Kandi Technologies Reports Third Quarter 2015 Financial Results

Jinhua, China--(Newsfile Corp. - November 9, 2015) - Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi"), today announced its financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Highlights

• Total revenues grew 14.3% to $50.5 million for the third quarter of 2015 from $44.2 million for the same period of 2014;

• Electric Vehicle ("EV") parts sales increased 35.7% to $49.0 million for the third quarter of 2015, compared with $36.1 million in the same period of 2014;

• Kandi Electric Vehicles Group Co., Ltd. (the "JV Company"), sold 6,004 EV products, a 208% increase compared with the same period last year. Total EV product sales comprised 3,000 EV products to the Micro Public Transportation (MPT) program and 3,004 EV products through the distribution channel under its direct sales program, with the latter being a significant sequential increase of 367.2% over the 643 EV products sold through the distribution channel under the direct sales program in the second quarter.

• GAAP net income for the third quarter of 2015 was $2.3 million, or approximately $0.05 per fully diluted share, compared with $13.5 million, or approximately $0.31 per fully diluted share in the same period of 2014. The decrease was mainly due to changes in stock-based compensation expenses and the fair value of the financial derivatives during the period;

• Non-GAAP adjusted net income¹, which excludes stock award expenses and changes in the fair value of financial derivatives, was $6.3 million, a 17.7% increase from $5.4 million in the same quarter of 2014. Non-GAAP adjusted earnings per share¹ was approximately $0.13 per fully diluted share for the third quarter of 2015 compared with $0.12 per fully diluted share for the same quarter of 2014;

• Working capital surplus was $54.2 million as of September 30, 2015;

• Cash, cash equivalents and restricted cash totaled $27.4 million as of September 30, 2015.

"The third quarter performance underscores our tremendous growth in EV parts and EV sales as we became China's top seller for EV products in September," commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, "During the third quarter, we obtained the approval for a vehicle purchase tax exemption for Kandi Cyclone ("K17"), while launching a successful promotion in Beijing and Shanghai. The initial market response has been extremely positive, and we believe K17 will become the Company's key driver for growth over the next year. Meanwhile, China's central government has extended its continuous support and confidence in developing the new energy vehicle (NEV) industry by releasing additional policies, including reducing traffic controls and purchase quotas on NEVs, encouraging government purchases, and promoting EV car-share programs. With the government's dedication, we see unprecedented opportunities ahead of us, and we are well-positioned to benefit from the EV adoption in China by leveraging our unique growth engines: the rapid expansion of our Micro Public Transportation program and the burgeoning direct sales program through the distribution channel."

"We are very pleased to achieve strong financial results in the third quarter of 2015," added Mr. Wang Cheng, Chief Financial Officer of Kandi, "Both sales and gross margin were in line with our expectations. With positive operating cash flow of $11.6 million, we are fully prepared for the significant growth potential around the corner."

Third Quarter 2015 Financial Results:

Net Revenues and Gross Profit

Net revenues increased 5.3% sequentially from the second quarter of 2015 due to the sales growth of EV products from the JV Company. Gross margin increased 0.6% sequentially as a result of the cost control from battery packing production. Gross margin increased 1.6% year-over-year due to the margin improvement from EV parts, which was mainly contributed by effective cost control and the scaled production. Gross margin growth was partially offset by the sales decrease in off-road vehicles and EV products sales, with the latter being completely transferred to the JV Company this year per the Joint Venture Agreement.

Operating Income (Loss)

Total operating expenses were $9.6 million, compared with $4.5 million in the second quarter of 2015, and $2.9 million in the third quarter of 2014. The significant increase in total operating expenses was mainly due to the $7.0 million expenses for stock award compensation and $0.5 million in legal expenses in the third quarter of 2015.

GAAP Net Income

Non-GAAP Net Income

Net income was $2.3 million, compared with $5.4 million in the second quarter of 2015, and $13.5 million in the third quarter of 2014. The decrease in net income was mainly due to the $7.0 million expenses for the stock award compensation in the third quarter of 2015. Non-GAAP net income was $6.3 million, a 28.6% increase from $4.9 million in the second quarter of 2015 and 16.7% increase from $5.4 million in the third quarter of 2014. The increase in non-GAAP net income was in line with the revenue growth and the margin improvements.

JV Company Financial Results

In the third quarter, the JV Company sold 6,004 EV products, a 208% increase compared with the same period last year. Total EV product sales comprised 3,000 EV products to the Micro Public Transportation program and 3,004 EV products through the distribution channel under the direct sales program, with the latter being a significant sequential increase over the 643 EV products sold through the distribution channel under the direct sales program in the second quarter.

The condensed financial income statement is as below:

Gross margin in the third quarter of 2015 was 13.5%, compared with gross margin of 15.4% in the second quarter of 2015 and 15.0% in the same period of 2014. The sequential decrease was the result of the lower selling price to a strategic partner in the third quarter of 2015.

We accounted for our investments in the JV Company under the equity method of accounting as we have a 50% ownership interest in the JV Company. As a result, we recorded 50% of the JV Company's profit for $0.8 million for the third quarter of 2015. After eliminating intra-entity profits and losses, our share of the after tax profit of the JV Company was $1.2 million for the three months ended September 30, 2015.

Outlook

For the fourth quarter 2015, Kandi expects net revenues to be in the range of $54.0 million to $56.0 million with gross margin in the range of 13.5% to 14.5% .

The Company also expects the JV Company to deliver 8,000 to 10,000 EV products in the fourth quarter and a total of 20,000-22,000 EV products in the full year of 2015.

This outlook reflects Kandi's current view, which is subject to change.

Third Quarter 2015 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. EST) on November 9, 2015 (9:00 PM Beijing time on November 9, 2015). Mr. Hu Xiaoming, Chief Executive Officer and Mr. Wang Cheng (Henry), Chief Financial Officer, will deliver prepared remarks, 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
• Conference ID: 13623086
• Webcast and replay: http://public.viavid.com/index.php?id=116814

The live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations website at http://ir.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, Zhejiang Province, is engaged in the research and development, manufacturing and sales of various vehicle products. Kandi has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") products (through its joint venture), EV parts and off-road vehicles. More information can be viewed at 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 securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

Company Contact:

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

IR Contact:

The Piacente Group
Phone: 1-212-481-2050
Email: kandi@tpg-ir.com

¹ Non-GAAP measures, including the Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of the fair value of financial derivatives and the effects of the stock award expense. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.

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