SOURCE: Kandi Technologies, Corp.

Kandi Technologies, Corp.

March 31, 2010 17:17 ET

Kandi Technologies, Corp. Reports Fourth Quarter and Full Year 2009 Financial Results

Fourth Quarter Revenues and Net Income Grew 46% and 77% Respectively Over the Same Period Last Year and Full Year COCO Sales Reached $8.5 Million

JINHUA, CHINA--(Marketwire - March 31, 2010) - Kandi Technologies, Corp. (NASDAQ: KNDI), a leading Chinese exporter of recreational vehicles and the developer of the "COCO" all electric LSV, which recently forged a China-based multi-company Alliance to create China's most advanced, large-scale electric vehicle (EV) model city, today reported 2009 full year and fourth quarter results. As anticipated, full year revenues and net income affected by the global economic situation were well below results in 2008. However, improvements the Company began to see at mid-year pointing to a moderation in the recession continued through the 2009 fourth quarter, as reflected in a revenue increase in this period of 46% and growth in net income of 77% compared with the same period in the prior year. Further, 2009 was a pivotal year for the Company as it paved the way for a new business model focused on securing a leading position in the promising global EV market.

Selected 2009 Highlights:

-- Revenue for the 2009 fourth quarter was $14,716,645, up 46% from the
   same period in 2008
-- 2009 fourth quarter net income was $780,520, up 77% from the prior year
   period
-- Full year revenues declined to $33.8 million due to the export product
   slowdown during the year, but began to ease in the second half of 2009
   which contributed 72% ($24.34 million) of full year revenues
-- Full year net income of approximately $1 million included non-cash
   stock compensation expenses and $2.34 million in R&D costs
-- 2009 revenues from the Company's Electric Vehicle, the COCO, reached
   approximately $8.5 million  after a strong fourth quarter sales advance

Mr. Xiaoming Hu, Chairman and CEO of Kandi, commented, "Like most export oriented companies in China, we experienced a very challenging first half in 2009, but began to see a major improvement in our business in the second half of the year. We are not yet in a comfort zone with respect to resumption of growth to pre-recession levels in our legacy ATRV businesses. We are focused on continuing progress, but the fragility in the world economy necessitates caution with respect to any expectations of a rapid turnaround. At the same time, we are pursuing the enormous long term opportunity in the still rapidly growing Chinese economy, where there also is strong local and national government support for developing a new petroleum and pollution free transportation model. We believe we are in the forefront of a gathering EV revolution and, together with our new Alliance partners, envision this as an opportunity for substantial future growth."

2009 Full Year And Fourth Quarter Results

The Company reported that revenues for the year ended December 31, were $33,827,762, approximately 16% lower than revenues of $40,513,788 in 2008. Full year net income in 2009 was $999,801, down 81% from $4,922,078 a year ago. EPS as of December 31, 2009 was $0.05, based on 21,478,717 fully diluted shares outstanding, as compared with $0.25 per fully diluted share at year end 2008, based on 19,961,000 outstanding shares.

In the fourth quarter ended December 31, 2009, revenues of $14,716,645 were 46% higher than revenues in the same period last year of $10,078,810. Fourth quarter net income increased 77% to $780,520 compared with $441,014 in last year's final quarter.

The Company noted that while 2009 sales were heavily affected by the global recession, increased revenues and net income in the second half of the year point to an easing of the effect of the world recession on the Company's performance.

COCO Sales

The Company said that revenues from the sales of its battery powered COCO reached $8,508,451 at the end of 2009, with almost 1,000 units sold in the final quarter of the year. In addition to the somewhat improved economic environment in the U.S., the Company believes federal and state subsidies contributed significantly to the increased sales in the final months of the year. Additionally, enhancements to the vehicle during the year permitted the Company to realize slightly higher prices. In November, the Company also reported its first COCO sales in China (30 units) to the Postal Service in Jinhua City for initial testing, and has since continued its efforts to expand sales to governmental agencies.

Recreational Products Sales Pick up

While sales in 2009 of all of the Company's recreational products were affected by the world financial crisis, and experienced substantial declines compared with 2008, in the second half of the year the Company began to see a turnaround in a few product categories. Of note, unit sales of ATVs nearly doubled in the final quarter of the year from unit sales in the first nine months and were about flat with full year unit sales in 2008.

Go-cart sales, which strengthened in the fourth quarter of 2009, were particularly hard hit on a year over year basis. Nevertheless, they were the largest contributor to 2009 sales with about $13.48 million in revenues.

UTVs contributed $8.47 million to 2009 total revenues, and continue to have a bright future with a focus on the agricultural market. Motorcycle sales (the TT) were about flat in 2009 on a unit basis.

R&D Costs Up

The Company said the turnaround in 2009 results came despite a substantial increase in full year spending for R&D of $2,341,393 (6.9% of revenues), which compared with $839,989 in 2008. This 179% year over year increase was primarily due to development expenses for new products being targeted at the domestic Chinese market.

During 2009, the Company also noted that stock compensation expense was approximately $1.8 million, including approximately $1.15 million in connection with a stock option plan for senior level employees.

New Business Model

Just after the end of the year, on January 4, 2010, the Company announced the launch of a new strategic Alliance with major energy, IT and battery companies in China to pursue a new open architecture business model for mass adoption of EVs which would reduce consumer purchase costs, eliminate battery concerns and permit substantially increased driving ranges. The Alliance has targeted Jinhua city, where Kandi is based, as its first test city in developing a comprehensive solution to the problems of mass production and utilization of EVs that could be expanded throughout China if successful. As a partner in the Alliance, Kandi's key contribution will be its battery powered vehicles and EV technology, and the Company also expects to share in revenues that may be generated by the battery replacement stations that are a key element in the revolutionary approach to expanding EV utilization for every day driving.

In another subsequent event, on January 21, 2010, Kandi announced it had raised $10 million through the issuance of a senior convertible note to two major institutional investors. The Company anticipates that proceeds from the financing will help in meeting its working capital requirements and successful implementation of the Company's new business model.

New EV Business Model Setting The Stage For Long Term Growth As Legacy ATRV Export Business Begins Slow Comeback

"We remain very optimistic about achieving a leading role in global EV development," Mr. Hu said. He added, "Undoubtedly, there will be new hurdles along the path to developing an EV model city in Jinhua and expanding this model nationally. As the year progresses, we will focus on moving forward what we believe is a disruptive advance in the automobile business and in transportation generally."

Mr. Hu continued, "In our core recreational products business, we believe a continuing improvement in the economic environment will set the pace for our exports, while we also continue to pursue our goal of building this business in our domestic market in China."

About The Alliance For Chinese Electric Vehicle Development and Commercialization ("the Alliance")

On January 4, 2010, Kandi announced it had forged an Alliance with major Chinese energy, IT and battery companies to help launch a new electronic vehicle (EV) era in China. The new business model of the Alliance addresses key hurdles to mass commercialization of EVs by reducing EV purchase costs, eliminating battery concerns and substantially increasing driving ranges. The new model envisions expansion on a city by city basis of its new model, key elements of which include: strong government cooperation, separating the sale of electric vehicles from the sale of batteries, construction of a comprehensive network of "battery stations" within each city for rental, repair, replacement and charging of batteries, and also, utilizing Kandi vehicles and patented and patent pending EV technology for easy removal and replacement of batteries. The core members of the Alliance are: Kandi Technologies Corp., China Potevio/CNOOC New Energy and Power Ltd. (a joint venture between China National Offshore Oil Corporation and China Potevio Co.) and Tianneng Power International, Ltd. Jinhua City, where Kandi is based, has been chosen as the first model EV city by the Alliance.

About Kandi Technologies, Corp.

Kandi Technologies, Corp. (NASDAQ: KNDI) ranks as one of the largest manufacturers and exporters of go-karts in China, making it a world leader in the production of this popular recreational vehicle. It also ranks among the leading manufacturers in China of all terrain vehicles (ATVs), and specialized utility vehicles (UTVs), especially for agricultural purposes. Recently, it introduced a second generation high mileage, two seater three-wheeled motorcycle. A major company focus also has been on the manufacture and sales of a highly economical, beautifully designed, all electric super mini car -- the COCO -- for neighborhood driving and commuting. Kandi believes that battery powered, electric super minis will become the Company's largest revenue and profit generator. The Company's products can be viewed at http://www.kandivehicle.com. Its corporate/ir website is http://www.chinakandi.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the Securities and Exchange Commission.


RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 2009 AS COMPARED
TO THREE MONTHS ENDED DECEMBER 31, 2008

The following table sets forth the amounts and percentage relationship to
revenue of certain items in our condensed consolidated statements of
income and comprehensive income.

                                   For Three                    For Three
                                  Months Ended                 Months Ended
                                  December 31,        % Of     December 31,
                                     2009            Revenue      2008
                                  ------------       -------   -----------

REVENUES, NET                      $14,716,645         100.0%  $10,078,810
COST OF GOODS SOLD                 (11,286,010)       (76.7%)   (8,082,043)
GROSS PROFIT                         3,430,635          23.3%    1,988,767
Research and development               574,183           3.9%      363,995
Selling and distribution expenses      760,230           5.2%      120,945
General and administrative
 expenses                              606,927           4.1%      563,410
INCOME FROM OPERATIONS               1,489,295          10.1%      940,416
Interest expense, net                 (617,513)        (4.2%)     (492,551)
Government grants                            -             0%        7,295
Forgiveness of debt                          -             0%       10,385
Forfeiture of customer deposits              -             0%        6,393
Other income, net                       49,712           0.4%       62,763
INCOME FROM OPERATIONS BEFORE
 INCOME TAXES                          921,493           6.3%      534,702
INCOME TAX (EXPENSE) BENEFIT          (140,973)        (1.0%)      (93,687)

INCOME FROM CONTINUING OPERATIONS      780,520           5.3%      441,014

DISCONTINUED OPERATION
NET GAIN FROM
 DISCONTINUED OPERATION                      -             -             -
NET (LOSS) INCOME                      780,520           5.3%      441,014


                                         % Of      Change In        Change
                                        Revenue      Amount           In %
                                        ------    ----------        ------

REVENUES, NET                            100.0%   $4,645,835          46.1%
COST OF GOODS SOLD                      (80.3%)   (3,203,967)         39.7%
GROSS PROFIT                              19.7%    1,441,867          72.5%
Research and development                   3.6%      210,188          57.7%
Selling and distribution expenses          1.2%      639,285         528.6%
General and administrative
 expenses                                  5.6%       43,517           7.7%
INCOME FROM OPERATIONS                     9.3%      548,879          58.4%
Interest expense, net                    (4.9%)     (124,962)         25.4%
Government grants                          0.1%       (7,295)        (100%)
Forgiveness of debt                        0.1%      (10,385)        (100%)
Forfeiture of customer deposits            0.1%       (6,393)        (100%)
Other income, net                          0.6%      (13,051)       (20.8%)
INCOME FROM OPERATIONS BEFORE
 INCOME TAXES                              5.3%      386,791          72.3%
INCOME TAX (EXPENSE) BENEFIT             (0.9%)      (47,286)         50.5%

INCOME FROM CONTINUING OPERATIONS          4.4%      339,506          77.0%

DISCONTINUED OPERATION
NET GAIN FROM
 DISCONTINUED OPERATION                       -            -             -
NET (LOSS) INCOME                          4.4%      339,506          77.0%





                        KANDI TECHNOLOGIES, CORP.
                           AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
             FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

                                                   2009           2008
                                              -------------  -------------

REVENUES, NET                                 $  33,827,762  $  40,513,788

COST OF GOODS SOLD                               25,613,087     30,919,868
                                              -------------  -------------

GROSS PROFIT                                      8,214,675      9,593,920
                                              -------------  -------------
Research and development                          2,341,393        839,989
Selling and marketing                             1,023,210        477,413
General and administrative                        2,573,509      1,836,394
                                              -------------  -------------
INCOME FROM CONTINUING OPERATIONS                 2,276,563      6,440,124
Interest expense                                 (1,811,930)    (2,334,097)
Interest income                                     333,654        316,774
Government grants                                   127,347         64,595
Forfeiture of customer deposits                           -          6,186
Forgiveness of debt                                       -         10,049
Other, net                                          361,745        100,331
                                              -------------  -------------
INCOME FROM CONTINUING OPERATIONS BEFORE
 INCOME TAXES                                     1,287,379      4,603,962

INCOME TAX EXPENSE                                 (287,578)        (9,605)
                                              -------------  -------------


INCOME FROM CONTINUING OPERATIONS                   999,801      4,594,357
                                              -------------  -------------


DISCONTINUED OPERATION

Loss from discontinued operation                          -        (33,398)
Gain from disposition of discontinued
 operation                                                -        361,119
                                              -------------  -------------

NET GAIN FROM
 DISCONTINUED OPERATION                                  -         327,721
                                              -------------  -------------

NET INCOME                                          999,801      4,922,078

OTHER COMPREHENSIVE INCOME


Foreign currency translation                        712,134        466,779
                                              -------------  -------------





                          KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
               FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

                                                   2009           2008
                                              -------------- --------------

COMPREHENSIVE INCOME                          $    1,711,935 $    5,388,857
                                              ============== ==============
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC         19,961,000     19,961,000
                                              ============== ==============
DILUTED                                           21,478,717     19,961,000
                                              ============== ==============

INCOME PER SHARE FROM CONTINUING OPERATIONS,
basic                                         $         0.05 $       $ 0.23
                                              ============== ==============
diluted                                       $         0.05 $         0.23
                                              ============== ==============

INCOME PER SHARE FROM NET GAIN FROM
 DISCONTINUED OPERATIONS, BASIC AND DILUTED   $            - $         0.02
                                              ============== ==============

NET INCOME PER SHARE, BASIC                   $         0.05 $         0.25
                                              ============== ==============

NET INCOME PER SHARE, DILUTED                 $         0.05 $         0.25
                                              ============== ==============

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