Kandi Technologies Reports Third Quarter 2021 Financial Results - Form 8-K

Kandi Technologies Reports Third Quarter 2021 Financial Results

--Revenue ~$17 million --

--Working Capital of ~$289 million, cash¹ balance $211 million -

-- Sales into e-Scooter-related markets surge nearly 600% --

JINHUA, CHINA-- (November 9, 2021) - Kandi Technologies Group, Inc. (the "Company," "we" or "Kandi") (NASDAQ GS: KNDI), today announced financial results for the third quarter of 2021.

Third Quarter Highlights

●	Total revenues decreased by 10.3% to $16.8 million, from $18.7 million in the same period of 2020.

●	EV parts sales were $3.2 million, compared to $8.4 million in the same period of 2020.

●	Off-road vehicles sales were $6.8 million, compared to $8.9 million in the same period of 2020.

●	Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $6.3 million, compared to $0.9 million in the same period of 2020.

●	Battery exchange equipment and battery exchange service sales were $0.2 million. This new business had no revenue in the same period of 2020.

●	Gross margin was 16.4%, compared to 20.9% for the same period of 2020.

●	Net loss was $7.9 million, or ($0.10) per fully diluted share due to decreased sales and increased investment in R&D, compared to net loss of $1.5 million, or ($0.03) per fully diluted share for the same period of 2020.

●	As of September 30, 2021, working capital was $289.4 million. Cash, cash equivalents, restricted cash, and a certificate of deposit totaled $211.0 million.

Hu Xiaoming, Chairman and CEO of Kandi commented: "Sales are surging in the segment of e-Scooters, electric self-balancing scooters and associated parts sales. With explosive growth again this quarter, we are increasingly confident that our traction in this market can continue. Our strategic entry into this market last year represents a great success in identifying and developing intelligent transportation products to counteract the impact to EV market demand caused by the COVID-19 outbreak in 2020. We expect the EV-related business recovery to take time. Our restructuring of this business segment resulted in lower sales of EV products and parts."

¹ Includes cash, cash equivalents, restricted cash, and certificate of deposit.

Hu continued, "Compared to the second quarter, our sales mix had a couple of notable shifts. Within EV parts, battery pack sales were impacted by supply chain constraints hitting the whole industry. Meanwhile, off-road vehicles sales grew more rapidly, indicating burgeoning customer demand for off-road and ATV recreation. We are excited about the new products we are introducing for this segment."

Turning to the balance sheet, Hu commented, "During the quarter we received the final payment related to the sale of our 22% equity position in Fengsheng. Our liquidity has never been better. We are well-capitalized to pursue the most promising market opportunities: those that show high demand, are not oversupplied, and play to our competitive strengths. After we finish the 'reset' of our electric vehicle business, we can again achieve substantial growth. "

Q3 2021 Financial Results

Net Revenues and Gross Profit (in USD millions)

			3Q21				3Q20				Y/Y%
Net Revenue		$	16.8			$	18.7				-10.3	%
Gross Profit		$	2.7			$	3.9				-29.7	%
Gross Margin			16.4	%			20.9	%			-

Net revenues of $16.8 million decreased 10.3% from the third quarter of 2020. The decrease in revenue was primarily due to lower sales of EV parts. Gross margin was 16.4%, lower than the 20.9% recorded in the same period of 2020, primarily attributable to a lower proportion of revenue generated from off-road vehicles, which offers higher gross margin.

Operating Income/Loss(in USD millions)

			3Q21				3Q20				Y/Y%
Operating Expenses		$	(11.8	)		$	(6.3	)			87.2	%
Loss from Operations		$	(9.0	)		$	(2.4	)			279.3	%
Operating Margin			-53.7	%			-12.7	%			-

Operating expenses were $11.8 million, compared with expenses of $6.3 million in the third quarter of 2020. The greater expense was primarily attributable to increased R&D spending for new product development.

2

Net Loss (in USD millions)

			3Q21				3Q20				Y/Y%
Net Loss		$	(7.9	)		$	(1.5	)			439.6	%
Net Loss per Share, Basic and Diluted		$	(0.10	)		$	(0.03	)			-

Net loss was $7.9 million, compared with a net loss of $1.5 million in the same period of 2020. The greater loss was primarily attributable to higher R&D spending and decreased revenue generated by certain EV parts.

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 9, 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:

●	Toll-free dial-in number: [phone]

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

●	Webcast and replay: https://viavid.webcasts.com/starthere.jsp?ei=1511452&tp_key=9297e2ff2a

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

[phone]

[e-mail]

The Blueshirt Group

Mr. Gary Dvorchak, CFA

[e-mail]

- Tables Below -

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KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		September 30, 2021			December 31, 2020
Current assets
Cash and cash equivalents		$	132,866,957			$	142,078,190
Restricted cash			23,903,418				442,445
Certificate of deposit			54,207,258				-
Accounts receivable (net of allowance for doubtful accounts of $111,481 and $110,269 as of September 30, 2021 and December 31, 2020, respectively)			43,998,755				38,547,137
Inventories			27,346,751				19,697,383
Notes receivable			106,514				31,404,630
Other receivables			23,754,321				1,875,245
Prepayments and prepaid expense			19,371,962				13,708,149
Advances to suppliers			12,506,543				36,733,182
Amount due from the Affiliate Company			-				21,742,226
Amount due from related party			-				886,989
TOTAL CURRENT ASSETS			338,062,479				307,115,576
NON-CURRENT ASSETS
Property, plant and equipment, net			90,461,708				65,402,680
Intangible assets, net			2,770,152				3,232,753
Land use rights, net			3,224,185				3,257,760
Construction in progress			8,306,311				16,317,662
Deferred taxes assets			7,852,209				8,964,946
Long term investment			154,878				45,958
Investment in the Affiliate Company			-				28,892,638
Goodwill			29,963,965				29,712,383
Other long term assets			11,946,463				32,307,484
TOTAL NON-CURRENT ASSETS			154,679,871				188,134,264
TOTAL ASSETS		$	492,742,350			$	495,249,840
CURRENT LIABILITIES
Accounts payable		$	26,177,367			$	34,257,935
Other payables and accrued expenses			3,000,136				7,218,395
Short-term loans			2,630,000				-
Notes payable			371,707				92,445
Income tax payable			11,660,654				1,313,754
Advance receipts			601,644				38,229,242
Amount due to related party			500,000				500,000
Other current liabilities			3,682,386				2,185,654
TOTAL CURRENT LIABILITIES			48,623,894				83,797,425
NON-CURRENT LIABILITIES
Deferred taxes liability			602,435				3,483,171
Contingent consideration liability			-				3,743,000
Other long-term liabilities			464,634				459,580
TOTAL NON-CURRENT LIABILITIES			1,067,069				7,685,751
TOTAL LIABILITIES			49,690,963				91,483,176
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,462,516 and 77,298,499 shares issued and 77,152,972 and 75,377,555 outstanding at September 30,2021 and December 31,2020, respectively			77,153				75,377
Additional paid-in capital			448,591,602				439,549,338
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at September 30,2021 and December 31,2020, respectively)			(421,965	)			(27,079,900	)
Accumulated other comprehensive loss			(5,195,403	)			(8,778,151	)
TOTAL STOCKHOLDERS' EQUITY			443,051,387				403,766,664
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	492,742,350			$	495,249,840

4

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

		Three Months Ended			Nine Months Ended
		September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
REVENUES FROM UNRELATED PARTIES, NET		$	16,795,712			$	18,717,212			$	62,647,714			$	44,525,756
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET			-				6				1,587				962
REVENUES, NET			16,795,712				18,717,218				62,649,301				44,526,718
COST OF GOODS SOLD			(14,046,041	)			(14,806,322	)			(49,447,497	)			(35,911,785	)
GROSS PROFIT			2,749,671				3,910,896				13,201,804				8,614,933
OPERATING INCOME (EXPENSE):
Research and development			(6,747,934	)			(987,285	)			(31,937,436	)			(2,777,426	)
Selling and marketing			(1,290,544	)			(2,165,383	)			(3,494,927	)			(3,807,355	)
General and administrative			(3,733,230	)			(3,212,209	)			(13,522,925	)			(10,186,135	)
Gain on disposal of long-lived assets			2,238				76,159				48,255,905				13,983,733
TOTAL OPERATING EXPENSE			(11,769,470	)			(6,288,718	)			(699,383	)			(2,787,183	)
(LOSS) INCOME FROM OPERATIONS			(9,019,799	)			(2,377,822	)			12,502,421				5,827,750
OTHER INCOME (EXPENSE):
Interest income			1,247,544				558,059				2,750,241				1,118,795
Interest expense			(63,368	)			(788,589	)			(267,785	)			(2,894,579	)
Change in fair value of contingent consideration			-				(1,069,000	)			-				1,794,000
Government grants			220,967				13,431				570,162				111,329
Gain from sale of equity in the Affiliate Company			822				-				17,734,733				-
Share of loss after tax of the Affiliate Company			(119	)			(1,550,568	)			(2,584,520	)			(5,631,867	)
Other income, net			442,102				988,287				4,768,092				2,051,272
TOTAL OTHER INCOME (EXPENSE), NET			1,847,948				(1,848,380	)			22,970,923				(3,451,050	)
(LOSS) INCOME BEFORE INCOME TAXES			(7,171,851	)			(4,226,202	)			35,473,344				2,376,700
INCOME TAX (EXPENSE) BENEFIT			(696,968	)			2,767,939				(8,815,409	)			(1,354,563	)
NET (LOSS) INCOME			(7,868,819	)			(1,458,263	)			26,657,935				1,022,137
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment			(116,054	)			8,216,974				3,582,748				5,171,643
COMPREHENSIVE (LOSS) INCOME		$	(7,984,873	)		$	6,758,711			$	30,240,683			$	6,193,780
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED			76,394,573				54,112,981				75,766,749				53,282,066
NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED		$	(0.10	)		$	(0.03	)		$	0.35			$	0.02

5

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			Total
Balance, 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			10,000				10				-				22,290				-				-				22,300
Net loss			-				-				-				-				(1,574,646	)			-				(1,574,646	)
Foreign currency translation			-				-				-				-				-				(3,523,065	)			(3,523,065	)
Balance, March 31, 2020			52,849,441			$	52,849			$	(2,477,965	)		$	259,713,660			$	(18,260,382	)		$	(26,246,646	)		$	212,781,516
Stock issuance and award			1,502,717				1,503								3,164,925												3,166,428
Net income																			4,055,043								4,055,043
Foreign currency translation																							477,734				477,734
Balance, June 30, 2020			54,352,158			$	54,352			$	(2,477,965	)		$	262,878,585			$	(14,205,339	)		$	(25,768,912	)		$	220,480,721
Stock issuance and award			258,600				259				-				870,837				-				-				871,096
Net loss			-				-				-				-				(1,458,263	)			-				(1,458,263	)
Foreign currency translation			-				-				-				-				-				8,216,974				8,216,974
Reduction in the Affiliate Company's equity			-				-				-				(3,144,213	)			-				-				(3,144,213	)
Balance, September 30, 2020			54,610,758			$	54,611			$	(2,477,965	)		$	260,605,209			$	(15,663,602	)		$	(17,551,938	)		$	224,966,315

		Number of Outstanding Shares			Common Stock			Treasury Stock			Additional Paid-in Capital			Accumulated Earning (Deficit)			Accumulated Other Comprehensive Income			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 Affiliate Company's equity (net off 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

6

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

		Nine Months Ended
		September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	26,657,935			$	1,022,137
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			6,893,192				6,078,070
(Reversal) provision of allowance for doubtful accounts			-				(150,756	)
Deferred taxes			(11,970	)			1,256,167
Share of loss after tax of the Affiliate Company			2,584,520				5,631,867
Gain from equity sale in the Affiliate Company			(17,734,733	)			-
Gain on disposal of long-live assets			(48,255,905	)			(13,983,733	)
Change in fair value of contingent consideration			-				(1,794,000	)
Stock based compensation expense			1,452,381				870,471
Changes in operating assets and liabilities:
Accounts receivable			4,289,150				18,165,084
Inventories			(7,443,414	)			(1,830,827	)
Other receivables and other assets			(17,537,034	)			(5,226,968	)
Advances to supplier and prepayments and prepaid expenses			18,776,708				(84,089	)
Amount due from the Affiliate Company			-				4,178,477
Increase (Decrease) In:
Accounts payable			(4,116,153	)			(15,642,931	)
Other payables and accrued liabilities			7,052,572				2,675,156
Notes payable			(93,278	)			(13,725,855	)
Income tax payable			8,053,977				(804,238	)
Net cash used in operating activities		$	(19,432,052	)		$	(13,365,968	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net			(10,948,968	)			(383,568	)
Prepayments for acquisition of Jiangxi Huiyi			(3,864,346	)			-
Payment for construction in progress			(4,048,889	)			(1,604,427	)
Proceeds from disposal of long-lived assets			23,235,758				51,872,829
Loan to third party			31,687,637				(45,958,247	)
Certificate of deposit			(54,100,844	)			-
Cash received from sales of equity in the Affiliate Company			47,608,743				42,321,385
Long Term Investment			(108,202	)			-
Advance receipts of equity transfer			600,463				-
Net cash provided by investing activities		$	30,061,352			$	46,247,972
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans			2,630,000				24,163,223
Repayments of short-term loans			-				(50,042,178	)
Repayments of long-term loans			-				(285,955	)
Proceeds from long-term loans			-				394,116
Net cash provided by (used in) financing activities		$	2,630,000			$	(25,770,794	)
NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		$	13,259,300			$	7,111,210
Effect of exchange rate changes		$	990,440			$	535,314
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR		$	142,520,635			$	16,512,635
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	156,770,375			$	24,159,159
-CASH AND CASH EQUIVALENTS AT END OF PERIOD			132,866,957				23,909,159
-RESTRICTED CASH AT END OF PERIOD			23,903,418				250,000
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		$	688,160				901,021
Interest paid		$	17,536				644,724
SUPPLEMENTAL NON-CASH DISCLOSURES:
Reversal of decrease in investment in the Affiliate Company due to change in its equity (net off tax effect of $491,400)		$	2,813,968				-
Decrease in investment in the Affiliate Company due to change in its equity			-				3,057,540
Common stock issued for settlement of payables related to acquisitions (see Note 21)		$	4,853,451				3,166,427

7