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): June 5, 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 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

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.  

 

 

 

 

 

  

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On June 5, 2020, Kandi Technologies Group, Inc. (the “Company”) issued a press release announcing certain financial results for the quarter ended March 31, 2020. 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 June 5, 2020

  

1

 

 

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: June 5, 2020 By: /s/ Hu Xiaoming
  Name: Hu Xiaoming
  Title: Chief Executive Officer

 

 

2

 

Exhibit 99.1

 

Kandi Technologies Reports First Quarter 2020 Financial Results

 

JINHUA, China, June 05, 2020 (GLOBE NEWSWIRE) — Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the first quarter of 2020.

 

First Quarter Highlights

 

Total revenues decreased 64.7% to $6.4 million for the first quarter of 2020, from $18.1 million in the same period of 2019.

 

Electric Vehicle (“EV”) parts sales decreased 83.7% to $2.1 million for the first quarter of 2020, compared with $12.8 million in the same period of 2019. 

 

Off-road vehicle revenues decreased 23.8% to $4.0 million for the first quarter of 2020 compared with $5.3 million in the same period of 2019.

 

Gross margin for the first quarter of 2020 was 18.3%, compared to 17.4% for the same period of 2019.

 

Net loss for the first quarter of 2020 was $1.6 million, or $0.03 loss per fully-diluted share, compared with net loss of $4.4 million, or $0.09 loss per fully-diluted share in the same period in 2019.

 

The Company’s working capital surplus was $60.7 million as of March 31, 2020. Cash, cash equivalents and restricted cash totaled $9.8 million as of March 31, 2020.

 

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “First quarter results were heavily impacted by the global virus outbreak. We prioritized the health and safety of our employees, and fully cooperated with the government by taking various preventative and quarantine measures across our company soon after the outbreak.  The primary action was closing our facilities and ceasing production.  Since the beginning of April, the situation has turned the corner; business is gradually resuming, sales are recovering, and consumer demand is rebounding.”

 

Commenting on important regulatory developments, Mr. Hu said, “As the inventor of the “vehicle/battery separation” battery swapping model for pure electric vehicles, we are extremely gratified to our industry’s regulators shift from rejecting battery swapping to fully embracing it.  Most recently, on April 23 the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and the Development and Reform Commission of China jointly issued a paper discussing the “vehicle/battery separation” battery swapping model. Kandi is fully levered to the battery swap opportunity with the intelligent automatic swap system built by our subsidiary Jinhua Ankao.  We are continuously improving this system, and believe it can be a market leader in China.”

 

Hu continued, “Another important development was the government’s publication on June 1 of a detailed plan to construct a Hainan Free Trade Port.  There will be 60 distinct policies supporting the trade port.  We believe the port could catalyze rapid growth for our Hainan factory.”

 

Shifting to new market opportunities, Hu continued, “The COVID outbreak has seriously impacted the EV market in 2020, leading us to explore how to augment our business.  As we conducted market research, we found potential in a number of ancillary products aimed at intelligent transportation.  For example, Electric Scooters and Electric Self-Balancing Vehicles have distinct potential, with tens of millions of units sold each year around the world.  We are pursuing these opportunities by expanding production of intelligent transportation products that exploit our advantages in Yongkang Scrou’s power electric motors and Jinhua Ankao’s power battery packs.  Our products aimed at this market combines our motors and battery packs into a dynamic power train system. Through extensive product trials, we are able to meet a leading standard in China, and thus will go into mass production this month. As this business is developing quickly, we will consider merging Yongkang Scrou and Jinhua Ankao into a single specialized powertrain technology company, and evaluate the possibility of raising capital in China’s capital market to fund growth.”

 

 

 

 

Further discussing new opportunities, Hu concluded, “Recently, we have been in discussions with Mr. Ying Jiawei, CEO of Hangzhou Chic Intelligent Technology Co., Ltd, a leading high tech company that is well-recognized as a major exporter in intelligent balance scooter sector. We have agreed to have Kandi to start using its power trains system to produce balance scooters for Hangzhou Chic.  Hangzhou Chic has accumulated more than 500 technical patents in the balance scooter sector and is an originator of the balance scooter products.  Their leading and innovative technology has broadly penetrated the market. Each year, about ten million scooters using their patents are produced.  We believe this can be a productive partnership, as we marry their technology expertise with our manufacturing prowess and technology advantages.”

 

Net Revenues and Gross Profit

 

   1Q20   1Q19   Y-o-Y% 
Net Revenues (US$mln)  $6.4   $18.1    -64.7%
Gross Profit (US$mln)  $1.2   $3.1    -62.8%
Gross Margin   18.3%   17.4%   - 

 

Net revenues for the first quarter decreased 64.7% compared to the same period last year. The decrease in revenue was mainly due to the outbreak of COVID-19 and the lock-down policy in China in the first quarter of 2020, which significantly affected both our production and customer demand.

 

Operating Income (Loss)

 

   1Q20   1Q19   Y-o-Y% 
Operating Expenses (US$mln)  $4.6   $3.2    43.5%
Operating Loss (US$mln)  $(3.4)  $(0.06)   5740.1%
Operating Margin   -53.6%   -0.3%   - 

 

Total operating expenses in the first quarter were $4.6 million, compared with $3.2 million in the same quarter of 2019. The increase in total operating expenses was primarily due to higher general and administrative expenses.

 

Net Loss

 

   1Q20   1Q19   Y-o-Y% 
Net Loss (US$mln)  $(1.6)  $(4.4)   -64.3%
Loss per Weighted Average Common Share Outstanding Basic  $(0.03)  $(0.09)   - 
Loss per Weighted Average Common Share Outstanding Diluted  $(0.03)  $(0.09)   - 

 

Net loss was $1.6 million in the first quarter, compared with net loss of $4.4 million in the same quarter of 2019. The decrease in loss was primarily attributable to the decreased share of the losses of the Affiliate Company and increased gain related to changes in the fair value of contingent consideration, offset by the decreased gain from equity dilution in the Affiliate Company and decreased gross profit.

 

Financial Condition

 

As of March 31, 2020, the Company had cash and cash equivalents of $3.7 million, restricted cash of $6.0 million, working capital of $60.7 million; compared to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019.

 

As of March 31, 2020, our accounts receivable was $53.9 million, compared to $61.2 million as of December 31, 2019.

 

For the first quarter of 2020, cash used in operating activities was $26.5 million, as compared to cash used in operating activities of $14.0 million for the same period last year.

 

First Quarter of 2020 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 June 5, 2020. 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: http://public.viavid.com/index.php?id=140085

 

The live audio webcast 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.

 

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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.

 

Follow us on Twitter: @ Kandi_Group

 

For More Information:

 

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

 

The Blueshirt Group

 

U.S.:
Mr. Gary Dvorchak
Email: gary@blueshirtgroup.com

 

China:
Ms. Susie Wang
Email: susie@blueshirtgroup.com

 

- Tables Below –

 

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

 

   March 31,
2020
   December 31,
2019
 
   (UNAUDITED)     
Current assets        
Cash and cash equivalents  $3,719,142   $5,490,557 
Restricted cash   6,034,751    11,022,078 
Accounts receivable (net of allowance for doubtful accounts of $250,325 and $254,665 as of March 31, 2020 and December 31, 2019, respectively)   53,896,084    61,181,849 
Inventories   30,172,551    27,736,566 
Notes receivable   -    42,487,225 
Other receivables   44,265,730    5,019,971 
Prepayments and prepaid expense   10,407,639    10,615,063 
Amount due from the Affiliate Company, net   20,026,310    31,330,763 
Other current assets   8,910,217    688,364 
TOTAL CURRENT ASSETS   177,432,424    195,572,436 
           
LONG-TERM ASSETS          
Property, plant and equipment, net   71,391,249    74,407,858 
Intangible assets   3,442,513    3,654,772 
Land use rights, net   11,000,953    11,272,815 
Investment in the Affiliate Company   45,337,659    47,228,614 
Goodwill   27,905,037    28,270,400 
Other long term assets   10,473,979    10,811,501 
TOTAL Long-Term Assets   169,551,390    175,645,960 
           
TOTAL ASSETS  $346,983,814   $371,218,396 
           
CURRENT LIABILITIES          
Accounts payable  $58,128,742   $72,093,940 
Other payables and accrued expenses   5,021,303    6,078,041 
Short-term loans   33,861,956    25,980,364 
Notes payable   2,962,921    10,765,344 
Income tax payable   1,761,101    1,796,601 
Long term bank loans - current portion   13,544,782    13,779,641 
Other current liability   1,480,193    1,379,808 
Total Current Liabilities   116,760,998    131,873,739 
           
LONG-TERM LIABILITIES          
Long term bank loans   14,109,148    14,353,792 
Deferred taxes liability   1,362,786    1,362,786 
Contingent consideration liability   1,405,000    5,197,000 
Other long-term liability   564,366    574,152 
Total Long-Term Liabilities   17,441,300    21,487,730 
           
TOTAL LIABILITIES   134,202,298    153,361,469 
           
STOCKHOLDER’S EQUITY          
Common stock, $0.001 par value; 100,000,000 shares authorized; 56,273,102 and 56,263,102 shares issued and 52,849,441 and 52,839,441 outstanding at March 31, 2020 and December 31, 2019, respectively   52,849    52,839 
Less: Treasury stock (487,155 shares with average price of $5.09 at March 31, 2020 and December 31, 2019, respectively)   (2,477,965)   (2,477,965)
Additional paid-in capital   259,713,660    259,691,370 
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at March 31, 2020 and December 31, 2019, respectively)   (18,260,382)   (16,685,736)
Accumulated other comprehensive loss   (26,246,646)   (22,723,581)
TOTAL STOCKHOLDERS’ EQUITY   212,781,516    217,856,927 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $346,983,814   $371,218,396 

 

4

 

 

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

  

   Three Months Ended 
   March 31,
2020
   March 31,
2019
 
         
REVENUES FROM UNRELATED PARTY, NET  $6,372,424   $16,334,963 
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTY, NET   -    1,733,497 
           
REVENUES, NET   6,372,424    18,068,460 
           
COST OF GOODS SOLD   (5,205,165)   (14,932,023)
           
GROSS PROFIT   1,167,259    3,136,437 
           
OPERATING EXPENSES:          
Research and development   (640,240)   (537,433)
Selling and marketing   (878,306)   (618,003)
General and administrative   (3,066,735)   (2,039,528)
Total Operating Expenses   (4,585,281)   (3,194,964)
           
LOSS FROM OPERATIONS   (3,418,022)   (58,527)
           
OTHER INCOME (EXPENSE):          
Interest income   338,944    252,404 
Interest expense   (982,934)   (439,183)
Change in fair value of contingent consideration   3,792,000    89,000 
Government grants   11,099    47,724 
Gain from equity dilution in the Affiliate Company   -    4,365,390 
Share of loss after tax of the Affiliate Company   (1,102,770)   (9,949,158)
Other income, net   19,650    474,390 
Total other income (expense), net   2,075,989    (5,159,433)
           
LOSS BEFORE INCOME TAXES   (1,342,033)   (5,217,960)
           
INCOME TAX (EXPENSE) BENEFIT   (232,613)   808,488 
           
NET LOSS   (1,574,646)   (4,409,472)
           
OTHER COMPREHENSIVE INCOME (LOSS)          
Foreign currency translation   (3,523,065)   5,404,028 
           
COMPREHENSIVE INCOME (LOSS)  $(5,097,711)  $994,556 
           
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC   52,361,077    51,565,287 
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED   52,361,077    51,565,287 
           
NET LOSS PER SHARE, BASIC  $(0.03)  $(0.09)
NET LOSS PER SHARE, DILUTED  $(0.03)  $(0.09)

 

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
Income
   Total 
Balance, December 31, 2018   51,484,444   $51,484   $      -   $254,989,657   $(9,497,009)  $(19,921,258)  $225,622,874 
Stock issuance and award   1,096,397    1,097    -    3,387,379    -    -    3,388,476 
Net loss   -    -    -    -    (4,409,472)   -    (4,409,472)
Foreign currency translation   -    -    -    -    -    5,404,028    5,404,028 
Balance, March 31, 2019   52,580,841   $52,581   $-   $258,377,036   $(13,906,481)  $(14,517,230)  $230,005,906 

 

   Number of
Outstanding
Shares
   Common
Stock
   Treasury
Stock
   Additional
Paid-in
Capital
   Accumulated
Deficit
   Accumulated
Other
Comprehensive
Income
   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 

 

6

 

 

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

  

   Three Months Ended 
   March 31,
2020
   March 31,
2019
 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(1,574,646)  $(4,409,472)
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   2,037,045    2,258,224 
Impairments   24,316    (31,718)
Allowance for doubtful accounts   -    15,629 
Share of loss after tax of the Affiliate Company   1,102,770    9,949,158 
Gain from equity dilution in the Affiliate Company   -    (4,365,390)
Change in fair value of contingent consideration   (3,792,000)   (89,000)
Stock compensation cost   22,925    31,675 
           
Changes in operating assets and liabilities:          
(Increase) Decrease In:          
Accounts receivable   5,540,503    (17,991,854)
Notes receivable   -    74,114 
Notes receivable from the Affiliate Company and related party   -    444,682 
Inventories   (2,955,178)   (4,659,780)
Other receivables and other assets   (8,734,544)   (14,278,768)
Advances to supplier and prepayments and prepaid expenses   (8,311,506)   436,768 
Amount due from the Affiliate Company   4,187,038    (2,339,431)
           
Increase (Decrease) In:          
Accounts payable   (2,575,446)   22,593,966 
Other payables and accrued liabilities   (781,409)   5,484,913 
Notes payable   (10,745,294)   (5,624,153)
Income tax payable   29,357    (1,537,204)
Net cash used in operating activities  $(26,526,069)  $(14,037,641)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property, plant and equipment, net   (1,355)   (300,704)
Cash received from equity sale in the Affiliate Company   11,461,646    - 
Net cash provided by (used in) investing activities  $11,460,291   $(300,704)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from short-term bank loans   8,452,964    2,816,317 
Repayments of short-term bank loans   -    (2,816,317)
Net cash provided by financing activities  $8,452,964   $- 
           
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH   (6,612,814)   (14,338,345)
Effect of exchange rate changes on cash   (145,928)   446,948 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR   16,512,635    22,353,071 
           
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD   9,753,893    8,461,674 
-CASH AND CASH EQUIVALENTS AT END OF PERIOD   3,719,142    3,327,013 
-RESTRICTED CASH AT END OF PERIOD   6,034,751    5,134,661 
           
SUPPLEMENTARY CASH FLOW INFORMATION          
Income taxes paid   203,256    594,425 
Interest paid   345,170    439,183 

 

 

7