Kandi Technologies Reports Second Quarter 2016 Financial Results

Jinhua, China--(Newsfile Corp. - August 9, 2016) - Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi") today announced its financial results for the second quarter of 2016.

Second Quarter Highlights

• Total revenues grew 15.1% to $55.2 million for the second quarter of 2016, compared with $48.0 million for the same period of 2015;

• Electric Vehicle ("EV") parts sales increased 15.4% to $53.8 million for the second quarter of 2016, compared with $46.6 million in the same period of 2015;

• Kandi Electric Vehicles Group Co., Ltd. (the "JV Company"), sold 7,200 units of EV products, including 5,072 EV products to the Micro Public Transportation (MPT) program and 2,128 EV products to the direct sales program, a 61.9% increase compared to the same period last year;

• GAAP net income for the second quarter of 2016 was $2.8 million, or $0.06 per fully-diluted share, compared with $5.4 million, or $0.12 per fully-diluted share in the same period of 2015;

• Non-GAAP adjusted net income¹, which excludes stock award expenses and changes in the fair value of financial derivatives, was $10.5 million in the second quarter of 2016, compared with $4.9 million of the same period of 2015. Non-GAAP adjusted earnings per share¹ was approximately $0.22 per fully-diluted share for the first quarter of 2016 compared with $0.10 per fully-diluted share for the same quarter of 2015; and

• Working capital surplus was $67.4 million as of June 30, 2016. Cash, cash equivalents and restricted cash totaled $34.1million as of June 30, 2016.

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 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.

"After more than 3 months of waiting, the JV Company finally obtained the approval for a purchase tax exemption for its "Global Hawk" EV products and had a positive sales performance in May and June. The total number of EV products sold in the second quarter was 7,200, a 61.9% increase compared to the same period of 2015 and exceeded our guidance by 20%," commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi. "Notably, Zhejiang Geely Holding Group, the parent company of Geely Automobile Holdings Ltd., is planning to purchase 50% of the equity of Shanghai Maple Guorun Automobile Co., Ltd. at a premium price (a purchase price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years), which will support the future growth of the JV Company and also create better conditions for the JV Company to apply for its EV production license and pursue public listing in China. Recently Zhejiang Zuozhongyou Electric Vehicles Service Co., Ltd. (the "Service Company") expanded its micro public transportation program into two new cities, Tianjin and Jiangyin. Pang Da Automobile Trade Co., Ltd. ("Pang Da") has also signed a framework sales agreement pursuant to which Pang Da is to buy at least 60,000 EVs in the next four years from the JV Company for its Green Campus Drive Electric Campaign. We are excited to see progress and continued business growth in the future."

"We have performed very well financially during the second quarter of 2016," added Mr. Wang Cheng (Henry), Chief Financial Officer of Kandi. "Our margin improved compared to the same quarter last year, and our non-GAAP net income reached $10.5 million, a 114.8% increase compared to $4.9 million in the same period of 2015. We realized positive cash flow of $3.2 million in the first half of 2016, compared to negative cash flow of $17.0 million in the same period of 2015."

Net Revenues and Gross Profit

Net revenues for the second quarter of 2016 increased 15.1% compared to the same quarter last year. This increase in net revenues was mainly due to the growth in EV parts sales. Gross margin was 15.3%, 1.8% higher compared to 13.5% for the same quarter of 2015, which was the result of cost reduction on batteries purchased.

Operating Income (Loss)

Total operating expenses in the second quarter of 2016 were $10.8 million, compared with $4.5 million in the same quarter of 2015. The increase in total operating expenses was due to an increase in stock compensation expenses, which were $8.3 million in this quarter, compared with $3.5 million in the same quarter last year. Excluding stock compensation expenses, operating expenses in the second quarter of 2016 were $2.6 million, compared with $1.0 million in the same quarter last year. This increase was mainly due to the maintenance expenses of batteries and a one-time expense reversal in the second quarter of 2015.

GAAP Net Income

Net income was $2.8 million in the second quarter of 2016, compared with $5.4 million in the same quarter of 2015. Net income was affected by significant increases in stock option expense amortization, gain from the JV Company and change inthe fair value of financial derivatives.

Non-GAAP net income was $10.5 million, a 114.8% increase in the second quarter of 2016 compared to $4.9 million in the same quarter of 2015. The increase in Non-GAAP net income was attributable to growth in revenue and gross profits, net profits from the JV company and government subsidy income.

Kandi Electric Vehicles Group Co., Ltd. (the "JV Company") Financial Results

In the second quarter of 2016, the JV Company sold 7,200 EV products, an increase of 61.9% compared to 4,446 EV products sold in the same quarter of 2015.

The condensed financial income statement of for JV Company for the second quarter of 2016 is below:

Revenue for the JV Company was $111.8 million in the second quarter of 2016, an increase of 62.1% compared to the same quarter of 2015. Net income was $8.6 million, a 444.0% increase compared to the same quarter of 2015.

Kandi's investments in the JV Company are accounted for using the equity method of accounting because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company's income, $4.3 million, forthis quarter. After eliminating intra-entity profits and losses, Kandi's share of the after-tax income of the JV Company was $4.9 million for the second quarter of 2016.

Second Quarter of 2016 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. Eastern time) on August 9, 2016 (8:00 PM Beijing time on August 9, 2016). 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   1-877-407-3982

• TOLL/INTERNATIONAL   1-201-493-6780

• Webcast and replay: http://public.viavid.com/index.php?id=120673

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

- Tables Below -

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

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

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