Financial Data and Key Metrics Changes - Kandi Technologies reported nearly $25 million in revenue for Q1 2022, representing a year-over-year increase of 56% [5][6][18] - The company has a strong cash position, trading at a significant discount to its book value and cash reserves [38][36] Business Line Data and Key Metrics Changes - The establishment of Hainan Kandi Holding New Energy Technology Company Limited aims to produce crossover electric golf cars, with 778 units delivered by the end of April and an expectation to ship another 2,000 in May [6][7] - Kandi's focus on all-electric off-road vehicles and battery swapping technology is expected to drive future growth [7][29] Market Data and Key Metrics Changes - The company is optimistic about the prospects in the all-electric off-road vehicle market, particularly as the China EV market stabilizes [7][29] - The partnership with Hunan Hengrun Automobile Limited for battery swap enabled electric vehicles is progressing, with the application for necessary licenses already in the public announcement stage [8][9] Company Strategy and Development Direction - Kandi is focused on innovative R&D to improve technology and create new opportunities in the electric vehicle sector [7][29] - The company aims to strengthen its fundamental business operations and is cautious about market entry until conditions are more favorable [35][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current challenges in the Chinese market but believes that the share price is undervalued and will rise as business performance improves [40][41] - The company is committed to developing its battery swap technology and believes it is a key direction for future growth [29][31] Other Important Information - Kandi repurchased 603,000 shares from April 1 to May 5, indicating ongoing commitment to shareholder value [22] - The company is adjusting its K23 and K27 models to Neighborhood Electric Vehicles (NEVs) due to regulatory challenges in the U.S. [43][44] Q&A Session Summary Question: Has the deal with Hunan Hengrun been activated? - Yes, the agreement is in place and the application is in the public announcement stage [9] Question: Will Kandi's brand be used in the joint venture? - The vehicles will carry the Henghe brand, but Kandi will play a major role in manufacturing [11] Question: What does Hengrun contribute to the battery exchange program? - Kandi produces major components, while Hengrun assembles and sells the vehicles in the Chinese market [13] Question: What is the status of the K23 and K27 models in the U.S.? - The models have not yet met U.S. safety requirements, and a timeline for compliance is uncertain [43][44] Question: What is the status of the strategic cooperation agreement with the State Grid? - The agreement is still in place, but large-scale implementation has not yet occurred due to market conditions [48]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements and management's analysis for the first quarter, along with market risk disclosures and control assessments [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2022, and related notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were $509.0 million, a slight decrease from $520.2 million, primarily due to reduced cash and cash equivalents, while liabilities also decreased Balance Sheet Summary | Balance Sheet Items | March 31, 2022 (Unaudited) ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $332,309,538 | $342,608,136 | | **Total Assets** | $509,030,721 | $520,160,272 | | **Total Current Liabilities** | $55,950,060 | $64,162,690 | | **Total Liabilities** | $66,731,808 | $76,959,945 | | **Total Stockholders' Equity** | $442,298,913 | $443,200,327 | | **Cash and cash equivalents** | $99,997,938 | $129,223,443 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q1 2022 net revenues increased 55.8% to $24.9 million, but gross profit decreased 45.2% to $2.4 million, while net loss narrowed to $1.6 million due to reduced operating expenses Income Statement Summary | Income Statement | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :--- | :--- | :--- | | **Revenues, Net** | $24,891,404 | $15,977,754 | | **Gross Profit** | $2,387,163 | $4,354,351 | | **Expense from Operations** | ($5,703,653) | ($22,847,235) | | **Net Loss Attributable to Stockholders** | ($1,616,056) | ($6,402,720) | | **Net Loss Per Share (Basic and Diluted)** | ($0.02) | ($0.08) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity slightly decreased to $442.3 million in Q1 2022, primarily due to a $1.6 million net loss and stock buybacks, partially offset by foreign currency translation gains - Key changes in stockholders' equity for Q1 2022 included a stock buyback of **$1,583,560**, a net loss of **$1,619,013**, and a positive foreign currency translation adjustment of **$1,009,811**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 saw $6.2 million cash generated from operations, a significant improvement, while $16.7 million was used in investing activities and $0.3 million in financing, leading to a $10.5 million overall cash decrease Cash Flow Summary | Cash Flow Activities | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $6,188,441 | ($6,017,280) | | **Net cash (used in) provided by investing activities** | ($16,716,300) | $11,130,031 | | **Net cash used in financing activities** | ($279,829) | $0 | | **Net (Decrease) Increase in Cash** | ($10,807,688) | $5,112,751 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's EV business, liquidity with **$276.4 million** working capital, customer and supplier concentrations, the Q1 2021 sale of a 22% affiliate stake, ongoing legal proceedings, and revenue breakdown by product and geography - The company is a leading producer of **electric vehicle (EV) products**, EV parts, and off-road vehicles, operating primarily through its PRC and US subsidiaries[30](index=30&type=chunk) - In Q1 2022, three customers (A, B, and C) each accounted for **13%**, **10%**, and **10%** of consolidated revenue, indicating significant customer concentration[46](index=46&type=chunk)[47](index=47&type=chunk) - On February 18, 2021, the company agreed to sell its remaining **22%** equity interest in the Former Affiliate Company to Geely for approximately **$48 million**, with the transaction completed on March 9, 2021[93](index=93&type=chunk) Revenue by Product | Revenue by Product (Q1 2022 vs Q1 2021) | Q1 2022 Sales ($) | Q1 2021 Sales ($) | | :--- | :--- | :--- | | Off-road vehicles | $10,713,741 | $5,619,004 | | Lithium-ion cells | $8,017,054 | - | | EV parts | $3,667,778 | $6,368,331 | | Electric Scooters & parts | $2,127,365 | $3,868,925 | | EV products | $339,955 | $121,494 | | **Total** | **$24,891,404** | **$15,977,754** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2022 results, noting a **55.8%** revenue increase to **$24.9 million** driven by off-road vehicles and lithium-ion cells, a gross margin decline to **9.6%**, and a **94.7%** R&D expense decrease, reducing net loss to **$1.6 million** Key Performance Indicators | Key Performance Indicators | Q1 2022 ($) | Q1 2021 ($) | | :--- | :--- | :--- | | **Total Revenue** | $24,891,404 | $15,977,754 | | **Gross Profit** | $2,387,163 | $4,354,351 | | **Gross Margin** | 9.6% | 27.3% | | **Net Loss** | ($1,619,013) | ($6,402,720) | - Revenue growth was mainly due to increased sales of **off-road vehicles** and the inclusion of **lithium-ion cell sales** from the newly acquired Jiangxi Huiyi[119](index=119&type=chunk) - Gross margin decreased primarily due to a product mix with a higher concentration of **lower-margin products**, such as lithium-ion cells, and aggressive pricing for a new off-road vehicle brand[130](index=130&type=chunk) - R&D expenses decreased by **94.7%** to **$1.1 million**, as R&D for a new product was completed in the prior-year period[131](index=131&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include foreign exchange fluctuations between USD and RMB, minimal interest rate risk, significant credit risk, and broader economic, political, and pandemic-related risks, especially those in China - The main market risk is **foreign exchange rate fluctuation** between the USD and RMB, as the majority of revenues and costs are denominated in RMB[149](index=149&type=chunk) - **Interest rate risk** is considered immaterial as of March 31, 2022, due to fixed-rate debt instruments and the short-term nature of cash equivalents[152](index=152&type=chunk) - **Credit risk** is significant and is managed through credit approvals, limits, and by typically requiring prepayment from customers[156](index=156&type=chunk) - The **COVID-19 outbreak** continues to pose a risk, potentially affecting demand, supply chains, and overall financial condition[157](index=157&type=chunk)[159](index=159&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's **disclosure controls and procedures** were effective as of the end of the period covered by the report[161](index=161&type=chunk) - No changes in **internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[163](index=163&type=chunk) [PART II — OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section covers legal proceedings, updated risk factors, details on equity security sales, and a list of exhibits filed with the report [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20proceedings) The company is involved in various legal matters, including shareholder class actions, which management believes are without merit and for which potential loss cannot be estimated - The company is defending against several putative **shareholder class actions** and **derivative lawsuits** filed in U.S. federal courts[99](index=99&type=chunk)[104](index=104&type=chunk)[165](index=165&type=chunk) - The company is unable to estimate the possible loss, if any, associated with these litigations, noting that an unfavorable outcome could negatively impact its **financial condition**[105](index=105&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on regulatory risks from China's Cybersecurity Review Measures and the U.S. Holding Foreign Companies Accountable Act (HFCAA), which could impact overseas listings and delisting - China's **Cybersecurity Review Measures**, effective February 15, 2022, require online platform operators with over **one million users** to undergo a cybersecurity review for foreign listings, which the company believes does not currently apply to its operations[167](index=167&type=chunk)[169](index=169&type=chunk) - The **Holding Foreign Companies Accountable Act (HFCAA)** poses a risk of delisting from U.S. exchanges if the company's auditor cannot be inspected by the PCAOB for **three (potentially reduced to two) consecutive years**[172](index=172&type=chunk)[176](index=176&type=chunk) - The company's current auditor is **U.S.-based** and subject to **PCAOB inspection**, making the HFCAA not currently applicable, but this status could change in the future[173](index=173&type=chunk)[177](index=177&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its stock repurchase program, which authorized up to **$20 million** on December 1, 2021, with **1,138,785 shares** repurchased at an average price of **$3.48** as of March 31, 2022, leaving **$16.0 million** available Stock Repurchase Program | Period | Total Shares Purchased (Shares) | Average Price Paid ($) | Remaining Authorization ($) | | :--- | :--- | :--- | :--- | | Dec 2021 | 679,749 | $3.52 | $17,607,284 | | Jan 2022 | 459,036 | $3.42 | $16,037,380 | | Feb 2022 | - | - | $16,037,380 | | Mar 2022 | - | - | $16,037,380 | | **Total as of Mar 31, 2022** | **1,138,785** | **$3.48** | **$16,037,380** | - Between April 1 and May 5, 2022, the company repurchased an additional **603,500 shares** at an average price of **$2.69 per share**[108](index=108&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act and Inline XBRL financial data documents - The filing includes **CEO and CFO certifications** pursuant to Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[182](index=182&type=chunk) - **Interactive Data Files** are provided in **Inline XBRL format** as required[182](index=182&type=chunk)

Kandi Technologies Group, Inc. (NASDAQ:KNDI) Q4 2021 Results Conference Call March 15, 2022 8:00 AM ET Company Participants Kewa Luo - Manager, IR Xiaoming Hu - CEO Alan Lim - CFO Conference Call Participants Arthur Porcari - Corporate Strategies Walter Hill - Carty & Company Michael Pfeffer - Oppenheimer Operator Greetings. Welcome to Kandi Technologies Full Year 2021 Financial Results Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Kewa ...

Financial Data and Key Metrics Changes - The company reported impressive revenue growth in the electric scooter and electric self-balancing scooter segments, which accounted for nearly 40% of total quarterly sales, growing approximately 600% year-over-year [7][12] - The company achieved a working capital of about $289 million, marking the best liquidity status in its history [12] Business Line Data and Key Metrics Changes - Sales of electric vehicle parts decreased due to supply chain tensions and restructuring of the pure EV business, while vehicle sales declined compared to last year but increased by 25% sequentially, accounting for over 40% of total revenue [11][12] - Consumer demand for off-road vehicles, including ATVs and UTVs, is increasing, with plans to formally launch the K32 model soon [11][12] Market Data and Key Metrics Changes - The micro mobility market, including e-scooters, is projected to reach annual sales of $200 to $300 billion in the U.S. by 2030, driven by the COVID-19 pandemic which accelerated demand for such vehicles [9][10] Company Strategy and Development Direction - The company is focusing on the electric vehicle market while also expanding into the micro mobility segment as a supplemental business [25] - Plans include entering the electronic UTV and ATV market, leveraging technology to meet upcoming emission standards [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the EV market and the strong growth potential of e-scooters and off-road vehicles, indicating excitement about future opportunities [12][28] - The company is working on meeting U.S. safety standards for its EV models, with expectations to begin mass production by March or April 2022 [18][26] Other Important Information - The company is considering a share buyback based on market conditions, although specific details on timing and pricing were not disclosed [20][21] Q&A Session Summary Question: Is the factory on Hainan Island currently active and making cars? - The production of EV products is still being adjusted, and the company is seeking new partnerships for production after withdrawing from cooperation with Geely [17] Question: When do you expect the K23 and K27 models to be approved for highway travel in the U.S.? - The regular models have not yet met DOT safety standards, and the company is working on improvements without a specific timeline for completion [18] Question: Are you still contemplating a share buyback? - The company is considering a share buyback based on market conditions and will execute it at the appropriate moment [21] Question: What steps are being taken to address competition in the EV market? - The company is focusing on the car hailing platform and entering the electronic UTV and ATV market to remain competitive [25][26]

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Kandi Technologies Group's unaudited condensed consolidated financial statements and detailed explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets detail the company's financial position as of September 30, 2021, compared to December 31, 2020 **Condensed Consolidated Balance Sheets (as of Sep 30, 2021 vs. Dec 31, 2020):** | Metric | Sep 30, 2021 ($) | Dec 31, 2020 ($) | | :---------------------- | :--------------- | :--------------- | | Total Current Assets | 338,062,479 | 307,115,576 | | Total Non-Current Assets| 154,679,871 | 188,134,264 | | Total Assets | 492,742,350 | 495,249,840 | | Total Current Liabilities| 48,623,894 | 83,797,425 | | Total Non-Current Liabilities| 1,067,069 | 7,685,751 | | Total Liabilities | 49,690,963 | 91,483,176 | | Total Stockholders' Equity| 443,051,387 | 403,766,664 | - Working capital **increased by $66,120,434 to $289,438,585** as of September 30, 2021, from $223,318,151 as of December 31, 2020[21](index=21&type=chunk) - Cash and cash equivalents **decreased from $142,078,190 to $132,866,957**, while restricted cash **significantly increased from $442,445 to $23,903,418**[21](index=21&type=chunk) - The Company held **$54,207,258 in certificates of deposit** as of September 30, 2021, with no comparable amount at December 31, 2020[21](index=21&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This section details the company's revenues, costs, and profitability for the three and nine months ended September 30, 2021 and 2020 **Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited):** | Metric (Unaudited) | 3 Months Ended Sep 30, 2021 ($) | 3 Months Ended Sep 30, 2020 ($) | 9 Months Ended Sep 30, 2021 ($) | 9 Months Ended Sep 30, 2020 ($) | | :------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Revenues, Net | 16,795,712 | 18,717,218 | 62,649,301 | 44,526,718 | | Cost of Goods Sold | (14,046,041) | (14,806,322) | (49,447,497) | (35,911,785) | | Gross Profit | 2,749,671 | 3,910,896 | 13,201,804 | 8,614,933 | | (Loss) Income from Operations | (9,019,799) | (2,377,822) | 12,502,421 | 5,827,750 | | Net (Loss) Income | (7,868,819) | (1,458,263) | 26,657,935 | 1,022,137 | | Comprehensive (Loss) Income | (7,984,873) | 6,758,711 | 30,240,683 | 6,193,780 | | Net (Loss) Income Per Share, Basic and Diluted | (0.10) | (0.03) | 0.35 | 0.02 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement outlines changes in stockholders' equity for the nine months ended September 30, 2021 and 2020, reflecting stock issuances, net income/loss, and foreign currency adjustments **Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited):** | Metric (Unaudited) | Sep 30, 2021 ($) | Dec 31, 2020 ($) | | :-------------------------- | :--------------- | :--------------- | | Common Stock | 77,153 | 75,377 | | Additional Paid-in Capital | 448,591,602 | 439,549,338 | | Accumulated Deficit | (421,965) | (27,079,900) | | Accumulated Other Comprehensive Loss | (5,195,403) | (8,778,151) | | Total Stockholders' Equity | 443,051,387 | 403,766,664 | - Total stockholders' equity **increased by $39,284,723** from December 31, 2020, to September 30, 2021, primarily due to net income and additional paid-in capital from stock issuances[9](index=9&type=chunk)[13](index=13&type=chunk) - Accumulated deficit **significantly reduced from $(27,079,900) to $(421,965)**, driven by net income[9](index=9&type=chunk)[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020 **Condensed Consolidated Statements of Cash Flows (Unaudited):** | Cash Flow Activity (Unaudited) | 9 Months Ended Sep 30, 2021 ($) | 9 Months Ended Sep 30, 2020 ($) | | :----------------------------- | :------------------------------ | :------------------------------ | | Net Cash Used in Operating Activities | (19,432,052) | (13,365,968) | | Net Cash Provided by Investing Activities | 30,061,352 | 46,247,972 | | Net Cash Provided by (Used in) Financing Activities | 2,630,000 | (25,770,794) | | Net Increase in Cash and Cash Equivalents and Restricted Cash | 13,259,300 | 7,111,210 | | Cash and Cash Equivalents and Restricted Cash at End of Period | 156,770,375 | 24,159,159 | - Cash used in operating activities **increased to $19.43 million** in 9M 2021 from $13.37 million in 9M 2020, primarily due to changes in other receivables and advances to suppliers[15](index=15&type=chunk)[185](index=185&type=chunk) - Cash provided by investing activities **decreased to $30.06 million** in 9M 2021 from $46.25 million in 9M 2020, despite significant cash received from equity sale in the Affiliate Company ($47.61 million) and loan repayments ($31.69 million), offset by a large increase in certificates of deposit ($54.10 million)[15](index=15&type=chunk)[186](index=186&type=chunk) - Cash provided by financing activities was **$2.63 million** in 9M 2021, a significant improvement from cash used of $25.77 million in 9M 2020, mainly due to proceeds from short-term loans[15](index=15&type=chunk)[186](index=186&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's financial statements, covering organization, accounting policies, liquidity, and key events - Kandi Technologies Group, Inc. is a Delaware-incorporated company, headquartered in Jinhua City, Zhejiang Province, China, operating as a leading producer of EV products, EV parts, and off-road vehicles[16](index=16&type=chunk)[17](index=17&type=chunk) - The Company acquired all equity interests of Jiangxi Province Huiyi New Energy Co., Ltd. for **RMB 50 million (approximately $7.7 million)** in cash, aiming for vertical integration, with the transaction consummated on October 31, 2021[19](index=19&type=chunk)[108](index=108&type=chunk) - The Company sold its remaining **22% equity interests** in the Affiliate Company (Fengsheng Automotive Technology Group Co., Ltd.) to Geely for **RMB 308 million (approximately $48 million)**, with the final payment received on September 10, 2021, freeing Kandi from non-compete provisions[23](index=23&type=chunk)[124](index=124&type=chunk)[190](index=190&type=chunk) - The Jinhua factory completed its relocation in April 2021, leading to a **$48 million gain on disposal of long-lived assets** recognized in Q2 2021 from the repurchase agreement of the old land use right[64](index=64&type=chunk)[173](index=173&type=chunk) **Key Financial Data from Notes (as of Sep 30, 2021 vs. Dec 31, 2020):** | Metric | Sep 30, 2021 ($) | Dec 31, 2020 ($) | | :---------------------- | :--------------- | :--------------- | | Accounts Receivable, net| 43,998,755 | 38,547,137 | | Inventories | 27,346,751 | 19,697,383 | | Notes Receivable | 106,514 | 31,404,630 | | Other Receivables | 23,754,321 | 1,875,245 | | Advances to Suppliers | 12,506,543 | 36,733,182 | | Property, Plant & Equipment, net | 90,461,708 | 65,402,680 | | Intangible Assets, net | 2,770,152 | 3,232,753 | | Land Use Rights, net | 3,224,185 | 3,257,760 | | Other Long Term Assets | 11,946,463 | 32,307,484 | | Contingent Consideration Liability | 0 | 3,743,000 | - The Company's effective tax rate for the nine months ended September 30, 2021, was a tax expense of **24.85%** on a reported income before taxes of approximately **$35.5 million**, compared to a tax expense of 56.99% on $2.4 million in 2020[69](index=69&type=chunk)[182](index=182&type=chunk) - Tax benefit from tax holidays for the nine months ended September 30, 2021, was **$5,745,354**, contributing **$0.08** to basic net income per share[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing key factors influencing revenues, expenses, and liquidity [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management's estimates and assumptions are crucial for financial statement preparation, with no material changes from the 2020 Form 10-K[113](index=113&type=chunk) [Overview of Business and Operations](index=26&type=section&id=Overview%20of%20Business%20and%20Operations) Kandi Technologies operates primarily through its PRC subsidiaries, focusing on EV products, parts, and off-road vehicles, while expanding into intelligent transportation products and battery swap systems - Kandi Technologies is a Delaware holding company, conducting most operations through wholly-owned subsidiaries in the PRC and a Variable Interest Entity (VIE) for EV battery pack production licensing[114](index=114&type=chunk)[200](index=200&type=chunk) - The company's primary business involves designing, developing, manufacturing, and commercializing EV products, EV parts, automatic power exchange equipment, off-road vehicles, and intelligent transportation systems[20](index=20&type=chunk)[117](index=117&type=chunk) - The '300,000 government-accredited pure EV within 5 years rideshare' program, co-founded by Kandi, has begun trials, with **73 EVs delivered in Haikou and 109 in Shaoxing**, utilizing Kandi's battery swap feature and system[120](index=120&type=chunk) - Kandi is expanding production of intelligent transportation products like Electric Scooters and Electric Self-Balancing Vehicles, with plans for a separate listing of Kandi Smart Battery Swap on the domestic A-share market[121](index=121&type=chunk) - The company received EPA clearance for its K23 and K27 EV models in November 2020 and is modifying them for potential U.S. consumers[122](index=122&type=chunk) - The sale of the remaining **22% equity** in Fengsheng Automotive Technology Group Co., Ltd. to Geely frees Kandi from associated non-compete provisions, allowing it to pursue EV opportunities in China independently[124](index=124&type=chunk) [Results of Operations - Three Months Ended September 30, 2021 and 2020](index=29&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20September%2030,%202021%20and%202020) For the three months ended September 30, 2021, Kandi experienced a **10.3% decrease in net revenue** and a **29.7% decrease in gross profit**, with net loss significantly increasing to **$7.87 million** **Three Months Ended September 30, 2021 vs. 2020 - Key Financials:** | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :---------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues, Net | 16,795,712 | 18,717,218 | (1,921,506) | (10.3)% | | Gross Profit | 2,749,671 | 3,910,896 | (1,161,225) | (29.7)% | | Gross Margin | 16.4% | 20.9% | (4.5) pp | | | Research & Development | (6,747,934) | (987,285) | (5,760,649) | 583.5% | | Selling & Marketing | (1,290,544) | (2,165,383) | 874,839 | (40.4)% | | General & Administrative| (3,733,230) | (3,212,209) | (521,021) | 16.2% | | Loss from Operations | (9,019,799) | (2,377,822) | (6,641,977) | 279.3% | | Net Loss | (7,868,819) | (1,458,263) | (6,410,556) | 439.6% | **Three Months Ended September 30, 2021 vs. 2020 - Revenue by Product Type:** | Product Type | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :----------------------------------------- | :------------- | :------------- | :------------ | :--------- | | EV parts | 3,166,740 | 8,438,958 | (5,272,218) | (62.5)% | | EV products | 328,772 | 515,128 | (186,356) | (36.2)% | | Off-road vehicles | 6,848,448 | 8,852,475 | (2,004,027) | (22.6)% | | Electric Scooters, Self-Balancing Scooters & parts | 6,275,645 | 910,657 | 5,364,988 | 589.1% | | Battery exchange equipment & service | 176,107 | 0 | 176,107 | - | - The decrease in gross margin to **16.4% (from 20.9%)** was mainly due to a product mix shift towards lower-margin electric scooters and associated parts[138](index=138&type=chunk) - Interest income **increased by 123.6% to $1.25 million**, while interest expenses **decreased by 92.0% to $63,368**, primarily due to increased bank deposits and repayment of PRC subsidiaries' debt[144](index=144&type=chunk)[145](index=145&type=chunk) - Government grants **surged by 1545.2% to $220,967**, attributed to financial support from Jinhua and Hainan local governments[147](index=147&type=chunk) [Results of Operations - Nine Months Ended September 30, 2021 and 2020](index=35&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20September%2030,%202021%20and%202020) For the nine months ended September 30, 2021, Kandi's net revenue increased by **40.7%**, gross profit by **53.2%**, and net income by **2508.1%** to **$26.66 million** **Nine Months Ended September 30, 2021 vs. 2020 - Key Financials:** | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :---------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues, Net | 62,649,301 | 44,526,718 | 18,122,583 | 40.7% | | Gross Profit | 13,201,804 | 8,614,933 | 4,586,871 | 53.2% | | Gross Margin | 21.1% | 19.3% | 1.8 pp | | | Research & Development | (31,937,436) | (2,777,426) | (29,160,010) | 1049.9% | | Selling & Marketing | (3,494,927) | (3,807,355) | 312,428 | (8.2)% | | General & Administrative| (13,522,925) | (10,186,135) | (3,336,790) | 32.8% | | Gain on Disposal of Long-Lived Assets | 48,255,905 | 13,983,733 | 34,272,172 | 245.1% | | Income from Operations | 12,502,421 | 5,827,750 | 6,674,671 | 114.5% | | Gain from Sale of Equity in Affiliate Co. | 17,734,733 | 0 | 17,734,733 | - | | Net Income | 26,657,935 | 1,022,137 | 25,635,798 | 2508.1% | **Nine Months Ended September 30, 2021 vs. 2020 - Revenue by Product Type:** | Product Type | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :----------------------------------------- | :------------- | :------------- | :------------ | :--------- | | EV parts | 16,215,586 | 23,034,841 | (6,819,255) | (29.6)% | | EV products | 1,061,078 | 769,034 | 292,044 | 38.0% | | Off-road vehicles | 17,940,647 | 19,452,160 | (1,511,513) | (7.8)% | | Electric Scooters, Self-Balancing Scooters & parts | 26,671,006 | 1,270,683 | 25,400,323 | 1999.0% | | Battery exchange equipment & service | 760,984 | 0 | 760,984 | - | - The substantial increase in net income was primarily due to the **$48 million gain on disposal of long-lived assets** from the Jinhua factory relocation, compared to $14 million in the prior year[173](index=173&type=chunk)[183](index=183&type=chunk) - Research and development expenses **increased significantly by 1049.9% to $31.94 million**, reflecting increased investment in new products[169](index=169&type=chunk) - The gross margin improved to **21.1% (from 19.3%)**, mainly due to a higher concentration of sales from the Electric Scooters, Electric Self-Balancing Scooters, and associated parts product line, which has a higher gross margin[168](index=168&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Kandi's liquidity improved with an increase in working capital and a shift from cash used in financing activities to cash provided **Cash Flow Summary (Nine Months Ended September 30):** | Metric | 2021 ($) | 2020 ($) | | :---------------------------------------- | :-------------- | :-------------- | | Net cash used in operating activities | (19,432,052) | (13,365,968) | | Net cash provided by investing activities | 30,061,352 | 46,247,972 | | Net cash provided by (used in) financing activities | 2,630,000 | (25,770,794) | | Net increase in cash and cash equivalents and restricted cash | 13,259,300 | 7,111,210 | | Cash and cash equivalents and restricted cash at end of period | 156,770,375 | 24,159,159 | - Working capital **increased by $66,120,434 to $289,438,585** as of September 30, 2021, from $223,318,151 at December 31, 2020[187](index=187&type=chunk) - The Company received the final payment of **RMB 150 million (approximately $23 million)** from the real estate repurchase agreement in May 2021, following the relocation of its Jinhua factory[188](index=188&type=chunk) - The second half of the equity transfer payment of **RMB 154 million (approximately $24 million)** from the sale of the Affiliate Company equity was received on September 10, 2021[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company deems this item not applicable[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of September 30, 2021, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed **effective** as of September 30, 2021[192](index=192&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by the report[194](index=194&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters, including shareholder class actions and derivative lawsuits, with uncertain outcomes that could negatively impact financial condition or operations - The company faces ongoing shareholder class actions and derivative lawsuits, stemming from financial restatements in 2017 and allegations in a Hindenburg Research report in 2020[99](index=99&type=chunk)[103](index=103&type=chunk) - A motion to dismiss a securities class action transferred to New York federal court was granted in October 2021, but the appeal period is still open[99](index=99&type=chunk) - The company cannot estimate possible losses from these litigations, which could result in substantial monetary judgments and negatively impact financial condition or results of operations[104](index=104&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, primarily related to the company's operations in the PRC, including uncertainties in government policies, regulatory oversight of VIE structures, and new data security and cybersecurity laws - Substantial uncertainties exist regarding PRC government policies, laws, and regulations, which could significantly impact Kandi's business operations in China[196](index=196&type=chunk)[197](index=197&type=chunk) - The company's Variable Interest Entity (VIE) structure faces uncertainties under new laws, potentially leading to severe penalties or loss of control over operations[199](index=199&type=chunk)[201](index=201&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) - New PRC data security and cybersecurity laws could impose significant compliance costs, restrict operations, or lead to delisting from U.S. markets if not adhered to[213](index=213&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - The approval of the China Securities Regulatory Commission (CSRC) may be required for future offerings under PRC regulations, and obtaining such approval is uncertain, potentially limiting the company's ability to raise capital overseas[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - U.S. regulators face difficulties in conducting investigations or collecting evidence within China, potentially hindering shareholder claims or regulatory oversight[225](index=225&type=chunk) - If the company's auditor's work papers become located in China and are not subject to PCAOB inspection, Kandi's ordinary shares could be delisted from the stock exchange under the Holding Foreign Companies Accountable Act[226](index=226&type=chunk)[227](index=227&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents, providing supplementary information to the financial report - Exhibits include the Supplementary Agreement II to the Share Transfer Agreement of Jinhua An Kao Power Technology Co., Ltd., certifications from principal executive and financial officers, and various Inline XBRL documents[229](index=229&type=chunk)

Kandi Technologies Group, Inc. (NASDAQ:KNDI) Q2 2021 Earnings Conference Call August 9, 2021 8:00 AM ET Company Participants Kewa Luo - Investor Relations Xiaoming Hu - Chief Executive Officer Alan Lim - Chief Financial Officer Conference Call Participants Walter Hill - Carty & Company Mike Pfeffer - Oppenheimer Mark Kahnau - Swift Liquid Future Frank Blatterman - Private Investor Arthur Porcari - Corporate Strategies Operator Greetings. Welcome to Kandi Technologies Second Quarter 2021 Financial Results Ca ...

Kandi Technologies Group, Inc. (NASDAQ:KNDI) Q1 2021 Earnings Conference Call May 10, 2021 8:00 AM ET Company Participants Kewa Luo - Manager of Investor Relations Xiaoming Hu - Chief Executive Officer & Chairman Alan Lim - Chief Financial Officer Conference Call Participants Arthur Porcari - Corporate Strategies Incorporated Michael Fearnow – Focus Tech Investments Mike Pfeffer - Oppenheimer Operator Greetings and welcome to the Kandi Technologies First Quarter 2021 Financial Results Call. At this time, al ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2021 financial statements show revenue growth to **$16.0 million** but a net loss of **$6.4 million** due to increased R&D, partially offset by a **$17.7 million** gain from an equity sale [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets slightly decreased to **$484.6 million**, while cash and equivalents increased to **$146.7 million**, and stockholders' equity declined to **$399.0 million** Condensed Consolidated Balance Sheet Highlights (in USD) | Financial Metric | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $146,714,469 | $142,078,190 | | Total Current Assets | $322,355,382 | $307,115,576 | | Total Assets | $484,571,960 | $495,249,840 | | **Liabilities & Equity** | | | | Total Current Liabilities | $78,263,142 | $83,797,425 | | Total Liabilities | $85,590,077 | $91,483,176 | | Total Stockholders' Equity | $398,981,883 | $403,766,664 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q1 2021 revenues increased **150.7%** to **$16.0 million**, but a **$22.8 million** operating loss, driven by surging R&D, resulted in a **$6.4 million** net loss despite a **$17.7 million** equity sale gain Q1 2021 vs Q1 2020 Statement of Operations (in USD) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Revenues, Net | $15,977,754 | $6,372,424 | | Gross Profit | $4,354,351 | $1,167,259 | | Research and development | ($21,624,597) | ($640,240) | | Loss from Operations | ($22,847,235) | ($3,418,022) | | Gain from sale of equity in the Affiliate Company | $17,700,260 | - | | Net Loss | ($6,402,720) | ($1,574,646) | | Net Loss Per Share | ($0.08) | ($0.03) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly improved to **$6.0 million** in Q1 2021, while investing activities provided **$11.1 million**, leading to a period-end cash balance of **$147.2 million** Cash Flow Summary (in USD) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,017,280) | ($26,526,069) | | Net cash provided by investing activities | $11,130,031 | $11,460,291 | | Net cash provided by financing activities | $0 | $8,452,964 | | Net increase (decrease) in cash | $5,112,751 | ($6,612,814) | | Cash at end of period | $147,195,073 | $9,753,893 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail significant accounting policies, the **$47.0 million** sale of Affiliate Company equity yielding a **$17.7 million** gain, expected **$25 million** real estate payment, and ongoing legal proceedings - The company's working capital increased to **$244.1 million** as of March 31, 2021, from **$223.3 million** at year-end 2020[19](index=19&type=chunk) - On February 18, 2021, the company agreed to sell its remaining **22%** equity in the Affiliate Company to Geely for approximately **$47.0 million** The transaction was completed on March 9, 2021, and resulted in a recognized gain of **$17.7 million** in Q1 2021[21](index=21&type=chunk)[27](index=27&type=chunk)[84](index=84&type=chunk) - The company is involved in several ongoing legal proceedings, including putative shareholder class actions and a derivative action, but believes the claims are without merit and is unable to estimate any potential loss[90](index=90&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) Revenue by Product and Geography (Q1 2021 vs Q1 2020, in USD) | Category | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | **By Geography** | | | | Overseas | $7,867,426 | $2,130,824 | | China | $8,110,328 | $4,241,600 | | **By Product** | | | | EV parts | $6,368,331 | $2,081,335 | | Off-road vehicles | $5,619,004 | $4,035,270 | | Electric Scooters & parts | $3,868,925 | - | | EV products | $121,494 | $255,819 | | **Total Revenue** | **$15,977,754** | **$6,372,424** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2021 revenue growth to EV parts and scooters, with the net loss driven by surging R&D expenses, while liquidity improved from asset sales and new EV products are under development - Total revenue for Q1 2021 was **$16.0 million**, a **150.7%** increase from Q1 2020, while net loss increased to **$6.4 million** from **$1.6 million**, mainly due to higher R&D investment[105](index=105&type=chunk) - The company is developing a short-distance small-scale pure EV with a target cost under **RMB 30,000** and a high-end pure electric four-wheel drive UTV, both planned for launch within the year[146](index=146&type=chunk) - After selling its stake in the Affiliate Company, Kandi is no longer bound by non-compete provisions and is actively seeking to acquire a company to continue its growth in the electric vehicle field[146](index=146&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q1 2021 revenue grew **150.7%** to **$16.0 million** driven by EV parts and new electric scooters, with gross margin improving to **27.3%**, despite operating expenses surging due to a **3,277.6%** increase in R&D Revenue by Product Type (in USD) | Product Type | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | EV parts | $6,368,331 | $2,081,335 | 206.0% | | Off-road vehicles | $5,619,004 | $4,035,270 | 39.2% | | Electric Scooters & parts | $3,868,925 | - | N/A | | EV products | $121,494 | $255,819 | (52.5%) | | **Total** | **$15,977,754** | **$6,372,424** | **150.7%** | - Gross margin increased to **27.3%** in Q1 2021 from **18.3%** in Q1 2020, mainly due to an increased sales proportion of higher-margin battery processing business and contributions from new intelligent transportation products[124](index=124&type=chunk) - Research and development expenses surged by **3,277.6%** to **$21.6 million** in Q1 2021, compared to **$0.64 million** in Q1 2020, due to investment in a new product[125](index=125&type=chunk) - The company recognized a gain of **$17.7 million** from the sale of its **22%** equity interest in the Affiliate Company to Geely, which was completed on March 9, 2021[133](index=133&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity improved with working capital increasing by **$20.8 million** to **$244.1 million**, and cash used in operations significantly decreased to **$6.0 million**, bolstered by **$23.5 million** from an equity sale and an expected **$25 million** real estate payment - Working capital was **$244.1 million** at March 31, 2021, an increase of **$20.8 million** from December 31, 2020[142](index=142&type=chunk) - The company received the first payment of **RMB 154 million** (approx. **$23.5 million**) in March 2021 for the sale of its Affiliate Company equity, with the remainder expected within six months[144](index=144&type=chunk) - The company anticipates receiving a final installment payment of **RMB 162 million** (approx. **$25 million**) from a real estate repurchase agreement with the Jinhua government after vacating its old factory property[143](index=143&type=chunk)[99](index=99&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable to the company as a smaller reporting company - The company states that this item is not applicable[149](index=149&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[150](index=150&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[152](index=152&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing legal proceedings, including shareholder class actions, which management believes are without merit, though the ultimate financial impact remains uncertain - The company is subject to ongoing legal proceedings, including a putative securities class action filed in December 2020 based on claims made in a Hindenburg Research report[94](index=94&type=chunk)[154](index=154&type=chunk) - Management believes the claims in these litigations are without merit but is unable to estimate the possible loss, if any, associated with them[96](index=96&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Equity Transfer Agreement with Geely, officer certifications, and XBRL data files - The exhibits include the Equity Transfer Agreement with Geely, CEO/CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 906), and XBRL data files[155](index=155&type=chunk)