Kandi Technologies Reports Third Quarter 2022 Financial Results

- Steady Growth in Off-road Vehicles

- Revenue growth drove significantly narrowed loss

JINHUA, China, Nov. 08, 2022 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2022.

Third Quarter Highlights

• Total revenues of $33.7 million compared to $16.8 million in the same period of 2021.
  
  

• Off-road vehicles and associated parts sales increased by 217.6% to $21.7 million, compared to $6.8 million in the same period of 2021.
  
  

• EV products sales increased significantly to $1.7 million from $0.3 million in the same period of 2021.
  
  

• EV parts sales were $2.6 million, compared to $3.2 million in the same period of 2021.
  
  

• Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $1.2 million, compared with $6.3 million in the same period of 2021.
  
  

• Net income was $1.1 million, or $0.01 income per fully diluted share, compared to a net loss of $7.9 million, or $0.10 loss per fully diluted share for the same period of 2021. A turn to profitability from loss was largely attributed to higher total revenue, resulted from highly performed off-road vehicles and associated parts sales, and lower operating expenses.
  
  

• Working capital totaled $252.9 million as of September 30, 2022
  
  

• Cash and equivalents, restricted cash, and certificate of deposit totaled $210.2 million as of September 30, 2022
  

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented, “During the third quarter, our strategic pivot enabled us to make inroads in electric off-road vehicles. With high market interest in the electrification of off-road vehicles, we successfully developed and delivered “crossover” electric golf carts that are seeing high acceptance by our customers. Growing demand, and positive market feedback gives us more confidence to invest more in electric off-road vehicles. Our next step is to launch more models in the categories of golf crossovers, utility terrain vehicles, and more. We believe that our top line growth and disciplined control of operating expenses can drive improved profitability, which will be increasingly recognized by investors.”

Q3 2022 Financial Results

Net Revenues and Gross Profit (in USD millions)

	Q3 2022	Q3 2021	Y-o-Y%
Net Revenues	$33.7	$16.8	100.5%
Gross Profit	$6.4	$2.7	131.6%
Gross Margin%	18.9%	16.4%	-

Net revenues of $33.7 million in the third quarter of 2022 increased 100.5% from the same period of 2021. The increase in revenue and gross margin was primarily due to a product mix shift to off-road vehicles, a segment with a higher gross margin that achieved significant growth in the past quarter.

Operating Income/Loss (in USD millions)

	Q3 2022	Q3 2021	Y-o-Y%
Operating Expenses	($8.6)	($11.8)	27.3%
Loss from Operations	($2.2)	($9.0)	75.7%
Operating Margin%	-6.5%	-53.7%	-

Operating expenses were $8.6 million, compared with operating expense of $11.8 million for the same period of 2021. Operating expenses decreased as the Company moved past the 2021 peak research and development effort on new products.

Net Income/Loss (in USD millions)

	Q3 2022	Q3 2021	Y-o-Y%
Net Income (Loss)	$1.1	($7.9)	113.6%
Net Income (Loss) per Share, Basic and Diluted	$0.01	($0.1)	-

Net income was $1.1 million comparing to a net loss of $7.9 million for the same period of 2021. The turn to profitability was primarily due to higher total revenue and lower operating expenses.

Third Quarter 2022 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 (9:00 P.M. Beijing Time) on Tuesday, November 8, 2022. 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:

• Toll-free dial-in number: +1-844-825-9789

• International dial-in number: + 1-412-317-5180

• Webcast and replay: https://viavid.webcasts.com/starthere.jsp?ei=1581599&tp_key=a040e098ec
  

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 Technologies Group Co., Ltd. (“Zhejiang Kandi Technologies”), formerly, Zhejiang Kandi Vehicles Co., Ltd. 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, and its wholly-owned subsidiary, Kandi America Investment, LLC. Zhejiang Kandi Technologies has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

		September 30, 2022				December 31, 2021
Current assets
Cash and cash equivalents		$	99,029,118			$	129,223,443
Restricted cash			40,855,710				39,452,564
Certificate of deposit			70,324,477				55,041,832
Accounts receivable (net of allowance for doubtful accounts of $2,734,642 and $3,053,277 as of September 30, 2022 and December 31, 2021, respectively)			40,034,961				52,896,305
Inventories			43,673,888				33,171,973
Notes receivable			1,371,773				323,128
Other receivables			19,293,487				8,901,109
Prepayments and prepaid expense			4,006,808				17,657,326
Advances to suppliers			5,800,659				5,940,456
TOTAL CURRENT ASSETS			324,390,881				342,608,136
NON-CURRENT ASSETS
Property, plant and equipment, net			94,908,520				111,577,411
Intangible assets, net			10,785,106				13,249,079
Land use rights, net			2,843,944				3,250,336
Construction in progress			329,726				79,317
Deferred tax assets			2,171,890				2,219,297
Long-term investment			140,649				157,262
Goodwill			32,960,659				36,027,425
Other long-term assets			10,423,361				10,992,009
TOTAL NON-CURRENT ASSETS			154,563,855				177,552,136
TOTAL ASSETS		$	478,954,736			$	520,160,272
CURRENT LIABILITIES
Accounts payable		$	33,281,208			$	36,677,802
Other payables and accrued expenses			7,894,152				9,676,973
Short-term loans			5,604,312				950,000
Notes payable			17,170,279				8,198,193
Income tax payable			1,121,744				1,620,827
Other current liabilities			6,425,151				7,038,895
TOTAL CURRENT LIABILITIES			71,496,846				64,162,690
NON-CURRENT LIABILITIES
Long-term loans			2,210,589				2,210,589
Deferred taxes liability			2,462,901				2,460,141
Contingent consideration liability			3,266,000				7,812,000
Other long-term liabilities			777,211				314,525
TOTAL NON-CURRENT LIABILITIES			8,716,701				12,797,255
TOTAL LIABILITIES			80,213,547				76,959,945
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,658,730 and 77,385,130 shares issued and 75,343,594 and 76,705,381 outstanding at September 30,2022 and December 31,2021, respectively			77,659				77,385
Less: Treasury stock (2,315,136 shares with average price of $2.96 and 679,749 shares with average price of $3.52 at September 30,2022 and December 31,2021, respectively )			(6,848,731	)			(2,392,203	)
Additional paid-in capital			450,380,994				449,479,461
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at September 30,2022 and December 31,2021, respectively)			(7,390,410	)			(4,216,102	)
Accumulated other comprehensive loss			(39,637,503	)			251,786
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS’ EQUITY			396,582,009				443,200,327
Non-controlling interests			2,159,180				-
TOTAL STOCKHOLDERS’ EQUITY			398,741,189				443,200,327
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	478,954,736			$	520,160,272

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

		Three Months Ended								Nine Months Ended
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
REVENUES FROM UNRELATED PARTIES, NET		$	33,673,201			$	16,795,712			$	79,405,788			$	62,647,714
REVENUES FROM THE FORMER AFFILIATE COMPANY AND RELATED PARTIES, NET			-				-				-				1,587
REVENUES, NET			33,673,201				16,795,712				79,405,788				62,649,301
COST OF GOODS SOLD			(27,304,038	)			(14,046,041	)			(67,930,595	)			(49,447,497	)
GROSS PROFIT			6,369,163				2,749,671				11,475,193				13,201,804
OPERATING INCOME (EXPENSE):
Research and development			(1,433,649	)			(6,747,934	)			(3,828,078	)			(31,937,436	)
Selling and marketing			(1,440,995	)			(1,290,544	)			(3,807,222	)			(3,494,927	)
General and administrative			(5,686,233	)			(3,733,230	)			(18,016,843	)			(13,522,925	)
Gain on disposal of long-lived assets			-				2,238				-				48,255,905
TOTAL OPERATING EXPENSE			(8,560,877	)			(11,769,470	)			(25,652,143	)			(699,383	)
(LOSS) INCOME FROM OPERATIONS			(2,191,714	)			(9,019,799	)			(14,176,950	)			12,502,421
OTHER INCOME (EXPENSE):
Interest income			2,138,130				1,247,544				4,739,208				2,750,241
Interest expense			(177,417	)			(63,368	)			(463,994	)			(267,785	)
Change in fair value of contingent consideration			434,995				-				2,733,995				-
Government grants			829,539				220,967				1,536,856				570,162
Gain from sale of equity in the Former Affiliate Company			-				822				-				17,734,733
Share of loss after tax of the Former Affiliate Company			-				(119	)			-				(2,584,520	)
Other income, net			536,726				442,102				2,954,036				4,768,092
TOTAL OTHER INCOME, NET			3,761,973				1,847,948				11,500,101				22,970,923
INCOME (LOSS) BEFORE INCOME TAXES			1,570,259				(7,171,851	)			(2,676,849	)			35,473,344
INCOME TAX (EXPENSE) BENEFIT			(497,211	)			(696,968	)			255,232				(8,815,409	)
NET INCOME (LOSS)			1,073,048				(7,868,819	)			(2,421,617	)			26,657,935
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS			694,029				-				752,691				-
NET INCOME (LOSS) ATTRIBUTABLE TO KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS			379,019				(7,868,819	)			(3,174,308	)			26,657,935
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment			(20,932,870	)			(116,054	)			(39,889,289	)			3,582,748
COMPREHENSIVE (LOSS) INCOME		$	(19,859,822	)		$	(7,984,873	)		$	(42,310,906	)		$	30,240,683
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC			75,741,399				76,394,573				75,962,899				75,766,749
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED			75,885,630				76,394,573				76,061,190				75,766,749
NET INCOME (LOSS) PER SHARE, BASIC		$	0.01			$	(0.10	)		$	(0.03	)		$	0.35
NET INCOME (LOSS) PER SHARE, DILUTED		$	0.01			$	(0.10	)		$	(0.03	)		$	0.35

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

		Number of Outstanding Shares				Common Stock				Treasury Stock				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Non-controlling interests				Total
Balance, December 31, 2020			75,377,555			$	75,377			$	-			$	439,549,338			$	(27,079,900	)		$	(8,778,151	)		$	-			$	403,766,664
Stock issuance and award			10,000				10				-				22,290				-				-				-				22,300
Net loss			-				-				-				-				(6,402,720	)			-				-				(6,402,720	)
Foreign currency translation			-				-				-				-				-				(1,176,013	)			-				(1,176,013	)
Reversal of reduction in the Former Affiliate Company’s equity (net of tax effect of $491,400)			-				-				-				2,771,652				-				-				-				2,771,652
Balance, March 31, 2021			75,387,555			$	75,387			$	-			$	442,343,280			$	(33,482,620	)		$	(9,954,164	)		$	-			$	398,981,883
Stock issuance and award			238,600				239				-				1,374,098				-				-				-				1,374,337
Net income			-				-				-				-				40,929,474				-				-				40,929,474
Foreign currency translation			-				-				-				-				-				4,874,815				-				4,874,815
Balance, June 30, 2021			75,626,155			$	75,626			$	-			$	443,717,378			$	7,446,854			$	(5,079,349	)		$	-			$	446,160,509
Stock issuance and award			1,526,817				1,527				-				4,874,224				-				-				-				4,875,751
Net loss			-				-				-				-				(7,868,819	)			-				-				(7,868,819	)
Foreign currency translation			-				-				-				-				-				(116,054	)			-				(116,054	)
Balance, September 30, 2021			77,152,972			$	77,153			$	-			$	448,591,602			$	(421,965	)		$	(5,195,403	)		$	-			$	443,051,387

		Number of Outstanding Shares				Common Stock				Treasury Stock				Additional Paid-in Capital				Accumulated Earning (Deficit)				Accumulated Other Comprehensive Income				Non-controlling interests				Total
Balance, December 31, 2021			77,385,130			$	77,385			$	(2,392,203	)		$	449,479,461			$	(4,216,102	)		$	251,786			$	-			$	443,200,327
Stock issuance and award			25,000				25				-				92,925				-				-				-				92,950
Stock buyback			-				-				(1,570,324	)			(13,236	)			-				-				-				(1,583,560	)
Capital contribution from shareholder			-				-				-				-				-				-				1,198,398				1,198,398
Net loss			-				-				-				-				(1,616,056	)			-				(2,957	)			(1,619,013	)
Foreign currency translation			-				-				-				-				-				1,009,811				-				1,009,811
Balance, March 31, 2022			77,410,130			$	77,410			$	(3,962,527	)		$	449,559,150			$	(5,832,158	)		$	1,261,597			$	1,195,441			$	442,298,913
Stock issuance and award			238,600				239				-				584,331				-				-				-				584,570
Stock buyback			-				-				(1,974,490	)			(22,578	)			-				-				-				(1,997,068	)
Net income (loss)			-				-				-				-				(1,937,271	)			-				61,619				(1,875,652	)
Foreign currency translation			-				-				-				-				-				(19,966,230	)			(63,460	)			(20,029,690	)
Balance, June 30, 2022			77,648,730			$	77,649			$	(5,937,017	)		$	450,120,903			$	(7,769,429	)		$	(18,704,633	)			1,193,600			$	418,981,073
Stock issuance and award			10,000				10				-				22,290				-				-				-				22,300
Stock based compensation															250,673																250,673
Stock buyback			-				-				(911,714	)			(12,872	)			-				-				-				(924,586	)
Capital contribution from shareholder			-				-				-				-				-				-				337,557				337,557
Net income (loss)			-				-				-				-				379,019				-				694,029				1,073,048
Foreign currency translation			-				-				-				-				-				(20,932,870	)			(66,006	)			(20,998,876	)
Balance, September 30, 2022			77,658,730			$	77,659			$	(6,848,731	)		$	450,380,994			$	(7,390,410	)		$	(39,637,503	)			2,159,180			$	398,741,189

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		Nine Months Ended
		September 30, 2022				September 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income		$	(2,421,617	)		$	26,657,935
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			9,512,970				6,893,192
Provision (reversal) of allowance for doubtful accounts			4,220				-
Deferred taxes			(116,206	)			(11,970	)
Share of loss after tax of the Former Affiliate Company			-				2,584,520
Gain from equity sale in the Former Affiliate Company			-				(17,734,733	)
Gain on disposal of long-lived assets			-				(48,255,905	)
Change in fair value of contingent consideration			(2,733,995	)			-
Stock award and stock based compensation expense			913,288				1,452,381
Changes in operating assets and liabilities:
Accounts receivable			(20,932,970	)			4,289,150
Notes receivable			1,927,621				-
Inventories			(13,183,546	)			(7,443,414	)
Other receivables and other assets			(10,264,805	)			(17,537,034	)
Advances to supplier and prepayments and prepaid expenses			12,405,615				18,776,708
Increase (Decrease) In:
Accounts payable			46,796,615				(4,116,153	)
Other payables and accrued liabilities			4,951,022				7,052,572
Notes payable			(13,574,849	)			(93,278	)
Income tax payable			(60,313	)			8,053,977
Net cash provided by (used in) operating activities		$	13,223,050			$	(19,432,052	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net			(1,674,445	)			(10,948,968	)
Acquisition of Jiangxi Huiyi			-				(3,864,346	)
Payment for construction in progress			(278,777	)			(4,048,889	)
Proceeds from disposal of long-lived assets			-				23,235,758
(Loan to) Repayment from third party			(4,545,386	)			31,687,637
Certificate of deposit			(22,726,928	)			(54,100,844	)
Proceeds from sales of equity in the Former Affiliate Company			-				47,608,743
Long-term Investment			-				(108,202	)
Advance receipts of equity transfer			-				600,463
Net cash (used in) provided by investing activities		$	(29,225,536	)		$	30,061,352
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans			20,642,224				2,630,000
Repayments of short-term loans			(15,987,912	)			-
Contribution from non-controlling shareholder			772,716				-
Purchase of treasury stock			(4,505,213	)			-
Net cash provided by financing activities		$	921,815			$	2,630,000
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		$	(15,080,671	)		$	13,259,300
Effect of exchange rate changes		$	(13,710,508	)		$	990,440
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR		$	168,676,007			$	142,520,635
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	139,884,828			$	156,770,375
-CASH AND CASH EQUIVALENTS AT END OF PERIOD			99,029,118				132,866,957
-RESTRICTED CASH AT END OF PERIOD			40,855,710				23,903,418
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		$	274,037				688,160
Interest paid		$	225,479				17,536
SUPPLEMENTAL NON-CASH DISCLOSURES:
Reversal of decrease in investment in the Former Affiliate Company due to change in its equity (net of tax effect of $491,400)			-				2,813,968
Contribution from non-controlling shareholder by inventories, fix assets and intangible assets			393,986				-
Common stock issued for settlement of payables related to acquisitions (see Note 19)			-				4,853,451