GlobeNewswire Inc | Aug 10, 2020 07:15AM EDT

August 10, 2020

Off-road vehicles sales increased 27.3% to $6.6 million Gross margin of 18.2% versus 17.4% year-ago Net income increased 155.4% to $4.1 million compared to net loss of $7.3 million

JINHUA, China, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the Company, we or Kandi) (NASDAQ GS: KNDI), today announced its financial results for the second quarter of 2020.

Second Quarter Highlights

-- Total revenues were $19.4 million for the second quarter of 2020, a decrease of 19.5% from total revenues of $24.1 million for the same period in 2019. -- Electric Vehicle (EV) parts sales decreased by 34.1%, to $12.5 million for the second quarter of 2020, compared with EV parts sales of $19.0 million for the same period in 2019. -- Revenues from sales of off-road vehicles increased by 27.3%, to $6.6 million for the second quarter of 2020, compared with revenues from sales of off-road vehicles of $5.2 million for the same period in 2019.

-- Gross margin for the second quarter of 2020 was 18.2%, compared to 17.4% for the same period of 2019.

-- Net income for the second quarter of 2020 was $4.1 million, or $0.08 earnings per fully diluted share, compared with net loss of $7.3 million, or $0.14 loss per fully diluted share for the same period in 2019.

-- Working capital was $75.6 million as of June 30, 2020. Cash, cash equivalents and restricted cash totaled $6.7 million as of June 30, 2020.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, Our second quarter results were satisfactory. After the pandemic in China was effectively contained, Kandi fully resumed production and actively pushed the business forward. The COVID-19 situation significantly decreased consumer demand, yet we contained the revenue decline, improved gross margin, and achieved $4.1 million in profit. We made meaningful progress in preparing for the online car-hailing business, the launch of which is planned for Hainan soon. Our first fully automatic intelligent battery swapping equipment was delivered to the rideshare operator in Hainan on August 2. Installation has been completed, and trial operations will commence. For the first time, battery swapping stations are classified as infrastructure construction based on the Government Work Report delivered by Premier Li Keqiang during the 2020 NPC. As such, we believe that our fully automatic smart replacement system will be favored by the market and drive sales of our electric vehicles. Furthermore, our affiliate company Fengsheng Automotive successively launched two exciting new pure electric SUVs and multi-purpose passenger vehicles and will continue to launch more pure electric vehicle models to meet the diversified travel needs of users.

Mr. Hu discussed the U.S. opportunity: While maintaining growth of off-road vehicles, our American wholly-owned subsidiary has also prepared to launch sales of pure EVs in the United States. A live virtual event will occur on August 18 to officially kick-off pre-sales, which will be a key milestone in the Companys history. As a technology innovator, Kandi is committed to provide high quality products with great performance and affordable price.

As a pioneer in the electric vehicle industry and inventor of the vehicle/battery separation swap model, Kandi is well-positioned to benefit from growing demand for EVs. The market potential of online car hailing in China is huge, and with government support for the battery swapping model, we are confident that Kandi will gain market share in Chinas EV industry in the near future. Mr. Hu concluded.

Net Revenues and Gross Profit

?? 2Q20 2Q19 Y-o-Y %Net Revenues (US$million) $ 19.4 $ 24.1 -19.5 %Gross Profit (US$million) $ 3.5 $ 4.2 -15.8 %Gross Margin 18.2 % 17.4 % -

Net revenues for the second quarter of 2020 decreased by 19.5% compared to the same period last year. The decrease in revenue was mainly due to lower sales of EV parts. Due to the outbreak of COVID-19 in China, the demand for EV parts from customers was significantly affected during the first half of 2020.

Income (Loss) from Operations

?? 2Q20 2Q19 Y-o-Y %Total Operating Income (Expenses) (US$million) $ 8.1 ($ 7.2 ) -213.0 %Income (Loss) from Operations (US$million) $ 11.6 ($ 3.0 ) -493.5 %Operating Margin 59.8 % -12.2 % -

Total operating income in the second quarter of 2020 were $8.1 million, compared with $7.2 million of total operating expenses in the same quarter of 2019. The increase in total operating income was mainly due to the gain on disposal of long-live asset related to the real estate repurchase agreement of our Jinhua Facilitys relocation which was $13.9 incurred during the second quarter of 2020.

Net Income (Loss)

?? 2Q20 2Q19 Y-o-Y %Net Income (Loss) (US$million) $ 4.1 ($ 7.3 ) -155.4 %Earnings (loss) per Weighted Average Common Share $ 0.08 ($ 0.14 ) - Earnings (loss) per Weighted Average Diluted Share $ 0.08 ($ 0.14 ) -

Net income was $4.1 million in the second quarter of 2020, compared with net loss of $7.3 million in the same quarter of 2019. The decrease in loss was primarily due to the gain on disposal of long-live asset which was related to the real estate repurchase agreement of our Jinhua Facilitys relocation.

Financial Condition

As of June 30, 2020, the Company had cash and cash equivalents of $3.5 million, restricted cash of $3.2 million, working capital of $75.6 million; compared to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019.

As of June 30, 2020, our accounts receivable was $60.0 million, compared to $61.2 million as of December 31, 2019.

For the first half of 2020, cash used in operating activities was $34.3 million, as compared to cash used in operating activities of $33.1 million for the same period last year.

Second Quarter 2020 Conference Call DetailsThe Company will conduct a conference call and live webcast to discuss its second quarter 2020 financial results at8:00 A.M.Eastern Time (8:00 P.M. Beijing Time) onAugust 10, 2019. 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=1441129

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 Wang Email: susie@blueshirtgroup.com

KANDI TECHNOLOGIES GROUP, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

June30, December31, 2020 2019 (UNAUDITED) Current assets Cash and cash equivalents $ 3,457,498 $ 5,490,557 Restricted cash 3,221,053 11,022,078 Accounts receivable (net of allowance fordoubtful accounts of $251,012 and $254,665as of 60,020,455 61,181,849 June 30, 2020 and December 31, 2019,respectively)Inventories 28,245,267 27,736,566 Notes receivable - 42,487,225 Other receivables 42,661,342 5,019,971 Prepayments and prepaid expense 10,407,572 10,615,063 Amount due from the Affiliate Company, net 20,107,347 31,330,763 Other current assets 13,283,400 688,364 TOTAL CURRENT ASSETS 181,403,934 195,572,436 LONG-TERM ASSETS Property, plant and equipment, net 69,907,964 74,407,858 Intangible assets 3,298,384 3,654,772 Land use rights, net 8,765,196 11,272,815 Investment in the Affiliate Company 42,490,448 47,228,614 Goodwill 27,962,871 28,270,400 Other long term assets 10,529,348 10,811,501 TOTAL Long-Term Assets 162,954,211 175,645,960 TOTAL ASSETS $ 344,358,145 $ 371,218,396 CURRENT LIABILITIES Accounts payable $ 59,656,133 $ 72,093,940 Other payables and accrued expenses 4,239,760 6,078,041 Short-term loans - 25,980,364 Notes payable 2,971,053 10,765,344 Income tax payable 2,901,610 1,796,601 Advance receipts 18,497,676 - Long term loans - current portion 16,128,576 13,779,641 Other current liability 1,421,364 1,379,808 Total Current Liabilities 105,816,172 131,873,739 LONG-TERM LIABILITIES Long term loans 11,712,415 14,353,792 Deferred taxes liability 3,448,922 1,362,786 Contingent consideration liability 2,334,000 5,197,000 Other long-term liability 565,915 574,152 Total Long-Term Liabilities 18,061,252 21,487,730 TOTAL LIABILITIES 123,877,424 153,361,469 STOCKHOLDER?S EQUITY Common stock, $0.001 par value; 100,000,000shares authorized;56,273,102 and 56,263,102 shares issued and 54,352 52,839 54,352,158 and 52,839,441 outstanding atJune 30,2020 andDecember 31,2019, respectivelyLess: Treasury stock (487,155 shares withaverage price of $5.09 at June 30,2020 and (2,477,965 ) (2,477,965 )December 31,2019, respectively )Additional paid-in capital 262,878,585 259,691,370 Accumulated deficit (the restricted portionis $4,422,033 and $4,422,033 at June (14,205,339 ) (16,685,736 )30,2020 andDecember 31,2019, respectively)Accumulated other comprehensive loss (25,768,912 ) (22,723,581 )TOTAL STOCKHOLDERS? EQUITY 220,480,721 217,856,927 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 344,358,145 $ 371,218,396

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

Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 REVENUES FROMUNRELATED $ 19,436,120 $ 20,056,696 $ 25,808,544 $ 36,391,659 PARTY, NETREVENUES FROMTHE AFFILIATECOMPANY 956 4,089,534 956 5,823,031 AND RELATEDPARTY, NET REVENUES, NET 19,437,076 24,146,230 25,809,500 42,214,690 COST OF GOODS (15,900,298 ) (19,944,076 ) (21,105,463 ) (34,876,099 )SOLD GROSS PROFIT 3,536,778 4,202,154 4,704,037 7,338,591 OPERATINGINCOME (EXPENSES):Research and (1,149,901 ) (632,590 ) (1,790,141 ) (1,170,023 )developmentSelling and (763,666 ) (899,478 ) (1,641,972 ) (1,517,481 )marketingGeneral and (3,907,191 ) (5,623,798 ) (6,973,926 ) (7,663,326 )administrativeGain ondisposal of 13,907,574 - 13,907,574 - long-liveassetTotalOperating 8,086,816 (7,155,866 ) 3,501,535 (10,350,830 )Income(Expenses) INCOME (LOSS)FROM 11,623,594 (2,953,712 ) 8,205,572 (3,012,239 )OPERATIONS OTHER INCOME (EXPENSES):Interest 221,792 97,814 560,736 350,218 incomeInterest (1,123,056 ) (429,355 ) (2,105,990 ) (868,538 )expenseChange in fairvalue of (929,000 ) 548,000 2,863,000 637,000 contingentconsiderationGovernment 86,799 175,319 97,898 223,043 grantsGain fromequitydilution in - (24,131 ) - 4,341,259 the AffiliateCompanyShare of lossafter tax of (2,978,529 ) (4,500,201 ) (4,081,299 ) (14,449,359 )the AffiliateCompanyOther income(expenses), 1,043,335 (174,597 ) 1,062,985 299,793 netTotal other (3,678,659 ) (4,307,151 ) (1,602,670 ) (9,466,584 )expenses, net INCOME (LOSS)BEFORE INCOME 7,944,935 (7,260,863 ) 6,602,902 (12,478,823 )TAXES INCOME TAX(EXPENSE) (3,889,889 ) (57,295 ) (4,122,502 ) 751,193 BENEFIT NET INCOME 4,055,046 (7,318,158 ) 2,480,400 (11,727,630 )(LOSS) OTHERCOMPREHENSIVE INCOME (LOSS)Foreigncurrency 477,734 (4,915,589 ) (3,045,331 ) 488,439 translation COMPREHENSIVE $ 4,532,780 $ (12,233,747 ) $ (564,931 ) $ (11,239,191 )INCOME (LOSS) WEIGHTEDAVERAGE SHARES 53,369,602 52,806,331 52,862,043 52,189,237 OUTSTANDINGBASICWEIGHTEDAVERAGE SHARES 53,369,602 52,806,331 52,862,043 52,189,237 OUTSTANDINGDILUTED NET INCOME(LOSS) PER $ 0.08 $ (0.14 ) $ 0.05 $ (0.22 )SHARE, BASICNET INCOME(LOSS) PER $ 0.08 $ (0.14 ) $ 0.05 $ (0.22 )SHARE, 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 IncomeBalance,December 51,484,444 $ 51,484 $ - $ 254,989,657 $ (9,497,009 ) $ (19,921,258 ) $ 225,622,874 31, 2018Stockissuance 1,096,397 1,097 - 3,387,379 - - 3,388,476 and awardNet income - - - - (4,409,472 ) - (4,409,472 )(loss)Foreigncurrency - - - - - 5,404,028 5,404,028 translation Balance,March 31, 52,580,841 $ 52,581 $ - $ 258,377,036 $ (13,906,481 ) $ (14,517,230 ) $ 230,005,906 2019Stockissuance 238,600 238 1,259,569 1,259,807 and awardNet income (7,318,158 ) (7,318,158 )(loss)Foreigncurrency (4,915,589 ) (4,915,589 )translation Balance,June 30, 52,819,441 52,819 - 259,636,605 (21,224,639 ) (19,432,819 ) 219,031,966 2019

Number of Additional Accumulated Outstanding Common Treasury Paid-in Accumulated Other Total Shares Stock Stock Capital Deficit Comprehensive IncomeBalance,December 52,839,441 $ 52,839 $ (2,477,965 ) $ 259,691,370 $ (16,685,736 ) $ (22,723,581 ) $ 217,856,927 31, 2019Stockissuance 10,000 10 - 22,290 - - 22,300 and awardNet income - - - - (1,574,646 ) - (1,574,646 )(loss)Foreigncurrency - - - - - (3,523,065 ) (3,523,065 )translation Balance,March 31, 52,849,441 $ 52,849 $ (2,477,965 ) $ 259,713,660 $ (18,260,382 ) $ (26,246,646 ) $ 212,781,516 2020Stockissuance 1,502,717 1,503 - 3,164,925 - - 3,166,428 and awardNet income - - - - 4,055,043 - 4,055,043 (loss)Foreigncurrency - - - - - 477,734 477,734 translation Balance,June 30, 54,352,158 54,352 (2,477,965 ) 262,878,585 (14,205,339 ) (25,768,912 ) 220,480,721 2020

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

June30, June30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,480,400 $ (11,727,630 )Adjustments to reconcile net incometo net cash provided by operating activitiesDepreciation and amortization 4,022,676 4,376,097 Impairments (148,054 ) 59,799 Allowance for doubtful accounts - 15,543 Deferred taxes 2,089,505 51,275 Share of loss after tax of the 4,081,299 14,449,359 Affiliate CompanyGain from equity dilution in the - (4,341,259 )Affiliate CompanyGain on disposal of long-live asset (13,907,574 ) - Change in fair value of contingent (2,863,000 ) (637,000 )considerationStock compensation cost 847,546 1,314,408 Changes in operating assets and liabilities:(Increase) Decrease In: Accounts receivable (1,431,388 ) (16,560,338 )Notes receivable - 250,593 Notes receivable from the Affiliate - 442,223 Company and related partyInventories (743,483 ) (7,093,904 )Other receivables and other assets (11,248,701 ) (6,258,341 )Advances to supplier and prepayments (12,586,777 ) 708,825 and prepaid expensesAmount due from the Affiliate Company 4,129,516 (4,128,506 ) Increase (Decrease) In: Accounts payable (282,560 ) 387,505 Other payables and accrued 736,715 7,868,402 liabilitiesNotes payable (10,664,922 ) (10,161,233 )Income tax payable 1,161,312 (2,134,722 )Net cash used in by operating $ (34,327,490 ) $ (33,118,904 )activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and (59,670 ) (512,707 )equipment, netProceeds from disposal of long-live 34,696,547 - assetCash received from equity sale in the 15,641,886 - Affiliate CompanyAdvance receipts of equity transfer - 14,740,783 Net cash provided by investing $ 50,278,763 $ 14,228,076 activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term loans 24,031,625 17,541,532 Repayments of short-term loans (49,769,638 ) (15,920,046 )Proceeds from long-term loans 394,116 - Repayments of long-term loans (284,398 ) (147,408 )Net cash (used in) provided by $ (25,628,295 ) $ 1,474,078 financing activities NET DECREASE IN CASH AND CASHEQUIVALENTS AND RESTRICTED (9,677,022 ) (17,416,750 )CASHEffect of exchange rate changes on (157,062 ) 246,604 cashCASH AND CASH EQUIVALENTS ANDRESTRICTED CASH AT 16,512,635 22,353,071 BEGINNING OF YEAR CASH AND CASH EQUIVALENTS ANDRESTRICTED CASH AT END OF 6,678,551 5,182,925 PERIOD-CASH AND CASH EQUIVALENTS AT END OF 3,457,498 3,608,933 PERIOD-RESTRICTED CASH AT END OF PERIOD 3,221,053 1,573,992 SUPPLEMENTARY CASH FLOW INFORMATION Income taxes paid 870,082 1,199,807 Interest paid 641,213 868,538