SOURCE: Kandi Technologies, Corp.

Kandi Technologies, Corp.

November 14, 2012 10:02 ET

Kandi Technologies Reports Strong Sales and Earnings Increase in Third Quarter 2012

Third Quarter Revenue Increased 23.8% YoY to $12.77 Million, Income From Operation Jumped by 164.5% to $1.49 Million; Third Quarter GAAP Net Income Increased 54.5% YoY to $0.59 Million; Company Gained Significant Increase in ATV, Go-Kart and EV Sales Before the Official Launch of Hangzhou's 20,000 Pure EV Project

JINHUA, CHINA--(Marketwire - Nov 14, 2012) -  Kandi Technologies, Corp. (the 'Company' or 'Kandi') (NASDAQ: KNDI), a leading Chinese manufacturer and developer of pure electric vehicles (EVs) and off-road vehicles, today announced its unaudited financial results for the third quarter ended September 30, 2012.

Q3 2012 Financial Highlights:

  • Revenue for the third quarter grew 23.8% year-over-year to $12.77 million from $10.31 million last year. ATV sales grew 66.0% to $1.73 million and EV sales grew 83.8% to $2.78 million as compared to the same period of 2011
  • Income from operations jumped by 164.5% in the quarter to $1.49 million as compared to $0.57 million in the same period of 2011
  • Gross margins reached to 25.3% in the 2012 third quarter, up from 22.6% in the prior year
  • GAAP net income in the third quarter jumped to $0.59 million, or $0.02 per diluted share, a 54.5% increase compared to a GAAP net income of $0.38 million, or $0.01 per diluted share, in the same period last year
  • Non-GAAP adjusted net income in the third quarter of 2012, excluding effects from convertible notes' interest expense, amortization of discount on convertible notes, stock awards expense and the change of the fair value of derivatives was $1.51 million, an increase of 111.5% compared with $0.72 million in the same period of 2011
  • The Company sold 471 electronic vehicles in Q3, all related to the previously announced 3,000 EV order from Jinhua City
  • A working capital surplus of $25.90 million was achieved at quarter-end, improved from a reported working capital surplus of $18.94 million as of September 30, 2011
  • Cash, cash equivalents and restricted cash totaled $21.44 million at quarter-end, a 140% increase from $8.93 million at the end of 2011

Mr. Xiaoming Hu, Chairman and Chief Executive Officer of Kandi Technologies, commented, "We are very pleased to report another successful quarter just before the initial launch of our largest EV project in China, Hangzhou's 20,000 EV leasing program. The third quarter demonstrated the balanced growth of both Kandi's legacy businesses, particularly the ATV and Go-cart segment, and the continued strength of our EV business offerings. During the quarter, we achieved robust year-over-year revenue and net income growth. We also have very strong EV sales in Jinhua City and sold 471 EVs in Q3. In coming months, by collaborating closely with State Grid Corporation of China (SGCC), China Aviation Lithium Battery Co., Ltd (CALB), and Hangzhou municipal government, we expect to launch the initial shipment of the first 5000 EVs to CALB for the currently largest pure EV commercialization launch in China -- the 20,000 pure EV leasing program in Hangzhou." 

"There is a growing demand in China for clean energy products and solutions at both the national as well as municipal level. Our company is uniquely positioned to capitalize on this trend with our practical EV products and innovative business model which shall strengthen Kandi's market leadership in China."

Outlook
"The recent Letter of Intent we have entered with the government of Weifang Binhai Economic Development Zone of Shandong Province and Wanning city government of Hainan Province will help us effectively expand into new markets and build order backlog for the years to come. We are confident that our business model will be soon replicated in many other markets throughout China given our successful track record, favorable central government policy, support from regional government and our strong alliance with industry partners," concluded Mr. Hu.

*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. 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. 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 Q1 2012 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.

 
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
         
ASSETS        
    September 30,   December 31,
    2012   2011
    (Unaudited)    
CURRENT ASSETS            
Cash and cash equivalents   $ 1,546,006   $ 2,294,352
Restricted cash     19,895,444     6,634,989
Accounts receivable     26,921,141     12,932,776
Inventories (net of reserve for slow moving inventory of $0 and $72,487 as of September 30, 2012 and December 31, 2011 respectively)     14,385,086     6,674,467
Notes receivable     15,980,324     37,879,243
Other receivables     1,056,257     2,438,917
Prepayments and prepaid expenses     92,349     185,037
Due from employees     57,624     79,857
Advances to suppliers     4,105,847     852,638
Total Current Assets     84,040,078     69,972,276
             
LONG-TERM ASSETS            
Plant and equipment, net     18,124,202     20,981,893
Land use rights, net     14,383,669     10,992,769
Intangible assets     723,003     -
Construction in progress     12,214,227     10,007,601
Deferred taxes     35,025     89,998
Investment in associated companies     184,701     229,213
Goodwill     437,525     -
Total Long-Term Assets     46,102,352     42,301,474
             
TOTAL ASSETS   $ 130,142,430   $ 112,273,750
 
 
 
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
LIABILITIES AND STOCKHOLDERS' EQUITY
         
    September 30,   December 31,
    2012   2011
    (Unaudited)    
CURRENT LIABILITIES            
Accounts payable   $ 10,968,071   $ 5,061,069
Other payables and accrued expenses     1,182,349     3,137,983
Short-term bank loans     34,970,003     36,372,492
Customer deposits     131,557     1,025,357
Notes payable, net of discount of $0 and $71 as of September 30, 2012 and December 31, 2011 respectively     9,630,565     5,847,552
Income tax payable     181,766     153,730
Due to employees     160,547     9,455
Due to related party     841,251     841,251
Deferred taxes     70,522     56,362
Financial derivate - liability     -     213
  Total Current Liabilities     58,136,631     52,505,464
             
LONG-TERM LIABILITIES            
Financial derivatives - liability     2,621,557     3,919,411
  Total Long-Term Liabilities     2,621,557     3,919,411
             
TOTAL LIABILITIES     60,758,188     56,424,875
             
STOCKHOLDERS' EQUITY            
Common stock, $0.001 par value; 100,000,000 shares authorized; 29,941,134and 27,445,600 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively     29,941     27,446
Additional paid-in capital     38,614,210     31,533,378
Retained earnings (the restricted portion is $1,940,832 at September 30, 2012 and December 31, 2011)     23,093,029     19,210,330
Accumulated other comprehensive income     7,647,062     5,077,721
TOTAL STOCKHOLDERS' EQUITY     69,384,242     55,848,875
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 130,142,430   $ 112,273,750
 
 
 
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
 
    Three Months Ended   Nine Months Ended
    30-Sep-12   30-Sep-11   30-Sep-12   30-Sep-11
REVENUES, NET   $ 12,765,694   $ 10,310,558   $ 38,182,211   $ 28,789,766
                         
COST OF GOODS SOLD     -9,541,687     -7,984,828     -29,829,097     -22,060,888
                         
GROSS PROFIT     3,224,007     2,325,730     8,353,114     6,728,878
Research and development     -630,083     -608,463     -2,006,269     -1,695,003
Selling and marketing     -158,714     -85,239     -331,750     -234,854
General and administrative     -940,930     -1,067,021     -2,520,600     -2,568,417
                         
INCOME FROM CONTINUING OPERATIONS     1,494,280     565,007     3,494,495     2,230,604
Interest income (expense), net     -76,866     117,353     -133,806     95,549
Change in fair value of financial instruments     -882,731     -271,780     1,078,795     7,480,992
Government grants     20,634     9,235     45,942     289,962
Investment (loss) income     -18,259     -12,905     -45,670     -20,181
Other income, net     239,203     95,067     285,805     262,299
                         
INCOME (LOSS) BEFORE INCOME TAXES     776,261     501,977     4,725,561     10,339,225
                         
INCOME TAX EXPENSE     -181,743     -117,119     -842,863     -394,624
                         
NET INCOME     594,518     384,858     3,882,698     9,944,601
                         
OTHER COMPREHENSIVE INCOME                        
Foreign currency translation     -260,114     377,991     2,569,341     1,524,411
                         
                         
COMPREHENSIVE INCOME (LOSS)   $ 334,404   $ 762,849   $ 6,452,039     11,469,012
                         
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC     29,909,130     27,445,600     29,068,208     27,436,434
                         
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED     31,464,257     28,617,870     30,413,267     28,740,204
                         
NET INCOME PER SHARE, BASIC   $ 0.02   $ 0.01   $ 0.13     0.36
                         
NET INCOME PER SHARE, DILUTED   $ 0.02   $ 0.01   $ 0.13     0.35
 
 
 
KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
    Nine Months Ended September 30
    2012   2011
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income (loss)   $ 3,882,698   $ 9,944,601
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:            
Depreciation and amortization     3,694,917     3,501,765
Deferred taxes     72,004     236,939
Option and warrant expense     19,053     195,474
Change of derivative instrument's fair value     -1,297,854     -7,480,992
Loss in investment in associated company     45,670     29,786
             
Changes in operating assets and liabilities:            
(Increase) Decrease In:            
Accounts receivable     -13,939,987     8,118,796
Inventories     -7,686,157     -2,554,537
Other receivables and prepaid expenses     1,395,899     -880,750
Due from employees     173,844     10,376
Prepayments and prepaid expenses     -3,158,733     -3,290,026
  Marketable equity securities (trading)     -     305,564
             
Increase (Decrease) In:            
Accounts payable     5,888,514     -1,431,210
Other payables and accrued liabilities     -1,957,184     -156,970
Customer deposits     -899,693     -24,783
Income tax payable     27,318     -14,090
Net cash (used in) provided by operating activities   $ -13,739,691   $ 6,509,943
             
CASH FLOWS FROM INVESTING ACTIVITIES:            
Cash Acquired in Acquisition     112,551     -
  Purchases of plant and equipment     -472,696     -240,954
  Purchase of construction in progress     -2,160,338     -6,019,101
  Issuance of notes receivable     -1,010,596     -2,751,302
  Repayments of notes receivable     23,115,794     7,810,463
Net cash provided by (used in) investing activities   $ 19,584,715   $ -1,200,894
CASH FLOWS FROM FINANCING ACTIVITIES:            
Restricted cash   $ -13,241,885   $ -8,255,977
Proceeds from short-term bank loans     31,023,311     25,607,093
Repayments of short-term bank loans     -32,603,714     -22,748,197
Proceeds from notes payable     18,316,871     33,309,509
Repayments of notes payable     -14,558,408     -39,023,610
Option exercise & other financing     116,903     65,544
Common Stock Issued, net of Cost of Capital     3,741,790     -
Warrant exercise     219,059      
Net cash provided by financing activities     -6,986,073     -11,045,638
             
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     -1,141,049     -5,736,589
  Effect of exchange rate changes on cash     392,703     -136,100
  Cash and cash equivalents at beginning of period     2,294,352     7,754,166
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 1,546,006   $ 1,881,477
             
SUPPLEMENTARY CASH FLOW INFORMATION            
  Income taxes paid   $ 688,668   $ 408,714
  Interest paid   $ 2,062,306   $ 1,776,835
Issuance of Common Stock for Acquisition   $ 8,616,416     -
             

About Kandi Technologies, Corp.

Kandi Technologies, Corp. (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. More information can be viewed at its corporate website is http://www.kandivehicle.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.

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