UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 28, 2020

 

KANDI TECHNOLOGIES GROUP, INC.
(Exact name of registrant as specified in its charter)

 

Delaware   001-33997   90-0363723
(State of Incorporation)   (Commission File Number)   (IRS Employer Identification)

 

Jinhua City Industrial Zone
Jinhua, Zhejiang Province
People’s Republic of China
Post Code 321016
(Address of principal executive offices)

 

(86-579) 8223-9700
Registrant’s telephone number, including area code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐   Soliciting material pursuant to Rule 1 4a- 12 under the Exchange Act (17 CFR 240.1 4a- 12)

 

☐   Pre-commencement communications pursuant to Rule 1 4d-2(b) under the Exchange Act (17 CFR 240.1 4d-2(b))

 

☐   Pre-commencement communications pursuant to Rule 1 3e-4(c) under the Exchange Act (17 CFR 240.1 3e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐   

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   KNDI   NASDAQ Global Select Market

 

 

 

 

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On April 28, 2020, Kandi Technologies Group, Inc. (the “Company”) issued a press release announcing certain financial results for the fiscal year ended December 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

 

The information contained in this Item 2.02 is not “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not deemed incorporated by reference by any general statements incorporating by reference this report or future filings into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates the information by reference.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibits.

 

Exhibit No.   Description
99.1   Press release dated April 28, 2020

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  KANDI TECHNOLOGIES GROUP, INC.
     
Date: April 28, 2020 By: /s/ Hu Xiaoming
  Name: Hu Xiaoming
  Title: Chief Executive Officer

 

 

2

 

Exhibit 99.1

 

Kandi Technologies Reports Full Year 2019 Financial Results

 

-   Full Year Revenues of $135.7 m, up 20.7% yoy

-   Full Year Off-road Vehicles Sales of $22.7 m, up 70.5% yoy

-   Full Year Operating Income of $0.9 m, compared with operating loss of $1.6m in 2018

 

JINHUA, CHINA-- (April 28, 2020) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the full year ended December 31, 2019. 

 

Full Year 2019 Highlights

 

Total revenues were $135.7 million in 2019, an increase of 20.7% from total revenues of $112.4 million in 2018.

 

EV parts sales increased by 11.7% to $110.7 million in 2019, compared with EV parts sales of $99.1 million in 2018.

 

Off-road vehicles sales increased by 70.5% to $22.7 million in 2019, compared with off-road vehicles sales of $13.3 million in 2018.

 

Gross margin for the year ended December 31, 2019 was 18.7%, compared to 18.0% for the year ended December 31, 2018.

 

Operating income in 2019 was $0.9 million, compared with an operating loss of $1.6 million in 2018.

 

Net loss in 2019 was $7.2 million, or $0.14 loss per fully diluted share, compared with a net loss of $5.7 million, or $0.11 loss per fully diluted share in 2018.

 

As of December 31, 2019, working capital was $63.7 million; cash, cash equivalents, and restricted cash totaled $16.5 million.

 

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “Despite challenging market conditions, we delivered solid revenue growth of 20.7% year-over-year and improved gross margin to 18.7%.”

 

Hu continued, “During the year, we achieve two major strategic milestones that position us for strong growth in the years ahead. First, we completed the restructuring of the Affiliate Company, formerly defined as the JV Company by transferring 21.47% of its equity interests in the Affiliate Company to Geely for a total amount of RMB 516 million, or approximately $72.3 million. As a result of the completion of the equity transfer, Kandi’s 100% owned subsidiary Kandi Vehicles owns 22% of the Affiliate Company. The restructuring yielded us over $70 million, which will fund our other growth opportunities.”

 

 

 

 

“The second achievement was finalizing our transaction with Jinhua Economic and Technological Development Zone. Where Kandi’s Jinhua facility is located is required to be rebuilt into a central innovation District (CID) according to the Jinhua City Construction Plan, which resulted in relocation of the Company’s Jinhua facility. After two years of negotiation, we signed a real estate repurchase agreement with Jinhua Economic and Technological Development Zone in the first quarter of 2020. The Jinhua local government agreed to pay RMB 525 million, or approximately $75.6 million to purchase the land and facility. In addition, within the next eight years, the Jinhua local government will offer subsidies of no less than RMB 500 million, or approximately $71.9 million, based on Kandi Vehicle’s financial contribution to the local department of finance. This deal will yield significant cash, both currently and in future years, while enabling us to transfer production to a new, more modern and efficient facility. This deal frees up our old land for other development, and so is a win-win both for us and the local authorities.”

 

Concerning the current environment, Hu stated, “Coming off such a strong finish to 2019, we looked forward to more success in 2020, but the COVID-19 crisis has put the global economy on pause. Our foremost concern is the health and safety of our employees, customers, and business partners. As the pandemic unfolded, we immediately took action, such as closing our facilities and going to remote work when possible. Now, the pandemic appears under control in China, and we fully resumed production in the beginning of March.”

 

“The Chinese government has supported the EV industry during these turbulent times. Most importantly, state subsidies and tax breaks for new energy vehicles have been extended until the end of 2022, two years longer than the original expiration at the end of this year. This extension will encourage a more-rapid resumption of demand, and gives the whole industry more time to fully recover. We applaud the wisdom of the authorities in taking this long-term view. As an EV leader in China, we believe Kandi will benefit from this more supportive policy environment.”

 

Mr. Hu concluded, “Even as we focus in the near-term on business recovery, we are planning for strong growth over the long-term. In particular, our focus this year will be to make real progress on our smaller-city EV online ride-share operating platform with government-accredited ride-share vehicle service. Our partnership with Jinpeng is critical to this effort, and our collaboration is off to a good start. We look forward to building a compelling service that can drive high volume vehicles sales in the years ahead.”

 

Full Year 2019 Financial Results

 

Net Revenues and Gross Profit

 

   2019   2018   Y-o-Y% 
Net Revenues (US$mln)  $135.7   $112.4    20.7%
Gross Profit (US$mln)  $25.4   $20.2    25.6%
Gross Margin   18.7%   18.0%   - 

 

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Net revenues for the full year 2019 increased 20.7% to $135.7 million from 2018. The increase in net revenues was mainly due to an increase in sales of EV parts and off-road vehicles. Gross margin for the full year 2019 expanded to 18.7%, compared with 18.0% in 2018. The increase in the gross margin was mainly due to higher selling prices for charging and exchange equipment, as well as an increased proportion of high-margin battery processing business.

 

Operating Income (Loss)

 

   2019   2018   Y-o-Y% 
Operating Expenses (US$mln)  $24.5   $21.9    12.0%
Operating Income (Loss) (US$mln)  $0.9   ($1.6)   -155.5%
Operating Margin   0.7%   -1.5%   - 

 

Total operating expenses in 2019 were $24.5 million, compared with $21.9 million in 2018. The increase in operating expenses was due to higher general and administrative expenses.

 

Net Loss

 

   2019   2018   Y-o-Y% 
Net Loss (US$mln)  $(7.2)  $(5.7)   26.2%
Loss per Weighted Average Common Share  $(0.14)  $(0.11)   - 
Loss per Weighted Average Diluted Share  $(0.14)  $(0.11)   - 

 

Net loss in 2019 was $7.2 million, compared with a net loss of $5.7 million in 2018. The increase in net loss was primarily attributable to increased operation cost of Hainan facility.

 

Full Year 2019 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 Tuesday, April 28, 2020. Management will deliver prepared remarks to be followed by a question and answer session.

 

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The dial-in details for the conference call are as follows:

 

Toll-free dial-in number: +1-800-289-0438

 

International dial-in number: + 1-323-794-2423

 

Webcast and replay: http://public.viavid.com/index.php?id=139383

 

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 Vehicles Co., Ltd. ("Kandi Vehicles") and its subsidiaries, SC Autosports, LLC, 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.

 

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Follow us on Twitter: @ Kandi_Group

 

Investor Relations Contact:

 

Kandi Technologies Group, Inc.
Ms. Kewa Luo
Phone: +1 (212) 551-3610
Email: IR@kandigroup.com

 

The Blueshirt Group

Mr. Gary Dvorchak

Email: gary@blueshirtgroup.com

 

Ms. Susie Wang
Phone: +86 (138) 1081-7454
Email: susie@blueshirtgroup.com

 

- Tables Below -

 

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KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   December 31,
2019
   December 31,
2018
 
         
Current assets        
Cash and cash equivalents  $5,490,557   $15,662,201 
Restricted cash   11,022,078    6,690,870 
Accounts receivable (net of allowance for doubtful accounts of $254,665 and $120,010 as of December 31, 2019 and December 31, 2018, respectively)   61,181,849    34,274,728 
Inventories   27,736,566    21,997,868 
Notes receivable   42,487,225    72,712 
Notes receivable from the Affiliate Company and related party   -    3,861,032 
Prepayments and prepaid expense   10,615,063    11,136,408 
Amount due from the Affiliate Company, net   31,330,763    67,683,462 
Other current assets   5,708,335    5,970,507 
TOTAL CURRENT ASSETS   195,572,436    167,349,788 
           
LONG-TERM ASSETS          
Property, plant and equipment, net   74,407,858    82,045,923 
Intangible assets   3,654,772    4,328,127 
Land use rights, net   11,272,815    11,749,728 
Investment in the Affiliate Company   47,228,614    128,929,893 
Goodwill   28,270,400    28,552,215 
Other long term assets   10,811,501    5,873,590 
TOTAL Long-Term Assets   175,645,960    261,479,476 
           
TOTAL ASSETS  $371,218,396   $428,829,264 
           
CURRENT LIABILITIES          
Accounts payable  $72,093,940   $112,309,683 
Other payables and accrued expenses   6,078,041    4,251,487 
Short-term loans   25,980,364    30,539,236 
Notes payable   10,765,344    12,787,619 
Income tax payable   1,796,601    3,471,366 
Long term bank loans - current portion   13,779,641    - 
Other current liabilities   1,379,808    1,463,486 
Total Current Liabilities   131,873,739    164,822,877 
           
LONG-TERM LIABILITIES          
Long term bank loans   14,353,792    28,794,136 
Deferred taxes liability   1,362,786    1,711,343 
Contingent consideration liability   5,197,000    7,256,000 
Other long-term liability   574,152    622,034 
Total Long-Term Liabilities   21,487,730    38,383,513 
           
TOTAL LIABILITIES   153,361,469    203,206,390 
           
STOCKHOLDER’S EQUITY          
Common stock, $0.001 par value; 100,000,000 shares authorized;  56,263,102 and 55,992,002 shares issued and 52,839,441 and 51,484,444 outstanding at December 31,2019 and December 31,2018, respectively   52,839    51,484 
Less: Treasury stock (487,155 shares with average price of $5.09 and 0 shares at December 31, 2019 and December 31, 2018, respectively )   (2,477,965)   - 
Additional paid-in capital   259,691,370    254,989,657 
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at December 31, 2019 and December 31,2018, respectively)   (16,685,736)   (9,497,009)
Accumulated other comprehensive loss   (22,723,581)   (19,921,258)
TOTAL STOCKHOLDERS’ EQUITY   217,856,927    225,622,874 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $371,218,396   $428,829,264 

 

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KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

 

   Year Ended 
   December 31,
2019
   December 31,
2018
 
         
REVENUES FROM UNRELATED PARTY, NET  $119,879,895   $63,707,518 
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTY, NET   15,861,441    48,731,310 
           
REVENUES, NET   135,741,336    112,438,828 
           
COST OF GOODS SOLD   (110,310,427)   (92,191,383)
           
GROSS PROFIT   25,430,909    20,247,445 
           
OPERATING EXPENSES:          
Research and development   (6,207,747)   (10,084,378)
Selling and marketing   (4,070,001)   (3,189,022)
General and administrative   (14,243,625)   (8,612,393)
Total Operating Expenses   (24,521,373)   (21,885,793)
           
INCOME (LOSS) FROM OPERATIONS   909,536    (1,638,348)
           
OTHER INCOME (EXPENSE):          
Interest income   791,888    1,324,812 
Interest expense   (4,822,734)   (1,871,851)
Change in fair value of contingent consideration   (1,107,427)   3,405,864 
Government grants   792,628    17,787,445 
Gain from equity dilution in the Affiliate Company   4,263,764    - 
Gain from equity sale in the Affiliate Company   20,438,986    - 
Share of loss after tax of the Affiliate Company   (30,716,938)   (17,888,706)
Other income, net   1,569,311    956,839 
Total other (expense) income, net   (8,790,522)   3,714,403 
           
(LOSS) INCOME BEFORE INCOME TAXES   (7,880,986)   2,076,055 
           
INCOME TAX BENEFIT (EXPENSE)   692,259    (7,770,754)
           
NET LOSS   (7,188,727)   (5,694,699)
           
OTHER COMPREHENSIVE LOSS          
Foreign currency translation   (2,802,323)   (13,610,495)
           
COMPREHENSIVE LOSS  $(9,991,050)  $(19,305,194)
           
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC   52,337,308    51,188,647 
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED   52,337,308    51,188,647 
           
NET LOSS PER SHARE, BASIC  $(0.14)  $(0.11)
NET LOSS PER SHARE, DILUTED  $(0.14)  $(0.11)

 

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KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

 

   Number of
Outstanding
Shares
   Common
Stock
   Treasury
Stock
   Additional
Paid-in
Capital
   Accumulated
Earning
(Deficit)
   Accumulated
Other
Comprehensive
Income
   Total 
BALANCE AT DECEMBER 31, 2017   48,036,538   $48,037   $      -   $233,055,348   $(3,802,310)  $(6,310,763)  $222,990,312 
Stock issuance and award   3,447,906    3,447    -    21,934,309    -    -    21,937,756 
Net loss   -    -    -    -    (5,694,699)   -    (5,694,699)
Foreign currency translation   -    -    -    -    -    (13,610,495)   (13,610,495)
                                    
BALANCE AT DECEMBER 31, 2018   51,484,444   $51,484   $-   $254,989,657   $(9,497,009)  $(19,921,258)  $225,622,874 
Stock issuance and award   1,354,997    1,355    -    4,716,328    -    -    4,717,683 
Stock buyback   -    -    (2,477,965)   -    -    -    (2,477,965)
Commission in stock buyback   -    -    -    (14,615)   -    -    (14,615)
Net loss   -    -    -    -    (7,188,727)   -    (7,188,727)
Foreign currency translation   -    -    -    -    -    (2,802,323)   (2,802,323)
                                    
BALANCE AT DECEMBER 31, 2019   52,839,441   $52,839   $(2,477,965)  $259,691,370   $(16,685,736)  $(22,723,581)  $217,856,927 

 

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KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

 

   Year Ended 
   December 31,
2019
   December 31,
2018
 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(7,188,727)  $(5,694,699)
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   8,202,869    4,326,296 
Impairments   398,790    263,185 
Allowance for doubtful accounts   137,387    (213,809)
Deferred taxes   (1,066,536)   4,815,774 
Share of loss after tax of the Affiliate Company   30,716,938    17,888,706 
Gain from equity dilution in the Affiliate Company   (4,263,764)   - 
Gain from equity sale in the Affiliate Company   (20,438,986)   - 
Reserve for fixed assets   -    (52,744)
Change in fair value of contingent consideration   1,107,427    (3,405,864)
Stock compensation cost   1,360,258    285,609 
           
Changes in operating assets and liabilities:          
(Increase) Decrease In:          
Accounts receivable   (40,123,966)   (57,503,289)
Deferred taxes assets   -    375 
Notes receivable   246,120    483,778 
Notes receivable from the Affiliate Company and related party   434,329    6,231,669 
Inventories   (6,458,104)   (5,243,388)
Other receivables and other assets   (8,200,714)   (31,373,831)
Due from employee   (8,217)   1,045 
Advances to supplier and prepayments and prepaid expenses   4,379,925    (5,386,448)
Amount due from the Affiliate Company   8,803,542    (95,442,739)
Amount due from Affiliate Company-Longterm   -    15,907,183 
Due from related party   -    159,405 
           
Increase (Decrease) In:          
Accounts payable   10,440,338    137,390,139 
Other payables and accrued liabilities   6,069,133    60,736,669 
Notes payable   (12,743,628)   (30,542,040)
Customer deposits   (26,166)   (104,047)
Income tax payable   (1,619,659)   822,422 
Deferred income   (44,861)   (761,736)
Net cash (used in) provided by operating activities  $(29,886,272)  $13,587,621 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property, plant and equipment, net   (526,336)   (582,872)
Purchases of land use rights and other intangible assets   -    (103,871)
Acquisition of Jinhua An Kao (net of cash received)   -    (3,555,766)
Acquisition of SC Autosports   -    486,954 
Purchases of construction in progress   (71,862)   (418,755)
Reimbursement of capitalize interests for construction in progress   -    1,790,652 
Cash received from equity sale in the Affiliate Company   31,850,822    - 
Long Term Investment   -    1,436,217 
Net cash provided by (used in) investing activities  $31,252,624   $(947,441)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from short-term bank loans   34,746,352    32,503,855 
Repayments of short-term bank loans   (38,944,869)   (33,259,759)
Repayments of long-term bank loans   (289,553)   (302,361)
Proceeds from notes payable   -    54,348,577 
Repayment of notes payable   -    (58,588,036)
Stock buyback with commission   (2,492,579)   - 
Net cash used in financing activities  $(6,980,649)  $(5,297,724)
           
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH   (5,614,297)   7,342,456 
Effect of exchange rate changes on cash   (226,139)   (1,099,881)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR   22,353,071    16,110,496 
           
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD   16,512,635    22,353,071 
-CASH AND CASH EQUIVALENTS AT END OF PERIOD   5,490,557    15,662,201 
-RESTRICTED CASH AT END OF PERIOD   11,022,078    6,690,870 
           
SUPPLEMENTARY CASH FLOW INFORMATION          
Income taxes paid   1,994,526    2,056,670 
Interest paid   1,738,656    1,708,766 
           
SUPPLEMENTAL NON-CASH DISCLOSURES:          
Acquisition of Jinhua An Kao by stock   -    20,718,859 
Acquisition of SC Autosports by stock   -    756,664 
Amount due from the Affiliate Company converted to investment in the Affiliate Company   -    82,393,493 
Notes receivable from unrelated parties for equity transfer payment   42,853,834    - 

 

 

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