OREANDA-NEWS. May 11, 2016. Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ:KNDI), announced a correction to its press release issued on Tuesday, May 10, 2016 entitled, “Kandi Technologies Reports First Quarter 2016 Financial Results.”

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

The complete press release with corrected information is as follows:

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

First Quarter Highlights

  • Total revenues grew 15.7% to \\$50.7 million for the first quarter of 2016, from \\$43.8 million for the same period of 2015.
  • Electric Vehicle (“EV”) parts sales increased 7.5% to \\$46.2 million for the first quarter of 2016, compared with \\$43.0 million in the same period of 2015.
  • GAAP net income for the first quarter of 2016 was \\$0.1 million, or \\$0.00 per fully diluted share, compared with \\$6.1 million, or \\$0.13 per fully diluted share in the same period of 2015.
  • Non-GAAP adjusted net income1, which excludes stock award expenses and changes in the fair value of financial derivatives, was \\$3.7 million in the first quarter of 2016, compared with \\$3.4 million of the same period of 2015. Non-GAAP adjusted earnings per share1 was approximately \\$0.08 per fully diluted share for the first quarter of 2016 compared with \\$0.07 per fully diluted share for the same quarter of 2015;
  • Working capital surplus was \\$72.5 million as of March 31, 2016. Cash, cash equivalents and restricted cash totaled \\$29.7 million as of March 31, 2016.

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

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

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

    
Net Revenues and Gross Profit
    

1Q161Q15Y-o-Y%
Net Revenues (US\\$mln)\\$50.7 \\$43.8  15.7%
Gross Profit (US\\$mln)\\$6.7 \\$6.4  5.5%
Gross Margin 13.3% 14.6% - 
          

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

 
Operating Income (Loss)
    

1Q161Q15Y-o-Y%
Operating Expenses (US\\$mln)\\$8.3 \\$4.5  85.5%
Operating Income (Loss) (US\\$mln)(\\$1.6)\\$1.9  - 
Operating Margin -3.1% 4.4% - 
Operating Income (Loss) (US\\$mln) (Non-GAAP)\\$5.3 \\$4.0  34.5%
          

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

    
GAAP Net Income
    

1Q161Q15Y-o-Y%
Net Income (Loss) (US\\$mln)\\$0.1 \\$6.1  -98.6%
Earnings per Weighted Average Common Share\\$0.00 \\$0.13  - 
Earnings per Weighted Average Diluted Share\\$0.00 \\$0.13  - 
Stock award expenses\\$6.9 \\$2.0  236.0%
Change of the fair value of financial derivatives(\\$3.3)(\\$4.8) - 
Non-GAAP net income (loss) from continuing operations\\$3.7 \\$3.4  7.5%
          

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

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

JV Company Financial Results

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

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

    

1Q161Q15Y-o-Y%
Net Revenues (US\\$mln)(\\$0.5)\\$30.6  -101.6%
Gross Profit (US\\$mln)(\\$1.1)\\$8.0  -113.3%
Gross Margin -  26.1% - 
Net Income(\\$8.1)\\$0.8  - 
% of Net revenue -  2.6% - 
          

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

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

Outlook

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

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

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

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

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

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

About Kandi Technologies Group, Inc.

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

Safe Harbor Statement

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

Follow us on Twitter: @ Kandi_Group

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

- Tables Below -

 
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  March 31,  December 31, 
  2016  2015 
       
Current assets      
Cash and cash equivalents\\$13,447,666 \\$16,738,559 
Restricted cash 16,277,051  16,172,009 
Short term investment 3,100,391  1,613,727 
       
       
Accounts receivable 40,867,698  8,136,421 
Inventories (net of provision for slow moving inventory of 489,057 and 485,901 as of March 31, 2016 and December 31, 2015, respectively 25,814,430  17,773,679 
Notes receivable 11,276,387  13,033,315 
Other receivables 487,077  332,922 
Prepayments and prepaid expense 353,628  181,534 
Due from employees 105,868  34,434 
Advances to suppliers 348,761  71,794 
Amount due from JV Company, net 92,789,649  76,172,471 
Amount due from related party 5,585,613  40,606,162 
Deferred taxes assets 744,910  - 
       
TOTAL CURRENT ASSETS 211,199,129  190,867,027 
       
LONG-TERM ASSETS      
Plant and equipment, net 19,539,908  20,525,126 
Land use rights, net 12,934,208  12,935,121 
Construction in progress 54,750,430  54,368,753 
Long Term Investment 1,472,686  1,463,182 
Investment in JV Company 86,034,442  90,337,899 
Goodwill 322,591  322,591 
Intangible assets 474,782  495,306 
Other long term assets 155,020  154,019 
       
TOTAL Long-Term Assets 175,684,067  180,601,997 
       
TOTAL ASSETS\\$386,883,196 \\$371,469,024 
       
CURRENT LIABILITIES      
Accounts payables\\$91,647,247 \\$73,957,969 
Other payables and accrued expenses 1,678,011  9,544,909 
Short-term loans 36,894,649  36,656,553 
Customer deposits 149,688  94,026 
Notes payable 5,968,252  3,850,478 
Income tax payable 1,822,276  624,276 
Due to employees 11,944  9,423 
Deferred taxes liabilities -  2,374,924 
Financial derivate - liability 537,250  3,823,590 
Deferred income -  13,726 
       
Total Current Liabilities 138,709,317  130,949,874 
       
LONG-TERM LIABILITIES      
Deferred taxes liabilities 312,693  1,593,582 
Financial derivate - liability -  - 
Total Long-Term Liabilities 312,693  1,593,582 
       
TOTAL LIABILITIES 139,022,010  132,543,456 
       
STOCKHOLDER'S EQUITY      
Common stock, \\$0.001 par value; 100,000,000 shares authorized; 47,019,638 and 46,964,855 shares issued and outstanding at March 31,2016 and December 31,2015, respectively 47,020  46,965 
Additional paid-in capital 219,886,837  212,564,334 
Retained earnings (the restricted portion is \\$4,172,324 and \\$4,172,324 at March 31,2016 and December 31,2015, respectively) 31,144,340  31,055,919 
Accumulated other comprehensive loss (3,217,011) (4,741,650)
       
TOTAL STOCKHOLDERS' EQUITY 247,861,186  238,925,568 
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY\\$386,883,196 \\$371,469,024 
 
 
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
 
  Three Months Ended 
  March 31,   March 31, 
  2016   2015 
        
REVENUES, NET\\$ 50,657,893  \\$ 43,781,086 
        
COST OF GOODS SOLD 43,939,795   37,410,353 
        
GROSS PROFIT 6,718,098   6,370,733 
        
OPERATING EXPENSES:       
Research and development 205,968   571,020 
Selling and marketing 46,335   113,895 
General and administrative 8,032,882   3,780,648 
Total Operating Expenses 8,285,185   4,465,563 
        
INCOME(LOSS) FROM OPERATIONS (1,567,087)  1,905,170 
        
OTHER INCOME(EXPENSE):       
Interest income 780,181   590,480 
Interest expense (442,079)  (598,591)
Change in fair value of financial instruments 3,286,340   4,750,300 
Government grants 194,473   - 
Share of profit after tax of JV (4,822,470)  469,356 
Other income, net 22,387   23,847 
Total other income (loss), net (981,168)  5,235,392 
        
INCOME BEFORE INCOME TAXES (2,548,255)  7,140,562 
        
INCOME TAX BENEFIT (EXPENSE) 2,636,675   (1,008,909)
        
NET INCOME 88,420   6,131,653 
        
OTHER COMPREHENSIVE INCOME       
Foreign currency translation 1,524,639   493,211 
        
COMPREHENSIVE INCOME\\$ 1,613,059  \\$ 6,624,864 
        
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 47,009,834   46,281,299 
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED 47,027,744   46,397,993 
        
NET INCOME PER SHARE, BASIC\\$ 0.00  \\$ 0.13 
NET INCOME PER SHARE, DILUTED\\$ 0.00  \\$ 0.13 
        
 
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
  Three Months Ended 
  March 31, 2016   March 31, 2015 
        
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net income\\$ 88,420  \\$6,131,653 
Adjustments to reconcile net income to net cash provided by operating activities       
Depreciation and amortization  1,223,243   1,479,384 
Deferred taxes  (4,397,828)  - 
Change in fair value of financial instruments  (3,286,340)  (4,750,300)
Share of profit after tax of JV Company  4,822,470   (469,356)
Stock Compensation cost  6,887,892   2,049,683 
        
Changes in operating assets and liabilities, net of effects of acquisition:       
(Increase) Decrease In:       
Accounts receivable  (32,225,627)  (12,844,602)
Inventories  (7,815,491)  (11,246,265)
Other receivables  (144,118)  (65,602)
Due from employee  (67,798)  (10,225)
Prepayments and prepaid expenses  (441,602)  (527,687)
Amount due from JV Company  (15,899,018)  (19,570,708)
        
Increase (Decrease) In:       
Accounts payable  16,975,799   31,915,168 
Other payables and accrued liabilities  (7,875,311)  (1,438,571)
Customer deposits  54,289   1,365 
Income Tax payable  1,165,635   (130,488)
Due from related party  34,781,767   - 
Net cash used in operating activities\\$ (6,153,618) \\$(9,476,551)
        
CASH FLOWS FROM INVESTING ACTIVITIES:       
Purchases of plant and equipment, net  (29,696)  (233,343)
Disposal of land use rights and other intangible assets  13,767   - 
Purchases of construction in progress  (28,140)  (39,266)
Issuance of notes receivable  (614,592)  (4,225,884)
Repayment of notes receivable  2,430,657   2,584,147 
Short Term Investment  (1,455,727)  - 
Net cash provided by (used in) investing activities\\$ 316,269  \\$(1,914,346)
        
CASH FLOWS FROM FINANCING ACTIVITIES:       
Restricted cash  -   (12,366,201)
Proceeds from short-term bank loans  -   6,338,475 
Proceeds from notes payable  2,063,766   6,663,525 
Warrant exercise  434,666   - 
Net cash provided by financing activities\\$ 2,498,432  \\$635,799 
        
NET INCREASE IN CASH AND CASH EQUIVALENTS  (3,338,917)  (10,755,098)
Effect of exchange rate changes on cash  48,024   11,296 
Cash and cash equivalents at beginning of year  16,738,559   26,379,460 
        
CASH AND CASH EQUIVALENTS AT END OF PERIOD  13,447,666   15,635,658 
        
SUPPLEMENTARY CASH FLOW INFORMATION       
Income taxes paid  595,518   1,139,397 
Interest paid  445,176   577,874