SOURCE: Kandi Technologies, Corp.

Kandi Technologies, Corp.

March 30, 2012 08:15 ET

Kandi Technologies Reports 2011 Financial Results

GAAP Net Income Rose 1058% to $9.11 Million on 6% Decline in Revenues; Company Expresses Optimism on Near Term EV Sales Boost

JINHUA, CHINA--(Marketwire - Mar 30, 2012) - Kandi Technologies, Corp. (the 'Company' or 'Kandi') (NASDAQ: KNDI), a leading Chinese manufacturer and developer of pure electric vehicles (EVs) and all-terrain vehicles (ATVs), reported today its financial results for the fourth quarter and full year ending December 31, 2011.

The Company noted that its principal focus during the year was to more firmly establish its leadership position in the emerging pure EV market in China and globally, building toward what it believes will be a "breakthrough" year for EV sales in 2012. At the same time, during the year its traditional business continued to buck a still sluggish economic environment. Consequently, while GAAP net income was up sharply for the full year, both revenues and non-GAAP net income were somewhat lower despite a strong rebound in ATV sales and increased sales of pure EVs.

Selected Financial and Operational Highlights (*see note below on Non-GAAP figures)

  • Net revenues for the year ended December 31, 2011 were $40,177,148, compared with $42,880,300 last year, a decline of 6%.
  • GAAP net income in 2011 grew 1058% to $9,114,770 including $5,401,929 of income resulting from the change in fair value of financial instruments compared with a loss of $(951,439) which included $(2,725,987) of loss resulting from the change in fair value of financial instruments in 2010.
  • Diluted GAAP EPS in 2011 was $0.32 per share (28.7 million weighted average diluted shares) as compared with a loss of $(0.04) per share in 2010 (22.2 million weighted average diluted shares).
  • 2011 non-GAAP net income was $4.0 million or $0.14 per diluted share, down 19% from $4.97 million or $0.22 per diluted share on a non-GAAP basis in 2010. (*)
  • Pure EV sales contributed more than $6.2 million to total revenues in 2011, as unit sales nearly doubled from 658 super mini-cars sold in 2010 to 1076 sold in 2011.
  • During the year the Company invested more than $9.83 million in new equipment and molds to increase mini-car production capacity, while also increasing mini-car related marketing and R&D expenditures.
  • Revenues in the 2011 fourth quarter were $11,387,382, down 21% from $14,345,368 in Q4 last year.
  • In the 2011 fourth quarter the Company recorded a GAAP net loss of ($829,831) compared with a net loss in same quarter last year of ($219,138)
  • On a non-GAAP basis, net income in the 2011 fourth quarter was $1,346,907, down 31% from $1,940,413 in last year's final quarter. (*)
  • Working capital surplus as of December 31, 2011 was $17.47 million, compared with $18,522,694 on December 31, 2010, principally due to the Company using part of the proceeds raised in the Company's equity offerings in 2010 to purchase construction in progress and fixed assets.

The Company said its most successful traditional products in 2011 were its ATVs which experienced a 70% year over year increase in unit sales and 30% increase in revenues as the Company developed more price competitive products. A relatively new product category in 2011was refitted cars, which generated nearly $2 million in revenues, and has continuing growth potential. Sales of TT motorcycles remained slow as the role of the three-wheeler shifted from recreational use to street legal use. Sales of the Company's high end UTVs decreased year over year, but showed improvement in the second half as new products were introduced to the market. Revenues and unit sales from the go-karts decreased roughly 10% and 9% from last year, respectively, but the impact was most apparent in the fourth quarter. While the go-kart sales increased over the first three quarters, they could not match the sharp spike in sales in the fourth quarter last year, which developed on the basis of pent up demand.

EV Super Mini-Car Momentum Continued To Build in 2011

The Company's Super-Mini segment, which it believes offers the most significant long term growth potential, achieved a number of milestones during 2011, as the Company continued to build a strong base for future growth. Perhaps most significantly, since October 12, 2011, as previously reported, both the Jinhua City government and the Zhejiang Province government have formally agreed to initiate substantial subsidies to buyers of pure electric vehicles.

Progress Since Year End

Additional progress has been made since the end of year 2011. As announced, the Company signed an exchange agreement under which Yongkang Scrou Electric Co., Ltd. ("Scrou"), a leading Chinese manufacturer of motors and related products for pure EVs, will become a subsidiary of the Company. And, in February and March this year, two new Kandi pure electric cargo vehicles are included in the list issued by the Ministry of Industry and Information Technology of China. The KD5011XXYEV model is among the first on the list of Energy-Saving and New Energy Vehicles for Registration Tax Reduction and Exemption, approved by the Ministry of Finance, Ministry of State Administration of Taxation, and Ministry of Industry and Information Technology of China KD5011XXYEV model is exempted from the annual registration tax for the vehicle owner.

Expanding Production Capacity

As noted above, actual sales of EVs during the year of 2011 trended up to 1,076 vehicles. To ensure the Company will be able to meet what it anticipates to be growing demand for its EVs in China in 2012 and beyond, the Company spent close to $10 million on new equipment in 2011, which, with additional future expenditures being planned, should permit expansion over time to a targeted production capacity of 20,000 to 100,000 vehicles annually.

Expanded EV Sales on the Horizon

Mr. Xiaoming Hu, CEO and Chairman of the Company, commented, "We remain very optimistic about the EV market in China and the leading role we believe we can play in it. We have been setting the stage for success for some time now and believe that 2012 will be a breakout year for Kandi and for what we see as a transformative industry worldwide. Most recently, in mid-March, we had very encouraging conversations with a key official who is responsible for the 20,000 EV project in Hangzhou in connection with a group led by him to inspect our facilities and test drive Kandi's electric vehicles. As a consequence, we are encouraged to be informed that 20,000 EVs will be able to launch in Hangzhou soon. Our discussion in regards to becoming the EV provider also is coming to a conclusion. Kandi's anticipated role in this launch would have an enormous positive impact on our Company and open many new opportunities if we are successful."

(*) EXPLANATION OF NON-GAAP RESULTS

In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Additionally, the non-GAAP financial measures used by Kandi may not be comparable to non-GAAP financial measures used by other companies. Management believes the non-GAAP financial measures are appropriate for period to period comparisons in our budget, planning and evaluation processes, and to show the reader how our performance compares to other periods. However, investors need to be aware that non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP, and they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Non-GAAP net income and losses, and related per share amounts as reported for 2011 exclude the effects of all option related expenses, stock award expense, Convertible Note interest expense, effects caused by amortization of discounts, on Convertible Notes, and the change of the fair value of financial derivatives.

About Kandi Technologies, Corp.

Kandi Technologies, Corp. (NASDAQ: KNDI) is a manufacturer and exporter of a variety of vehicles in China, making it a world leader in the production of popular off-road vehicles (ORVs). It also ranks among the leading manufacturers in China of all-terrain vehicles (ATVs), specialized utility vehicles (UTVs), and a recently introduced second-generation high mileage, two-seat three-wheeled motorcycle. Another major company focus has been on the manufacture and sale of the COCO electric vehicle (EV), a highly economical, beautifully designed, all-electric super mini-car for neighborhood driving and commuting. The convertible and hardtop models of the COCO EV are available in the United States and other countries, while the Chinese government has approved the sale of Kandi EVs in China since 2010. The Company's products can be viewed at http://www.kandivehicle.com and its corporate website is http://www.chinakandi.com.

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.

The attached tables are provided as a convenience and should be read in conjunction with the Company's 10-K filed with U.S. Securities and Exchange Commission.

KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2011 2010
CURRENT LIABILITIES
Accounts payable $ 5,061,069 $ 6,452,652
Other payables and accrued expenses 3,137,983 794,625
Short-term bank loans 36,372,492 28,434,012
Customer deposits 1,025,357 82,127
Notes payable, net of discount of $71 and $0 as of December 31, 2011 and 2010 respectively 5,847,552 19,039,898
Income tax payable 153,730 127,339
Due to employees 9,455 12,767
Due to related party 841,251 841,251
Deferred taxes 56,362 34,083
Financial derivate - liability 213 -
Total Current Liabilities 52,505,464 55,818,754
LONG-TERM LIABILITIES
Note payable, net of discount of $0 and $730 as of December 31, 2011 and 2010 respectively - 270
Financial derivatives - liability 3,919,411 9,321,553
Total Long-Term Liabilities 3,919,411 9,321,823
TOTAL LIABILITIES 56,424,875 65,140,577
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 27,445,600and 27,396,101 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively 27,446 27,396
Additional paid-in capital 31,533,378 31,090,100
Retained earnings (the restricted portion is $1,940,832 and $1,319,067 at December 31, 2011 and December 31, 2010, respectively) 19,210,330 10,095,560
Accumulated other comprehensive income 5,077,721 3,261,082
TOTAL STOCKHOLDERS' EQUITY 55,848,875 44,474,138
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 112,273,750 $ 109,614,715
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010
REVENUES, NET $ 40,177,148 $ 42,880,300
COST OF GOODS SOLD (30,964,173 ) (33,257,851 )
GROSS PROFIT 9,212,975 9,622,449
Research and development (2,304,373 ) (1,908,134 )
Selling and marketing (414,255 ) (1,120,739 )
General and administrative (3,458,388 ) (3,371,829 )
INCOME FROM CONTINUING OPERATIONS 3,035,959 3,221,747
Interest income 2,200,678 769,942
Interest (expense) (1,945,260 ) (2,922,960 )
Government grants 298,072 351,343
Investment income (expense) in trading security 9,653 (1,771 )
Other, net 717,495 761,960
Change in fair value of financial instruments 5,401,929 (2,725,987 )
Investment (loss) in associated companies (52,696 ) -
INCOME (LOSS) BEFORE INCOME TAXES 9,665,830 (545,726 )
INCOME TAX EXPENSE (551,060 ) (405,713 )
NET INCOME 9,114,770 (951,439 )
OTHER COMPREHENSIVE INCOME
Foreign currency translation 1,816,639 1,323,814
COMPREHENSIVE INCOME $ 10,931,409 $ 372,375
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 27,438,725 22,173,550
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED 28,735,748 22,173,550
NET INCOME PER SHARE, BASIC $ 0.33 $ (0.04 )
NET INCOME PER SHARE, DILUTED $ 0.32 $ (0.04 )
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,114,770 $ (951,439 )
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,696,848 4,714,058
Provision for doubtful accounts
Deferred taxes 207,327 (62,231 )
Change in value of financial instruments (5,401,929 ) 2,725,987
Loss in investment (including investment in associated company) 52,696 1,771
Notes and warrant issuance payments - (1,992,250 )
Option cost 252,632 1,438,573
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) Decrease In:
Accounts receivable 4,647,184 (1,572,489 )
Inventories (550,024 ) (312,357 )
Other receivables (1,566,603 ) (470,573 )
Due from employees (45,096 ) (83,633 )
Prepayments and prepaid expenses (730,321 ) 923,818
Marketable equity securities (trading) 307,098 (293,269 )
Increase (Decrease) In:
Accounts payable (1,614,496 ) 1,514,332
Other payables and accrued liabilities 2,326,656 (1,101,042 )
Customer deposits 924,241 40,394
Income tax payable 21,087 (79,099 )
Net cash (used in) provided by operating activities 12,642,070 4,440,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment (646,143 ) (3,589,396 )
Addition to construction in progress (9,839,388 ) -
Investment in a subsidiary, net of cash acquired - (265,536 )
Issuance of notes receivable (22,992,866 ) (24,253,579 )
Repayments of notes receivable 11,147,503 2,287,152
Net cash provided by (used in) investing activities (22,330,894 ) (25,821,359 )

Contact Information

  • Contacts:

    China:
    Kandi Technologies Corp.
    Phone: 86-579-82239856

    U.S.A.
    Email: IR@kandigroup.com
    Phone: 1-212-551-3610