Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the full year ended December 31, 2020.
Full Year 2020 Highlights
Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “The lock downs and closures of stores and facilities around the world, caused by the spread of COVID-19, challenged every corner of the economy in 2020. Although our operations in China fully resumed in early March of 2020, sales of EV parts, one of our primary revenue sources, were severely impacted by several waves of the pandemic. On the positive side, this challenge resulted in relentless effort and commitment from our management and employees to explore other market opportunities that leverage our expertise. We decided to pursue product innovation in Electric Scooters and Electric Self-Balancing Scooters, which have a global market of tens of millions of units sold each year. We pursued these opportunities by expanding production of intelligent transportation products that exploit our advantages in electric motors and battery packs. This resulted in revenue from Electric Scooters, Electric Self-Balancing Scooters and associated parts increasing by 160.5% in 2020, offsetting a 63.3% decline in revenue from EV parts.”
Hu continued, “During 2020 we achieved three major strategic milestones despite unfavorable market conditions.
First, we smoothly executed the real estate repurchase agreement with Jinhua Economic and Technological Development Zone, a key element of our Jinhua facility relocation. The local government agreed to pay us approximately RMB525 million, or $80 million, in three installments. We received the first two installments, totaling RMB 363 million, or $55 million. The final payment of RMB 162 million, or $25 million, will be received when we demolish all the current factory buildings on this land and move to our new facility. We are nearing the end of the relocation process and have almost completed the move into our new factory.
“Our second milestone was the successful trial of the ‘300,000 government-accredited ride-sharing vehicles within 5 years’ program initiated by us. Zhejiang Ruiheng Technology Co., Ltd plans to deliver over 3,000 government compliant EVs in 2021, and gradual delivery is underway. All those EVs feature our battery swapping technology, which is recognized by the central government as one of the three approved charging methods in China. Driven by the tailwinds of Chinese Government policy regarding battery exchange, in 2020 we moved forward in many ways. For example, we signed an agreement with the Zhejiang State Grid Electric Vehicle Service Company in October 2020 to strategically incorporate battery exchange into pure EVs. We believe this program can drive the production and sales of our EV parts and battery swap equipment, and therefore drive the growth in our pure EV business.”
Regarding the U.S. market, Hu commented, “In August 2020 we successfully held a virtual launch event to introduce our K23 and K27 EV models into the U.S. market, achieving our third milestone of the year. We have obtained clearance from the United States Environmental Protection Agency (EPA) for both models, so our focus now is working on some modifications to meet all Federal Motor Vehicle Safety Standards (FMVSS) requirements. We are also working on feature improvements to accommodate U.S. consumer tastes.”
Hu concluded, “Looking forward, we have multiple growth opportunities. We are dedicated to building our business in the U.S., and we are pursuing third and fourth-tier city government-accredited EV online ride-share service businesses. With capital from the real estate repurchase agreement and the $160 million direct placement, we are confident that we can fund the R&D necessary to develop sports cars, battery swapping technology, and the ride-sharing program. Furthermore, our recent exit from the Fengsheng affiliation through the transfer of the remaining equity interest eliminates the non-compete restrictions, thus enabling us to pursue the EV market more aggressively in China. We believe the years ahead hold a multitude of opportunities that can restart our growth.”
Full Year 2020 Financial Results
Net Revenues and Gross Profit
| 2020 | 2019 | Y-o-Y% | |
| Net Revenues (US$mln) | $76.9 | $135.7 | -43.3% |
| Gross Profit (US$mln) | $13.5 | $25.4 | -47.0% |
| Gross Margin | 17.5% | 18.7% | - |
Net revenues of $76.9 million decreased 43.3% from 2019. The decrease was due primarily to reduced sales of EV parts, a result of production interruptions caused by the COVID-19 pandemic and the overall demand of EV parts from customers was significantly affected during 2020. Gross margin was 17.5%, compared with 18.7% in 2019. The decrease was due to less high-margin battery processing compared to 2019.
Operating Income (Loss)
| 2020 | 2019 | Y-o-Y% | |
| Operating Expenses (US$mln) | $12.7 | $24.5 | -48.1% |
| Operating Income (US$mln) | $0.75 | $0.91 | -17.1% |
| Operating Margin | 1.0% | 0.7% | - |
Total operating expenses were $12.7 million, compared with $24.5 million in 2019. The decrease was due to lower general and administrative expenses, largely due to cost-cutting programs and tighter budget control. We also booked a $14.2 million gain on disposal of long-lived assets, which was related to the real estate repurchase agreement. In June 2020, 73,333 square meters of land use rights were transferred to the local government, and the related gain was recognized.
Net Loss
| 2020 | 2019 | Y-o-Y% | |
| Net Loss (US$mln) | ($10.4) | ($7.2) | 44.6% |
| Loss per Weighted Average Common Share | ($0.19) | ($0.14) | - |
| Loss per Weighted Average Diluted Share | ($0.19) | ($0.14) | - |
Net loss was $10.4 million, compared with a net loss of $7.2 million in 2019. The greater net loss was primarily attributable to the absence of gains on the sales of equity that were present in 2019.
Full Year 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 Tuesday, March 30, 2021. 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:
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 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. Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.
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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Contacts:
Kandi Technologies Group, Inc.
Ms. Kewa Luo
+1 (212) 551-3610
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The Blueshirt Group
Mr. Gary Dvorchak, CFA
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- Tables Below -
KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, 2020 | December 31, 2019 | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 142,078,190 | $ | 5,490,557 | ||||
| Restricted cash | 442,445 | 11,022,078 | ||||||
| Accounts receivable (net of allowance for doubtful accounts of $110,269 and $254,665 as of December 31, 2020 and December 31, 2019, respectively) | 38,547,137 | 61,181,849 | ||||||
| Inventories | 19,697,383 | 27,736,566 | ||||||
| Notes receivable | 31,404,630 | 42,487,225 | ||||||
| Other receivables | 1,875,245 | 5,023,327 | ||||||
| Prepayments and prepaid expense | 13,708,149 | 10,615,063 | ||||||
| Advances to suppliers | 36,733,182 | 685,008 | ||||||
| Amount due from the Affiliate Company | 21,742,226 | 31,330,763 | ||||||
| Amount due from related party | 886,989 | - | ||||||
| TOTAL CURRENT ASSETS | 307,115,576 | 195,572,436 | ||||||
| NON-CURRENT ASSETS | ||||||||
| Property, plant and equipment, net | 65,402,680 | 74,407,858 | ||||||
| Intangible assets, net | 3,232,753 | 3,654,772 | ||||||
| Land use rights, net | 3,257,760 | 11,272,815 | ||||||
| Construction in progress | 16,317,662 | 71,247 | ||||||
| Deferred taxes assets | 8,964,946 | 726,182 | ||||||
| Long term investment | 45,958 | - | ||||||
| Investment in the Affiliate Company | 28,892,638 | 47,228,614 | ||||||
| Goodwill | 29,712,383 | 28,270,400 | ||||||
| Other long term assets | 32,307,484 | 10,014,072 | ||||||
| TOTAL NON-CURRENT ASSETS | 188,134,264 | 175,645,960 | ||||||
| TOTAL ASSETS | $ | 495,249,840 | $ | 371,218,396 | ||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 34,257,935 | $ | 72,093,940 | ||||
| Other payables and accrued expenses | 7,218,395 | 6,078,041 | ||||||
| Short-term loans | - | 25,980,364 | ||||||
| Notes payable | 92,445 | 10,765,344 | ||||||
| Income tax payable | 1,313,754 | 1,796,601 | ||||||
| Advance receipts | 38,229,242 | - | ||||||
| Long term loans - current portion | - | 13,779,641 | ||||||
| Amount due to related party | 500,000 | - | ||||||
| Other current liabilities | 2,185,654 | 1,379,808 | ||||||
| TOTAL CURRENT LIABILITIES | 83,797,425 | 131,873,739 | ||||||
| NON-CURRENT LIABILITIES | ||||||||
| Long term loans | - | 14,353,792 | ||||||
| Deferred taxes liability | 3,483,171 | 1,362,786 | ||||||
| Contingent consideration liability | 3,743,000 | 5,197,000 | ||||||
| Other long-term liabilities | 459,580 | 574,152 | ||||||
| TOTAL NON-CURRENT LIABILITIES | 7,685,751 | 21,487,730 | ||||||
| TOTAL LIABILITIES | 91,483,176 | 153,361,469 | ||||||
| STOCKHOLDER’S EQUITY | ||||||||
| Common stock, $0.001 par value; 100,000,000 shares authorized; 77,298,499 and 56,263,102 shares issued and 75,377,555 and 52,839,441 outstanding at December 31,2020 and December 31,2019, respectively | 75,377 | 52,839 | ||||||
| Less: Treasury stock (nil and 487,155 shares with average price of $5.09 at December 31,2020 and December 31,2019, respectively) | - | (2,477,965 | ) | |||||
| Additional paid-in capital | 439,549,338 | 259,691,370 | ||||||
| Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at December 31,2020 and December 31,2019, respectively) | (27,079,900 | ) | (16,685,736 | ) | ||||
| Accumulated other comprehensive loss | (8,778,151 | ) | (22,723,581 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 403,766,664 | 217,856,927 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 495,249,840 | $ | 371,218,396 | ||||
KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
| Years Ended | ||||||||
| December 31, 2020 | December 31, 2019 | |||||||
| REVENUES FROM UNRELATED PARTIES, NET | $ | 76,176,609 | $ | 119,879,895 | ||||
| REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET | 743,904 | 15,861,441 | ||||||
| REVENUES, NET | 76,920,513 | 135,741,336 | ||||||
| COST OF GOODS SOLD | (63,432,580 | ) | (110,310,427 | ) | ||||
| GROSS PROFIT | 13,487,933 | 25,430,909 | ||||||
| OPERATING EXPENSES: | ||||||||
| Research and development | (7,246,312 | ) | (6,207,747 | ) | ||||
| Selling and marketing | (6,619,355 | ) | (4,070,001 | ) | ||||
| General and administrative | (13,042,103 | ) | (14,243,625 | ) | ||||
| Gain on disposal of long-lived assets | 14,174,233 | - | ||||||
| TOTAL OPERATING EXPENSES | (12,733,537 | ) | (24,521,373 | ) | ||||
| INCOME FROM OPERATIONS | 754,396 | 909,536 | ||||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest income | 2,190,678 | 791,888 | ||||||
| Interest expense | (3,750,233 | ) | (4,822,734 | ) | ||||
| Change in fair value of contingent consideration | (565,000 | ) | (1,107,427 | ) | ||||
| Government grants | 1,130,262 | 792,628 | ||||||
| Gain from equity dilution in the Affiliate Company | - | 4,263,764 | ||||||
| Gain from sale of equity in the Affiliate Company | - | 20,438,986 | ||||||
| Share of loss after tax of the Affiliate Company | (17,252,662 | ) | (30,716,938 | ) | ||||
| Other income, net | 2,051,226 | 1,569,311 | ||||||
| TOTAL OTHER EXPENSE, NET | (16,195,729 | ) | (8,790,522 | ) | ||||
| LOSS BEFORE INCOME TAXES | (15,441,333 | ) | (7,880,986 | ) | ||||
| INCOME TAX BENEFIT | 5,047,169 | 692,259 | ||||||
| NET LOSS | (10,394,164 | ) | (7,188,727 | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Foreign currency translation adjustment | 13,945,430 | (2,802,323 | ) | |||||
| COMPREHENSIVE INCOME (LOSS) | $ | 3,551,266 | $ | (9,991,050 | ) | |||
| WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED | 55,960,010 | 52,337,308 | ||||||
| NET LOSS PER SHARE, BASIC AND DILUTED | $ | (0.19 | ) | $ | (0.14 | ) | ||
KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
| Number of Outstanding Shares | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||
| 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 | ||||||||||||
| Stock issuance and award | 1,771,317 | 1,771 | - | 4,058,052 | - | - | 4,059,823 | |||||||||||||||||||||
| Cancellation of the Treasury Stock | (487,155 | ) | (487 | ) | 2,477,965 | (2,477,478 | ) | - | - | - | ||||||||||||||||||
| Registered Direct Offering | 18,253,952 | 18,254 | - | 151,904,993 | - | - | 151,923,247 | |||||||||||||||||||||
| Stock option exercise | 3,000,000 | 3,000 | - | 29,157,000 | - | - | 29,160,000 | |||||||||||||||||||||
| Net loss | - | - | - | - | (10,394,164 | ) | - | (10,394,164 | ) | |||||||||||||||||||
| Foreign currency translation | - | - | - | - | 13,945,430 | 13,945,430 | ||||||||||||||||||||||
| Reduction in the Affiliate Company’s equity (net off tax effect of $491,400) | - | - | - | (2,784,599 | ) | - | - | (2,784,599 | ) | |||||||||||||||||||
| BALANCE AT DECEMBER 31, 2020 | 75,377,555 | $ | 75,377 | $ | - | $ | 439,549,338 | $ | (27,079,900 | ) | $ | (8,778,151 | ) | $ | 403,766,664 | |||||||||||||
KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
| Years Ended | ||||||||
| December 31, 2020 | December 31, 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (10,394,164 | ) | $ | (7,188,727 | ) | ||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 8,222,984 | 8,202,869 | ||||||
| Impairments | - | 398,790 | ||||||
| (Reversal) provision of allowance for doubtful accounts | (152,809 | ) | 137,387 | |||||
| Deferred taxes | (5,349,722 | ) | (1,066,536 | ) | ||||
| Share of loss after tax of the Affiliate Company | 17,252,662 | 30,716,938 | ||||||
| Gain from equity dilution in the Affiliate Company | - | (4,263,764 | ) | |||||
| Gain from equity sale in the Affiliate Company | - | (20,438,986 | ) | |||||
| Gain on disposal of long-live assets | (14,174,233 | ) | - | |||||
| Change in fair value of contingent consideration | 565,000 | 1,107,427 | ||||||
| Stock based compensation expense | 902,666 | 1,360,258 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 19,247,519 | (40,123,966 | ) | |||||
| Notes receivable | - | 246,120 | ||||||
| Notes receivable from the Affiliate Company and related party | - | 434,329 | ||||||
| Inventories | 9,246,455 | (6,458,104 | ) | |||||
| Other receivables and other assets | 2,008,612 | (8,208,931 | ) | |||||
| Advances to supplier and prepayments and prepaid expenses | (36,330,634 | ) | 4,379,925 | |||||
| Amount due from the Affiliate Company | 4,237,103 | 8,803,542 | ||||||
| Due from related party | (339,118 | ) | - | |||||
| Increase (Decrease) In: | ||||||||
| Accounts payable | (30,993,717 | ) | 10,440,338 | |||||
| Other payables and accrued liabilities | (173,806 | ) | 5,998,106 | |||||
| Notes payable | (13,912,842 | ) | (12,743,628 | ) | ||||
| Income tax payable | (745,208 | ) | (1,619,659 | ) | ||||
| Net cash used in operating activities | $ | (50,883,252 | ) | $ | (29,886,272 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment, net | (7,483,743 | ) | (526,336 | ) | ||||
| Purchases of land use rights and other intangible assets | (3,281,115 | ) | - | |||||
| Payment for construction in progress | (7,419,644 | ) | (71,862 | ) | ||||
| Proceeds from disposal of long-lived assets | 52,579,492 | - | ||||||
| Loan to third party | (26,097,991 | ) | - | |||||
| Cash received from sales of equity in the Affiliate Company | 42,897,929 | 31,850,822 | ||||||
| Long Term Investment | (43,478 | ) | - | |||||
| Net cash provided by investing activities | $ | 51,151,450 | $ | 31,252,624 | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term loans | 24,642,399 | 34,746,352 | ||||||
| Repayments of short-term loans | (50,873,903 | ) | (38,944,869 | ) | ||||
| Repayments of long-term loans | (28,799,501 | ) | (289,553 | ) | ||||
| Proceeds from long-term loans | 394,116 | - | ||||||
| Fund raising through issuing common stock and warrants | 151,923,247 | - | ||||||
| Stock buyback with commission | - | (2,492,579 | ) | |||||
| Option exercise, stock awards & other financing | 29,160,000 | - | ||||||
| Net cash provided by (used in) financing activities | $ | 126,446,358 | $ | (6,980,649 | ) | |||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $ | 126,714,556 | $ | (5,614,297 | ) | |||
| Effect of exchange rate changes | $ | (706,556 | ) | $ | (226,139 | ) | ||
| 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 | $ | 142,520,635 | $ | 16,512,635 | ||||
| -CASH AND CASH EQUIVALENTS AT END OF PERIOD | 142,078,190 | 5,490,557 | ||||||
| -RESTRICTED CASH AT END OF PERIOD | 442,445 | 11,022,078 | ||||||
| SUPPLEMENTARY CASH FLOW INFORMATION | ||||||||
| Income taxes paid | $ | 1,046,127 | 1,994,526 | |||||
| Interest paid | $ | 653,507 | 1,738,656 | |||||
| SUPPLEMENTAL NON-CASH DISCLOSURES: | ||||||||
| Decrease in investment in the Affiliate Company due to change in its equity | $ | 3,099,193 | - | |||||
| Notes receivable from unrelated parties for equity transfer payment | $ | - | 42,853,834 | |||||
| Purchase of construction in progress in accounts payable and other payable | 7,945,414 | - | ||||||
| Common stock issued from settlement of payables to KSBS Shareholders and former members of SC Autosports | $ | 3,166,427 | 3,357,425 | |||||
| Last Trade: | US$1.25 |
| Daily Change: | -0.03 -2.34 |
| Daily Volume: | 140,461 |
| Market Cap: | US$109.200M |
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