SOURCE: Kandi Technologies, Corp.

Kandi Technologies, Corp.

May 18, 2010 07:30 ET

Kandi Technologies, Corp. 2010 First Quarter Revenues Grew 106.1% Compared to the Same Period Last Year as Demand for Recreational Vehicles Improved in Recovering Global Economy

JINHUA, CHINA--(Marketwire - May 18, 2010) - Kandi Technologies, Corp. (NASDAQ: KNDI), a leading Chinese exporter of recreational vehicles and developer of the "COCO" all electric LSV -- which recently forged a China-based multi-company Alliance to create a large-scale, "daily commuter" electric vehicle (EV) model city in Jinhua City, Zhejiang Province -- reported today a continuing recovery in sales of the Company's recreational vehicles in an improving world economy led to more than a doubling in net revenues and a sharp increase in gross profits in its first quarter ended March 31, 2010 compared with the same period last year. 

First Quarter Highlights

Revenues in the first quarter of 2010 grew 106.1% to $8,254,624, compared with $4,005,904 in the first quarter last year. Gross profit in this year's first quarter grew 88.7% to $1,850,009 compared with $980,182 in the year ago period.

The Company also reported that excluding non-cash stock option compensation expenses booked in the 2010 first quarter, it achieved a significant, bottom line turnaround from a non GAAP adjusted net loss of $(372,782) or (0.02) per share in the first quarter last year, to non GAAP adjusted net income of $803,573 or $0.04 per share in the first quarter this year. On a GAAP basis, including the non-cash stock option compensation expense, a net loss was incurred in the first quarter this year of $(177,895) or $(0.01) per share, down significantly from a net loss of $(582,899) or $(0.03) per share in the first quarter of 2009 during the global financial crisis.

Mr. Xiaoming Hu, Chairman and CEO of the Company, stated, "The continuing recovery in the world economy as 2010 began, coupled with our efforts to expand the geographic reach of our vehicles helped us achieve strong gains in first quarter sales, led by a sharp increase in sales of our go-karts. Sales also were up in the quarter for our COCO EV. As the year progresses, our goal is to begin to expand domestic sales in China based on the landmark approval we received from the government on April 30, 2010, and when our Alliance plans in Jinhua City advance further." 

Improved Sales of Recreational Vehicles

With respect to the more than doubling in sales in the 2010 first quarter sales, the Company noted, in particular, that unit sales of the Company's popular go-karts grew to 3602 units compared with 275 in the same period last year, and contributed $3,764,963 or approximately 44% of 2010 first quarter revenues. Revenues from the sale of ATVs more than doubled in the first quarter of 2010 compared with the prior year quarter as unit sales grew from 746 to 1053 units, reflecting the Company's success in selling higher end vehicles. The Company also recorded increased revenue from the sale of three wheeled motorcycles in the 2010 first quarter and a decline in sales of UTVs. The Company said its recent mass introduction of exciting new lines of three-wheeled motorcycles (tricycles) in April and May, should result in improving sales in future periods, and UTV sales -- primarily for agricultural use -- also are expected to grow in the spring and summer. In the first quarter of 2010, the Company expanded its efforts to sell its products outside of North America which it is continuing. It added that sales of its all electric COCO sales in the year's first quarter contributed $1,679,458 to first quarter sales as units sold increased from 169 vehicles in the first quarter last year to 372 vehicles in the most recent quarter.

Selling and distribution expenses in the first quarter of 2010 increased to $852,326 compared to $86,184 in the prior year period, primarily as the result of a $780,902 option related expense for consultants hired by the Company to help develop the domestic Chinese market for its products. In the 2010 first quarter, excluding option related expenses, selling and distribution expenses decreased 17.1% to $71,424. General and administrative expenses decreased 16.3% from the year ago quarter to $650,812, including a stock based compensation cost of $200,566 for the Company's stock option plan for executives and managerial level employees. The Company said that R&D expense also declined in the 2010 first quarter reflecting the completion of a substantial portion of the current phase of its R&D activity related to its electric powered COCO in earlier periods.

New Business Model and Subsequent Events

At the start of the 2010 first quarter, the Company announced the formation of a new Alliance it spearheaded (see description below) to pursue the mass commercialization of EVs in China, and its all electric supermini COCO LSV in particular. Pursuing a new business model to achieve this goal, a key first aim of the Alliance is to create China's leading EV model city in Jinhua City, in Zhejiang province.

During the quarter, pursuit of this plan -- a key element of which is close working cooperation with local and regional authorities -- was a key management focus. Consequently, in early April, the Company was pleased to announce a significant development in this regard. Namely, based on discussions at the city and provincial level, the Company and the Alliance anticipate that local government will help "jump-start" consumer sales of the COCO with government funded subsidies to the first 3,000 domestic COCO purchasers for up to 50% of the purchase price of the vehicle. Final approval of the subsidies by Zhejiang Province is anticipated before year end.

Additionally, it was announced that progress was being made on the development and construction of battery stations every five square kilometers in Jinhua -- another key element of the plan -- and that further announcements relating to this planned 300 square kilometer saturation would be forthcoming. 

Later in April, another important development was announced with respect to potential COCO sales in the U.S. and in Europe, namely, that the Company had begun shipments of a new COCO hardtop model to complement the COCO convertible now being sold.

And last week, in an announcement the Company termed a "milestone" event, it said that it had received a long awaited governmental approval to sell its COCO EV to domestic consumers and agencies in China. As previously reported, the vehicle underwent months of testing and scrutiny to achieve the approval, and when the announcement of the approved vehicle list was made by the government, the COCO was the only EV on the list.

Successful $10 Million Institutional Private Placement

On January 21, 2010, Kandi announced that it had successfully raised $10,000,000 through the issuance of senior convertible notes to two U.S. institutional investors. In connection with the raise, Mr. Hu commented that he was extremely pleased that, right at the start, Kandi was able to attract significant U.S. investor support for its role in developing an electric vehicle model city in China. He added, "I believe this funding strengthens our ability to meet anticipated first stage production requirements, while also pursuing our legacy business."

Going Forward

"The outlook for our Company is brighter than ever," stated Mr. Hu, "with solid progress being made by our Alliance and, with the governmental approval we have obtained, our ability to also begin selling our COCO to domestic consumers. Plans in this regard are being formulated, with a particular focus on fleet sales to government agencies such as the Post Office, which we believe has had a satisfactory experience with the vehicles they were able to purchase from us several months ago."

"Further," Mr. Hu stated, "we continue to see signs of a slow strengthening of economies around the globe which should permit further improvement in sales of our core recreational vehicles. We fully intend to maintain our leadership in this space while pursuing our leadership goal in EVs."

About Kandi Technologies, Corp. And the COCO

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. Available in convertible and hardtop models, the COCO travels up to 60 miles at speeds reaching 25mph on a six hour charge. 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.

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.

SEE ATTACHED TABLES

Non-GAAP Financials

We provide non-GAAP information in this release for financial results which exclude non-cash stock option compensation expenses. It is our belief that providing this information enhances investor understanding of our operations, because the exclusion of such non-cash stock option expenses permits more transparent comparisons of Kandi's operations that management utilizes to evaluate their performance, in addition to the GAAP presentation of results. The non-GAAP information presented is supplemental and is not meant to substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

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.

KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
 
    Three Months Ended  
    March 31, 2010     March 31, 2009  
REVENUES, NET   $ 8,254,624     $ 4,005,904  
                 
COST OF GOODS SOLD     (6,404,615 )     (3,025,722 )
                 
GROSS PROFIT     1,850,009       980,182  
                 
Research and development     343,407       526,201  
Selling and distribution expenses     852,326       86,184  
General and administrative expenses     650,812       777,932  
INCOME (LOSS) INCOME FROM OPERATIONS     3,464       (410,135 )
                 
Interest expense, net     (207,926 )     (309,304 )
Government grants     29,842       99,053  
Other income, net     47,051       56,214  
                 
LOSS FROM OPERATIONS BEFORE INCOME TAXES     (127,569 )     (564,172 )
                 
INCOME TAX EXPENSE     (50,326 )     (18,727 )
                 
LOSS FROM OPERATIONS     (177,895 )     (582,899 )
                 
                 

 

KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
 
   
    Three Months Ended  
    March 31, 2010     March 31, 2009  
NET (LOSS)     (177,895 )     (582,899 )
                 
OTHER COMPREHENSIVE INCOME                
Foreign currency translation     6,552       12,298  
COMPREHENSIVE (LOSS)     (171,343 )     (570,601 )
                 
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC     19,972,117       19,961,000  
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED     19,972,117       19,961,000  
                 
NET (LOSS) PER SHARE, BASIC   $ (0.01 )   $ (0.03 )
NET (LOSS) PER SHARE, DILUTED     (0.01 )     (0.03 )
                 
   
   

Contact Information

  • Contacts:
    Kandi Technologies, Corp.
    Hu Xiaoming
    Chairman and CEO
    86-579 - 83906856

    US Investors:

    Ken Donenfeld
    donfgroup@aol.com
    kdonenfeld@dgiir.com
    Tel: 212-425-5700
    Fax- 646-381-9727