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Kandi Technologies Reports Full Year 2020 Financial Results

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- Full year revenue of $76.9 million
- Electric Scooters, Electric Self-Balancing Scooters and associated parts sales was $5.8 m, up 160.5% yoy
- Full year operating income of $0.8 million, stable with 2019
- Year-end working capital surplus of $223 million

JINHUA, CHINA, March 30, 2021 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the full year ended December 31, 2020.

Full Year 2020 Highlights

  • Total revenue was $76.9 million, compared to $135.7 million in 2019.

  • EV parts sales were $40.6 million, compared to $110.7 million in 2019.

  • Off-road vehicles sales increased by 31.1% to $29.8 million, compared to $22.7 million in 2019.

  • EV product sales were $0.7 million, compared to $0.1 million in 2019.

  • Electric Scooters, Electric Self-Balancing Scooters and associated parts sales increased by 160.5% to $5.8 million, compared with $2.2 million in 2019.

  • Gross margin was 17.5%, compared to 18.7% in 2019.

  • Operating income was $0.8 million, compared to $0.9 million in 2019.

  • Net loss was $10.4 million, or $0.19 loss per fully diluted share, compared to a net loss of $7.2 million, or $0.14 loss per fully diluted share in 2019.

  • As of December 31, 2020, working capital was $223.3 million; cash, cash equivalents, and restricted cash totaled $142.5 million.

  • Two registered direct offerings were completed with $160 million raised in November 2020.

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “The lock downs and closures of stores and facilities around the world, caused by the spread of COVID-19, challenged every corner of the economy in 2020. Although our operations in China fully resumed in early March of 2020, sales of EV parts, one of our primary revenue sources, were severely impacted by several waves of the pandemic. On the positive side, this challenge resulted in relentless effort and commitment from our management and employees to explore other market opportunities that leverage our expertise. We decided to pursue product innovation in Electric Scooters and Electric Self-Balancing Scooters, which have a global market of tens of millions of units sold each year. We pursued these opportunities by expanding production of intelligent transportation products that exploit our advantages in electric motors and battery packs. This resulted in revenue from Electric Scooters, Electric Self-Balancing Scooters and associated parts increasing by 160.5% in 2020, offsetting a 63.3% decline in revenue from EV parts.”

Hu continued, “During 2020 we achieved three major strategic milestones despite unfavorable market conditions.

First, we smoothly executed the real estate repurchase agreement with Jinhua Economic and Technological Development Zone, a key element of our Jinhua facility relocation. The local government agreed to pay us approximately RMB525 million, or $80 million, in three installments. We received the first two installments, totaling RMB 363 million, or $55 million. The final payment of RMB 162 million, or $25 million, will be received when we demolish all the current factory buildings on this land and move to our new facility. We are nearing the end of the relocation process and have almost completed the move into our new factory.

“Our second milestone was the successful trial of the ‘300,000 government-accredited ride-sharing vehicles within 5 years’ program initiated by us. Zhejiang Ruiheng Technology Co., Ltd plans to deliver over 3,000 government compliant EVs in 2021, and gradual delivery is underway. All those EVs feature our battery swapping technology, which is recognized by the central government as one of the three approved charging methods in China. Driven by the tailwinds of Chinese Government policy regarding battery exchange, in 2020 we moved forward in many ways. For example, we signed an agreement with the Zhejiang State Grid Electric Vehicle Service Company in October 2020 to strategically incorporate battery exchange into pure EVs. We believe this program can drive the production and sales of our EV parts and battery swap equipment, and therefore drive the growth in our pure EV business.”

Regarding the U.S. market, Hu commented, “In August 2020 we successfully held a virtual launch event to introduce our K23 and K27 EV models into the U.S. market, achieving our third milestone of the year. We have obtained clearance from the United States Environmental Protection Agency (EPA) for both models, so our focus now is working on some modifications to meet all Federal Motor Vehicle Safety Standards (FMVSS) requirements. We are also working on feature improvements to accommodate U.S. consumer tastes.”

Hu concluded, “Looking forward, we have multiple growth opportunities. We are dedicated to building our business in the U.S., and we are pursuing third and fourth-tier city government-accredited EV online ride-share service businesses. With capital from the real estate repurchase agreement and the $160 million direct placement, we are confident that we can fund the R&D necessary to develop sports cars, battery swapping technology, and the ride-sharing program. Furthermore, our recent exit from the Fengsheng affiliation through the transfer of the remaining equity interest eliminates the non-compete restrictions, thus enabling us to pursue the EV market more aggressively in China. We believe the years ahead hold a multitude of opportunities that can restart our growth.”

Full Year 2020 Financial Results

Net Revenues and Gross Profit

2020

2019

Y-o-Y%

Net Revenues (US$mln)

$76.9

$135.7

-43.3%

Gross Profit (US$mln)

$13.5

$25.4

-47.0%

Gross Margin

17.5%

18.7%

-

Net revenues of $76.9 million decreased 43.3% from 2019. The decrease was due primarily to reduced sales of EV parts, a result of production interruptions caused by the COVID-19 pandemic and the overall demand of EV parts from customers was significantly affected during 2020. Gross margin was 17.5%, compared with 18.7% in 2019. The decrease was due to less high-margin battery processing compared to 2019.

Operating Income (Loss)

2020

2019

Y-o-Y%

Operating Expenses (US$mln)

$12.7

$24.5

-48.1%

Operating Income (US$mln)

$0.75

$0.91

-17.1%

Operating Margin

1.0%

0.7%

-

Total operating expenses were $12.7 million, compared with $24.5 million in 2019. The decrease was due to lower general and administrative expenses, largely due to cost-cutting programs and tighter budget control. We also booked a $14.2 million gain on disposal of long-lived assets, which was related to the real estate repurchase agreement. In June 2020, 73,333 square meters of land use rights were transferred to the local government, and the related gain was recognized.

Net Loss

2020

2019

Y-o-Y%

Net Loss (US$mln)

($10.4)

($7.2)

44.6%

Loss per Weighted Average Common Share

($0.19)

($0.14)

-

Loss per Weighted Average Diluted Share

($0.19)

($0.14)

-

Net loss was $10.4 million, compared with a net loss of $7.2 million in 2019. The greater net loss was primarily attributable to the absence of gains on the sales of equity that were present in 2019.

Full Year 2020 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on Tuesday, March 30, 2021. Management will deliver prepared remarks to be followed by a question and answer session.

The dial-in details for the conference call are as follows:

The live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations page on the Company's website at http://www.kandivehicle.com. An archive of the webcast will be available on the Company's website following the live call.

About Kandi Technologies Group, Inc.

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. ("Kandi Vehicles") and its subsidiaries including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, and SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States. Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

More information about KNDI is available on the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

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 applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

Contacts:

Kandi Technologies Group, Inc.
Ms. Kewa Luo
+1 (212) 551-3610
IR@kandigroup.com

The Blueshirt Group
Mr. Gary Dvorchak, CFA
gary@blueshirtgroup.com

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31,
2020

December 31,
2019

Current assets

Cash and cash equivalents

$

142,078,190

$

5,490,557

Restricted cash

442,445

11,022,078

Accounts receivable (net of allowance for doubtful accounts of $110,269 and $254,665 as of December 31, 2020 and December 31, 2019, respectively)

38,547,137

61,181,849

Inventories

19,697,383

27,736,566

Notes receivable

31,404,630

42,487,225

Other receivables

1,875,245

5,023,327

Prepayments and prepaid expense

13,708,149

10,615,063

Advances to suppliers

36,733,182

685,008

Amount due from the Affiliate Company

21,742,226

31,330,763

Amount due from related party

886,989

-

TOTAL CURRENT ASSETS

307,115,576

195,572,436

NON-CURRENT ASSETS

Property, plant and equipment, net

65,402,680

74,407,858

Intangible assets, net

3,232,753

3,654,772

Land use rights, net

3,257,760

11,272,815

Construction in progress

16,317,662

71,247

Deferred taxes assets

8,964,946

726,182

Long term investment

45,958

-

Investment in the Affiliate Company

28,892,638

47,228,614

Goodwill

29,712,383

28,270,400

Other long term assets

32,307,484

10,014,072

TOTAL NON-CURRENT ASSETS

188,134,264

175,645,960

TOTAL ASSETS

$

495,249,840

$

371,218,396

CURRENT LIABILITIES

Accounts payable

$

34,257,935

$

72,093,940

Other payables and accrued expenses

7,218,395

6,078,041

Short-term loans

-

25,980,364

Notes payable

92,445

10,765,344

Income tax payable

1,313,754

1,796,601

Advance receipts

38,229,242

-

Long term loans - current portion

-

13,779,641

Amount due to related party

500,000

-

Other current liabilities

2,185,654

1,379,808

TOTAL CURRENT LIABILITIES

83,797,425

131,873,739

NON-CURRENT LIABILITIES

Long term loans

-

14,353,792

Deferred taxes liability

3,483,171

1,362,786

Contingent consideration liability

3,743,000

5,197,000

Other long-term liabilities

459,580

574,152

TOTAL NON-CURRENT LIABILITIES

7,685,751

21,487,730

TOTAL LIABILITIES

91,483,176

153,361,469

STOCKHOLDER’S EQUITY

Common stock, $0.001 par value; 100,000,000 shares authorized; 77,298,499 and 56,263,102 shares issued and 75,377,555 and 52,839,441 outstanding at December 31,2020 and December 31,2019, respectively

75,377

52,839

Less: Treasury stock (nil and 487,155 shares with average price of $5.09 at December 31,2020 and December 31,2019, respectively)

-

(2,477,965

)

Additional paid-in capital

439,549,338

259,691,370

Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at December 31,2020 and December 31,2019, respectively)

(27,079,900

)

(16,685,736

)

Accumulated other comprehensive loss

(8,778,151

)

(22,723,581

)

TOTAL STOCKHOLDERS’ EQUITY

403,766,664

217,856,927

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

495,249,840

$

371,218,396

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Years Ended

December 31,
2020

December 31,
2019

REVENUES FROM UNRELATED PARTIES, NET

$

76,176,609

$

119,879,895

REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET

743,904

15,861,441

REVENUES, NET

76,920,513

135,741,336

COST OF GOODS SOLD

(63,432,580

)

(110,310,427

)

GROSS PROFIT

13,487,933

25,430,909

OPERATING EXPENSES:

Research and development

(7,246,312

)

(6,207,747

)

Selling and marketing

(6,619,355

)

(4,070,001

)

General and administrative

(13,042,103

)

(14,243,625

)

Gain on disposal of long-lived assets

14,174,233

-

TOTAL OPERATING EXPENSES

(12,733,537

)

(24,521,373

)

INCOME FROM OPERATIONS

754,396

909,536

OTHER INCOME (EXPENSE):

Interest income

2,190,678

791,888

Interest expense

(3,750,233

)

(4,822,734

)

Change in fair value of contingent consideration

(565,000

)

(1,107,427

)

Government grants

1,130,262

792,628

Gain from equity dilution in the Affiliate Company

-

4,263,764

Gain from sale of equity in the Affiliate Company

-

20,438,986

Share of loss after tax of the Affiliate Company

(17,252,662

)

(30,716,938

)

Other income, net

2,051,226

1,569,311

TOTAL OTHER EXPENSE, NET

(16,195,729

)

(8,790,522

)

LOSS BEFORE INCOME TAXES

(15,441,333

)

(7,880,986

)

INCOME TAX BENEFIT

5,047,169

692,259

NET LOSS

(10,394,164

)

(7,188,727

)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustment

13,945,430

(2,802,323

)

COMPREHENSIVE INCOME (LOSS)

$

3,551,266

$

(9,991,050

)

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED

55,960,010

52,337,308

NET LOSS PER SHARE, BASIC AND DILUTED

$

(0.19

)

$

(0.14

)

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Number of Outstanding Shares

Common Stock

Treasury Stock

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income

Total

BALANCE AT DECEMBER 31, 2018

51,484,444

$

51,484

$

-

$

254,989,657

$

(9,497,009

)

$

(19,921,258

)

$

225,622,874

Stock issuance and award

1,354,997

1,355

-

4,716,328

-

-

4,717,683

Stock buyback

-

-

(2,477,965

)

-

-

-

(2,477,965

)

Commission in stock buyback

-

-

-

(14,615

)

-

-

(14,615

)

Net loss

-

-

-

-

(7,188,727

)

-

(7,188,727

)

Foreign currency translation

-

-

-

-

-

(2,802,323

)

(2,802,323

)

BALANCE AT DECEMBER 31, 2019

52,839,441

$

52,839

$

(2,477,965

)

$

259,691,370

$

(16,685,736

)

$

(22,723,581

)

$

217,856,927

Stock issuance and award

1,771,317

1,771

-

4,058,052

-

-

4,059,823

Cancellation of the Treasury Stock

(487,155

)

(487

)

2,477,965

(2,477,478

)

-

-

-

Registered Direct Offering

18,253,952

18,254

-

151,904,993

-

-

151,923,247

Stock option exercise

3,000,000

3,000

-

29,157,000

-

-

29,160,000

Net loss

-

-

-

-

(10,394,164

)

-

(10,394,164

)

Foreign currency translation

-

-

-

-

13,945,430

13,945,430

Reduction in the Affiliate Company’s equity (net off tax effect of $491,400)

-

-

-

(2,784,599

)

-

-

(2,784,599

)

BALANCE AT DECEMBER 31, 2020

75,377,555

$

75,377

$

-

$

439,549,338

$

(27,079,900

)

$

(8,778,151

)

$

403,766,664

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Years Ended

December 31,
2020

December 31,
2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(10,394,164

)

$

(7,188,727

)

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

8,222,984

8,202,869

Impairments

-

398,790

(Reversal) provision of allowance for doubtful accounts

(152,809

)

137,387

Deferred taxes

(5,349,722

)

(1,066,536

)

Share of loss after tax of the Affiliate Company

17,252,662

30,716,938

Gain from equity dilution in the Affiliate Company

-

(4,263,764

)

Gain from equity sale in the Affiliate Company

-

(20,438,986

)

Gain on disposal of long-live assets

(14,174,233

)

-

Change in fair value of contingent consideration

565,000

1,107,427

Stock based compensation expense

902,666

1,360,258

Changes in operating assets and liabilities:

Accounts receivable

19,247,519

(40,123,966

)

Notes receivable

-

246,120

Notes receivable from the Affiliate Company and related party

-

434,329

Inventories

9,246,455

(6,458,104

)

Other receivables and other assets

2,008,612

(8,208,931

)

Advances to supplier and prepayments and prepaid expenses

(36,330,634

)

4,379,925

Amount due from the Affiliate Company

4,237,103

8,803,542

Due from related party

(339,118

)

-

Increase (Decrease) In:

Accounts payable

(30,993,717

)

10,440,338

Other payables and accrued liabilities

(173,806

)

5,998,106

Notes payable

(13,912,842

)

(12,743,628

)

Income tax payable

(745,208

)

(1,619,659

)

Net cash used in operating activities

$

(50,883,252

)

$

(29,886,272

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment, net

(7,483,743

)

(526,336

)

Purchases of land use rights and other intangible assets

(3,281,115

)

-

Payment for construction in progress

(7,419,644

)

(71,862

)

Proceeds from disposal of long-lived assets

52,579,492

-

Loan to third party

(26,097,991

)

-

Cash received from sales of equity in the Affiliate Company

42,897,929

31,850,822

Long Term Investment

(43,478

)

-

Net cash provided by investing activities

$

51,151,450

$

31,252,624

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term loans

24,642,399

34,746,352

Repayments of short-term loans

(50,873,903

)

(38,944,869

)

Repayments of long-term loans

(28,799,501

)

(289,553

)

Proceeds from long-term loans

394,116

-

Fund raising through issuing common stock and warrants

151,923,247

-

Stock buyback with commission

-

(2,492,579

)

Option exercise, stock awards & other financing

29,160,000

-

Net cash provided by (used in) financing activities

$

126,446,358

$

(6,980,649

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

$

126,714,556

$

(5,614,297

)

Effect of exchange rate changes

$

(706,556

)

$

(226,139

)

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

$

16,512,635

$

22,353,071

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

142,520,635

$

16,512,635

-CASH AND CASH EQUIVALENTS AT END OF PERIOD

142,078,190

5,490,557

-RESTRICTED CASH AT END OF PERIOD

442,445

11,022,078

SUPPLEMENTARY CASH FLOW INFORMATION

Income taxes paid

$

1,046,127

1,994,526

Interest paid

$

653,507

1,738,656

SUPPLEMENTAL NON-CASH DISCLOSURES:

Decrease in investment in the Affiliate Company due to change in its equity

$

3,099,193

-

Notes receivable from unrelated parties for equity transfer payment

$

-

42,853,834

Purchase of construction in progress in accounts payable and other payable

7,945,414

-

Common stock issued from settlement of payables to KSBS Shareholders and former members of SC Autosports

$

3,166,427

3,357,425