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/ CORRECTION - Kandi Technologies Announces Second Quarter and Six Months 2012 Financial Results

JINHUA, CHINA--(Marketwire -08/14/12)- In the news release, "Kandi Technologies Announces Second Quarter and Six Months 2012 Financial Results," issued earlier today by Kandi Technologies, Corp. (KNDI), we are advised by the company that the 6th bullet under Financial Highlights should read "GAAP net income for the first half was $3.29 million" rather than "GAAP net income in the second quarter was $3.29 million," "Cash, cash equivalents and restricted cash totaled $30.78 million at the end of the second quarter, a 244.68% increase from $8.93 million at the end of 2011" rather than "Cash, cash equivalents and restricted cash totaled $30.78 million at quarter-end, a 12.3% increase from $8.93 million at the end of 2011" as originally issued. The company has also updated the first bullet under EV Milestones with additional information about the Hangzhou pure EV rental program. Other non-material changes have been made throughout the release by the company. Complete corrected text follows.

Kandi Technologies Announces Second Quarter and Six Months 2012 Financial Results

1st Half 2012 Revenue Increases 37.5% YoY to $25.42 Million; 1st Half 2012 Operating Income Increases 20.1% YoY to $2.00 Million; Company Gained Significant Increase in ATV and Go-Kart Sales

JINHUA, CHINA -- August 14, 2012 -- Kandi Technologies, Corp. (the 'Company' or 'Kandi') (KNDI), a leading Chinese manufacturer and developer of pure electric vehicles (EVs) and all-terrain vehicles (ATVs), today announced its financial results for the second quarter and six months ended June 30, 2012.

Financial Highlights:

  • Revenue for the six months ended June 30, 2012 grew 37.5% to $25.42 million from $18.48 last year as compared to the six months last year. ATV sales grew 71.6% to $2.96 million and go-kart sales grew approximately 41.1% to $15.73 million as compared to the six months last year;
  • Revenue for the second quarter grew 9.1% to $11.06 million from $10.14 last year as compared to the second quarter last year. ATV sales grew 209.0% to $0.96 million as compared to the second quarter last year;
  • Gross profit for the first half of 2012 increased 16.5% to $5,129,107 compared to $4,403,148 at the same period of last year, as a result of increased revenue;
  • ATV unit sales grew to 7,078 units in the first half of 2012, up 165.6% from 2,665 units a year ago, while go-kart unit sales increased 49.0% year over year to 16,982 units up from 11,394 units of the first half of last year;
  • Operating income rose 20.1% to $2.00 million compared with $1.67 million in the same period of last year;
  • GAAP net income for the first half was $3.29 million, or $0.11 per diluted share, compared to a net income of $9.56 million, or $0.33 per diluted share, in the same period last year;
  • A working capital surplus of $23.37 million was achieved at the end of the second quarter, slightly increase from a reported working capital surplus of $23.01 million as of June 30, 2010;
  • Cash, cash equivalents and restricted cash totaled $30.78 million at the end of the second quarter, a 244.68% increase from $8.93 million at the end of 2011.

Mr. Xiaoming Hu, Chairman and Chief Executive Officer of Kandi Technologies, commented, "We are delighted that we solidly grew our revenue. The sales of ATV and go-kart will continue with the high growth. The EV sales have begun to boost as the strong government support and our brand and technologies of pure EV started to be introduced in Jinhua, Hangzhou and other potential cities throughout China."

EV Milestones

During the second and recent quarter, the Company continued to achieve new milestones in its developing pure EV business, including:

  • On August 11th, 2012, the Hangzhou pure EV rental program started its trial process to the local residents. Hangzhou Electric Vehicle Industry Development Ltd. Co. began to accept individuals' registration and reservation for the pure EV rental program. The Kandi EVs that are provided in this program are well received by the residents in Hangzhou, and about a thousand people have registered just in one day on August 12th, 2012. Kandi EVs will continue to be deployed in Hangzhou market if the trial goes successfully.
  • On August 10th, 2012, Kandi signed a cooperation framework agreement with Zhejiang Guoxin Vehicle Leasing Co., Ltd in Hangzhou to promote the public transportation project of self-driving EV rentals in Hangzhou.
  • On August 10th, 2012, Kandi participated in the 2012 China International Green Vehicle Industry Expo in Hangzhou, and showcased for the first time the "smart" charging stations vertical parking system for EVs, with functions of charging and exchanging batteries, jointly developed by the Company and Zhejiang Leimeng Machinery and Equipment Co., Ltd.
  • On July 13th, 2012, the Company signed a framework agreement with the government of Weifang Binhai Economic Development Zone in Wei Fang City of Shandong Province, under which Kandi intends to invest and establish a project company that will have a capacity to produce key components and parts for 100,000 electrical vehicles annually.
  • On May 13th, 2012, Kandi attended a seminar in Beijing along with top Chinese government officials, and other environmental and transportation experts to review a nine-month long feasibility study of Kandi's innovative plan for a comprehensive Pure EV rental system for reducing traffic, parking and pollution problems in cities throughout China.
  • On April 23rd, 2012, the Chairman and CEO of Kandi, Mr. Xiaoming Hu transferred his personally owned intellectual property rights relating to eleven key pure electric vehicle (EV) patents to Kandi.

"We are very excited by the growing momentum for the EV demand and continue to see strong growth from ATV and go-kart sales. We will continue to work diligently with the regional government and industry partners to expand our EV sales distribution and network. With cooperative letters of intent we have signed recently, we are confident about the future growth of our EVs and becoming the leader in this market," Mr. Hu concluded.

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.

  KANDI TECHNOLOGIES, CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2012 2011 2012 2011 REVENUES, NET $ 11,060,976 $ 10,137,702 $ 25,416,517 $ 18,479,208 COST OF GOODS SOLD (9,272,719) (7,795,987) (20,287,410) (14,076,060) GROSS PROFIT 1,788,257 2,341,715 5,129,107 4,403,148 Research and development (620,090) (574,588) (1,376,186) (1,086,540) Selling and marketing (79,201) (92,679) (173,036) (149,615) General and administrative (896,050) (827,529) (1,579,670) (1,501,396) INCOME FROM CONTINUING OPERATIONS 192,916 846,919 2,000,215 1,665,597 Interest income (expense), net (188,542) 275,466 (56,940) (21,804) Change in fair value of financial instruments 1,018,576 2,367,594 1,961,526 7,752,772 Government grants 25,308 273,139 25,308 280,727 Investment (loss) income (14,010) (8,490) (27,411) (7,276) Other income, net 12,134 53,526 46,602 167,232 ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES 1,046,382 3,808,154 3,949,300 9,837,248 INCOME TAX EXPENSE (141,154) (186,811) (661,120) (277,505) NET INCOME 905,228 3,621,343 3,288,180 9,559,743 ------------ ------------ ============ ============ OTHER COMPREHENSIVE INCOME Foreign currency translation 2,434,039 827,820 2,829,455 1,146,420 COMPREHENSIVE INCOME (LOSS) $ 3,339,267 $ 4,449,163 $ 6,117,635 $ 10,706,163 WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 29,845,122 27,440,878 28,647,746 27,431,851 WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED 31,166,260 28,578,592 29,990,967 28,786,145 NET INCOME PER SHARE, BASIC $ 0.03 $ 0.13 $ 0.11 $ 0.35 NET INCOME PER SHARE, DILUTED $ 0.03 $ 0.13 $ 0.11 $ 0.33 KANDI TECHNOLOGIES, CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 2012 2011 (Unaudited) CURRENT LIABILITIES Accounts payable $ 8,584,600 $ 5,061,069 Other payables and accrued expenses 1,150,306 3,137,983 Short-term bank loans 36,599,839 36,372,492 Customer deposits 43,407 1,025,357 Notes payable, net of discount of $0 and $71 as of June 30, 2012 and December 31, 2011 respectively 15,174,771 5,847,552 Income tax payable 128,390 153,730 Due to employees 168,567 9,455 Due to related party 841,251 841,251 Deferred taxes 56,362 Financial derivate - liability - 213 ------------- ------------- Total Current Liabilities 62,691,131 52,505,464 LONG-TERM LIABILITIES Financial derivatives - liability 1,957,885 3,919,411 Total Long-Term Liabilities 1,957,885 3,919,411 TOTAL LIABILITIES 64,649,016 56,424,875 STOCKHOLDERS' EQUITY Common stock, $0.001 par value; 100,000,000 shares authorized; 29,845,122 and 27,445,600 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively 29,845 27,446 Additional paid-in capital 38,345,747 31,533,378 Retained earnings (the restricted portion is $1,940,832 at June 30, 2012 and December 31, 2011) 22,498,511 19,210,330 Accumulated other comprehensive income 7,907,176 5,077,721 TOTAL STOCKHOLDERS' EQUITY 68,781,279 55,848,875 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 133,430,295 $ 112,273,750 KANDI TECHNOLOGIES, CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30 ---------------------------- 2012 2011 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 3,288,180 $ 9,559,743 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization 2,470,911 2,317,662 Deferred taxes (24,219) 58,459 Option and warrant expense 19,053 138,315 Change of derivative instrument's fair value (1,961,526) (7,752,771) Loss in investment in associated company 27,411 16,819 Changes in operating assets and liabilities: (Increase) Decrease In: Accounts receivable (11,844,213) 7,991,676 Inventories (6,826,372) (5,214,768) Other receivables and prepaid expenses 1,701,831 (773,085) Due from employees 185,624 20,490 Prepayments and prepaid expenses 30,204 (9,321,749) Marketable equity securities (trading) - 303,596 Increase (Decrease) In: Accounts payable 3,484,295 (1,413,790) Other payables and accrued liabilities (1,990,887) (134,299) Customer deposits (988,344) (10,616) Income tax payable (26,411) 57,387 ------------- ------------- Net cash (used in) provided by operating activities $ (12,454,463) $ (4,156,931) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash Acquired in Acquisition 112,551 - Purchases of plant and equipment (452,393) (201,490) Purchase of construction in progress (2,091,168) (93,652) Issuance of notes receivable - (2,733,584) Repayments of notes receivable 23,123,103 7,260,308 ------------- ------------- Net cash provided by (used in) investing activities $ 20,692,093 $ 4,231,582 ------------- ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Restricted cash $ (20,103,142) $ (8,857,647) Proceeds from short-term bank loans 14,749,822 14,507,848 Repayments of short-term bank loans (14,781,440) (14,507,848) Proceeds from notes payable 15,160,857 29,473,839 Repayments of notes payable (5,883,855) (19,224,884) Option exercise & other financing 67,403 60,069 Common Stock Issued, net of Cost of Capital 3,740,423 - ------------- ------------- Net cash provided by financing activities (7,049,932) 1,451,377 ------------- ------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,187,698 1,526,028 Effect of exchange rate changes on cash 497,098 92,029 Cash and cash equivalents at beginning of period 2,294,352 7,754,166 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,979,148 $ 9,372,223 ============= ============= SUPPLEMENTARY CASH FLOW INFORMATION Income taxes paid $ 687,530 $ 220,119 Interest paid $ 1,316,591 $ 1,232,993 Issuance of Common Stock for Acquisition $ 8,616,416 -