GlobeNewswire Inc | Nov 9, 2020 07:30AM EST

November 09, 2020

- Off-road vehicles sales increased 51.6% to $8.9 million - Gross margin of 20.9% up versus 16.7% year-ago

JINHUA, CHINA, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the Company, we or Kandi) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2020.

Operating Highlights

During the third quarter, Kandi achieved:

-- In September, established China Battery Exchange Technology Company, a wholly-owned subsidiary for its battery swapping services. -- On August 18, Kandi America held a successful virtual launch event to introduce its K23 and K27 EVs into the U.S. market. -- In August, delivered its fully automatic intelligent battery exchange system to the rideshare operator in Haikou City, Hainan. -- In July, the Affiliate Company Fengsheng Automotive launched sales of the Maple 30X, its first pure electric SUV. -- Fengsheng Automatives Maple 60V all-electric multi-purpose vehicle) was approved for purchase subsidies by Chinas Ministry of Industry and Information Technology.

More recently, Kandi also announced:

-- A strategic cooperation agreement with the Zhejiang State Grid Electric Vehicle Service Company in the area of battery exchange for pure electric vehicles. -- The establishment of Zhejiang Ruiheng Technology Company, which intends to operate a ridesharing service across China. -- Initiated the IPO process for its wholly owned subsidiary, Zhejiang Kandi Smart Battery Swap Technology, to list on the Shanghai Stock Exchange STAR market. -- Kandi America, the U.S. subsidiary has received the required clearance from the United States Environmental Protection Agency (EPA) for its two electric vehicle models theK23andK27 via Certificates of Conformity.

Financial Highlights

All figures refer to the third quarter of 2020 unless noted otherwise. All comparisons are with the third quarter of 2019, unless noted otherwise.

-- Total revenues were down 40.9% to $18.7 million. -- Electric Vehicle (EV) parts sales decreased by 67.4% to $8.4 million. -- Off-road vehicle sales increased by 51.6% to $8.9 million. -- Gross margin of 20.9% increased 42 basis points versus the year-ago period. -- Net loss was $1.5 million, or $0.03 per fully diluted share. This compares to net income of $12.1 million, or $0.23 last year. -- As of September 30, 2020, working capital was $79.8 million. Cash, cash equivalents and restricted cash was $24.2 million.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, As we approach year-end, we are proud of our progress despite the challenges posed by COVID-19 around the world. We were productive in the third quarter. Most importantly, after a lengthy process of preparation, the 300,000 government-accredited pure EV within 5 years rideshare programof which Kandi was a co-founder-- has begun its trial with the gradual delivery of 1,000 EVs to the city of Haikou in Hainan province and 2,500 EVs to the city of Shaoxing in Zhejiang province. All the EVs delivered for the program include our battery swap feature. We believe that this program can drive the production and sales of our EV parts and battery swap equipment, and we can thus restore growth in our pure EV business.

Hu also discussed the plan to list Kandis Battery Swap Subsidiary on the Shanghai Stock Exchanges STAR Board: Based on feedback from three world-class advisors preliminary due diligence, we are confident about this proposed spin-off listing on the STAR market. By tapping Chinas capital markets, listing on the STAR Board will accelerate the Companys business growth and also enable Kandi to unlock and realize the value of this emerging business.

Net Revenues and Gross Profit

?? 3Q20 3Q19 Y-o-Y% Net Revenues (US$million) $ 18.7 $ 31.7 -40.9 %Gross Profit (US$million) $ 3.9 $ 5.3 -25.9 %Gross Margin 20.9 % 16.7 % -

The decline in revenue was due mainly to slower sales of EV parts, a result of reduced demand from our customers due to the economic effects of the COVID-19 pandemic.

Operating Loss

?? 3Q20 3Q19 Y-o-Y% Operating Expenses (US$million) $ 6.3 $ 5.0 26.8 %Operating (Loss) Income (US$million) ($ 2.4 ) $ 0.3 -851.3 %Operating Margin -12.7 % 1.0 % -

Operating expenses increased due to higher sales and marketing expense related to the Companys entry into the U.S. electric vehicle market.

Net Income (Loss)

?? 3Q20 3Q19 Y-o-Y% Net(Loss) Income (US$million) ($ 1.5 ) $ 12.1 -112.1 %(Loss) Earnings per Weighted Average Common ($ 0.03 ) $ 0.23 - Share(Loss) Earnings per Weighted Average Diluted ($ 0.03 ) $ 0.23 - Share

Net loss was $1.5 million in the third quarter of 2020, compared with net income of $12.1 million in the same quarter of 2019. The decline was due to recognition in the third quarter of 2019 of a $20.6 million gain from the sale of equity in the Affiliate Company.

Financial Condition

As of September 30, 2020, the Company had cash and cash equivalents of $23.9 million, restricted cash of $0.25 million, and working capital of $79.8 million. This compares to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019, respectively.

As of September 30, 2020, accounts receivable were $38.4 million, compared to $61.2 million as of December 31, 2019.

For the first three quarters of 2020, cash used in operating activities was $13.4 million, as compared to cash used in operating activities of $14.6 million for the same period last year.

Third Quarter 2020 Conference Call Details

The Company will conduct a conference call and live webcast to discuss its third quarter 2020 financial results at8:00 A.M.Eastern Time (9:00 P.M. Beijing Time) onNovember 9, 2020. Management will deliver prepared remarks to be followed by a question and answer session.

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: http://public.viavid.com/index.php?id=142327

A live audio webcast of the call can also be accessed by visitingKandi'sInvestor Relations page on the Companys website at http://www.kandivehicle.com. An archive of the webcast will be available on the Companys 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, SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States and Fengsheng Automobile Technology Group Co., Ltd (formerly known as Kandi Electric Vehicles Group Co., Ltd., the Affiliate Company). Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

In 2013, Kandi Vehicles and Geely Group, China's leading automaker, jointly invested in the establishment of the Affiliate Company in order to develop, manufacture and sell pure electric vehicle ("EV") products. Geely Group (including its affiliate) and Kandi Vehicles currently holds 78% and 22% of the equity interests in the Affiliate Company, respectively. The Affiliate Company has established itself as one of the driving forces in the development and the manufacturing of pure EV products in China.

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

For More Information:

Kandi Technologies Group, Inc.

Ms. Kewa LuoPhone: +1 (212) 551-3610Email: IR@kandigroup.com

The Blueshirt Group

U.S.:Mr. Gary DvorchakEmail: gary@blueshirtgroup.com

China:Ms. Susie WangEmail: susie@blueshirtgroup.com

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)



September30, December31, 2020 2019 (UNAUDITED) Current assets Cash and cash equivalents $ 23,909,159 $ 5,490,557 Restricted cash 250,000 11,022,078 Accounts receivable (net of allowancefor doubtful accounts of $105,833 and 38,370,898 61,181,849 $254,665 as of September30, 2020and December31, 2019, respectively)Inventories 30,244,514 27,736,566 Notes receivable 235,249 42,487,225 Other receivables 54,654,688 5,019,971 Prepayments and prepaid expense 10,980,473 10,615,063 Amount due from the Affiliate Company 20,869,315 31,330,763 Other current assets 4,262,285 688,364 TOTAL CURRENT ASSETS 183,776,581 195,572,436 NON-CURRENT ASSETS Property, plant and equipment, net 71,132,470 74,407,858 Intangible assets, net 3,264,500 3,654,772 Land use rights, net 9,042,991 11,272,815 Investment in the Affiliate Company 39,442,126 47,228,614 Goodwill 28,792,031 28,270,400 Other long term assets 13,132,240 10,811,501 TOTAL NON-CURRENT ASSETS 164,806,358 175,645,960 TOTAL ASSETS $ 348,582,939 $ 371,218,396 CURRENT LIABILITIES Accounts payable $ 42,154,366 $ 72,093,940 Other payables and accrued expenses 5,857,897 6,078,041 Short-term loans - 25,980,364 Notes payable - 10,765,344 Income tax payable 1,087,338 1,796,601 Advance receipts 36,691,372 - Long term loans - current portion 16,761,501 13,779,641 Other current liabilities 1,456,108 1,379,808 TOTAL CURRENT LIABILITIES 104,008,582 131,873,739 NON-CURRENT LIABILITIES Long term loans 12,156,573 14,353,792 Deferred taxes liability 3,460,346 1,362,786 Contingent consideration liability 3,403,000 5,197,000 Other long-term liabilities 588,123 574,152 TOTAL NON-CURRENT LIABILITIES 19,608,042 21,487,730 TOTAL LIABILITIES 123,616,624 153,361,469 STOCKHOLDER'S EQUITY Common stock, $0.001 par value;100,000,000 shares authorized;56,531,702 and 56,263,102 shares 54,611 52,839 issued and 54,610,758 and 52,839,441outstanding at September30, 2020and December31, 2019, respectivelyLess: Treasury stock (487,155 shareswith average price of $5.09 at (2,477,965 ) (2,477,965 )September30, 2020 and December31,2019, respectively)Additional paid-in capital 260,605,209 259,691,370 Accumulated deficit (15,663,602 ) (16,685,736 )Accumulated other comprehensive loss (17,551,938 ) (22,723,581 )TOTAL STOCKHOLDERS' EQUITY 224,966,315 217,856,927 TOTAL LIABILITIES AND STOCKHOLDERS' $ 348,582,939 $ 371,218,396 EQUITY

KANDI TECHNOLOGIES GROUP, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE INCOME (LOSS)(UNAUDITED)

Three Months Ended Nine Months Ended September30, September30, September30, September30, 2020 2019 2020 2019 REVENUES FROMUNRELATED $ 18,717,212 $ 26,968,385 $ 44,525,756 $ 63,360,044 PARTIES, NETREVENUES FROMTHE AFFILIATECOMPANY AND 6 4,720,159 962 10,543,190 RELATEDPARTIES, NET REVENUES, NET 18,717,218 31,688,544 44,526,718 73,903,234 COST OF GOODS (14,806,322 ) (26,412,129 ) (35,911,785 ) (61,288,228 )SOLD GROSS PROFIT 3,910,896 5,276,415 8,614,933 12,615,006 OPERATING EXPENSES:Research and (987,285 ) (596,187 ) (2,777,426 ) (1,766,210 )developmentSelling and (2,165,383 ) (930,810 ) (3,807,355 ) (2,448,291 )marketingGeneral and (3,212,209 ) (3,432,920 ) (10,186,135 ) (11,096,246 )administrativeGain ondisposal of 76,159 - 13,983,733 - long-livedassetsTOTALOPERATING (6,288,718 ) (4,959,917 ) (2,787,183 ) (15,310,747 )EXPENSES, NET (LOSS) INCOMEFROM (2,377,822 ) 316,498 5,827,750 (2,695,741 )OPERATIONS OTHER INCOME (EXPENSE):Interest 558,059 209,736 1,118,795 559,954 incomeInterest (788,589 ) (435,524 ) (2,894,579 ) (1,304,062 )expenseChange in fairvalue of (1,069,000 ) 57,000 1,794,000 694,000 contingentconsiderationGovernment 13,431 502,146 111,329 725,189 grantsGain (loss)from equitydilution in - (49,285 ) - 4,291,974 the AffiliateCompanyGain from saleof equity in - 20,574,217 - 20,574,217 the AffiliateCompanyShare of lossafter tax of (1,550,568 ) (8,433,767 ) (5,631,867 ) (22,883,126 )the AffiliateCompanyOther income, 988,287 57,833 2,051,272 357,626 netTOTAL OTHER(EXPENSE) (1,848,380 ) 12,482,356 (3,451,050 ) 3,015,772 INCOME, NET (LOSS) INCOMEBEFORE INCOME (4,226,202 ) 12,798,854 2,376,700 320,031 TAXES INCOME TAXBENEFIT 2,767,939 (709,413 ) (1,354,563 ) 41,780 (EXPENSE) NET (LOSS) (1,458,263 ) 12,089,441 1,022,137 361,811 INCOME OTHERCOMPREHENSIVE INCOME (LOSS)Foreigncurrency 8,216,974 (8,531,043 ) 5,171,643 (8,042,604 )translationadjustment COMPREHENSIVE $ 6,758,711 $ 3,558,398 $ 6,193,780 $ (7,680,793 )INCOME (LOSS) WEIGHTEDAVERAGE SHARESOUTSTANDING 54,112,981 52,613,642 53,282,066 52,332,260 BASIC ANDDILUTED NET (LOSS)INCOME PER $ (0.03 ) $ 0.23 $ 0.02 $ 0.01 SHARE, BASICAND DILUTED



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

Number of Additional Accumulated Outstanding Common Treasury Paid-in Accumulated Other Total Shares Stock Stock Capital Deficit Comprehensive LossBalance, December31, 51,484,444 $ 51,484 $ - $ 254,989,657 $ (9,497,009 ) $ (19,921,258 ) $ 225,622,874 2018Stock issuance and 1,096,397 1,097 - 3,387,379 - - 3,388,476 awardsNet loss - - - - (4,409,472 ) - (4,409,472 )Foreign currency - - - - - 5,404,028 5,404,028 translationBalance, March 31, 2019 52,580,841 $ 52,581 $ - $ 258,377,036 $ (13,906,481 ) $ (14,517,230 ) $ 230,005,906 Stock issuance and 238,600 238 - 1,259,569 - - 1,259,807 awardsNet loss - - - - (7,318,158 ) - (7,318,158 )Foreign currency - - - - - (4,915,589 ) (4,915,589 )translationBalance, June 30, 2019 52,819,441 $ 52,819 $ - $ 259,636,605 $ (21,224,639 ) $ (19,432,819 ) $ 219,031,966 Stock issuance and 20,000 20 - 69,380 - - 69,400 awardsStock buyback - - (2,477,965 ) - - - (2,477,965 )Commission in stock - - - (14,615 ) - - (14,615 )buybackNet income - - 12,089,441 - 12,089,441 Foreign currency - - - - - (8,531,043 ) (8,531,043 )translationBalance, September30, 52,839,441 $ 52,839 $ (2,477,965 ) $ 259,691,370 $ (9,135,198 ) $ (27,963,862 ) $ 220,167,184 2019

Number of Additional Accumulated Outstanding Common Treasury Paid-in Accumulated Other Total Shares Stock Stock Capital Deficit Comprehensive LossBalance,December31, 52,839,441 $ 52,839 $ (2,477,965 ) $ 259,691,370 $ (16,685,736 ) $ (22,723,581 ) $ 217,856,927 2019Stockissuance and 10,000 10 - 22,290 - - 22,300 awardsNet loss - - - - (1,574,646 ) - (1,574,646 )Foreigncurrency - - - - - (3,523,065 ) (3,523,065 )translationBalance,March 31, 52,849,441 $ 52,849 $ (2,477,965 ) $ 259,713,660 $ (18,260,382 ) $ (26,246,646 ) $ 212,781,516 2020Stockissuance and 1,502,717 1,503 - 3,164,925 - - 3,166,428 awardsNet income - - - - 4,055,043 - 4,055,043 Foreigncurrency - - - - - 477,734 477,734 translationBalance, June 54,352,158 $ 54,352 $ (2,477,965 ) $ 262,878,585 $ (14,205,339 ) $ (25,768,912 ) $ 220,480,721 30, 2020Stockissuance and 258,600 259 - 870,837 - - 871,096 awardsNet loss - - - - (1,458,263 ) - (1,458,263 )Foreigncurrency - - - - - 8,216,974 8,216,974 translationReduction inthe Affiliate - - - (3,144,213 ) - - (3,144,213 )Company?sequityBalance,September30, 54,610,758 $ 54,611 $ (2,477,965 ) $ 260,605,209 $ (15,663,602 ) $ (17,551,938 ) $ 224,966,315 2020

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

Nine Months Ended September30, September30, 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,022,137 $ 361,811 Adjustments to reconcile net incometo net cash provided by operating activitiesDepreciation and amortization 6,078,070 6,443,422 (Reversal) provision of allowance for (150,756 ) 15,366 doubtful accountsDeferred taxes 1,256,167 50,693 Share of loss after tax of the 5,631,867 22,883,126 Affiliate CompanyGain from equity dilution in the - (4,291,974 )Affiliate CompanyGain from sale of equity in the - (20,574,217 )Affiliate CompanyGain on disposal of long-lived assets (13,983,733 ) - Change in fair value of contingent (1,794,000 ) (694,000 )considerationStock based compensation expense 870,471 1,337,333 Changes in operating assets and liabilities:Accounts receivable 18,165,084 (36,822,184 )Notes receivable - 174,881 Notes receivable from the Affiliate - 437,203 Company and related partyInventories (1,830,827 ) (14,768,603 )Other receivables and other assets (5,226,968 ) (7,746,801 )Prepayments and prepaid expenses (84,089 ) 1,357,001 Amount due from the Affiliate Company 4,178,477 30,549,072 Increase (Decrease) In: Accounts payable (15,642,931 ) 11,383,411 Other payables and accrued 2,675,156 8,934,397 liabilitiesNotes payable (13,725,855 ) (11,836,950 )Income tax payable (804,238 ) (1,803,574 )Net cash used in operating activities $ (13,365,968 ) $ (14,610,587 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and (383,568 ) (955,670 )equipment, netPayment for construction in progress (1,604,427 ) (18,491 )Proceeds from disposal of long-lived 51,872,829 - assetsLoan to third party (45,958,247 ) (9,555,014 )Cash received from sales of equity in 42,321,385 32,061,558 the Affiliate CompanyNet cash provided by investing $ 46,247,972 $ 21,532,383 activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term loans 24,163,223 27,864,409 Repayments of short-term loans (50,042,178 ) (26,261,331 )Repayments of long-term loans (285,955 ) (145,734 )Proceeds from long-term loans 394,116 - Repayments of loan from third party - (1,259,551 )Stock buyback with commission - (2,492,579 )Net cash used in financing activities $ (25,770,794 ) $ (2,294,786 ) NET INCREASE IN CASH AND CASH 7,111,210 4,627,010 EQUIVALENTS AND RESTRICTED CASHEffect of exchange rate changes 535,314 (928,440 )CASH AND CASH EQUIVALENTS AND 16,512,635 22,353,071 RESTRICTED CASH AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AND $ 24,159,159 $ 26,051,641 RESTRICTED CASH AT END OF PERIOD-CASH AND CASH EQUIVALENTS AT END OF 23,909,159 14,338,637 PERIOD-RESTRICTED CASH AT END OF PERIOD 250,000 11,713,004 SUPPLEMENTARY CASH FLOW INFORMATION Income taxes paid $ 901,021 $ 1,711,101 Interest paid $ 644,724 $ 1,304,062 SUPPLEMENTAL NON-CASH DISCLOSURES: Decrease in investment in theAffiliate Company due to change in $ 3,057,540 $ - its equityNotes receivable from unrelated $ - $ 43,137,369 parties for equity transfer paymentCommon stock issued for settlement ofpayables related to acquisitions (see $ 3,166,427 $ 3,357,425 Note 20)