Kandi Technologies, Corp. Reports Third Quarter Adjusted Net Income Grew 57% and Anticipates Full Year Sales Will Reach or Exceed $40 Million

Marketwired

JINHUA, CHINA--(Marketwire - 11/15/10) - Kandi Technologies, Corp. (NASDAQ:KNDI - News) ("Kandi" or the "Company"), a leading Chinese exporter of recreational vehicles, developer of the "CoCo" all electric LSV, and a leader in Electric Vehicle (EV) development in China, today reported third quarter and nine month results for the period ended September 30, 2010.Financial Highlights

 
-- On a non-GAAP basis which excludes certain non-cash charges,
(see below), the Company reported adjusted net income of $1.4mm in its
2010 third quarter, up 57% from adjusted net income of $0.9mm in the
same period last year.
-- Adjusted net income in the first nine months of 2010 grew 188% to
$3.1mm, compared with $1.1mm in the first nine months of 2009.
-- Led by recreational vehicle sales, 2010 third quarter sales grew 9% to
$10.5mm compared with $9.6mm in the prior year period.
-- Reflecting the continuing recovery in sales of the Company's
traditional recreational vehicles, and a strong second quarter
contribution from U.S. sales of the super mini Kandi "CoCo," nine month
revenues increased 50% to $28.6mm, compared with $19.1mm in the
comparable period last year.
-- Net cash provided by operations through the first nine months of 2010
was $7.4mm.
Full Year OutlookMr. Hu Xiaoming, Chairman and CEO of the Company, commented, "We are pleased by the double digit gains we reported for the quarter, boosted by strong go kart results in the pre-holiday period. In fact, we are seeing a further strengthening of our recreational product sales thus far in our fourth quarter, which we believe will permit full year Kandi sales to reach or exceed $40mm.""Going forward, the development of EV sales in China will increasingly become our major focus," Mr. Hu continued, "and could make an increasing contribution to our revenues and profits. In addition we are gratified to see a return to sales and earnings levels achieved prior to the world economic crisis in our traditional recreational vehicle business. There is still an excellent growth opportunity ahead for our recreational vehicles, especially as we broaden our sales efforts to include other countries as well as a potentially burgeoning market in China."Excitement is Building"Of greater significance as we approach year end," Mr. Hu stated, "we continue to anticipate the completion of the first battery farm in Jinhua by our joint venture partner State Grid Power Corporation. This will pave the way for consumer sales in China of Kandi's 'pure' EV. Through our 30% stake in the joint venture with State Grid Power Corporation and Tianneng Power International, Ltd.," Mr. Hu added, "it will trigger potential revenue development from our 'express change' service centers. A core feature of our new EV business model is providing EV owners with batteries and service center to quickly change batteries as needed utilizing our 'express change' technology.""As we close in on these landmark events," Mr. Hu continued, "the excitement is building at our Company, in Jinhua, and among our partners, for the launch of what we believe will be a new era for Kandi, and more significantly, for environmentally sound, low cost transportation in China and the world."Focus on China EV MarketThe Company believes strongly that the biggest opportunity for EV development globally is in China, where the government at all levels is pushing to see China become the world EV leader."Kandi intends to become not only an EV producer, but also a leading EV infrastructure and service provider. With increasingly clear signs of government endorsement of our strategy, we and our joint venture partners are working as hard as we can to bring to fruition our model EV city in Jinhua. If successful, we firmly believe this will lead to expansion to other cities in our region and then nationally," Mr. Hu concluded.Expense Related to Convertible Notes and Options CompensationAs more fully described in Kandi's third quarter 10-Q being filed today with the U.S. Securities and Exchange Commission, expenses related to options compensation, warrants issued to Convertible Notes investors and placement agents, and the changes in the fair value of conversion features embedded in the Convertible Notes are excluded from our calculation of adjusted net income in this press release.Excluding the effects of derivatives related expenses noted above, the Company's adjusted net income for the third quarter of 2010 was $1.4mm, compared with $0.9mm for the same period in 2009 excluding the same effects. For the nine months ended September 30, 2010, adjusted net income was $3.1mm, up 188% compared with $1.1mm for the first nine months of 2009.With respect to the Convertible Notes referred to above, the Company also reported in its Third Quarter 10-Q being filed today that, as of November 15, 2010, nearly all of the Notes have now been converted, with only $1,000 in Notes remaining outstanding.MilestonesDuring the quarter there were several very significant milestones reported by the Company in connection with the implementation of its new EV business strategy, which has an intermediate goal of establishing a model EV city in Jinhua. These events, which are placing Kandi in the forefront of the EV "transformation" have included:
 
-- Chinese government approval in June of the Kandi Model KD5010 EV. The
Company obtained a license to manufacture and market finished
automobiles for the Chinese consumer. This event has set the
foundation for the sale of Kandi EVs.
-- In July, Kandi announced its first EV sale to the Postal Service in
Hangzhou.
-- Later in July, Kandi announced that its partner, State Grid Power
Corporation of China, had begun to build the first battery "charging
farm" in Jinhua.
-- In early October, Kandi announced that it was teaming up with China's
largest power company, State Grid Power Corporation, and leading
battery maker, Tianneng Power International, to create China's first
Battery and Rental Replacement Company for the construction and
operation of "express change" service stations in Jinhua. Kandi's 30%
ownership in the joint venture is expected to become a new source of
revenue for the Company.
-- Most recently, Kandi announced the appointment of experienced U.S.
investment banker and financial executive, Ms. Cathy Cao, to serve as
Executive Vice President of Finance. Among Ms. Cao's duties are
building and strengthening relationships with current and prospective
Kandi shareholders. As previously announced, Ms. Cao will be the
speaker representing Kandi at two major Investment Conferences in New
York in November.
For complete financial information please refer to the Company 10Q filing at the website for the Securities and Exchange Commission at www.sec.gov.SEE ATTACHED TABLEAbout Kandi Technologies, Corp.Kandi Technologies, Corp. (NASDAQ:KNDI - News) 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 highly economical, beautifully designed, all electric super mini cars for neighborhood driving and commuting. Available in the U.S., convertible and hardtop models of the CoCo travel up to 60 miles at speeds reaching 25mph on a six hour charge. In China, the government recently approved the sale there of Kandi EVs, including the larger, more powerful, KD5010. Kandi believes that battery powered, electric super minis and related services 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.China's First EV Battery Replacement Services CompanyIn early October, Kandi announced the launch of a three partner joint venture in which it holds a 30% interest with China's leading battery maker, Tianneng Power International, Ltd., and Jinhua Bada Group, a subsidiary of State Grid Power Corporation, China's largest power company, to create China's first Electric Vehicle (EV) battery replacement services company.This pioneering agreement paves the way for the realization of Kandi's EV business model in Jinhua. In this model, purchasers of Kandi EVs will have easy access to multiple, easily reached "Express Change" battery stations throughout the city, eliminating concerns about limited driving ranges and battery maintenance. Further, by having batteries available on a rental basis, rather than having to purchase them with their vehicles, the purchase cost of new EVs will be lowered substantially.In the announcement, the Company added that construction in Jinhua by State Grid Corporation of the main battery farm within the city is expected to be completed in October, and following that, in November, Kandi anticipates that sales in Jinhua of the previously announced 3000 Kandi EVs being subsidized by the local and regional government will commence. It was noted this will mean the development of two revenue streams for Kandi -- one from the sale of its battery-powered vehicles and the other from a share of the battery rental, replacement, charging and recycling fees generated by the new joint venture. Kandi said a key enabling feature of the "Express Change" will be the Company's quick "Express Change" technology, which will permit drivers to have their batteries exchanged in a matter of minutes.Information Regarding Forward-Looking StatementsExcept 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 Nine Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
2010 2009 2010 2009
------------- ------------- ------------- -------------

REVENUES, NET $ 10,478,224 $ 9,626,593 $ 28,637,863 $ 19,114,049
COST OF GOODS
SOLD (8,140,771) (7,266,052) (22,098,905) (14,329,404)
------------- ------------- ------------- -------------

GROSS PROFIT 2,337,453 2,360,541 6,538,958 4,784,645
------------- ------------- ------------- -------------
Research and
development 459,935 660,108 1,203,270 1,767,081
Selling and
distribution
expenses 58,121 79,310 1,000,187 263,304
General and
administrative
expenses 516,929 510,212 2,315,088 1,966,422
------------- ------------- ------------- -------------
INCOME (LOSS)
FROM OPERATIONS 1,302,468 1,110,911 2,020,413 787,838

Interest income
(expense), net (572,032) (442,315) (2,015,516) (860,872)
Change of fair
value of
financial
instruments (2,578,693) - (802,884) -
Government grants 191,934 3,312 266,911 127,317
Other income,
net 33,249 9,800 91,088 311,984
------------- ------------- ------------- -------------
(LOSS) INCOME
FROM OPERATIONS
BEFORE INCOME
TAXES (1,623,074) 681,708 (439,988) 366,267

INCOME TAX
(EXPENSE)
BENEFIT (94,282) (105,558) (269,338) (146,642)
------------- ------------- ------------- -------------

(LOSS) INCOME
FROM CONTINUING
OPERATIONS (1,717,356) 576,150 (709,326) 219,625
------------- ------------- ------------- -------------

------------- ------------- ------------- -------------

NET INCOME
(LOSS) (1,717,356) 576,150 (709,326) 219,625
------------- ------------- ------------- -------------

*ADJUSTED NET
INCOME (NON
GAAP) 1,401,470 891,326 3,058,404 1,060,093


*See note above




KANDI TECHNOLOGIES, CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
September 30, December 31,
2010 2009
(Unaudited) (Audited)
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $ 3,411,842 $ 218,207
Restricted cash 9,857,822 5,704,984
Accounts receivable, net of allowance for
doubtful accounts of $0 as of September 30,
2010 and December 31, 2009 14,156,701 14,879,968
Inventories, net of reserve for slow moving
inventories of $155,441 and $152,278 as of
September 30, 2010 and December 31, 2009,
respectively 10,993,840 5,382,760
Notes receivable 13,864,424 2,267,599
Other receivables 911,130 321,336
Prepayments and prepaid expenses 30,708 30,083
Due from employees 42,452 28,228
Advances to suppliers 350,525 1,164,672
-------------- --------------
Total Current Assets 53,619,444 29,997,837
-------------- --------------

LONG-TERM ASSETS
Plant and equipment, net 21,669,805 23,146,833
Land use rights, net 10,755,939 10,719,528
Deferred tax asset 219,351 207,747
-------------- --------------
Total Long-Term Assets 32,645,095 34,074,108
-------------- --------------

TOTAL ASSETS $ 86,264,539 $ 64,071,945
============== ==============




KANDI TECHNOLOGIES, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

September, 30, December 31,
2010 2009
(Unaudited) (Audited)
-------------- --------------
CURRENT LIABILITIES
Accounts payable $ 10,159,908 $ 4,738,543
Other payables and accrued expenses 1,414,921 1,871,020
Short-term bank loans 23,887,371 26,326,566
Customer deposits 4,257 39,371
Notes payable 14,105,767 7,931,540
Income tax payable 95,439 201,564
Due to employees 10,748 88,306
Due to related party 841,251 841,251
Deferred tax liability 54,808 62,544
-------------- --------------
Total Current Liabilities 50,574,470 42,100,705
-------------- --------------

LONG TERM LIABILITIES
Note payable, net of discount of $3,302,508
and $0 as of September, 30, 2010 and
December 31, 2009, respectively 807,278 -
Warrant liabilities 5,737,418 -
-------------- --------------
Total Long-Term Liabilities 6,544,696 -
-------------- --------------

-------------- --------------
TOTAL LIABILITIES 57,119,166 42,100,705
-------------- --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 100,000,000
shares authorized; 22,960,266 and
19,961,000 shares outstanding at September
30, 2010 and December 31, 2009, respectively 22,960 19,961
Additional paid-in capital 16,120,761 8,967,012
Retained earnings (the restricted portion is
$890,912 at September 30, 2010 and December
31, 2009) 10,337,673 11,046,999
Accumulated other comprehensive income 2,663,979 1,937,268
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 29,145,373 21,971,240
============== ==============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,264,539 $ 64,071,945
============== ==============
Contact:


Contacts:
Kandi Technologies, Corp.
Hu Xiaoming
Chairman and CEO
86-579 - 82239856
US Investors:
Ken Donenfeld
donfgroup@aol.com
kdonenfeld@dgiir.com
Tel: 212-425-5700
Fax- 646-381-9727
View Comments (0)