Kandi Technologies Reports Second Quarter 2022 Financial Results

-  Off-road Vehicles Sales Are Steadily Growing
-  Quarter-end cash balance¹ increased to $232.5 million

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

Second Quarter Highlights

• Total revenues of $20.8 million compared to $29.9 million in the same period of 2021.
  
  

• Off-road vehicles sales increased by 84.4% to $10.1 million, compared to $5.5 million in the same period of 2021.
  
  

• EV products sales increased by 307.1% to $2.5 million, compared to $0.6 million in the same period of 2021.
  
  

• EV parts sales were $0.6 million, compared to $6.7 million in the same period of 2021.
  
  

• Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $1.2 million, compared with $16.5 million in the same period of 2021.
  
  

• Net loss was $1.9 million, or $0.02 loss per fully diluted share, compared to a net income of $40.9 million, or $0.54 income per fully diluted share for the same period of 2021. The decrease was primarily due to the second quarter 2021 gain from the disposal of long-lived assets of approximately $48.3 million, which was related to the relocation of our Jinhua factory. There was no similar gain in the second quarter of 2022.
  
  

• Working capital of $264.2 million as of June 30, 2022
  
  

• Cash, cash equivalents, restricted cash, and certificate of deposit of $232.5 million as of June 30, 2022
  

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented, “Kandi has continuously refined its business strategy to make our company more diversified and competitive. We saw the positive impact of this effort in the second quarter. Despite frequent lockdowns caused by COVID resurgences and severe supply chain disruptions, our business strategy adjustments enabled us to achieve relatively solid results. Notably, we are getting traction in a variety of newly launched off-road vehicles, such as golf karts, UTVs, ATVs, and beach dune buggy crossovers. For example, the monthly production of golf crossovers increased to 2,000 units in June, from just double digits in March. We intend to launch more new models as the year goes on to capture this market opportunity. We believe this product category could grow around 19%² annually in compound growth rate, and eventually exceeding $2.2 billion by 2028. We are confident of sequential growth in off-road vehicles in the quarters ahead.”

Q2 2022 Financial Results

Net Revenues and Gross Profit (in USD millions)

	Q2 2022	Q2 2021	Y-o-Y%
Net Revenues	$20.8	$29.9	-30.2%
Gross Profit	$2.7	$6.1	-55.4%
Gross Margin%	13.0%	20.4%	-

Net revenues of $20.8 million in the second quarter of 2022 decreased 30.2% from the same period of 2021. The revenue decline was primarily due to lower sales volumes of Electric Scooters, Electric Self-Balancing Scooters and associated parts and EV parts due to lower seasonal demand. The mix shift to more battery revenue caused the contraction in gross margin.

Operating Income/Loss (in USD millions)

	Q2 2022		Q2 2021	Y-o-Y%
Operating (Expenses) Income	($9.0)		$38.3	-123.5%
(Loss) income from Operations	($6.3)		$44.4	-114.2%
Operating Margin%	-30.1%		148.5%	-

Operating expenses were $9.0 million, compared with operating income of $38.3 million for the same period of 2021. Second quarter 2021 operating income included the $48.3 million gain from the disposal of long-live assets related to our Jinhua facility relocation.

Net Income/Loss (in USD millions)

	Q2 2022			Q2 2021		Y-o-Y%
Net (loss) Income	($1.9)			$40.9		-104.6%
Net (Loss) income per Share, Basic and Diluted	($0.02)			$0.54		-

Net loss for the second quarter of 2022 was $1.9 million compared to net income of $40.9 million for the same period of 2021, reflecting the one-time facility relocation gain last year.

Second 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 (8:00 P.M. Beijing Time) on Monday, August 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: +1-877-407-3982
•        International dial-in number: + 1-201-493-6780
•        Webcast and replay: https://viavid.webcasts.com/starthere.jsp?ei=1562753&tp_key=ef917a2508

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

	June 30, 2022				December 31, 2021
	(Unaudited)
Current assets
Cash and cash equivalents	$	87,098,779			$	129,223,443
Restricted cash		72,235,039				39,452,564
Certificate of deposit		73,173,646				55,041,832
Accounts receivable (net of allowance for doubtful accounts of $2,903,505 and    $3,053,277 as of June 30, 2022 and December 31, 2021, respectively)		37,794,871				52,896,305
Inventories		41,937,709				33,171,973
Notes receivable		725,332				323,128
Other receivables		8,491,785				8,901,109
Prepayments and prepaid expense		2,516,142				17,657,326
Advances to suppliers		6,978,469				5,940,456
TOTAL CURRENT ASSETS		330,951,772				342,608,136
NON-CURRENT ASSETS
Property, plant and equipment, net		102,735,918				111,577,411
Intangible assets, net		11,606,688				13,249,079
Land use rights, net		3,041,861				3,250,336
Construction in progress		373,484				79,317
Deferred tax assets		2,171,889				2,219,297
Long-term investment		149,334				157,262
Goodwill		34,678,790				36,027,425
Other long-term assets		11,166,861				10,992,009
TOTAL NON-CURRENT ASSETS		165,924,825				177,552,136
TOTAL ASSETS	$	496,876,597			$	520,160,272
CURRENT LIABILITIES
Accounts payable	$	32,635,923			$	36,677,802
Other payables and accrued expenses		8,065,531				9,676,973
Short-term loans		1,450,000				950,000
Notes payable		17,933,221				8,198,193
Income tax payable		629,642				1,620,827
Other current liabilities		6,086,563				7,038,895
TOTAL CURRENT LIABILITIES		66,800,880				64,162,690
NON-CURRENT LIABILITIES
Long-term loans		2,210,589				2,210,589
Deferred taxes liability		2,490,130				2,460,141
Contingent consideration liability		5,513,000				7,812,000
Other long-term liabilities		880,925				314,525
TOTAL NON-CURRENT LIABILITIES		11,094,644				12,797,255
TOTAL LIABILITIES		77,895,524				76,959,945
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,648,730 and    77,385,130 shares issued and 75,760,807 and 76,705,381 outstanding at June    30,2022 and December 31,2021, respectively		77,649				77,385
Less: Treasury stock (1,887,923 shares with average price of $3.14 and 679,749    shares with average price of $3.52 at June 30,2022 and December 31,2021,    respectively )		(5,937,017	)			(2,392,203	)
Additional paid-in capital		450,120,903				449,479,461
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at June    30,2022 and December 31,2021, respectively)		(7,769,429	)			(4,216,102	)
Accumulated other comprehensive loss		(18,704,633	)			251,786
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS' EQUITY		417,787,473				443,200,327
Non-controlling interests		1,193,600				-
TOTAL STOCKHOLDERS' EQUITY		418,981,073				443,200,327
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	496,876,597			$	520,160,272

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

	Three Months Ended								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
REVENUES FROM UNRELATED PARTIES, NET	$	20,841,183			$	29,875,835			$	45,732,587			$	45,852,002
REVENUES FROM THE FORMER AFFILIATE COMPANY    AND RELATED PARTIES, NET		-				-				-				1,587
REVENUES, NET		20,841,183				29,875,835				45,732,587				45,853,589
COST OF GOODS SOLD		(18,122,316	)			(23,778,053	)			(40,626,557	)			(35,401,456	)
GROSS PROFIT		2,718,867				6,097,782				5,106,030				10,452,133
OPERATING INCOME (EXPENSE):
Research and development		(1,253,843	)			(3,564,905	)			(2,394,429	)			(25,189,502	)
Selling and marketing		(1,172,528	)			(1,057,517	)			(2,366,227	)			(2,204,383	)
General and administrative		(6,574,079	)			(5,359,572	)			(12,330,610	)			(9,789,695	)
Gain on disposal of long-lived assets		-				48,253,667				-				48,253,667
TOTAL OPERATING (EXPENSE) INCOME		(9,000,450	)			38,271,673				(17,091,266	)			11,070,087
(LOSS) INCOME FROM OPERATIONS		(6,281,583	)			44,369,455				(11,985,236	)			21,522,220
OTHER INCOME (EXPENSE):
Interest income		1,378,774				974,105				2,601,078				1,502,697
Interest expense		(138,433	)			(78,069	)			(286,577	)			(204,417	)
Change in fair value of contingent consideration		(391,000	)			(357,000	)			2,299,000				-
Government grants		463,219				114,402				707,317				349,195
Gain from sale of equity in the Former Affiliate Company		-				33,651				-				17,733,911
Share of loss after tax of the Former Affiliate Company		-				(4,904	)			-				(2,584,401	)
Other income, net		2,373,528				3,827,089				2,417,310				4,325,990
TOTAL OTHER INCOME , NET		3,686,088				4,509,274				7,738,128				21,122,975
(LOSS) INCOME BEFORE INCOME TAXES		(2,595,495	)			48,878,729				(4,247,108	)			42,645,195
INCOME TAX BENEFIT (EXPENSE)		719,843				(7,949,255	)			752,443				(8,118,441	)
NET (LOSS) INCOME		(1,875,652	)			40,929,474				(3,494,665	)			34,526,754
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-    CONTROLLING INTERESTS		61,619				-				58,662				-
NET (LOSS) INCOME ATTRIBUTABLE TO KANDI    TECHNOLOGIES GROUP, INC. STOCKHOLDERS		(1,937,271	)			40,929,474				(3,553,327	)			34,526,754
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment		(19,966,230	)			4,874,815				(18,956,419	)			3,698,802
COMPREHENSIVE (LOSS) INCOME	$	(21,841,882	)		$	45,804,289			$	(22,451,084	)		$	38,225,556
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED		75,863,479				75,510,788				76,075,484				75,447,633
NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED	$	(0.02	)		$	0.54			$	(0.05	)		$	0.46

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

	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

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

	Six Months Ended
	June 30, 2022				June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(3,494,665	)		$	34,526,754
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		6,447,548				4,443,218
Provision (reversal) of allowance for doubtful accounts		4,301				-
Deferred taxes		(116,206	)			(11,970	)
Share of loss after tax of the Former Affiliate Company		-				2,584,401
Gain from equity sale in the Former Affiliate Company		-				(17,733,911	)
Gain on disposal of long-lived assets		-				(48,253,667	)
Change in fair value of contingent consideration		(2,299,000	)			-
Stock based compensation expense		639,690				1,429,456
Changes in operating assets and liabilities:
Accounts receivable		(9,108,858	)			2,054,930
Notes receivable		1,925,896				-
Inventories		(9,949,597	)			(3,328,120	)
Other receivables and other assets		(2,806,192	)			(14,040,619	)
Advances to supplier and prepayments and prepaid expenses		13,475,591				20,596,182
Increase (Decrease) In:
Accounts payable		32,751,997				(1,044,040	)
Other payables and accrued liabilities		4,198,349				(463,016	)
Notes payable		(7,788,622	)			(93,273	)
Income tax payable		(777,068	)			7,671,740
Net cash provided by (used in) operating activities	$	23,103,164			$	(11,661,935	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net		(1,491,918	)			(6,565,755	)
Payment for construction in progress		(308,304	)			(1,869,028	)
Proceeds from disposal of long-lived assets		-				23,234,680
Repayment from (loan to) third party		-				31,686,168
Certificate of deposit		(21,617,615	)			(54,098,335	)
Proceeds from sales of equity in the Former Affiliate Company		-				23,803,268
Long-term Investment		-				(108,197	)
Net cash (used in) provided by investing activities	$	(23,417,837	)		$	16,082,801
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans		5,070,582				250,000
Repayments of short-term loans		(4,570,582	)			-
Contribution from non-controlling shareholder		787,499				-
Purchase of treasury stock		(3,580,628	)			-
Net cash (used in) provided by financing activities	$	(2,293,129	)		$	250,000
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	(2,607,802	)		$	4,670,866
Effect of exchange rate changes	$	(6,734,387	)		$	997,982
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	$	159,333,818			$	148,189,483
-CASH AND CASH EQUIVALENTS AT END OF PERIOD		87,098,779				132,071,957
-RESTRICTED CASH AT END OF PERIOD		72,235,039				16,117,526
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	$	140,831				373,433
Interest paid	$	102,722				-
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
Increase of other receivable for equity transfer payment of the Former Affiliate Company		-				23,803,268
Contribution from non-controlling shareholder by inventories and fix assets		393,986				-

---

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

² Source: The Insight Partners, Electric Off-Road Vehicle Market Forecast to 2028 - COVID-19 Impact and Global Analysis By Vehicle (All-Terrain Vehicle (ATV), Special Service Vehicle/Utility Terrain Vehicle (SSV/UTV), and Off-Road Motorcycles), Application (Utility, Sports, Recreation, and Military), and Geography, July 13, 2022.