1,439,709
Due June 21, 2017		-		1,439,709
Due July 6, 2017		1,180,045		-
Due September 23, 2017		8,850,341		-
Due October 21, 2017		803,906		-
Due November 2, 2017		6,637,756		-
Due November 4, 2017		885,034		-
Due December 6, 2017		885,034		-
Due December 22, 2017		91,731		-
Due June 21, 2018		360,893		-
Other Notes Payable:
Due May 6, 2017		-		11,517,669
Due May 6, 2019		17,594,271
Total	$	37,289,011	$	14,797,325

XML

Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Taxes [Abstract]

Summary of income tax expenses

	For Three Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	2,647,813
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(639,962	)		(247,587	)
Income tax expense (benefit)	$	(131,939	)	$	2,400,226

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Current:
Provision for CIT	$	508,023		$	4,408,966
Provision for Federal Income Tax		-			-
Deferred:
Provision for CIT		(5,415,959	)		(4,645,415	)
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

Schedue of income tax expenses differ from ''expected'' tax expense

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Expected taxation at PRC statutory tax rate	$	(10,154,847	)	$	661,288
Effect of differing tax rates in different jurisdictions		(446,896	)		(1,207,759	)
Non-taxable income		-			(24,041	)
Non-deductible expenses①		2,086,777			2,068
Research and development super-deduction		(19,195	)		(74,248	)
Under-accrued EIT for previous years		267,574			(2,727,454	)
Effect of PRC preferential tax rates		1,717,207			(135,630	)
Addition to valuation allowance		1,688,376			3,269,327
Other		(46,932	)		-
Income tax expense (benefit)	$	(4,907,936	)	$	(236,449	)

① It's mainly due to share of (loss) in JV Company and its subsidiaries.

Schedule of deferred tax assets and liabilities

	June 30,			December 31,
	2017			2016
Deferred tax assets:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation	$	-		$	-
Expense k		522,909			72,742
Depreciation		205,704			230,156
Loss carried forward		32,618,384			27,218,934
less: valuation allowance		(27,337,091	)		(26,820,811	)
Total deferred tax assets, net of valuation allowance		6,009,906			701,021
Deferred tax liabilities:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation		-			-
Expense l		1,615,714			1,698,303
Depreciation		-			-
Other		-			-
Accumulated other comprehensive gain		-			-
Total deferred tax liability		1,615,714			1,698,303
Net deferred tax assets (liabilities)	$	4,394,192		$	(997,282	)

k It's provision for impairment inventory, fixed assets and loss contingency-litigation.

l It's due to the difference of tax basis and GAAP basis of other long term assets.

Schedule of income (loss) before income taxes

	For Six Months Ended
	June 30,
	(Unaudited)
	2017			2016
Income(loss) before income taxes consists of:
PRC	$	(35,612,423	)	$	14,295,017
Non-PRC		(5,006,965	)		(11,649,866	)
Total	$	(40,619,388	)	$	2,645,151

Schedule of valuation allowance of deferred tax assets

Net change of valuation allowance of Deferred tax assets
Balance at December 31,2016	$	26,820,811
Additions-change to tax expense		1,688,376
Deduction-expired of loss carried forward ④		(1,172,096	)
Balance at June 30,2017	$	27,337,091

④It's due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

Schedule of income tax expense exemptions and reductions

	For Six Months Ended
	June 30,
	2017		2016
Tax benefit (holiday) credit	$	19,195	$	209,878
Basic net income per share effect	$	0.000	$	0.004

XML

Stock Options and Warrants (Tables)

6 Months Ended

Jun. 30, 2017

Stock Options and Warrants [Abstract]

Summary of stock option activities

Outstanding as of January 1, 2016	4,900,000		$	9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(333,333	)		9.72
Outstanding as of January 1, 2017	4,566,667			9.72
Granted	–			–
Exercised	–			–
Cancelled	–			–
Forfeited	(166,667	)		9.72
Outstanding as of June 30, 2017	4,400,000		$	9.72

XML

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Intangible Assets [Abstract]

Schedule of gross carrying value and accumulated amortization for each major class of our intangible assets

	Remaining	June 30,			December 31,
	useful life	2017			2016
Gross carrying amount:
Trade name	4 years	$	492,235		$	492,235
Customer relations	4 years		304,086			304,086
			796,321			796,321
Less : Accumulated amortization
Trade name		$	(262,188	)	$	(236,815	)
Customer relations			(161,970	)		(146,295	)
			(424,158	)		(383,110	)
Intangible assets, net		$	372,163		$	413,211

Schedule of amortization expenses

2017 (six months)	$	41,048
2018		82,095
2019		82,095
2020		82,095
2021		82,095
Thereafter		2,735
Total	$	372,163

XML

Summarized Information of Equity Method Investment in the JV Company (Tables)

6 Months Ended

Jun. 30, 2017

Summarized Information Of Equity Method Investments [Abstract]

Schedule of condensed income statement information

	Three months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	18,650,533		$	111,767,049
Gross (loss)income		(1,487,979	)		14,663,818
Net (loss)income		(14,577,384	)		8,626,568
Company’s equity in net (loss) income of JV	$	(7,288,692	)	$	4,313,284

	Six months ended
	June 30,
	2017			2016
Condensed income statement information:
Net sales	$	19,928,152		$	111,271,482
Gross (loss) profit		(1,824,736	)		13,601,171
Net (loss) income		(25,185,112	)		558,120
Company’s equity in net (loss) income of JV	$	(12,592,556	)	$	279,060

Schedule of condensed balance sheet information

	June 30,		December 31,
	2017		2016
Condensed balance sheet information:
Current assets	$	575,007,161	$	514,958,008
Noncurrent assets		176,042,414		177,563,800
Total assets	$	751,049,575	$	692,521,808
Current liabilities		576,715,978		505,356,626
Noncurrent liabilities		40,711,567		31,817,560
Equity		133,622,030		155,347,622
Total liabilities and equity	$	751,049,575	$	692,521,808

Schedule of equity method investments

	June 30,			December 31,
	2017			2016
Investment in JV Company, beginning of the period,	$	77,453,014		$	90,337,899
Share of loss		(12,592,556	)		(7,077,789	)
Intercompany transaction elimination		(1,530,488	)		(230,787	)
Year 2016 unrealized profit realized		223,077			1,066
Exchange difference		1,705,929			(5,577,376	)
Investment in JV Company, end of the period	$	65,258,976		$	77,453,013

Schedule of breakdown of sales

	Three Months ended
	June 30,
	2017		2016
JV Company	$	25,715,753	$	41,919,634
Kandi Changxing		60,810		1,657,335
Kandi Shanghai		33,841		3,766,230
Kandi Jinhua		-		(5,197	)
Kandi Jiangsu		361,320		130,813
Total sales to JV	$	26,171,724	$	47,468,815

	Six Months ended
	June 30,
	2017		2016
JV Company	$	27,027,395	$	55,005,270
Kandi Changxing		60,810		1,817,932
Kandi Shanghai		33,841		3,924,432
Kandi Jinhua		-		47,067
Kandi Jiangsu		361,320		149,089
Total sales to JV	$	27,483,366	$	60,943,790

Summary of amount due from the JV company

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	821,277	$	281,657
Kandi Changxing		16,841,443		16,359,721
Kandi Jinhua		5,174,527		5,050,525
Kandi Jiangsu		767,495		352,587
JV Company		116,196,574		114,492,235
Consolidated JV	$	139,801,316	$	136,536,725

Summary of amount due to the JV company

	June 30,		December 31,
	2017		2016
Kandi Shanghai	$	660,643	$	-
Kandi Changxing		232,116		566
Consolidated JV	$	892,759	$	566

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies [Abstract]

Schedule of guarantees for bank loans

	June 30,		December 31,
Guarantee provided to	2017		2016
Zhejiang Shuguang industrial Co., Ltd.		4,277,665		4,175,155
Nanlong Group Co., Ltd.		-		2,879,417
Kandi Electric Vehicles Group Co., Ltd.		47,939,345		46,790,530
Total	$	52,217,010	$	53,845,102

Schedule of loss contingencies

	June 30,		December 31,
Loss contingencies – litigation	2017		2016
Zhejiang Shuguang Industrial Co., Ltd.	$	2,950,114	$	-
Total	$	2,950,114	$	-

XML

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Schedule of revenues by geographic area

	Three Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		886,374		3	%		992,662		2	%
China		26,438,905		97	%		54,224,706		98	%
Total		27,325,279		100	%		55,217,368		100	%

	Six Months Ended June 30,
	2017					2016
	Sales Revenue		Percentage			Sales Revenue		Percentage
Overseas		2,402,538		8	%		1,614,384		2	%
China		29,197,314		92	%		104,260,877		98	%
Total		31,599,852		100	%		105,875,261		100	%

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2017

Related Party Transactions [Abstract]

Schedule of sales to related parties

	Three Months ended
	June 30,
	2017		2016
Service Company		-		769,065
Total	$	-		769,065

	Six Months ended
	June 30,
	2017		2016
Service Company		-		3,977,568
Total	$	-		3,977,568

Schedule of due from related parties

	June 30,		December 31,
	2017		2016
Service Company		10,742,243		10,484,816
Total due from related party (other than the JV Company and its subsidiaries)	$	10,742,243		10,484,816

XML

Organization and Principal Activities (Details)								1 Months Ended				6 Months Ended
	Nov. 30, 2016	Oct. 31, 2016	Aug. 31, 2016	Jan. 31, 2014	Dec. 31, 2013	Dec. 21, 2012	Aug. 13, 2007	Apr. 30, 2017	Mar. 31, 2017	Nov. 30, 2015	Nov. 30, 2013	Jun. 30, 2017	May 25, 2017	May 19, 2017	Oct. 26, 2016	Jun. 30, 2016	Jan. 31, 2016	Aug. 31, 2015	Jul. 31, 2013	Mar. 31, 2013	Apr. 30, 2012	Jan. 31, 2011
Kandi Technologies [Member]
Organization and Principal Activities (Textual)
Entity Incorporation, Date of Incorporation												Mar. 31, 2004
Change of name of entity						Kandi Technologies changed its name to Kandi Technologies Group, Inc.	Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp.
Kandi Vehicles [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																						100.00%
Voting rights and residual interests, percentage																						100.00%
Ownership interest percentage owned by JV company												50.00%
Ownership interest, percentage																		9.50%
Shanghai Guorun [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage															50.00%			9.50%
Geely [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company												100.00%		31.00%
JV Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage												50.00%		50.00%		50.00%
Economic interest, percentage														19.00%
Service Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage										50.00%		13.00%							9.50%
Kandi Jinhua [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company								100.00%
Ownership interest, percentage											100.00%
Economic interest, percentage											50.00%
Indirect ownership interest percentage in JV company											50.00%
JiHeKang Service Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage										100.00%	100.00%
Economic interest, percentage										50.00%	50.00%
Indirect ownership interest percentage in JV company								50.00%			50.00%
Indirect ownership interest percentage in Kandi Jinhua								50.00%
Kandi Jiangsu [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company				50.00%				100.00%
Ownership interest, percentage				100.00%				100.00%
Economic interest, percentage				50.00%				50.00%
Indirect ownership interest percentage in JV company				50.00%
Puma Investment [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage										50.00%
Economic interest, percentage										25.00%
Indirect ownership interest percentage in JV company										50.00%
Hangzhou [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage										50.00%
Kandi Hainan [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																	100.00%
Voting rights and residual interests, percentage																	100.00%
Ownership interest, percentage																	90.00%
Kandi New Energy [Member]
Organization and Principal Activities (Textual)
Economic benefits percentage																	100.00%
Ownership interest, percentage																	10.00%
Jiangsu Jidian [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company			100.00%
Ownership interest, percentage			100.00%
Economic interest, percentage			50.00%
Indirect ownership interest percentage in JV company			50.00%
Tianjin BoHaiWan [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company		100.00%
Ownership interest, percentage		100.00%
Economic interest, percentage		50.00%
Indirect ownership interest percentage in JV company		50.00%
Changxing Maintenance [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company	100.00%
Ownership interest, percentage	100.00%
Economic interest, percentage	50.00%
Indirect ownership interest percentage in JV company	50.00%
Liuchuang [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company									100.00%
Ownership interest, percentage									100.00%
Economic interest, percentage									50.00%
Indirect ownership interest percentage in JV company									50.00%
Mr.Hu (Member)
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company													19.00%
Share Exchange Agreement [Member] | Yongkang Scrou [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																					100.00%
JV Agreement [Member] | Kandi Vehicles [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																				50.00%
JV Agreement [Member] | Shanghai Guorun [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																				50.00%
JV Agreement [Member] | Geely [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																				99.00%
JV Agreement [Member] | JV Company [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage																				50.00%
Ownership Transfer Agreement [Member] | Kandi Changxing [Member]
Organization and Principal Activities (Textual)
Ownership interest percentage owned by JV company					50.00%
Ownership interest, percentage					100.00%
Economic interest, percentage					50.00%
Ownership Transfer Agreement [Member] | Kandi Shanghai [Member]
Organization and Principal Activities (Textual)
Ownership interest, percentage					100.00%
Economic interest, percentage					50.00%
Indirect ownership interest percentage in JV company					50.00%

XML

Liquidity (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Liquidity (Textual)
Working capital surplus	$ 56,822,668
Commercial bank loans	$ 31,713,721
Refinanced short term loan	75.00%
Minimum [Member]
Liquidity (Textual)
Decrease in working capital surplus		$ 29,525,357
Maximum [Member]
Liquidity (Textual)
Decrease in working capital surplus		$ 86,348,025

XML

Principles of Consolidation (Details)	6 Months Ended
	Jun. 30, 2017
Kandi New Energy [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Kandi New Energy [Member] | Kandi Hainan [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	10.00%
Kandi Vehicles [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	100.00%
Economic interest	100% of the economic benefits
Kandi Vehicles [Member] | Kandi Hainan [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	90.00%
Kandi Vehicles [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Mr. Hu Xiaoming [Member]
Principles of Consolidation (Textual)
Ownership interest, percentage	50.00%
Kandi Changxing [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Kandi Jinhua [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
JiHeKang [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Kandi Shanghai [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Kandi Jiangsu [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
JiHeKang Service [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Tianjin BoHaiWan [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Changxing [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest
Liuchuang [Member] | JV Company [Member]
Principles of Consolidation (Textual)
Economic benefits percentage	50.00%
Ownership interest, percentage	50.00%
Economic interest	50% economic interest

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2017
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	30 years
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	10 years
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years
Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years
Molds [Member]
Property, Plant and Equipment [Line Items]
Property, plants and equipment, Estimated useful lives	5 years

XML

Summary of Significant Accounting Policies (Details 1)	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Period end RMB : USD exchange rate [Member]
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items]
Exchange rate	6.779400	6.945850	6.646140
Average RMB : USD exchange rate [Member]
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items]
Exchange rate	6.874859	6.645200	6.537380

XML

Summary of Significant Accounting Policies (Details Textual) MYR in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Jun. 30, 2017 MYR
Summary of Significant Accounting Policies (Textual)
Restricted cash	$ 22,708,654		$ 22,708,654		$ 12,957,377
Time deposit	11,800,454		$ 11,800,454
Maturities of time deposit, Description			Certificate of Time Deposit (CD) of $11,800,454 with Hangzhou Bank Jinhua Branch, of which $5,900,227 will mature on September 29, 2017, and the remainder will mature on October 29, 2017.
Notes receivable from JV Company and related parties					400,239
Total advance payments	110,000,000		110,000,000			MYR 744
Interest expenses capitalized for CIP	536,068	$ 0	1,044,012	$ 0
Research and development expenses	5,142,041	494,193	25,911,773	700,161
Grants and subsidies received	262,137	1,503,384	5,329,611	1,697,857
Stock-based option expenses	1,994,993	4,998,817	$ 3,128,512	11,108,483
Remaining useful lives			9 years 8 months 12 days
Amortization expenses	20,524	$ 20,524	$ 41,048	$ 41,048
Ownership interest			100.00%
Land use rights, Description			The land use rights granted to the Company are amortized using the straight-line method over a term of fifty years.
Advances to suppliers, current assets	14,806,230		$ 14,806,230
Advances to suppliers, long term assets	18,983,323		18,983,323
Construction in Progress [Member]
Summary of Significant Accounting Policies (Textual)
Interest expenses capitalized for CIP			$ 507,944
Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Current discount rate			5.00%
Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Current discount rate			4.80%
Level 2 [Member]
Summary of Significant Accounting Policies (Textual)
Notes payable, fair value	$ 37,289,011		$ 37,289,011		14,797,325
Level 3 [Member]
Summary of Significant Accounting Policies (Textual)
Fair value of warrants			$ 0		$ 0

XML

Concentrations (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Sales [Member] | Kandi Electric Vehicles Group Co., Ltd. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	94.00%	76.00%	86.00%	52.00%
Trade Receivable [Member] | Kandi Electric Vehicles Group Co., Ltd. [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			40.00%		53.00%

XML

Concentrations (Details 1)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Concentration Risk [Line Items]
Concentration percentage	100.00%	100.00%	100.00%	100.00%
Dongguan Chuangming Battery Technology Co., Ltd. [Member] | Accounts Payable [Member]
Concentration Risk [Line Items]
Concentration percentage			14.00%		22.00%
Dongguan Chuangming Battery Technology Co., Ltd. [Member] | Purchases [Member]
Concentration Risk [Line Items]
Concentration percentage	22.00%	47.00%	25.00%	47.00%
Zhejiang Tianneng Energy Technology Co., Ltd. [Member] | Accounts Payable [Member]
Concentration Risk [Line Items]
Concentration percentage			13.00%		15.00%
Zhejiang Tianneng Energy Technology Co., Ltd. [Member] | Purchases [Member]
Concentration Risk [Line Items]
Concentration percentage	17.00%	12.00%	17.00%	22.00%
Zhuhai Enpower Electrical Co., Ltd. [Member] | Accounts Payable [Member]
Concentration Risk [Line Items]
Concentration percentage			6.00%
Zhuhai Enpower Electrical Co., Ltd. [Member] | Purchases [Member]
Concentration Risk [Line Items]
Concentration percentage	13.00%		12.00%

XML

Earnings Per Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net income	$ (11,558,017)	$ 2,793,180	$ (35,711,452)	$ 2,881,600
Weighted average shares used in basic computation	47,974,974	47,601,286	47,854,351	47,305,560
Dilutive shares				6,024
Weighted average shares used in diluted computation	47,974,974	47,601,286	47,854,351	47,311,584
Earnings per share:
Basic	$ (0.24)	$ 0.06	$ (0.75)	$ 0.06
Diluted	$ (0.24)	$ 0.06	$ (0.75)	$ 0.06

XML

Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share (Textual)
Average number of potentially dilutive common shares				6,024
Potential dilutive common shares			4,400,000	5,106,395

XML

Accounts Receivable (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Accounts Receivable/Notes Receivable [Abstract]
Accounts receivable	$ 34,964,666	$ 32,394,613
Less: Provision for doubtful debts
Accounts receivable, net	$ 34,964,666	$ 32,394,613

XML

Inventories (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Inventories [Abstract]
Raw material	$ 4,594,174	$ 2,529,149
Work-in-progress	4,108,073	1,786,087
Finished goods	5,190,304	8,014,671
Total inventories	13,892,551	12,329,907
Less: provision for slow moving inventories	(465,096)	(415,797)
Inventories, net	$ 13,427,455	$ 11,914,110

XML

Notes Receivable (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Notes receivable as below:
Bank acceptance notes		$ 400,239
Total notes receivable		$ 400,239

XML

Notes Receivable (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2017
Accounts Receivable/Notes Receivable [Abstract]
Amount	$ 400,239
Counter party	Kandi Shanghai
Relationship	Subsidiary of the JV Company
Nature	Payments for sales
Manner of settlement	Not due

XML

Plants and Equipment (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	$ 48,657,320	$ 48,822,972
Less : Accumulated depreciation	(35,072,437)	(33,578,302)
Less: provision for impairment for fixed assets	(51,462)	(50,228)
Property, Plant and equipment, net	13,533,421	15,194,442
Buildings [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	13,296,092	12,977,465
Less : Accumulated depreciation	(4,270,277)	(3,948,909)
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	7,328,252	8,585,666
Less : Accumulated depreciation	(6,865,730)	(8,107,884)
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	494,476	475,162
Less : Accumulated depreciation	(256,922)	(216,226)
Motor vehicles [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	360,991	321,207
Less : Accumulated depreciation	(283,853)	(274,197)
Molds [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	27,177,509	26,463,472
Less : Accumulated depreciation	$ (23,395,655)	$ (21,031,086)

XML

Plants and Equipment (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Plants and Equipment (Textual)
Net book value of plant and equipment pledged as collateral for bank loans	$ 8,875,078		$ 8,875,078		$ 8,875,111
Depreciation expenses	$ 10,716,121	$ 1,130,545	$ 2,134,346	$ 2,263,277

XML

Land Use Rights (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Land Use Rights [Abstract]
Cost of land use rights	$ 14,630,896	$ 14,280,282
Less: Accumulated amortization	(2,727,683)	(2,504,562)
Land use rights, net	$ 11,903,213	$ 11,775,720

XML

Land Use Rights (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Land Use Rights [Abstract]
2017(Six Months)	$ 159,383
2018	318,766
2019	318,766
2020	318,766
2021	318,766
Thereafter	10,468,766
Total	$ 11,903,213	$ 11,775,720

XML

Land Use Rights (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Land Use Rights (Textual)
Net book value of land use rights pledged as collateral	$ 8,752,429		$ 8,752,429		$ 8,660,097
Amortization expenses of land use rights	$ 79,845	$ 83,849	$ 159,383	$ 153,836

XML

Construction-in-Progress (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Construction In Progress [Line Items]
Total in CIP as of March 31, 2017	$ 43,655,614	$ 27,054,181
Estimate to complete	38,671,989
Total contract amount	82,327,603
Kandi Hainan facility [Member]
Construction In Progress [Line Items]
Total in CIP as of March 31, 2017	43,655,614
Estimate to complete	38,671,989
Total contract amount	$ 82,327,603

XML

Construction-in-Progress (Details Textual) ¥ in Billions	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Apr. 30, 2013 CNY (¥) ElectronicValue
Construction-in-Progress (Textual)
Invest to establish a factory | ¥						¥ 1
Number of electronic vehicles | ElectronicValue						100,000
CIP amount	$ 43,655,614		$ 43,655,614		$ 27,054,181
Interest expenses capitalized for CIP	$ 536,068	$ 0	$ 1,044,012	$ 0

XML

Short -Term and Long-Term Bank Loans (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Summary of short-term loans
Short-term loans	$ 32,008,732	$ 34,265,065
Loans from China Ever-bright Bank [Member]
Summary of short-term loans
Short-term loans	10,325,398	11,229,727
Loans from Hangzhou Bank One [Member]
Summary of short-term loans
Short-term loans	7,198,277	7,025,778
Loans from Hangzhou Bank Two [Member]
Summary of short-term loans
Short-term loans	10,649,910	10,394,696
Loans from Hangzhou Bank Three [Member]
Summary of short-term loans
Short-term loans		5,614,864
Loans from Hangzhou Bank Four [Member]
Summary of short-term loans
Short-term loans	3,540,136
Loans from Individual Third Party [Member]
Summary of short-term loans
Short-term loans	$ 295,011

XML

Short -Term and Long-Term Bank Loans (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2017
Loans from China Ever-bright Bank [Member]
Summary of short-term loans
Interest rate	5.22%
Due date	Apr. 25, 2018
Loans from Hangzhou Bank One [Member]
Summary of short-term loans
Interest rate	4.35%
Due date	Oct. 12, 2017
Loans from Hangzhou Bank Two [Member]
Summary of short-term loans
Interest rate	4.35%
Due date	Jul. 03, 2017
Paid off date	Jul. 03, 2017
New due date	Jul. 04, 2018
Loans from Hangzhou Bank Three [Member]
Summary of short-term loans
Interest rate	4.35%
Paid off date	Mar. 23, 2017
Loans from Hangzhou Bank Four [Member]
Summary of short-term loans
Interest rate	4.35%
Due date	Mar. 26, 2018
Loans from Individual Third Party [Member]
Summary of short-term loans
Interest rate	12.00%

XML

Short -Term and Long-Term Bank Loans (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Summary of long-term loans
Long-term loan	$ 29,501,136	$ 28,794,172
Loans from Haikou Rural Credit Cooperative [Member]
Summary of long-term loans
Long-term loan	$ 29,501,136	$ 28,794,172

XML

Short -Term and Long-Term Bank Loans (Parenthetical) (Details 1) - Loans from Haikou Rural Credit Cooperative [Member]	6 Months Ended
	Jun. 30, 2017
Summary of long-term loans
Interest rate	7.00%
Due date	Dec. 12, 2021

XML

Short -Term and Long-Term Bank Loans (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Short -Term and Long-Term Bank Loans (Textual)
Interest expense of short-term and long-term bank loans	$ 548,810	$ 432,318	$ 1,163,263	$ 874,397
Aggregate amount of short-term and long-term loans guaranteed by various third parties	$ 0		$ 0

XML

Notes Payable (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	$ 37,289,011	$ 14,797,325
Due March 22, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		400,239
Due March 29, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		1,439,709
Due June 21, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		1,439,709
Due July 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	1,180,045
Due September 23, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	8,850,341
Due October 21, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	803,906
Due November 2, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	6,637,756
Due November 4, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	885,034
Due December 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	885,034
Due December 22, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	91,731
Due June 21, 2018 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	360,893
Due May 6, 2017 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total		11,517,669
Due May 6, 2019 [Member]
Bank Acceptance Notes And Other Notes Payable [Abstract]
Total	$ 17,594,271

XML

Notes Payable (Details Textual) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Notes Payable (Textual)
Notes payable collateral, amount	$ 10,844,399	$ 3,279,656

XML

Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Current:
Provision for CIT	$ 508,023	$ 2,647,813	$ 508,023	$ 4,408,966
Provision for Federal Income Tax
Deferred:
Provision for CIT	(639,962)	(247,587)	(5,415,959)	(4,645,415)
Income tax expense (benefit)	$ (131,939)	$ 2,400,226	$ (4,907,936)	$ (236,449)

XML

Taxes (Details 1) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Taxes [Abstract]
Expected taxation at PRC statutory tax rate				$ (10,154,847)	$ 661,288
Effect of differing tax rates in different jurisdictions				(446,896)	(1,207,759)
Non-taxable income					(24,041)
Non-deductible expenses	[1]			2,086,777	2,068
Research and development super-deduction				(19,195)	(74,248)
Under-accrued EIT for previous years				267,574	(2,727,454)
Effect of PRC preferential tax rates				1,717,207	(135,630)
Addition to valuation allowance				1,688,376	3,269,327
Other				(46,932)
Income tax expense (benefit)		$ (131,939)	$ 2,400,226	$ (4,907,936)	$ (236,449)

[1] It's mainly due to share of (loss) in JV Company and its subsidiaries.

XML

Taxes (Details 2) - USD ($)		Jun. 30, 2017	Dec. 31, 2016
Deferred tax assets:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation
Expense	[1]	522,909	72,742
Depreciation		205,704	230,156
Loss carried forward		32,618,384	27,218,934
less: valuation allowance		(27,337,091)	(26,820,811)
Total deferred tax assets, net of valuation allowance		6,009,906	701,021
Deferred tax liabilities:
Sales cut-off difference derived from Value Added Tax reporting system to calculate PRC Corporation Income Tax in accordance with the PRC State Administration of Taxation
Expense	[2]	1,615,714	1,698,303
Depreciation
Other
Accumulated other comprehensive gain
Total deferred tax liability		1,615,714	1,698,303
Net deferred tax assets (liabilities)		$ 4,394,192	$ (997,282)

[1] It's provision for impairment inventory, fixed assets and loss contingency-litigation.

[2] It's due to the difference of tax basis and GAAP basis of other long term assets.

XML

Taxes (Details 3) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Operating Loss Carryforwards [Line Items]
Total	$ (11,689,956)	$ 5,193,406	$ (40,619,388)	$ 2,645,151
PRC [Member]
Operating Loss Carryforwards [Line Items]
Total			(35,612,423)	14,295,017
Non-PRC[Member]
Operating Loss Carryforwards [Line Items]
Total			$ (5,006,965)	$ (11,649,866)

XML

Taxes (Details 4)	6 Months Ended
	Jun. 30, 2017 USD ($)
Taxes [Abstract]
Balance at December 31,2016	$ 26,820,811
Additions-change to tax expense	1,688,376
Deduction-expired of loss carried forward	(1,172,096)	[1]
Balance at June 30,2017	$ 27,337,091

[1] It's due to the loss carried forward deduction-expired of Kandi Technologies of 2012.

XML

Taxes (Details 5) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Taxes [Abstract]
Tax benefit (holiday) credit	$ 19,195	$ 209,878
Basic net income per share effect	$ 0.000	$ 0.004

XML

Taxes (Details Textual) - USD ($)
$ in Thousands

6 Months Ended

12 Months Ended

Jun. 30, 2017

Jun. 30, 2016

Dec. 31, 2016

Taxes (Textual)

Applicable corporate income tax rate

25.00%

Reduced income tax rate

15.00%

Research and development effective tax rate

12.08%

8.94%

U.S. Federal income tax rate

34.00%

25.00%

Tax exemptions holiday percent

25.00%

25.00%

Research Tax Credit Carryforward [Member]

Taxes (Textual)

Research and development effective tax rate

25.00%

UNITED STATES | 2013 through 2017 [Member]

Taxes (Textual)

Cumulative net losses

$ 80,400

Operating loss carryforwards, expire date description

The amount between 2018 and 2022.

UNITED STATES | 2012 through 2016 [Member]

Taxes (Textual)

Cumulative net losses

$ 78,880

Operating loss carryforwards, expire date description

The amount between 2017 and 2021

CHINA

Taxes (Textual)

Cumulative net losses

$ 2,120

Operating loss carryforwards, expiration date

Dec. 31, 2021

CHINA | 2016 through 2017 [Member]

Taxes (Textual)

Cumulative net losses

$ 21,270

Operating loss carryforwards, expire date description

The amount between 2021 and 2022.

Kandi New Energy [Member]

Taxes (Textual)

Applicable corporate income tax rate

25.00%

Yongkang Scrou [Member]

Taxes (Textual)

Applicable corporate income tax rate

25.00%

Kandi Hainan [Member]

Taxes (Textual)

Applicable corporate income tax rate

25.00%

Jv Company [Member]

Taxes (Textual)

Applicable corporate income tax rate

25.00%

XML

Stock Options and Warrants (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Stock Options and Warrants [Abstract]
Number of Shares Outstanding, Beginning Balance	4,566,667	4,900,000
Number of Shares, Granted
Number of Shares, Exercised
Number of Shares, Cancelled
Number of Shares, Forfeited	(166,667)	(333,333)
Number of Shares Outstanding, Ending Balance	4,400,000	4,566,667
Weighted Average Exercise Price Outstanding, Beginning Balance	$ 9.72	$ 9.72
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Cancelled
Weighted Average Exercise Price, Forfeited	9.72	9.72
Weighted Average Exercise Price, Outstanding, Ending Balance	$ 9.72	$ 9.72

XML

Stock Options and Warrants (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	May 29, 2015	Jun. 30, 2017	Dec. 31, 2016
Stock Options and Warrants (Textual)
Warrants issued to investors and placement agent		$ 0	$ 0
Stock Options [Member]
Stock Options and Warrants (Textual)
Stock options vesting period, description	The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date.
Company stock options value	$ 39,990,540
Expected volatility rate	90.00%
Expected life	10 years
Risk-free interest rate	2.23%
Expected dividend yield	0.00%
Stock compensation expenses		$ 3,128,512
Directors, officers and senior employees [Member] | Stock Options [Member]
Stock Options and Warrants (Textual)
Purchase shares of common stock	4,900,000
Common stock exercise price per share	$ 9.72
Employees and Directors [Member]
Stock Options and Warrants (Textual)
Fair value of common stock options issued	4,900,000
Options issued , price per share	$ 8.1613

XML

Stock Award (Details) - USD ($)		1 Months Ended				3 Months Ended		6 Months Ended					12 Months Ended
	Dec. 30, 2013	Feb. 13, 2017	Nov. 30, 2016	Sep. 26, 2016	May 20, 2015	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Feb. 28, 2014	Jan. 31, 2012	Dec. 31, 2011	Dec. 31, 2016
Stock Award (Textual)
Number of shares, granted
Reduce total number of shares of common stock				250,000
General and administrative expenses						$ 1,558,652	$ 9,625,194	$ 9,877,946	$ 17,658,076
2008 Plan [Member]
Stock Award (Textual)
Shares of common stock	335,000
Number of shares, granted		246,900
Reduce total number of shares of common stock				335,000
Increase in shares					9,000,000
Employee Stock Award Expenses [Member]
Stock Award (Textual)
General and administrative expenses						$ 2,016,043	$ 8,269,691	$ 4,493,187	$ 15,157,583
Mr. Henry Yu [Member]
Stock Award (Textual)
Restricted shares of common stock												5,000
Mr. Jerry Lewin's [Member]
Stock Award (Textual)
Restricted shares of common stock											5,000
Ms. Kewa Luo's [Member]
Stock Award (Textual)
Restricted shares of common stock										5,000
Mr. Mei Bing [Member] | Three Year Employment Agreement [Member]
Stock Award (Textual)
Shares of common stock			10,000
Vested shares of four equal quarterly installments			2,500

XML

Intangible Assets (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 796,321	$ 796,321
Less : Accumulated amortization	(424,158)	(383,110)
Intangible assets, net	$ 372,163	413,211
Remaining useful lives	9 years 8 months 12 days
Trade name [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 492,235	492,235
Less : Accumulated amortization	$ (262,188)	(236,815)
Remaining useful lives	4 years
Customer relations [Member]
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount:	$ 304,086	304,086
Less : Accumulated amortization	$ (161,970)	$ (146,295)
Remaining useful lives	4 years

XML

Intangible Assets (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Intangible Assets [Abstract]
2017 (six months)	$ 41,048
2018	82,095
2019	82,095
2020	82,095
2021	82,095
Thereafter	2,735
Total	$ 372,163	$ 413,211

XML

Intangible Assets (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Intangible Assets (Textual)
Amortization expenses	$ 20,524	$ 20,524	$ 41,048	$ 41,048

XML

Summarized Information of Equity Method Investment in the JV Company (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Condensed income statement information:
Net sales	$ 18,650,533	$ 111,767,049	$ 19,928,152	$ 111,271,482
Gross (loss)income	(1,487,979)	14,663,818	(1,824,736)	13,601,171
Net (loss)income	(14,577,384)	8,626,568	(25,185,112)	558,120
Company's equity in net (loss) income of JV	$ (7,288,692)	$ 4,313,284	$ (12,592,556)	$ 279,060	$ (7,077,789)

XML

Summarized Information of Equity Method Investment in the JV Company (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Condensed balance sheet information:
Current assets	$ 575,007,161	$ 514,958,008
Noncurrent assets	176,042,414	177,563,800
Total assets	751,049,575	692,521,808
Current liabilities	576,715,978	505,356,626
Noncurrent liabilities	40,711,567	31,817,560
Equity	133,622,030	155,347,622
Total liabilities and equity	$ 751,049,575	$ 692,521,808

XML

Summarized Information of Equity Method Investment in the JV Company (Details 2) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Summarized Information Of Equity Method Investments [Abstract]
Investment in JV Company, beginning of the period,			$ 77,453,014	$ 90,337,899	$ 90,337,899
Share of loss	$ (7,288,692)	$ 4,313,284	(12,592,556)	$ 279,060	(7,077,789)
Intercompany transaction elimination			(1,530,488)		230,787
Year 2016 unrealized profit realized			223,077		1,066
Exchange difference			1,705,929		(5,577,376)
Investment in JV Company, end of the period	$ 65,258,976		$ 65,258,976		$ 77,453,014

XML

Summarized Information of Equity Method Investment in the JV Company (Details 3) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Schedule of Equity Method Investments [Line Items]
Total sales to JV	$ 26,171,724	$ 48,237,880	$ 27,483,366	$ 64,921,357
JV Company [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	25,715,753	41,919,634	27,027,395	55,005,270
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	60,810	1,657,335	60,810	1,817,932
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	33,841	3,766,230	33,841	3,924,432
Kandi Jinhua [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV		(5,197)		47,067
Kandi Jiangsu [Member]
Schedule of Equity Method Investments [Line Items]
Total sales to JV	$ 361,320	$ 130,813	$ 361,320	$ 149,089

XML

Summarized Information of Equity Method Investment in the JV Company (Details 4) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 139,801,316	$ 136,536,725
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	821,277	281,657
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	16,841,443	16,359,721
Kandi Jinhua [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	5,174,527	5,050,525
Kandi Jiangsu [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	767,495	352,587
JV Company [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 116,196,574	$ 114,492,235

XML

Summarized Information of Equity Method Investment in the JV Company (Details 5) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 892,759	$ 566
Kandi Shanghai [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	660,643
Kandi Changxing [Member]
Schedule of Equity Method Investments [Line Items]
Consolidated JV	$ 232,116	$ 566

XML

Summarized Information of Equity Method Investment in the JV Company (Details Textual) - USD ($)

1 Months Ended

3 Months Ended

6 Months Ended

Nov. 30, 2016

Oct. 31, 2016

Aug. 31, 2016

Jan. 31, 2014

Dec. 31, 2013

Apr. 30, 2017

Mar. 31, 2017

Nov. 30, 2015

Nov. 30, 2013

Jun. 30, 2017

Jun. 30, 2016

Jun. 30, 2017

Jun. 30, 2016

May 25, 2017

May 19, 2017

Dec. 31, 2016

Oct. 26, 2016

Aug. 31, 2015

Jul. 31, 2013

Mar. 31, 2013

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Amount due from JV company

$ 139,801,316

$ 139,801,316

$ 136,536,725

Consolidated JV

892,759

892,759

566

Short-term debt

32,008,732

32,008,732

34,265,065

Revenue from related parties

26,171,724

$ 48,237,880

27,483,366

$ 64,921,357

Kandi Shanghai [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Amount due from JV company

821,277

821,277

281,657

Consolidated JV

660,643

660,643

Revenue from related parties

33,841

3,766,230

33,841

3,924,432

Kandi Changxing [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Amount due from JV company

16,841,443

16,841,443

16,359,721

Consolidated JV

232,116

232,116

566

Revenue from related parties

60,810

1,657,335

60,810

1,817,932

Kandi Jinhua [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Amount due from JV company

5,174,527

5,174,527

5,050,525

Ownership interest percentage owned by JV company

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Revenue from related parties

(5,197)

47,067

Kandi Jiangsu [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

100.00%

Amount due from JV company

767,495

767,495

352,587

Ownership interest percentage owned by JV company

50.00%

100.00%

Economic interest, percentage

50.00%

50.00%

Indirect ownership interest percentage in JV company

50.00%

Revenue from related parties

$ 361,320

$ 130,813

$ 361,320

$ 149,089

JV Company [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

50.00%

50.00%

50.00%

50.00%

Amount due from JV company

$ 116,196,574

$ 116,196,574

$ 114,492,235

Economic interest, percentage

19.00%

Short-term debt

43,514,175

43,514,175

Revenue from related parties

$ 25,715,753

$ 41,919,634

$ 27,027,395

$ 55,005,270

Interest rate

4.35%

4.35%

Sales to JV Company and subsidiaries, description

Sales to the Company's customers, the JV Company and its subsidiaries, for the three months ended June 30, 2017, were $26,171,724 or 96% of the Company's total revenue, a decrease of 44.9% from the same quarter last year. Sales to the Company's customers, the JV Company and its subsidiaries, for the six months ended June 30, 2017, were $27,483,366 or 87% of the Company's total revenue, a decrease of 54.9% from the same period last year. Sales to the JV Company and its subsidiaries were primarily battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts.

Consolidated interests of financial statements, description

(1) its 100% interest in Kandi Changxing; (2) its 100% interest in Kandi Jinhua; (3) its 100% interest in JiHeKang; (4) its 100% interest in Kandi Shanghai; (5) its 100% interest in Kandi Jiangsu; (6) its 100% interest in JiHeKang Service Company; (7) its 100% interest in Jiangsu JiDian; (8) its 100% interest in Tianjin BoHaiWan; (9) its 100% interest in Changxing Maintenance; and (10) its 100% interest in Liuchuang. The Company accounted for its investments in the JV Company under the equity method of accounting because the Company has a 50% ownership interest in the JV Company.

Shanghai Guorun [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

9.50%

Geely [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest percentage owned by JV company

100.00%

100.00%

31.00%

JiHeKang [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

100.00%

Economic interest, percentage

50.00%

50.00%

Indirect ownership interest percentage in JV company

50.00%

50.00%

Puma Investment [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

Economic interest, percentage

25.00%

Indirect ownership interest percentage in JV company

50.00%

Jiangsu JiDian [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Ownership interest percentage owned by JV company

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Changxing Maintenance [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Ownership interest percentage owned by JV company

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Liuchuang [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Ownership interest percentage owned by JV company

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Kandi Vehicles [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

9.50%

Ownership interest percentage owned by JV company

50.00%

50.00%

Service Company [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

19.00%

JiHeKang Service Company [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Tianjin BoHaiWan [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Ownership interest percentage owned by JV company

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Mr.Hu (Member)

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest percentage owned by JV company

19.00%

JV Agreement [Member] | JV Company [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

JV Agreement [Member] | Shanghai Guorun [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

JV Agreement [Member] | Geely [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

99.00%

JV Agreement [Member] | Kandi Vehicles [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

50.00%

Ownership transfer agreement [Member] | Kandi Shanghai [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Economic interest, percentage

50.00%

Indirect ownership interest percentage in JV company

50.00%

Ownership transfer agreement [Member] | Kandi Changxing [Member]

Summarized Information of Equity Method Investment in the Jv Company (Textual)

Ownership interest, percentage

100.00%

Ownership interest percentage owned by JV company

50.00%

Economic interest, percentage

50.00%

XML

Commitments and Contingencies (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Total	$ 52,217,010	$ 53,845,102
Zhejiang Shuguang industrial Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total	4,277,665	4,175,155
Nanlong Group Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total		2,879,417
Kandi Electric Vehicles Group Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total	$ 47,939,345	$ 46,790,530

XML

Commitments and Contingencies (Details 1) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Total	$ 2,950,114
Zhejiang Shuguang industrial Co., Ltd. [Member]
Loss Contingencies [Line Items]
Total	$ 2,950,114

XML

Commitments and Contingencies (Details Textual) ¥ in Millions			1 Months Ended
	Dec. 14, 2015 USD ($)	Mar. 15, 2013 USD ($)	Jul. 20, 2016 USD ($)	Sep. 29, 2015 USD ($)	Aug. 01, 2017 USD ($)	Aug. 01, 2017 CNY (¥)	Jul. 31, 2017 USD ($)	Jul. 31, 2017 CNY (¥)	Jun. 30, 2017 USD ($)
Commitments and Contingencies (Textual)
Accrued liability of estimated contingent losses									$ 2,900,000
Nanlong Group Co., Ltd. [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount		$ 2,902,534
Description of loans period		Loan period of March 15, 2013, to March 15, 2016.
JV Company [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount	$ 36,876,420		$ 11,062,926
Description of loans period	Loan period of December 14, 2015, to December 13, 2016, which was extended to September 14, 2017.		Loan period of July 20, 2016 to July 19, 2017.
JV Company [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textual)
Accrued liability of estimated contingent losses							$ 2,900,000	¥ 20
Zhejiang Shuguang industrial Co., Ltd. [Member]
Commitments and Contingencies (Textual)
Guarantee for bank loans amount				$ 4,277,665
Description of loans period				Loan period of September 29, 2015, to September 28, 2016.
Zhejiang Shuguang industrial Co., Ltd. [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textual)
Accrued liability of estimated contingent losses					$ 730,000	¥ 5

XML

Segment Reporting (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Information [Line Items]
Total	$ 27,325,279	$ 55,217,368	$ 31,599,852	$ 105,875,261
Percentage	100.00%	100.00%	100.00%	100.00%
China [Member] | Geographic Area [Member]
Segment Reporting Information [Line Items]
Total	$ 26,438,905	$ 54,224,706	$ 29,197,314	$ 104,260,877
Percentage	97.00%	98.00%	92.00%	98.00%
Overseas [Member] | Geographic Area [Member]
Segment Reporting Information [Line Items]
Total	$ 886,374	$ 992,662	$ 2,402,538	$ 1,614,384
Percentage	3.00%	2.00%	8.00%	2.00%

XML

Segment Reporting (Details Textual)	6 Months Ended
	Jun. 30, 2017 Segment
Segment Reporting (Textual)
Number of operating segment	1

XML

Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Related Party Transaction [Line Items]
Sales to related parties		$ 769,065		$ 3,977,568
Service Company [Member]
Related Party Transaction [Line Items]
Sales to related parties		$ 769,065		$ 3,977,568

XML

Related Party Transactions (Details 1) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Total due from related party ((other than the JV Company and its subsidiaries))	$ 10,742,243	$ 10,484,816
Service Company [Member]
Related Party Transaction [Line Items]
Total due from related party ((other than the JV Company and its subsidiaries))	$ 10,742,243	$ 10,484,816

XML

Related Party Transactions (Details Textual) - Service Company [Member]	Jun. 30, 2017	Nov. 30, 2015	Jul. 31, 2013
Related Party Transactions (Textual)
Ownership interest, percentage	13.00%	50.00%	9.50%
Mr.Hu (Member)
Related Party Transactions (Textual)
Ownership interest, percentage	9.50%