SOURCE: Kandi Technologies, Corp.

August 14, 2008 08:11 ET

Kandi Technologies, Corp. Says 2008 Second Quarter Revenues Grew 11.8% and 32% Through the First Half Propelled by Continuing Strength in ATV and Go-kart Sales

Net Income in the '08 Second Quarter Increased Approximately 28% and Approximately 23.5% in the First Half Compared With the Same Periods Last Year; Reiterating Its Growth Forecast, the Company Sees Recent Launch of COCO Super Mini Car Contributing to Significant Second Half and Full Year Gains; Investor Conference Call Scheduled for Tuesday, August 19, @ 4:30 pm ET

JINHUA, ZHEJIANG PROVINCE, CHINA--(Marketwire - August 14, 2008) - Kandi Technologies, Corp. (NASDAQ: KNDI), one of China's leading designers, manufacturers and exporters of all terrain vehicles (ATVs), utility vehicles (UTVs) and its number one exporter of go-karts, announced today that continuing strength in its ATV and go-kart sales in the U.S. led to an 11.8% increase in second quarter revenues to $12,424,373, compared with $11,109,555 in the same period last year. The Company noted that, as reported last year, 2007 second quarter sales were inflated approximately 20% by its decision to rush the delivery of orders ahead of an anticipated tax increase in the third quarter and, consequently, the gain in this year's quarter versus normalized results was actually closer to 30%. Through the first six months of the year, compared with last year's first half, revenues grew approximately 32% to a record $21,753,075.

The Company also reported that through the first six months of 2008, net income grew 23.5% to $3,510,413 compared with the same period in 2007. Including income of $334,010 from a discontinued operation, as well as an approximately $34,000 tax benefit, net income in the 2008 second quarter reached $2,435,451, a gain of 27.8% compared with $1,707,052 in the 2007 second quarter.

The Company said that the gain in net income also reflects a 24.4% increase in gross profits in the quarter, stemming not only from increased revenues, but also from the decrease achieved by the Company in its cost of sales from approximately 76% of revenues in the 2007 second quarter to 74% in the most recent period. The Company attributed this to discounts obtained on raw materials due to higher sales volume as well as its continued focus on cost controls.

At the same time, the Company said it increased spending in the quarter in line with its continuing rapid growth and the launch of its new super mini car product category, which the Company expects will rapidly become the most significant contributor to future revenue and profit growth. In particular, the Company continued to grow its sales and administrative personnel which increased spending in these areas. It also significantly increased expenditures on research and development, with a focus on development of its new TT, a three-wheeled motorcycle which, as previously announced, it expects to launch in the third quarter this year. The Company also has developed two new models of its popular UTVs for agricultural use and expects each of these products will make important contributions to second half results.

On June 30th, 2008, the Company closed on its previously reported approximately $12.3 million purchase of a new manufacturing facility adjacent to its existing facility. All of the Company's ATRV manufacturing has been moved to the new facility, and the Company's existing facility is now geared up for mass production of its new super minis.

EPS

Earnings per share for the second quarter ended June 30, 2008 were $0.12, compared with $0.16 in the year earlier period. For the first half of 2008, EPS was $0.18, compared with $0.24 in the first six months of 2007. The Company noted that EPS calculations for the quarter and the half in 2008 are based on 19,961,000 shares outstanding, while EPS figures in 2007 are based on 12,176,911 shares outstanding for the quarter and 12,088,456 shares in the year ago first half. The reason for the difference in shares outstanding is that under the required weighted average share formula the Company has utilized since the completion of its reverse merger in June, 2007, its outstanding shares of 19,961,000 have been weighted accordingly throughout 2007, but in 2008, are outstanding for the entire period.

COCO Launch

Earlier this week, the Company announced that the first shipments of its sporty new, fuel efficient (up to 60 mpg) COCO convertible have begun to arrive in the U.S., marking the start of a new era for the Company, in which it expects sales of its super mini cars will quickly become the key contributor to continuing growth. In the release the Company also reported that its U.S. distributor of the new super minis, Solus International Corp, based in Lynwood, Washington, has received a highly positive initial response from its sales outlets throughout North America, reinforcing the Company's belief that it will deliver to this market at least 5000 of its new, off highway vehicles before year end.

Outlook

Commenting on first half results and the outlook for the full year, Mr. Xiaoming Hu, CEO and Chairman of the Board of the Company, stated, "With the recent first shipments to the U.S. of our exciting, new COCO convertible, we have turned a new page in Kandi's development. In relatively short order we expect that the manufacturing and sales of super mini autos will become our largest business bringing a new growth dimension to the Company."

He added, "We continue to believe that barring any delays in production or shipping, strong consumer interest in our off highway super minis will translate to sales of the new COCO convertible in a range of 5,000 to 10,000 vehicles before year end. And, at a sales price to Kandi of approximately $4,000 per vehicle upon delivery, this should translate to a contribution of at least $20 million in new revenues to second half and full year results."

"Additionally," Mr. Hu stated, "given anticipated margins on these sales of up to 30%, we expect that overall gross margins in 2008 will exceed the margins achieved last year of 21.5%."

"At the same time," Mr. Hu said, "we expect continuing growth in our ATRV sales in a range of 10% to 20%, with a continued concentration on building fewer overall units of more high end vehicles which offer higher margins. In this regard, we expect to see a boost in sales from our two new UTV models for agricultural use."

He concluded, "We have not yet factored into our guidance an anticipated contribution from our newest product line, the TT three-wheeled motorcycle, which offers higher levels of safety and superb mileage. With its expected launch in the current quarter, it has already generated considerable excitement from our distributors, who have seen a dramatic climb in motorcycle imports over the past year."

"Beyond the current year," Mr. Hu stated, "we fully expect dramatic increases in the sales of our super minis to U.S. consumers hungry for more exciting, fuel efficient cars, especially as we add electric powered and gas powered hard tops to the line in the not too distant future."

Conference Call Invitation

The Company will host a conference call to discuss its second quarter results for the period ended June 30, 2008 and its full year '09 outlook on Tuesday, August 19, 2008 at 4:30 p.m. ET.

Interested participants should call 1-800-762-8795 when calling within the United States or 1-480-629-9031 when calling internationally. Please ask for the Kandi Technologies, Corp. Earnings Conference Call, Pass Code 3912198. There will be a playback available until 08/26/2008 . To listen to the playback, please call 1-800-406-7325 when calling within the United States or 1-303-590-3030 when calling internationally. Use the Pass Code 3912198 for the replay.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=0000554D or at ViaVid's website at www.viavid.net. The webcast can be accessed through August 19, 2009.

                        KANDI TECHNOLOGIES, CORP.

       (FORMERLY STONE MOUNTAIN RESOURCES, INC.) AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                 ASSETS

                                                   June 30,
                                                     2008      December 31,
                                                  (Unaudited)      2007
                                                 ------------  ------------

CURRENT ASSETS
Cash and cash equivalents                        $    156,896  $  1,149,140
Restricted cash                                     6,548,503     1,367,222
Accounts receivable, net of allowance for
 doubtful accounts of $1,634 and $3,701 as of
 June 30, 2008 and December 31, 2007,
 respectively                                      14,501,396    11,401,367
Inventories                                         5,425,919     3,293,529
Notes receivable, net of discount of $68,285 and
 $0 as of June 30, 2008 and December 31, 2007,
 respectively                                       6,506,108        47,853
Other receivables                                     131,281       416,454
Deposit for acquisition                                     -    12,270,859
Prepayments and prepaid expenses                       68,919        17,774
Due from employees                                          -         9,932
Discontinued operation                                      -    14,158,890
                                                 ------------  ------------
      Total Current Assets                         33,339,022    44,133,020
                                                 ------------  ------------

LONG-TERM ASSETS
Plant and equipment, net                           16,245,693    10,427,176
Land use rights, net                                9,477,194       385,539
Construction in progress                            1,253,868     1,321,832
Discontinued operation                                      -       506,526
Deferred taxes                                        480,986       405,006
                                                 ------------  ------------
   Total Long-Term Assets                          27,457,741    13,046,079
                                                 ------------  ------------

 TOTAL ASSETS                                    $ 60,796,763  $ 57,179,099
                                                 ============  ============





                        KANDI TECHNOLOGIES, CORP.

       (FORMERLY STONE MOUNTAIN RESOURCES, INC.) AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED BALANCE SHEETS

                   LIABILITIES AND SHAREHOLDERS' EQUITY


                                                   June 30,
                                                     2008      December 31,
                                                  (Unaudited)      2007
                                                 ------------  ------------
CURRENT LIABILITIES
Accounts payable                                 $ 11,397,872  $  6,333,057
Other payables and accrued expenses                   603,159       378,675
Short-term bank loans                              27,139,905    20,869,862
Customer deposits                                     789,933       483,320
Notes payable                                       3,463,430     1,476,600
Due to employees                                       37,086           310
Due to related party                                  164,250             -
Discontinued operation                                      -    14,296,572
                                                 ------------  ------------
      Total Current Liabilities                    43,595,635    43,838,396
                                                 ------------  ------------

LONG-TERM LIABILITIES
Discontinued operation                                      -         2,651
Deferred taxes                                        296,511       296,511
                                                 ------------  ------------
      Total Long-Term Liabilities                     296,511       299,162
                                                 ------------  ------------

  TOTAL LIABILITIES                                43,892,146    44,137,558
                                                 ------------  ------------

  CONTINGENCIES

SHAREHOLDERS’ EQUITY
Common stock, $0.001 par value; 100,000,000
 shares authorized; 19,961,000 and 19,961,000
 shares issued and outstanding at June 30, 2008
 and December 31, 2007, respectively                   19,961        19,961
Additional paid-in capital                          7,138,105     7,138,105
Retained earnings (the restricted portion is
 $534,040 and $0 at June 30, 2008 and December
 31, 2007, respectively)                            8,635,534     5,125,120
Accumulated other comprehensive income              1,111,017       758,355
                                                 ------------  ------------
  TOTAL SHAREHOLDERS’ EQUITY                       16,904,617    13,041,541
                                                 ------------  ------------
  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     $ 60,796,763  $ 57,179,099

                                                 ============  ============




Kandi Technologies, Corp.
Results of Operations

Comparison of Three Months Ended June 30, 2008 and June 30, 2007.

The following table sets forth the amounts and percentage relationship to
revenue of certain items in our consolidated statements of income and
comprehensive income for the three months ended June 30, 2008 and 2007:

                               Three Month Comparison

                 For the              For the
               three months         three months
                  ended                ended
                 June 30,             June 30,
                  2008                 2007
                             % of                 % of   Growth in Increase
                 Amount     Revenue   Amount     Revenue  Amount      in %
               -----------  ------  -----------  ------  ----------  ------
REVENUES       $12,424,373  100.0%  $11,109,555  100.0%  $1,314,818   11.8%
COST OF GOODS
 SOLD            9,139,131   73.6%    8,468,179   76.2%     670,952    7.9%
GROSS PROFIT     3,285,242   26.4%    2,641,376   23.8%     643,866   24.4%
Selling and
 Marketing         180,596    1.5%      107,756    0.4%      72,840   67.6%
General and
 Administrative    432,238    3.5%      142,060    1.0%     295,178  204.3%
Research and
 Development       224,146    1.8%       40,749    1.3%     183,397  450.1%
INCOME FROM
 CONTINUING
 OPERATIONS      2,448,262   19.7%    2,350,811   21.2%      92,451    4.1%
Government
 Grants             17,274    0.1%           --    0.0%      17,274    100%
Interest
 Expense, Net     (395,087)  -3.2%     (160,938)  -1.4%    (234,149) 145.5%
Other Income
 (Expense), Net     (1,948)   0.0%      (70,254)  -0.6%      68,305  -97.2%
INCOME FROM
 CONTINUING
 OPERATIONS
 BEFORE
 INCOME TAXES    2,068,501   16.6%    2,119,619   19.1%     (56,119)  -2.4%
INCOME TAX
 BENEFIT            33,920    0.3%           --    0.0%      33,920    100%
NET INCOME FROM
 CONTINUING
 OPERATIONS      2,102,421   16.9%    2,119,619   19.1%     (22,199)  -0.1%
INCOME FROM
 DISCONTINUED
 OPERATIONS        334,030    2.7%     (212,568)  -1.9%     546,598  357.1%
NET INCOME     $ 2,436,451   19.6%  $ 1,907,052   17.2%  $  524,399   27.8%


                                Six Month Comparison

                 For the              For the
                six months           six months
                  ended                ended
                 June 30,             June 30,
                  2008                 2007
                             % of                % of   Growth in  Increase
                 Amount     Revenue   Amount    Revenue   Amount      in %
               -----------  ------  ----------- ------  -----------  ------
REVENUES       $21,753,075  100.0%  $16,471,019 100.0%  $12,127,355   32.1%
COST OF GOODS
 SOLD           16,316,178   75.0%   12,861,099  75.0%   10,300,378   26.9%
GROSS PROFIT     5,436,897   25.0%    3,609,920  37.5%    1,826,977   50.6%
Selling and
 Marketing         409,102    1.9%      188,354   2.0%      220,748  117.2%
General and
 Administrative    704,682    3.2%      285,346   3.0%      399,336  147.0%
Research and
 Development       264,816    1.2%       52,615   0.5%      212,201  403.3%
INCOME FROM
 CONTINUING
 OPERATIONS      4,058,297   18.7%    3,083,605  32.0%      994,692   31.6%
Government
 Grants             40,574    0.2%           --   0.0%       40,573    100%
Interest
 Expense, Net   (1,009,699)  -4.6%     (295,748) -3.1%     (713,951) 241.4%
Forfeiture of
 customer
 deposits               --    0.0%      267,673   2.8%     (267,672)-100.0%
Other Income
 (Expense),
 Net                20,047    0.1%      (69,694) -0.7%       89,741 -128.8%
INCOME FROM
 CONTINUING
 OPERATIONS
 BEFORE
 INCOME TAX      3,109,219   14.3%    2,985,836  31.0%      143,383    4.1%
INCOME TAX          73,660    0.3%           --   0.0%       73,659    100%
NET INCOME FROM
 CONTINUING
 OPERATIONS      3,182,879   14.7%    2,985,836  31.0%      217,043   6.60%
GAIN (LOSS) FROM
 DISCONTINUED
 OPERATIONS        327,534    1.5%     (140,200) -1.5%      467,734  333.6%
NET INCOME     $ 3,510,413   16.1%  $ 2,845,636  29.6%  $   684,777   23.5%

About the Company

In its core All Terrain Recreational Vehicle (ATRV) businesses, Kandi Technologies, Corp. (NASDAQ: KNDI), which generated nearly $35 million in sales in 2007, coupled with a 370% increase in profits to just over $5 million, the Company ranks as the number one manufacturer and exporter of go-karts in China, making it a world leader in the production of this increasingly popular recreational vehicle. It also ranks among the leading manufacturers in China of all terrain vehicles (ATVs) producing more than 30,000 ATV units last year. A more recent Company focus in the ATRV category has been on specialized utility vehicles (UTVs), especially for agricultural purposes, a vehicle line that is seeing strong growth, especially in the North America, where Kandi sells approximately 70% of its products, all of which are exported. In the third quarter, the Company expects to launch its innovative three-wheeler motorcycle, the TT. The most exciting new development at the Company is the launch it has begun in the U.S. of its highly economical, beautifully designed off highway, super mini car for casual, neighborhood driving. Further, within the next two years it expects to follow its two seater, high mileage super mini convertible, with additional lines of electric and gas powered hard tops for highway driving. Kandi believes that super minis will very rapidly become the Company's largest revenue and profit generators.

The Company's products can be viewed at 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.

Contact Information

  • Contacts:

    Kandi Technologies Corp.
    Hu Xiaoming
    President and CEO
    (86-0579) 82239700

    US Investors

    Focus Asia Partners
    Robert Agriogianis
    Tel: 973-845-6642
    Fax: 973-966-6252

    Press

    Ken Donenfeld
    donfgroup@aol.com
    Tel: 212-425-5700
    Fax: 212-425-6951