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Form 10-Q Kandi Technologies Group For: Mar 31

May 10, 2016 4:18 PM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2016

or

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______to______

Commission file number 001-33997

KANDI TECHNOLOGIES GROUP, INC.
(Exact name of registrant as specified in charter)

Delaware 90-0363723
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  

Jinhua City Industrial Zone
Jinhua, Zhejiang Province
People’s Republic of China
Post Code 321016
(Address of principal executive offices)

(86 - 579) 82239856
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)
Yes [X]     No [   ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [   ] Accelerated filer [X]
Non-accelerated filer [   ] Smaller reporting company [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]     No [X]

As of May 3, 2016, the registrant had issued and outstanding 47,689,638 shares of common stock, par value $0.001 per share.


TABLE OF CONTENTS

  Page
PART I-- FINANCIAL INFORMATION  
 

 
Item 1.

Financial Statements

2
 

 

Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015

2
 

 

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) – Three Months Ended March 31, 2016 and 2015

3
 

 

Condensed Consolidated Statements of Cash Flows (unaudited) –Three Months Ended March 31, 2016 and 2015

4
 

 
Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

40
 

 
Item 3.

Quantitative and Qualitative Disclosures about Market Risk

53
 

 
Item 4.

Controls and Procedures

53
 

 
PART II-- OTHER INFORMATION

54

     
Item 1A.

Risk Factors

54
 

 
Item 6.

Exhibits

55
 

1


PART I-- FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

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

 

  March 31,     December 31,  

 

  2016     2015  

 

           

Current assets

           

Cash and cash equivalents

$  13,447,666   $  16,738,559  

Restricted cash

  16,277,051     16,172,009  

Short term investment

  3,100,391     1,613,727  

 

           

 

           

Accounts receivable

 

  40,867,698

    8,136,421  

Inventories (net of provision for slow moving inventory of
489,057 and 485,901 as of March 31, 2016 and December 31,
2015, respectively

  25,814,430     17,773,679  

Notes receivable

  11,276,387     13,033,315  

Other receivables

  487,077     332,922  

Prepayments and prepaid expense

  353,628     181,534  

Due from employees

  105,868     34,434  

Advances to suppliers

  348,761     71,794  

Amount due from JV Company, net

  92,789,649     76,172,471  

Amount due from related party

  5,585,613     40,606,162  

Deferred taxes assets

  744,910     -  

 

           

TOTAL CURRENT ASSETS

211,199,129 190,867,027

 

           

LONG-TERM ASSETS

           

Plant and equipment, net

  19,539,908     20,525,126  

Land use rights, net

  12,934,208     12,935,121  

Construction in progress

  54,750,430     54,368,753  

Long Term Investment

  1,472,686     1,463,182  

Investment in JV Company

  86,034,442     90,337,899  

Goodwill

  322,591     322,591  

Intangible assets

  474,782     495,306  

Other long term assets

  155,020     154,019  

 

           

TOTAL Long-Term Assets

175,684,067 180,601,997

 

           

TOTAL ASSETS

$  386,883,196   $  371,469,024  
             

CURRENT LIABILITIES

           

Accounts payables

$  91,647,247   $  73,957,969  

Other payables and accrued expenses

  1,678,011     9,544,909  

Short-term loans

  36,894,649     36,656,553  

Customer deposits

  149,688     94,026  

Notes payable

  5,968,252     3,850,478  

Income tax payable

  1,822,276     624,276  

Due to employees

  11,944     9,423  

Deferred taxes liabilities

  -     2,374,924  

Financial derivate - liability

  537,250     3,823,590  

Deferred income

  -     13,726  

 

           

Total Current Liabilities

  138,709,317     130,949,874  

 

           

LONG-TERM LIABILITIES

           

Deferred taxes liabilities

  312,693     1,593,582  

Financial derivate - liability

  -     -  

Total Long-Term Liabilities

  312,693     1,593,582  

 

           

TOTAL LIABILITIES

  139,022,010     132,543,456  

 

           

STOCKHOLDER'S EQUITY

           

Common stock, $0.001 par value; 100,000,000 shares
authorized; 47,019,638 and 46,964,855 shares issued and
outstanding at March 31,2016 and December 31,2015,
respectively

  47,020     46,965  

Additional paid-in capital

  219,886,837     212,564,334  

Retained earnings (the restricted portion is $4,172,324 and
$4,172,324 at March 31,2016 and December 31,2015,
respectively)

  31,144,340     31,055,919  

Accumulated other comprehensive loss

  (3,217,011 )   (4,741,650 )

 

           

TOTAL STOCKHOLDERS' EQUITY

  247,861,186     238,925,568  

 

           

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 386,883,196   $  371,469,024  
 

See accompanying notes to condensed consolidated financial statements

2


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

 

  Three Months Ended  

 

  March 31,     March 31,  

 

  2016     2015  

 

           

REVENUES, NET

$  50,657,893   $  43,781,086  

 

           

COST OF GOODS SOLD

  43,939,795     37,410,353  

 

           

GROSS PROFIT

  6,718,098     6,370,733  

 

           

OPERATING EXPENSES:

           

Research and development

  205,968     571,020  

Selling and marketing

  46,335     113,895  

General and administrative

  8,032,882     3,780,648  

Total Operating Expenses

  8,285,185     4,465,563  

 

           

INCOME(LOSS) FROM OPERATIONS

  (1,567,087 )   1,905,170  

 

           

OTHER INCOME(EXPENSE):

           

Interest income

  780,181     590,480  

Interest expense

  (442,079 )   (598,591 )

Change in fair value of financial instruments

  3,286,340     4,750,300  

Government grants

  194,473     -  

Share of profit after tax of JV

  (4,822,470 )   469,356  

Other income, net

  22,387     23,847  

Total other income (loss), net

  (981,168 )   5,235,392  

 

           

INCOME BEFORE INCOME TAXES

  (2,548,255 )   7,140,562  

 

           

INCOME TAX BENEFIT (EXPENSE)

  2,636,675     (1,008,909 )

 

           

NET INCOME

  88,420     6,131,653  

 

           

OTHER COMPREHENSIVE INCOME

           

Foreign currency translation

  1,524,639     493,211  

 

           

COMPREHENSIVE INCOME

$  1,613,059   $  6,624,864  

 

           

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC

  47,009,834     46,281,299  

WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED

  47,027,744     46,397,993  

 

           

NET INCOME PER SHARE, BASIC

$  0.00   $  0.13  

NET INCOME PER SHARE, DILUTED

$  0.00   $  0.13  
 

See accompanying notes to condensed consolidated financial statements

3


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

 

  Three Months Ended  

 

  March 31, 2016     March 31, 2015  

 

           

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net income

$  88,420   $ 6,131,653  

Adjustments to reconcile net income to net cash provided by operating activities

       

Depreciation and amortization

  1,223,243     1,479,384  

Deferred taxes

  (4,397,828 )   -  

Change in fair value of financial instruments

  (3,286,340 )   (4,750,300 )

Share of profit after tax of JV Company

  4,822,470     (469,356 )

Stock Compensation cost

  6,887,892     2,049,683  

 

           

Changes in operating assets and liabilities, net of effects of acquisition:

       

(Increase) Decrease In:

           

Accounts receivable

  (32,225,627 )   (12,844,602 )

Inventories

  (7,815,491 )   (11,246,265 )

Other receivables

  (144,118 )   (65,602 )

Due from employee

  (67,798 )   (10,225 )

Prepayments and prepaid expenses

  (441,602 )   (527,687 )

Amount due from JV Company

  (15,899,018 )   (19,570,708 )

 

           

Increase (Decrease) In:

           

Accounts payable

  16,975,799     31,915,168  

Other payables and accrued liabilities

  (7,875,311 )   (1,438,571 )

Customer deposits

  54,289     1,365  

Income Tax payable

  1,165,635     (130,488 )

Due from related party

  34,781,767     -  

Net cash used in operating activities

$  (6,153,618 ) $  (9,476,551 )

 

           

CASH FLOWS FROM INVESTING ACTIVITIES:

           

Purchases of plant and equipment, net

  (29,696 )   (233,343 )

Disposal of land use rights and other intangible assets

  13,767     -  

Purchases of construction in progress

  (28,140 )   (39,266 )

Issuance of notes receivable

  (614,592 )   (4,225,884 )

Repayment of notes receivable

  2,430,657     2,584,147  

Short Term Investment

  (1,455,727 )   -  

Net cash provided by (used in) investing activities

$  316,269   $  (1,914,346 )

 

           

CASH FLOWS FROM FINANCING ACTIVITIES:

           

 Restricted cash

  -     (12,366,201 )

 Proceeds from short-term bank loans

  -     6,338,475  

 Proceeds from notes payable

  2,063,766     6,663,525  

 Warrant exercise

  434,666     -  

Net cash provided by financing activities

$ 2,498,432   $  635,799  

 

           

NET INCREASE IN CASH AND CASH EQUIVALENTS

  (3,338,917 )   (10,755,098 )

Effect of exchange rate changes on cash

  48,024     11,296  

Cash and cash equivalents at beginning of year

  16,738,559     26,379,460  

 

           

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  13,447,666     15,635,658  

 

           

SUPPLEMENTARY CASH FLOW INFORMATION

           

Income taxes paid

  595,518     1,139,397  

Interest paid

  445,176     577,874  


See accompanying notes to condensed consolidated financial statements

4


NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

Kandi Technologies Group, Inc. (“Kandi Technologies”) was incorporated under the laws of the State of Delaware on March 31, 2004. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007. On December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in the Jinhua city, Zhejiang Province, China, the Company is one of China’s leading producers and manufacturers of electrical vehicle products, electrical vehicle parts and off road vehicles for sale in the People’s Republic of China (the “PRC”) and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partial and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

5


Operating Subsidiaries:

Pursuant to relevant agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests (100% profits and loss absorption rate) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”), a company in which Kandi Vehicles has 50% interest. Mr. Hu Xiaoming owns the other 50% which he entrusted Kandi Vehicles to manage Kandi New Energy. Kandi New Energy currently holds battery packing production rights (license), and supplies the battery pack to the JV Company (Defined below). It didn’t maintain the special-purpose vehicle production rights (license) on manufacturing Kandi brand electric utility vehicles. According to the JV Agreement (defined below) Kandi is not allowed to produce EVs. To avoid the maintenance fee on this license, the Company shall sell the special-purpose vehicle production rights (license) to others.

6


In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electrical products to the JV Company (defined below).

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company with products that are manufactured by its subsidiaries.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, which is called “Micro Public Transportation (“MPT”) program. The Company has 9.5% ownership interest in the Service Company through Kandi Vehicles.

In November 2013, Zhejiang Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company and is engaged in car sales business. The JV Company has 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Shanghai.

In January 2014, Zhejiang Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jiangsu. The company is mainly engaged in EV research and development, manufacturing and sales.

7


In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company, which focuses on the investment and consulting service. The JV Company has 50% ownership interest in Puma Investment, and the Company, indirectly through its JV Company, has 25% economic interest in Puma Investment. The other 50% ownership is held by the Service Company.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company, which focuses on the after-market service for the EV products sold. The JV Company has 100% ownership interest in JiHeKang Service Company, and the Company, indirectly through its JV Company, has 50% economic interest in JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”) was renamed from Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) which was originally formed in Wanning City of Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013 and then was transferred to Haikou City in January 2016. Kandi Vehicles has 90% ownership in Kandi Hainan, and Kandi New Energy has the remaining 10% interest. However, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests (100% profits and losses) of Kandi Hainan.

The Company’s primary business operations are the design, development, manufacturing and commercialization of EV products, EV parts and off road vehicles. As part of its strategic objective to become a leading manufacturer of EV products and related services, the Company has increased its focus on pure EV related products with a particular emphasis on expanding its market share in China.

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $72,489,812 as of March 31, 2016, an increase of $12,572,659 from $59,917,153 as of December 31, 2015.

As of March 31, 2016, the Company had credit lines from commercial banks of $36,894,649. The Company believes that its cash flows generated internally may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve (12) months. However, the Company believes its access to existing financing sources and established relationships with PRC banks will enable it to meet its obligations and fund its ongoing operations.

The Company has historically financed its operations through short-term commercial bank loans from PRC banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest in a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. The Company believes this practice has been ongoing year after year and that short-term bank loans remain available on normal trade terms if needed.

8


NOTE 3 - BASIS OF PRESENTATION

The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States (“U.S. GAAP”) and have been consistently applied in the presentation of financial statements.

The financial information included herein for the three-month ended March 31, 2016 are unaudited; however, such information reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for these interim periods.

The results of operations for the three-month ended March 31, 2016 are not necessarily indicative of the results expected for the entire fiscal year ending December 31, 2016.

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The consolidated financial statements reflect the accounts of the Company and its ownership interest in the following subsidiaries:

(i) Continental, a wholly-owned subsidiary of the Company;
   
(ii) Kandi Vehicles, a wholly-owned subsidiary of Continental;
   

(iii)

Kandi New Energy, a 50% owned subsidiary of Kandi Vehicles. Pursuant to relevant agreements executed in January 2011, Kandi Vehicles effectively controls a variable interest (“VIE”) of Kandi New Energy. PRC laws and regulations prohibit or restrict foreign 100% ownership of an entity who has the special purpose vehicle production license (maximum is 50%), to comply with these foreign ownership restrictions, the Company has entered various agreement with Mr. Hu Xiaoming to hold 50% equity share of Kandi New Energy on behalf. Based on the relevant agreements, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy; Based on these contractual arrangements, the Company consolidates the financial results of Kandi New Energy required by Accounting Standards Codification (“ASC”) subtopic 810-10 (“ASC 810-10”), Consolidation: Overall (Pre-Codification): Financial Accounting Standards Board (“FASB”) Interpretation No. 46R,Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. Based on the aforementioned agreements, the Company demonstrates its ability and intention to continue to exercise the ability to obtain substantially all of the profits and absorb all of the expected losses of Kandi New Energy. All significant intercompany accounts and transactions between the Company, its subsidiaries, and Kandi New energy have been eliminated in consolidation.

   
(iv) Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles;
   
(v) Kandi Hainan, a subsidiary, 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles.
 

9


Equity Method Investees

The consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as following:

(vi) The JV Company, 50% owned subsidiary of Kandi Vehicles;
   
(vii)

Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(viii)

Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(ix)

JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(x)

Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(xi)

Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(xii)

Puma Investment, a 50%-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 25% economic interest.

   
(xiii)

JiHeKang Service Company, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest.

All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

10


NOTE 6 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in the PRC. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The company’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivable, accounts payable, other payables and accrued liabilities, short-term bank loans, notes payable, and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivable, accounts payable, other payables and accrued liabilities and notes payable approximate fair value because of the short term nature of these items. The estimated fair values of short-term bank loans were not materially different from their carrying value as presented due to the short maturities and that the interest rates on the borrowing approximate those that would have been available for loans of similar remaining maturity and risk profile. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. The Company identified notes payable as a Level 2 instrument due to the fact that the inputs to the valuation are primarily based upon readily observable pricing information. The balance of notes payable, which was measured and disclosed at fair value, was $5,968,252 and $3,850,478 at March 31, 2016 and 2015, respectively.

11


Warrants, which are accounted as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. The fair value of warrants was $537,250 and $3,823,590 at March 31, 2016 and 2015, respectively. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of March 31, 2016 and December 31, 2015, represented time deposits on account for earning interest income. As of March 31, 2016, the Company’s restricted cash were $16,277,051, which reflects a one-year Certificate of Time Deposit (CD) with Hangzhou Bank Jinhua Branch.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the weighted average basis and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

(e) Accounts Receivable

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after an exhaustive collection effort. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item. As of March 31, 2016 and December 31, 2015, the Company had no allowance for doubtful accounts, as per the management’s judgment based on their best knowledge.

As of March 31, 2016 and December 31, 2015, the credit terms with the Company’s customers were typically 150 to 180 days after delivery.

(f) Notes receivable

Notes receivable represent short-term loans to third parties with the maximum term of one year. Interest income will be recognized according to each agreement between a borrower and the Company on an accrual basis. If notes receivable are paid back or written off, that transaction will be recognized in the relevant year. If the loan default is probable, reasonably assured and the loss can be reasonably estimated, the Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions being taken, the Company provides an accrual for the related foreclosure expenses and related litigation expenses. The Company also receives notes receivable from the JV Company to settle the accounts receivable.

12


(g) Prepayments

Prepayments represent cash paid in advance to suppliers, which also includes advances to raw material suppliers, mold manufacturers, and suppliers of equipment.

As of December 31, 2013, the Company recorded a significant prepayment made by the Company to a supplier Nanjing Shangtong (as defined in Note 16) as an advance of RMB 353 million ($54,721,895) and deposited by Kandi Wanning (renamed to Kandi Hainan in January 2016) to Nanjing Shangtong. As of December 31, 2015, the advance to Nanjing Shangtong was transferred to “construction-in-progress” as described in Note 16.

Advances for raw materials purchases typically are settled within two months by the Company’s receipt of raw materials. Prepayment is offset against purchase amount after equipment or materials are delivered.

(h) Plant and Equipment

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of assets, using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings

  30 years  

Machinery and equipment

  10 years  

Office equipment

  5 years  

Motor vehicles

  5 years  

Molds

  5 years  

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to expense as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction, the acquisition cost of buildings or machinery and design fees. Capitalization of these costs ceases, and the construction in progress is transferred to plant and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until the assets are completed and ready for their intended use. No interest expense has been capitalized for CIP as of March 31, 2016, as the Company did not get loans for CIP.

13


(j) Land Use Rights

According to the Chinese laws, land in the PRC is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the government grants the user a “land use right” to use the land. The land use rights granted to the Company are being amortized using the straight-line method over the term of fifty years.

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

During the reporting period, no impairment loss was recognized.

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

  Persuasive evidence of an arrangement exists;
  Delivery has occurred or services have been rendered;
  The seller’s price to the buyer is fixed or determinable; and
  Collectability is reasonably assured.

The Company recognized revenue when the products and the risk they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including significant improvements to existing products, are expensed as incurred. Research and development expenses were $205,968 and $571,020 for the three months ended March 31, 2016 and 2015, respectively.

14


(n) Government Grants

Grants and subsidies received from the PRC Government are recognized when the proceeds are received or collectible.

For the three months ended March 31, 2016 and 2015, $194,473 and $0 grants were received by the Company’s subsidiaries from the PRC government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the management’s best estimate on the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http://www.oanda.com

  March 31,     December 31,     March 31,  

 

  2016     2015     2015  

Period end RMB : USD exchange rate

  6.45080     6.49270     6.13210  

Average RMB : USD exchange rate

  6.54144     6.24010     6.15290  

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

15


(r) Segments

In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”), the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing performance of the Company. As a result of the assessment made by the chief operating decision makers, the Company has only one single operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of the stock option expenses is based on awards expected to vest, and there were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended March 31, 2016 and 2015 were $6,109,666 and $0, respectively. See Note 20.

(t) Warrant Costs

The Company’s warrant costs are recorded in liabilities in accordance with ASC 480, ASC 505 and ASC 815.

The fair value of a warrant is estimated using the Black-Scholes-Merton model and the lattice valuation model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the warrant. The risk-free interest rate for the expected term of the warrant is based on the U.S. Treasury yield curve in effect at the time of measurement. The warrants, which are freestanding derivatives and are classified as liabilities on the balance sheet, will be measured at fair value on each reporting date, with decreases in fair value recognized in earnings and increases in fair values were recognized in expenses.

(u) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

16


Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of March 31, 2016 and 2015, the Company determined that it goodwill was not impaired.

(v) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of March 31, 2016.

(w) Accounting for Sale of Common Stock and Warrants

Gross proceeds are firstly allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

(x) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Kandi Vehicles, to receive a majority of their respective expected residual returns.

17


Additionally, as Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of the company. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the Contractual Agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

The FASB has issued No. 2016-07 “Topic 323, Investments—Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting,” which aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments in this Update affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.

The FASB has issued No. 2016-08 “Topic 606, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which requires the entity to determine whether the nature of its promise is to provide good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. The amendments in this Update affect entities with transactions included within the scope of Topic 606. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2014-09. Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

18


The FASB has issued No. 2016-09 “Topic 718, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments in this Update affect all entities that issue share-based payment awards to their employees. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period.

The FASB has issued No. 2016-10 “Topic 606, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The amendments in this Update clarify that contractual provisions that, explicitly or implicitly, require an entity to transfer control of additional goods or services to a customer (for example, by requiring the entity to transfer control of additional rights to use or rights to access intellectual property that the customer does not already control) should be distinguished from contractual provisions that, explicitly or implicitly, define the attributes of a single promised license (for example, restrictions of time, geographical region, or use). The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month period ended March 31, 2016, the Company’s major customers, each of whom accounted for more than 10% of the Company’s consolidated revenue, were as follows:

 

  Sales     Accounts Receivable  

 

  Three Months     Three Months              

 

  Ended     Ended              

 

  March 31     March 31     March 31     December 31  

Major Customers

  2016     2015     2016     2015  

Jinhua Chaoneng Automobile Sales Co. Ltd.

  59%     -     26%     -  

Kandi Electric Vehicles Group Co., Ltd.

  26%     -     38%     46%  

19



(b) Suppliers

For the three-month period ended March 31, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

 

  Purchases     Accounts Payable  

 

  Three Months     Three Months              

 

  Ended     Ended     March 31     December 31  

 

  March 31     March 31              

Major Suppliers

  2016     2015     2016     2015  

Dongguan Chuangming Battery Technology Co., Ltd.

  47%     10%     21%     15%  

Zhejiang Tianneng Energy Technology Co., Ltd.

  32%     38%     26%     24%  

NOTE 9 –EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended March 31, 2016 and 2015, the average number of potentially dilutive common shares was 17,910 and 116,694, respectively. The potential dilutive common shares as at the three months ended March 31, 2016 and 2015 was 5,849,419 and 1,076,679 shares respectively.

The following is the calculation of earnings per share:

 

  For three months ended  

 

  March 31,  

 

  2016     2015  

Net income

$  88,420   $  6,131,653  

Weighted average shares used in basic computation

  47,009,834     46,281,299  

Dilutive shares

  17,910     116,694  

Weighted average shares used in diluted computation

  47,027,744     46,397,993  

 

           

Earnings per share:

           

Basic

$  0.00   $  0.13  

Diluted

$  0.00   $  0.13  

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NOTE 10 - ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

  March 31,     December 31,  

 

  2016     2015  

Accounts receivable

$  40,867,698   $  8,136,421  

Less: Provision for doubtful debts

  -     -  

Accounts receivable, net

$  40,867,698   $  8,136,421  

NOTE 11 - INVENTORIES

Inventories are summarized as follows:

 

  March 31,     December 31,  

 

  2016     2015  

Raw material

$  20,044,645   $  8,509,421  

Work-in-progress

  1,703,490     1,648,498  

Finished goods

  4,555,352     8,101,661  

Total inventories

  26,303,487     18,259,580  

Less: provision for slowing moving inventories

  (489,057 )   (485,901 )

Inventories, net

$  25,814,430   $  17,773,679  

NOTE 12 - NOTES RECEIVABLE

Notes receivable are summarized as follows:

21



 

  March 31,     December 31,    

 

  2016     2015  

Notes receivable as below:

           

Due September 30, 2016, interest at 7.2% per annum

$  7,884,560   $  10,578,574  

Bank acceptance notes

  3,391,827     2,454,741  

 

           

Notes receivable

$  11,276,387   $  13,033,315  

Details of Notes receivable are as below as of March 31, 2016:

Index Amount ($) Counter party Relationship Nature Manner of settlement
1 7,884,560 Yongkang HuiFeng Guarantee Co., Ltd No relationship beyond loan Receive interest income Not due
2 1,376,573 Kandi Changxing Subsidiary of the JV Company Payments for sales Not due
3 465,059 Kandi Shanghai Subsidiary of the JV Company Payments for sales Not due
4 1,550,195 Beijing Pangda Xinhong New Energy Automobile Sales and Service Co. Ltd. No relationship beyond loan Payments for sales Not due

Details of Notes receivable are as below as of December 31, 2015:

Index Amount ($) Counter party Relationship Nature Manner of settlement
1 10,578,574 Yongkang HuiFeng Guarantee Co., Ltd No relationship beyond loan Receive interest income Not due
2 1,871,332 Kandi Electric Vehicles Group Co., Ltd. Joint venture of the Company Payments for sales Not due
3 59,744 Kandi Shanghai Subsidiary of the JV Company Payments for sales Not due
4 523,665 Zhuhai Enpower electrical Limited No relationship beyond loan Payments for sales Not due

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NOTE 13 AMOUNT DUE FROM RELATED PARTY

The details for amount due from related parties as at the March 31, 2016 and December 31, 2015 were as below:

 

  March 31,     December 31,  

 

  2016     2015  

Service Company

  5,585,613     40,606,162  

Total due from related party

$  5,585,613     40,606,162  

The Company has 9.5% ownership of the Service Company and the Chairman and CEO of the Company, Mr.Hu, has 13% ownership of the Service Company. The main transactions between the Company and the Service Company are those the Service Company bought battery for the speed upgrade and EV parts for repairing and maintenance for its operating electric vehicles.

The transaction with JV Company, please refer to Note 23.

NOTE 14 – PLANT AND EQUIPMENT

Plant and equipment consisted of the following:

 

  March 31,     December 31,  

 

  2016     2015  

At cost:

           

Buildings

$  13,973,387   $  13,883,211  

Machinery and equipment

  9,322,054     7,804,097  

Office equipment

  486,395     395,328  

Motor vehicles

  337,404     335,227  

Moulds

  33,145,643     32,931,740  

 

  57,264,883     55,349,603  

Less : Accumulated depreciation

       

Buildings

$  (3,897,971 ) $  (3,755,582 )

Machinery and equipment

  (8,741,563 )   (7,108,925 )

Office equipment

  (233,148 )   (249,378 )

Motor vehicles

  (280,429 )   (271,495 )

Moulds

  (24,517,781 )   (23,385,363 )

 

  (37,670,892 )   (34,770,743 )

Less: provision for impairment for fixed assets

  (54,083 )   (53,734 )

Plant and equipment, net

$  19,539,908   $  20,525,126  

23


As of March 31, 2016 and December 31, 2015, the net book value of plant and equipment pledged as collateral for bank loans was $9,899,767 and $9,949,661, respectively.

Depreciation expenses for the first quarter of 2016 and 2015 were $1,132,732 and $1,361,481, respectively.

NOTE 15 – LAND USE RIGHTS

The Company’s land use rights consisted of the following:

  March 31,     December 31,  

 

  2016     2015  

Cost of land use rights

$  15,376,185   $  15,276,957  

Less: Accumulated amortization

  (2,441,977 )   (2,341,836 )

Land use rights, net

$  12,934,208   $  12,935,121  

As of March 31, 2016 and December 31, 2015, the net book value of land use rights pledged as collateral for the Company’s bank loans was $9,506,449 and $9,512,598, respectively. Also see Note 17.

The amortization expense for the three months ended March 31, 2016 and 2015 was $69,987 and $97,379, respectively. Amortization expense for the next five years and thereafter is as follows:

2016 (nine months)

$  209,961  

2017

  279,948  

2018

  279,948  

2019

  279,948  

2020

  279,948  

Thereafter

  11,604,455  

Total

$  12,934,208  

NOTE 16 - CONSTRUCTION-IN-PROGRESS

As of March 31, 2016, a total amount of advances to a supplier of RMB 353,000,000, or $54,721,895, made by Kandi Hainan to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) for equipment purchases was included in Construction in Process (“CIP”). None of the CIP was transferred to property, plant and equipment as of March 31, 2016.

24


Because the government of Hainan Province is enforcing a new plan to centralize the manufacturing in designated industry park, the Wanning facility will be relocated from Wanning City to Haikou City. In addition, all related expenses and assets disposal caused by the relocation were compensated by the local government. Currently Hainan facility is under construction and will be completed for production testing in the middle of 2017.

No depreciation is provided for CIP until such time as the facility is completed and placed into operation.

The contractual obligation under CIP of the Company as of March 31, 2016 is as follow:

 

    Total in CIP as of              

    March 31,     Contracted but     Total contract  

Project

    2016     not provided for     amount  

Kandi Hainan facility

  $  54,750,430   $  6,510,820   $  61,261,250  

Total

  $  54,750,430   $  6,510,820   $  61,261,250  

As of March 31, 2016 and December 31, 2015, the Company had CIP amounting to $54,750,430 and $54,368,753, respectively.

No interest expense has been capitalized for CIP as of March 31, 2016 and 2015, respectively, as the Company did not get loans for CIP.

NOTE 17 – SHORT TERM BANK LOANS

Short-term loans are summarized as follows:

  March 31,     December 31,  

 

  2016     2015  

Loans from China Ever-bright Bank

           

Interest rate 4.698% per annum, due October 28, 2016, secured by the assets of the Company, guaranteed by Mr. Hu Xiaoming and his wife.

  12,091,523     12,013,492  

Loans from Hangzhou Bank

           

Interest rate 4.60% per annum, due October 13, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.

  7,564,953     7,516,134  

Interest rate 4.82% per annum, due July 2, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.

  7,750,977     7,700,956  

Interest rate 4.85% per annum, due July 12, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.

  3,441,434     3,419,225  

Interest rate 4.35% per annum, due March 23, 2017, secured by the assets of the Company. Also see Note 14 and Note 15.

  6,045,762     -  

Interest rate 5.35% per annum, paid off on March 22, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.

  -     6,006,746  

$  36,894,649     36,656,553  

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The Interest Expenses for the three months ended March 31, 2016 and 2015 were $442,079 and $587,293, respectively.

As of March 31, 2016, the aggregate amount of short-term loans that was guaranteed by various third parties was $0.

NOTE 18 – NOTES PAYABLE

By issuing bank notes payables rather than paying cash to suppliers, the Company can defer the payments until the date the bank notes payable are due. Simultaneously, the Company may need to deposit restricted cash in banks to back up the bank notes payable. The restricted cash deposited in banks will generate interest income.

Notes payable for March 31, 2016 and December 31, 2015 were summarized as follows:

 

  March 31,     December 31,  

 

  2016     2015  

Bank acceptance notes:

           

Due May 12, 2016

$  2,325,293   $  2,310,287  

Due June 17, 2016

  1,550,195     1,540,191  

Due July 6, 2016

  1,550,195     -  

Due July 14, 2016

  232,529     -  

Due August 23, 2016

  155,020     -  

Due September 30, 2016

  155,020     -  

Total

$  5,968,252   $ 3,850,478  

A bank acceptance note is a promised future payment or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance notes specifies the amount of funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit. $5,968,252 and $3,850,478 were held as collateral for the notes payable as of March 31, 2016 and December 31, 2015, respectively.

26


NOTE 19 – TAXES

(a) Corporation Income Tax

In accordance with the relevant tax laws and regulations of the PRC, the applicable corporate income tax (“CIT”) rate for Kandi’s subsidiaries are as below:

Company Name

Applicable Corporate Income Tax

Kandi Vehicles 15%
Kandi New Energy 25%
Yongkang Scruo 25%
Kandi Hainan 25%
JV Company 25%

The Company, qualified as a high technology company in China, was entitled to pay a reduced CIT rate of 15%. After combining with the research and development tax credit of 25% on certain qualified research and development expenses, the final effective reduced income tax rate was 15.88%. The combined tax benefits were 45.28%. The actual effective income tax rate was reduced from 25% to 13.68% in the first quarter of 2016.

According to the PRC CIT reporting system, the CIT sales cut-off base is concurrent with the value-added tax (“VAT”), which should reported to the State Administration of Taxation (“SAT”) on a quarterly basis. Since the VAT and CIT are accounted for on a VAT tax basis that recorded all sales on a “State provided official invoices” reporting system, the Company is reporting the CIT according to the SAT prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off is not done on an accrual basis but rather on a VAT taxable reporting basis. Therefore, when the Company adopted U.S. GAAP using an accrual basis, the sales cut-off CIT timing (due to the VAT reporting system) creates a temporary sales cut-off timing difference. This difference is reflected in the deferred tax assets or liabilities calculations on the income tax estimate reported elsewhere on the report.

Effective January 1, 2007, the Company adopted ASC 740, Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2016, the Company did not have a liability for unrecognized tax benefits. The Company files income tax returns to the U.S. Internal Revenue Services (“IRS”) and states where the Company has operations. The Company is subject to U.S. federal or state income tax examinations by the IRS and relevant state tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss carry forwards (“NOLs”) for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in China. As of March 31, 2016, the Company was not aware of any pending income tax examinations by U.S. and China tax authorities. The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2016, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax f as of March 31, 2016 due to the net operating loss in the first quarter of 2016 and an accumulated net operating loss carry forward from prior years in the United States.

27


Income tax expense (benefit) for the three months ended March 31, 2016 and 2015 is summarized as follows:

 

  For Three Months Ended  

 

  March 31,  

 

  (Unaudited)  

 

  2016     2015  

Current:

           

Provision for CIT

$ (2,636,675 ) $  1,008,909  

Provision for Federal Income Tax

  -     -  

Deferred:

           

Provision for CIT

  -     -  

Income tax expense (benefit)

$ (2,636,675 ) $  1,008,909  

28


The Company’s income tax expense (benefit) differs from the “expected” tax expense for the three months ended March 31, 2016 and 2015 (computed by applying the U.S. Federal Income Tax rate of 34% and PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

 

  For Three Months Ended  

 

    March 31,  

 

  (Unaudited)  

 

  2016     2015  

Computed "expected" expense

$  (3,957,325 ) $  3,109,591  

Favorable tax rate

  (113,208 )   (2,416,981 )

Permanent differences

  (1,243,626 )   (27,713 )

Valuation allowance

  2,677,484     344,012  

Income tax expense (benefit)

$  (2,636,675 ) $  1,008,909  

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of March 31, 2016 and December 31, 2015 are summarized as follows:

 

  March 31,     December 31,  

 

  2016     2015  

 

  (Unaudited)        

Current portion:

           

Deferred tax assets (liabilities):

           

           Expense

$  (170,862 )   (272,953 )

Subtotal

  (170,862 )   (272,953 )

 

           

Deferred tax assets (liabilities):

           

Sales cut-off difference derived from Value Added
Tax reporting system to calculate PRC Corporation
Income Tax in accordance with the PRC State
Administration of Taxation

  915,772     290,850  

           Other

  -     (2,392,821 )

Subtotal

  915,772     (2,101,971 )

 

           

Total deferred tax assets (liabilities) – current portion

  744,910     (2,374,924 )

 

           

Non-current portion:

           

Deferred tax assets (liabilities):

           

           Depreciation

  (312,693 )   (353,115 )

           Loss carried forward

  2,677,484     7,645,386  

           Valuation allowance

  (2,677,484 )   (7,645,386 )

Subtotal

  (312,693 )   (353,115 )

 

           

Deferred tax liabilities:

           

           Accumulated other comprehensive gain

  -     (1,240,467 )

Subtotal

  -     (1,240,467 )

 

           

Total deferred tax assets - non-current portion

  (312,693 )   (1,593,582 )

 

           

Net deferred tax assets (liabilities)

$  432,217     (3,968,506 )

29


(b) Tax Benefit (Holiday) Effect

For the three months ended March 31, 2016 and 2015, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax benefit (holidays) for the three months ended March 31, 2016 and 2015.

The combined effects of the income tax expense exemptions and reductions available to the Company for the three months ended March 31, 2016 and 2015 are as follows:

  For the Three Months Ended  

  March 31,  

  (Unaudited)  

                                                                 

  2016     2015  

Tax benefit (holiday) credit

$  (113,208 ) $  2,416,981  

Basic net income per share effect

$  (0.002 ) $  0.052  

30


NOTE 20 - STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of common stock at an exercise price of $9.72 per share to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015 through May 29, 2018. The value of the options was estimated using the Black Scholes Model with an expected volatility of 90%, expected life of 10 years, risk-free interest rate of 2.23% and expected dividend yield of 0.00%.

The fair value of the 4,900,000 options issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

On June 26, 2013, the Company entered into a securities purchase agreement (the “2013 Securities Purchase Agreement”) with certain institutional investors (the “Third Round Investors”) that closed on July 1, 2013, pursuant to which the Company sold to the Third Round Investors, in a registered direct offering, an aggregate of 4,376,036 shares of the Company’s common stock at a negotiated purchase price of $6.03 per share. Under the 2013 Securities Purchase Agreement, the Third Round Investors also received Series A warrants for the purchase of up to 1,750,415 shares of the Company’s common stock at an exercise price of $7.24 per share and an option to make an additional investment in the form of Series B warrants and Series C warrants, Series B warrants to purchase a maximum aggregate of 728,936 shares of the Company’s common stock at an exercise price of $7.24 per share and Series C warrants to purchase a maximum aggregate of 291,574 shares of the Company’s common stock at an exercise price of $8.69 (the “Third Round Warrants”). As of June 30, 2014, all the Third Round Warrants had been exercised on a cash basis. In addition, the placement agent for this transaction also received warrants for the purchase of up to 262,562 shares of the Company’s common stock at an exercise price of $7.24 per share (the “Third Round Placement Agent Warrants”), which will expire on July 1, 2016, with a fair value of $1.054 per share.. Based on the warrants agreement, they contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet.

On January 15, 2014, the Company sold to certain institutional investors warrants to purchase an aggregate of 1,429,393 shares of the Company’s common stock at an exercise price of $15 per share (the “January 2014 Warrants”) for a total purchase price of approximately $14,294. According to the warrant subscription agreement by and among the Company and the holders, the exercise price was reduced by a credit of $0.01, which reflected the price per warrant share paid in connection with the issuance of the January 2014 Warrants. Consequently, the effective exercise price per warrant share is $14.99. The January 2014 Warrants expired on January 30, 2015 and no investors exercised their warrants.

31


On March 19, 2014, the Company entered into a securities purchase agreement with certain purchasers (the “Fourth Round Investors”), pursuant to which the Company sold to the Fourth Round Investors, in a registered direct offering, an aggregate of 606,000 shares of common stock, at a negotiated purchase price of $18.24 per share, for aggregate gross proceeds to the Company of approximately $11,053,440, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. As part of the transaction, the Fourth Round Investors also received warrants for the purchase of up to 90,900 shares of the Company’s common stock at an exercise price of $22.80 per share (the “Fourth Round Warrants”). In addition, the placement agent for this transaction also received warrants for the purchase of up to 36,360 shares of the Company’s common stock at an exercise price of $22.80 per share, which was adjusted to $9.72 on July 27, 2015. The Fourth Round Warrants have a term of eighteen months and are exercisable by the holders at any time after the date of issuance. On August 8, 2015, the Company extended the expiration date of these warrants from September 21, 2015 to January 20, 2016, among these warrants, 44,783 share were exercised in January 2016 and the rest warrant shares were expired and without exercise. Based on the warrants agreement, they contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet

On September 4, 2014, the Company entered in a securities purchase agreement with certain purchasers (the “Fifth Round Investors”), pursuant to which the Company sold to the Fifth Round Investors, in a registered direct offering, an aggregate of 4,127,908 shares of its common stock at a price of $17.20 per share, for aggregate gross proceeds to the Company of approximately $71 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company (the “Fifth Round Financing”). As part of the transaction, the Fifth Round Investors also received warrants for the purchase of up to 743,024 shares of the Company’s common stock at an exercise price of $21.50 per share (the “Fifth Round Warrants”), which was adjusted to $9.72 on July 27, 2015. The Fifth Round Warrants have a term of seventeen months and are exercisable by the holders at any time after the date of issuance. On August 8, 2015, the Company extended the expiration date of these warrants from February 4, 2016 to June 3, 2016. In addition, the placement agent for this transaction also received warrants for the purchase of up to 206,395 shares of the Company’s common stock at an exercise price of $20.64 per share, which was adjusted to as exercise price of $9.72 per share in December 2015 due to its financial consulting service. The placement agent’s warrants are exercisable for a term of seventeen months after the six months from the issuance. As of March 31, 2016, the fair value of the Fifth Round Warrants was $0.22 per share and the fair value of the Fifth Round Placement Agent Warrants was $0.46 per share. Based on the warrants agreement, they contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet.

NOTE 21 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company's restricted common stock every six months, beginning in July 2011.

32


As compensation for having Mr. Jerry Lewin to serve as a member of the Board, the Board authorized the Company to provide Mr. Jerry Lewin with 5,000 shares of Company's restricted common stock every six months, beginning in August 2011.

As compensation for having Ms. Kewa Luo to serve as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company's common stock every six months, beginning in September 2013.

The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are granted. The compensation costs for awards of common stock are recognized over the requisite service period of six months.

On December 30, 2013, the Board approved a proposal (as submitted by the Compensation Committee) of an award for selected executives and other key employees comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount. Any such increase in the grant would be subject to the total number of shares available under the Plan, and the Company’s Board and shareholders will need to approve an increase in the number of shares reserved under the Plan if the number of shares originally reserved is used up. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the Plan at its annual meeting. The fair value of each award granted under the Plan is determined based on the closing price of the Company’s stock on the date of grant of the award. To the extent that the performance goal is not met and so no shares become due, no compensation cost is recognized and any recognized compensation cost during the applicable year is reversed. The compensation expense is recognized in General and Administrative Expenses.

The stock award was below starting from 2013 based on the above award plan:

Issue Date (dd-mm-yyyyy) For Year Shares
22-05-2014 2013 801,163
15-04-2015 / 12-06-2015 2014 670,000
13-04-2016 2015 670,000

33


NOTE 22 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets other than goodwill:

 

        March 31,     December 31,    

  Remaining useful life     2016     2015  

Gross carrying amount:

           

Trade name

  5.75 years   $  492,235   $  492,235  

Customer relations

  5.75 years     304,086     304,086  

 

        796,321     796,321  

Less : Accumulated amortization

           

Trade name

      $  (198,756 ) $  (186,069 )

Customer relations

        (122,783 )   (114,946 )

 

        (321,539 )   (301,015 )

Intangible assets, net

      $  474,782   $  495,306  

The aggregate amortization expense for those intangible assets that continue to be amortized is reflected in amortization of intangible assets in the consolidated statements of income, and comprehensive income were $20,523 and $20,524 for the three months ended March 31, 2016 and 2015, respectively.

Amortization expense for the next five years and thereafter is as follows:

2016(nine months)

$  61,571  

2017

  82,095  

2018

  82,095  

2019

  82,095  

2020

  82,095  

Thereafter

  84,831  

Total

$  474,782  

34


NOTE 23 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”)

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company indirectly has 50% economic interest in Kandi Changxing through its 50% ownership interest in the JV Company after this transfer. In November 2013, Zhejiang Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jinhua. In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang. In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Shanghai. In January 2014, Zhejiang Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jiangsu. In addition, In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. In August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership of the Service Company since the transfer. In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has 25% economic interest in Puma Investment. In November 2015,Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang Service Company.

35


As of March 31, 2016, the JV Company consolidated the following entities on its financial statements: (1) 100% interest in Kandi Changxing; (2) 100% interest in Kandi Jinhua; (3) 100% interest in JiHeKang; (4) 100% interest in Kandi Shanghai; (5) 100% interest in Kandi Jiangsu; (6) 100% interest in JiHeKang Service; and (7) 50% interest in Puma Investment. The Company accounted for its investments in the JV Company under the equity method of accounting as the Company has 50% ownership interest in the JV Company. Therefore, the Company’s consolidated net income for the three months ended March 31, 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

 

  Three months ended  

 

  March 31,        

 

  2016     2015  

Condensed income statement information:

           

Net sales

$  (495,567 ) $  30,564,996  

Gross income

  (1,062,647 )   7,980,664  

Net income

  (8,068,447 )   803,221  

Company's equity in net income of JV

$  (4,034,224 ) $  401,610  

 

  March 31,     December 31,  

 

  2016     2015  

Condensed balance sheet information:

       

Current assets

$  411,728,560   $  455,368,595  

Noncurrent assets

  195,864,187     191,145,583  

Total assets

$  607,592,746   $  646,514,178  

Current liabilities

  386,899,933     429,487,683  

Noncurrent liabilities

  47,023,088     36,348,514  

Equity

  173,669,725     180,677,981  

Total liabilities and equity

$  607,592,746   $  646,514,178  

Starting from January 1, 2016, one criterion for the EV models to receive NEV subsidy is that the highest speed must meet 100 kilometers per hour, and the Ministry of Industry and Information Technology of China, or the MIIT, announced a new list of qualified EV models to receive the national subsidy. However, the National Tax Bureau has not released the list of EV models to receive purchase tax exemption accordingly. As such, the JV Company had no EV products sold in the first quarter of 2016 because potential purchasers could not obtain any tax exemption before the updated list from the National Tax Bureau was promulgated. The JV Company received the tax exemption approval on four EV models in early April 2016 and has started to sell EV products.

36


Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

The Company’s equity method investment in the JV Company for the three months ended March 31, 2016 and 2015 are as follows:

 

  Three Months ended  

 

  March 31,  

 

  2016     2015  

Investment in JV Company, beginning of the period,

$  90,337,899   $  83,309,095  

Share of profit

  (4,034,224 )   401,610  

Intercompany transaction elimination

  (789,329 )   (116,252 )

Year 2015 unrealized profit realized

  1,083     183,998  

Exchange difference

  519,013     292,327  

Investment in JV Company, end of the period

$  86,034,442   $  84,070,778  

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended March 31, 2016 were $13,474,975 or 28% of the Company’s total revenue, a decrease of 53.6% of the sales to the JV Company from the same quarter last year. The sales to the JV Company and its subsidiaries were primarily the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, the breakdown of the sales to the JV Company and its subsidiaries is as follows:

 

  Three Months ended  

 

  March 31,  

 

  2016     2015  

JV Company

$  13,085,636   $  -  

Kandi Changxing

  160,597     17,605,302  

Kandi Shanghai

  158,201     9,859,319  

Kandi Jinhua

  52,264     1,590,383  

Kandi Jiangsu

  18,277     -  

Total sales to JV

$  13,474,975   $  29,055,004  

As of March 31, 2016 and December 31, 2015, the amount due from the JV Company and its subsidiaries, net was $92,789,650 and $76,172,471, respectively, of which the majority was the balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

37



 

  March 31,     December 31,  

 

  2016     2015  

 

           

Kandi Shanghai

$  (295,339 ) $  (4,488,379 )

Kandi Changxing

  17,295,169     3,249,445  

Kandi Jinhua

  5,465,384     6,218,177  

Kandi Jiangsu

  18,533     11,453  

JV Company

  70,305,902     71,181,775  

Consolidated JV

$  92,789,649   $  76,172,471  

Within the receivables from the JV Company, the $23,252,930 was a one-year entrusted loan that Kandi Vehicle lent to the JV Company from December 16, 2015 to June 15, 2016 carrying an annual interest rate 8.7%, which will not be adjusted after the withdrawal during the lending period. The loan was organized by Bank of Communications Hangzhou Zhongan Branch as the agent bank between Kandi Vehicle and the JV Company. Entrusted loans are commonly found in China, where direct borrowing and lending between commercial enterprises are restricted.

NOTE 24 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for outer parties bank loans

As of March 31, 2016, the Company provided guarantees for the following outer parties:

(1) Guarantees for bank loans

 

  March 31,     December 31,  

Guarantee provided to

  2016     2015  

Zhejiang Shuguang industrial Co., Ltd.

  4,495,566     4,466,555  

Nanlong Group Co., Ltd.

  3,100,391     3,080,383  

Kandi Electric Vehicles Group Co., Ltd.

  50,381,348     50,056,216  

Total

$  57,977,305   $  57,603,154  

On March 15, 2013, the Company entered into a guarantee contract to serve as the guarantor of Nanlong Group Co., Ltd. (“NGCL”) from March 15, 2016 to March 15, 2018 for NGCL's loan amount of $3,100,391 from Shanghai Pudong Development Bank Jinhua Branch with related loan period from March 15, 2013 to March 15, 2016, which was extended to September 15, 2016. NGCL is not related to the Company but it has provided guarantees for the Company in the past due to industry customs. Under this guarantee contract, the Company agreed to perform all obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein.

On July 20, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company from July 20, 2016 to July 19, 2018 for the bank loans of $11,626,465 from Bank of China with related loan period from July 20, 2015 to July 19, 2016. Under this guarantee contract, the Company agreed to perform all obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

38


On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) from September 29, 2015 to September 28, 2018 for the bank loan amount of $4,495,566 from Ping An Bank with related loan period from September 29, 2015 to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company from December 14, 2016 to December 13, 2018 for the bank loans of $38,754,883 from China Import & Export Bank with related loan period from December 14, 2015 to December 13, 2016. Under this guarantee contract, the Company agreed to perform all obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

For the Company guarantee for NGCL and ZSIC, it is a common practice that among companies in the region of the PRC in which the Company is located to exchange guarantees for bank debts with no additional consideration given. It is considered a “favor for favor” business practice and is commonly required by Chinese lending banks. Now with Kandi’s creditability improvement in the bank, the related banks have no requirement to ask the third party to provide the company guarantee for Kandi, and then the Company shall also quit from the guarantee for them accordingly in the proper time.

The Company was a party to enter into contracts to indemnify a third party for certain liabilities, and as of March 31, 2016 and December 31, 2015, the Company guaranteed the third party’s long-term loan from other companies amounting to $57,977,305 and $57,603,154 that matured at various times in 2018, as a guarantor. In most cases, the Company cannot estimate the potential amount of future payments under these indemnities until events arise that would result in a liability under the indemnities. The Company believes that the liabilities for potential future payments of these guarantees and indemnities are not probable.

(2) Pledged collateral for outer parties bank loans

As of March 31, 2016 and December 31, 2015, none of the Company's land use rights or plant and equipment were pledged as collateral securing bank loans to outer parties.

NOTE 25 –SEGMENT REPORTING

The Company has only one single operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in the PRC. The Company only has operations in the PRC.

The following table sets forth revenues by geographic area:

 

  Three Months Ended March 31  

 

  2016           2015        

 

  Sales Revenue     Percentage     Sales Revenue     Percentage  

Overseas

$  621,722     1%   $  786,496     2%  

China

  50,036,170     99%     42,994,590     98%  

Total

$  50,657,893     100%   $  43,781,086     100%  

39


NOTE 26 – Related Party Transactions

The Board of Directors must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists the sales to related parties as of the three months ended March 31, 2016 and 2015:

 

  March 31,     March 31,  

 

  2016     2015  

 

           

Service Company

  3,208,502     -  

Total

$  3,208,502     -  

The Company has 9.5% ownership of the Service Company and Mr.Hu, Chairman and CEO of the Company, has 13% ownership of the Service Company. The main transactions between the Company and the Service Company is that the Service Company needs to buy battery for the speed upgrade and also EV parts for the repairing and maintenance for its operating electric vehicles.

For the transaction with JV Company, please refer to Note 23 for the details.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains forward-looking statements within the meaning of the federal securities laws that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology, such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential” or “continue” or the negative of such terms or other comparable terminology, although not all forward-looking statements contain such terms.

In addition, these forward-looking statements include, but are not limited to, statements regarding implementing our business strategy; development and marketing of our products; our estimates of future revenue and profitability; our expectations regarding future expenses, including research and development, sales and marketing, manufacturing and general and administrative expenses; difficulty or inability to raise additional financing, if needed, on terms acceptable to us; our estimates regarding our capital requirements and our needs for additional financing; attracting and retaining customers and employees; sources of revenue and anticipated revenue; and competition in our market.

40


Forward-looking statements are only predictions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All of our forward-looking information is subject to risks and uncertainties that could cause actual results to differ materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties include the risk factors and the timing of any of those risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2015 and those set forth from time to time in our other filings with the Securities and Exchange Commission (“SEC”). These documents are available on the SEC’s Electronic Data Gathering and Analysis Retrieval System at http://www.sec.gov.

Critical Accounting Policies and Estimates

This section should be read together with the Summary of Significant Accounting Policies in the attached condensed consolidated financial statements included in this report.

Policy affecting options and warrants

Our stock option cost is recorded in accordance with ASC 718 and ASC 505. The fair value of stock options is estimated using the Black-Scholes-Merton model. Our expected volatility assumption is based on the historical volatility of our common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Stock option expense recognition is based on awards expected to vest. There were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

Our warrant costs are recorded in liabilities in accordance with ASC 480, ASC 505 and ASC 815. The fair value of a warrant is estimated using the Black-Scholes-Merton model and the lattice valuation model. Our expected volatility assumption is based on the historical volatility of our common stock. The expected life assumption is primarily based on the expiration date of the warrant. The risk-free interest rate for the expected term of the warrant is based on the U.S. Treasury yield curve in effect at the time of measurement. The warrants, which are freestanding derivatives classified as liabilities on the balance sheet, are measured at fair value on each reporting date, with decreases in fair value recognized in earnings and increases in fair values recognized in expenses.

Estimates affecting accounts receivable and inventories

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect our reporting of assets and liabilities (and contingent assets and liabilities). These estimates are particularly significant where they affect the reported net realizable value of our accounts receivable and inventories.

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in the period when a loss is probable based on an assessment of specific factors, such as troubled collection, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after exhaustive efforts at collection. If accounts receivable are to be provided for, or written off, they would be recognized in the consolidated statement of operations within operating expenses. As of March 31, 2016 and December 31, 2015, we recorded no allowance for doubtful accounts. This determination was made per our management’s judgment, which was based on their best knowledge.

41


Inventory is stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. When inventories are sold, their carrying amount is charged to expense in the year in which the revenue is recognized.

Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the year the impairment or loss occurs.

Although we believe that there is little likelihood that actual results will differ materially from current estimates, if customer demand for our products decreases significantly in the near future, or if the financial condition of our customers deteriorates in the near future, we could realize significant write downs for slow-moving inventories or uncollectible accounts receivable.

Revenue Recognition

Our revenue recognition policy plays a key role in our consolidated financial statements. Revenues represent the invoiced value of goods sold, recognized upon the shipment of goods to customers, and revenues are recognized when all of the following criteria are met:

1. Persuasive evidence of an arrangement exists;
2. Delivery has occurred or services have been rendered;
3. The seller's price to the buyer is fixed or determinable; and
4. Collectability is reasonably assured.

The revenue recognition policies for our legacy products, including EV products, EV parts and Off-road vehicles, are the same: When the products are delivered, the associated risk of loss is deemed transferred, and at that time we recognize revenue.

Warranty Liability

Most of our non-EV products (the “Legacy Products”) are exported out of China to foreign countries that have legal and regulatory requirements with which we are not familiar with. Development of warranty policies for our Legacy Products in each of these countries would be virtually impossible and prohibitively expensive. Therefore, we provide price incentives and free parts to our customers and in exchange, our customers establish appropriate warranty policies and assume warranty responsibilities. Consequently, warranty issues are taken into consideration during the price negotiation for our products. The free parts are delivered along with the products, and when products are sold, the related parts are recorded as cost of goods sold. Due to the reliable quality of our products, we have been able to maintain this warranty policy and we have not had any product liabilities attributed to the quality of our products.

42


For the EV products that we sell in China, there is an eight-year or 120,000 kilometer manufacturer warranty. This warranty affects us through our participation and investment in the JV Company, which manufactures the EV products.

Results of Operations

Comparison of Three Months Ended March 31, 2016 and 2015

The following table sets forth the amounts and percentage relationship to revenue of certain items in our condensed consolidated statements of income (loss) and comprehensive income (loss) for the three months ended March 31, 2016 and 2015.

 

  Three Months Ended  

  March 31, 2016     % of Revenue     March 31, 2015     % of Revenue     Change in Amount     Change in %  

 

                                   

REVENUES, NET

$  50,657,893       $ 43,781,086         6,876,807     15.7%  

 

                                   

COST OF GOODS SOLD

  43,939,795     86.7%     37,410,353     85.4%     6,529,442     17.5%  

 

                                   

GROSS PROFIT

  6,718,098     13.3%     6,370,733     14.6%     347,365     5.5%  

 

                                   

OPERATING EXPENSES:

                       

Research and development

  205,968     0.4%     571,020     1.3%     (365,052 )   (63.9% )

Selling and marketing

  46,335     0.1%     113,895     0.3%     (67,560 )   (59.3% )

General and administrative

  8,032,882     15.9%     3,780,648     8.6%     4,252,234     112.5%  

Total Operating Expenses

  8,285,185     16.4%     4,465,563     10.2%     3,819,622     85.5%  

 

                                   

INCOME (LOSS) FROM OPERATIONS

  (1,567,087 )   (3.1% )   1,905,170     4.4%     (3,472,257 )   (182.3% )

 

                       

OTHER INCOME (EXPENSE):

                       

Interest income

  780,181     1.5%     590,480     1.3%     189,701     32.1%  

Interest expense

  (442,079 )   (0.9% )   (598,591 )   (1.4% )   156,512     (26.1% )

Change in fair value of financial instruments

  3,286,340     6.5%     4,750,300     10.9%     (1,463,960 )   (30.8% )

Government grants

  194,473     0.4%     -     0.0%     194,473      

Share of profit after tax of JV

  (4,822,470 )   (9.5% )   469,356     1.1%     (5,291,826 )   (1127.5 % )

Other income, net

  22,387     0.0%     23,847     0.1%     (1,460 )   (6.1% )

Total other income, net

  (981,168 )   (1.9% )   5,235,392     12.0%     (6,216,5 60 )   (118.7 % )

INCOME BEFORE INCOME TAXES

  (2,548,255 )   (5.0% )   7,140,562     16.3%     (9,688,817 )   (135.7 % )

 

                                   

INCOME TAX EXPENSE

  2,636,675     5.2%     (1,008,909 )   (2.3% )   3,645,58 4     (361.3 % )

 

                                   

NET INCOME

  88,420     0.2%     6,131,653     14.0%     (6,043,2 33 )   (98.6% )

43


(a) Revenue

For the three months ended March 31, 2016, our revenue was $50,657,893 compared to $43,781,086 for the same period of 2015, an increase of $6,876,807 or 15.7%. The increase in revenue was mainly due to the increase in EV products sales during this quarter.

The following table summarizes our revenues by product types for the three months ended March 31, 2016 and 2015:

  Three Months Ended March 31  

 

  2016     2015     Growth %  

 

  Sales     Sales        

EV parts

$  46,180,859   $  42,954,288     7.5%  

EV products

  3,777,270     -      

Off-road vehicles

  699,764     826,798     -15.4%  

Total

$  50,657,893   $  43,781,086     15.7%  

44


EV Parts

Among our total revenues during the three months ended March 31, 2016, approximately $46,180,859, or 91.2%, resulted from the sale of EV parts. We started the EV parts business in 2014, and our revenue of EV parts increased $3,226,571 or 7.5% compared to the first quarter of 2015. Our EV parts sales primarily consisted of the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts to the JV Company for manufacturing of EV products.

EV Products

Among our total revenues during the three months ended March 31, 2016, approximately $3,777,270, or 7.8%, resulted from the sale of EV products. The EV products revenue increased $ 3,777,270, or 100% compared to the same period of 2015. Under the JV Agreement with our joint venture partner, Shanghai Maple Guorun Automobile Co., Ltd., a 99%-owned subsidiary of Geely Automobile Holdings Ltd., starting from March 2013, our EV products manufacturing business has been gradually transferred to the JV Company, which was completed at the end of 2014, but the Company can continue to sell the EV products which were in the stock. We are now primarily responsible for supplying the JV Company with EV parts and the JV Company is primarily responsible for the production of EV products.

Off-Road Vehicles

Among our total revenues during the three months ended March 31, 2016, approximately $699,764, or 1.4%, resulted from the sale of off-road vehicles. The off-road vehicles revenue decreased $127,034, or 15.4% compared to the same period of 2015, mainly because the Company focused on the EV parts production which is in line with the long term strategy of the Company.

(b) Cost of goods sold

Cost of goods sold was $43,939,795 during the three months ended March 31, 2016, representing an increase of $6,529,442, or 17.5%, compared to the same period of 2015. This increase was mainly due to the increase for EV products in corresponding sales.

(c) Gross profit

The margins by products for the three months ended March 31, 2016 and 2015 are as below:

45



  Three Months Ended March 31  

  2016     2015  

  Sales     Cost     Gross Profit     Margin %     Sales     Cost     Gross Profit     Margin %  

EV parts

$  46,180, 859     39,621, 682     6,559,1 77     14.2%   $ 42,954, 288     36,771, 802     6,182,4 86     14.4%  

EV products

  3,777,270     3,713,644     63,626     1.7%     -     -     -     -  

Off-road vehicles

  699,764     604,469     95,295     13.6%     826,798     638,551     188,247     22.8%  

Total

$ 50,657, 893     43,939, 795     6,718,0 98     13.3%   $  43,781, 086     37,410, 353     6,370,7 33     14.6%  

Gross profit for the first quarter of 2016 increased 5.5% to $6,718,098, compared to $6,370,733 for the same period last year. This was primarily attributable to the sales growth. Our gross margin decreased to 13.3% compared to 14.6% for the same period of 2015. The decrease in gross margin was mainly due to the one-time lower margin EV products sales happened in this quarter.

(d) Selling and distribution expenses

Selling and distribution expenses were $46,335 for the first quarter of 2016, compared to $113,895 for the same period last year, a decrease of $67,560 or 59.3%. This decrease was primarily due to the transportation expense savings for the EV parts in this quarter.

(e) General and administrative expenses

General and administrative expenses were $8,032,882 for the first quarter of 2016, compared to $3,780,648 for the same period of last year, an increase of $4,252,234 or 112.5%. For the three months ended March 31, 2016, general and administrative expenses included $6,887,892 in expenses for common stock awards to employees and consultants, compared to $2,049,683 for the same period in 2015. Excluding stock compensation expense, our net general and administrative expenses for the three months ended March 31, 2016 were $1,144,990, a decrease of $585,974, or 33.9%, from $1,730,965 for the same period of 2015. The decrease was primarily due to the legal expenses paid in the first quarter of 2015 for the SEC investigation, which concluded in February 2015.

(f) Research and development

Research and development expenses were $205,968 for the first quarter of 2016, a decrease of $365,052 or 63.9% compared to the same period of last year. This decrease was primarily due to the materials savings in the first quarter of 2016.

46


(g) Government grants

Government grants were $194,473 for the first quarter of 2016, compared to $0 for the same quarter last year, representing an increase of $194,473, or 100%. It was for the tax refund for the land use tax.

(h) Interest income

Interest income was $780,181 for the first quarter of 2016, an increase $189,701 or 32.1% compared to the same period of last year. This change was primarily attributable to the entrusted loan rate adjusted from 5.88% in the first quarter of 2015 to 8.7% in the same quarter of 2016 to the JV Company.

(i) Interest expense

Interest expense was $442,079 for the first quarter of 2016, a decrease of $156,512 or 26.1% compared to the same period of last year. This change was primarily due to the loan interest rate decrease in the first quarter of 2016 compared to the same period last year.

(j) Change in fair value of financial instruments

For the first quarter of 2016, the gain related to changes in the fair value of derivative liability relating to the warrants issued to the investors and a placement agent was $3,286,340, a negative change of $1,463,960 to the same period of last year. This change was mainly due to the stock price change during the first quarter of 2016, and the stock price was $7.20 on March 31, 2016 compared to $10.90 on December 31, 2015.

(k) Share of profit (loss) after tax of the JV Company

For the first quarter of 2016, the JV Company’s net sales were $-495,567, gross loss was $1,062,647, and net loss was $8,068,447. 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 loss for $4,034,224 for the first quarter of 2016. After eliminating intra-entity profits and losses, our share of the after tax loss of the JV Company was $4,822,470 for the first quarter of 2016, a decrease of $5,291,826 compared to the same period of last year. The main reasons for the decrease of the JV Company’s profits was that there was no EV products sold in the first quarter of 2016 due to the impact of the government policy change. Starting from January 1, 2016, one criteria for EV Models to receive NEV subsidy is that the highest speed must meet 100 kilometers per hour, and the Ministry of Industry and Information Technology of China, or the MIIT, announced a new list of qualified EV models to receive the national subsidy. However, the National Tax Bureau has not released the list of EV models to receive purchase tax exemption accordingly. As such, the JV Company had no EV products sold in the first quarter of 2016 because potential purchasers cannot obtain any tax exemption before the updated list from the National Tax Bureau is promulgated. The JV Company received the tax exemption approval on four EV models in early April 2016 and ehas started to sell EV products after that.

During the first quarter of 2016, there were no EV products sold by the JV Company, compared to 1,670 units in the same quarter of 2015.

47


(l) Other income, net

Net other income was $22,387 for the first quarter of 2016, a slight decrease of $1,460 or 6.1% compared to the same period of last year.

(m) Net income from continuing operation

Net income was $88,420 for the first quarter of 2016, a change of $6,043,233 compared to $6,131,653 for the same period of last year. The decrease in net income was primarily attributable to the stock option expense amortization, the loss from the JV Company and also the change of fair value of financial derivatives. Excluding the effects of stock compensation expenses which were $6,887,892 and $2,049,683 for the first quarter of 2016 and 2015, respectively, and the change of the fair value of financial derivatives which was an income of $3,286,340 and an income of $4,750,300 for the three months ended March 31, 2016 and 2015, respectively, our non-GAAP net income was $3,689,972 for the three months ended March 31, 2016 as compared to non-GAAP net income $3,431,036 for the same period of 2015, an increase of $258,936, or 7.5%. This increase in net income (non-GAAP) was primarily attributable to the increase in sales of EV parts and also the corporate income tax benefits in this quarter.

We make reference to certain non-GAAP financial measure, i.e., the adjusted net income. Management believes that such adjusted financial result is useful to investors in evaluating our operating performance because it presents a meaningful measure of corporate performance. See the non-GAAP reconciliation table below. 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.

 

  Three Months Ended  

 

  March 31,  

 

  2016     2015  

GAAP net income (loss) from continuing operations

$  88,420   $  6,131,653  

Stock award expenses

  6,887,892     2,049,683  

Change of the fair value of financial derivatives

  (3,286,340 )   (4,750,300 )

Non-GAAP net income (loss) from continuing operations

$  3,689,972   $  3,431,036  

LIQUIDITY AND CAPITAL RESOURCES

48


Cash Flow

For the first quarter of 2016, cash used in operating activities was $6,153,618, as compared to cash used by operating activities of $9,476,551 for the same period of last year.

Below is the cash flow statement for the operating activities:

 

  Three Months Ended  

 

  March 31, 2016     March 31, 2015  

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net income

$  88,420   $  6,131,653  

Adjustments to reconcile net income to net cash provided by operating activities

       

Depreciation and amortization

  1,223,243     1,479,384  

Deferred taxes

  (4,397,828 )   -  

Change in fair value of financial instruments

  (3,286,340 )   (4,750,300 )

Share of profit after tax of JV Company

  4,822,470     (469,356 )

Stock Compensation cost

  6,887,892     2,049,683  

Changes in operating assets and liabilities, net of effects of acquisition:

       

(Increase) Decrease In:

           

Accounts receivable

  (32,225,627 )   (12,844,602 )

Inventories

  (7,815,491 )   (11,246,265 )

Other receivables

  (144,118 )   (65,602 )

Due from employee

  (67,798 )   (10,225 )

Prepayments and prepaid expenses

  (441,602 )   (527,687 )

Amount due from JV Company

  (15,899,018 )   (19,570,708 )

 

           

Increase (Decrease) In:

           

Accounts payable

  16,975,799     31,915,168  

Other payables and accrued liabilities

  (7,875,311 )   (1,438,571 )

Customer deposits

  54,289     1,365  

Income Tax payable

  1,165,635     (130,488 )

Due from related party

  34,781,767     -  

Net cash used in operating activities

$  (6,153,618 ) $ (9,476,551 )

49



The major operating activities that provided cash for the first quarter of 2016 were an increase in accounts payable of $16,975,799 and a decrease in receivables from related party of $34,781,767. The major operating activities that used cash for first quarter of 2016 were an increase in accounts receivable of $32,225,627 and an increase in receivables from the JV Company of $15,899,018.

Below is the cash flow statement for the investing activities:

 

  Three Months Ended  

 

  March 31, 2016     March 31, 2015  

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Purchases of plant and equipment, net

  (29,696 )   (233,343 )

Disposal of land use rights and other intangible assets

  13,767     -  

Purchases of construction in progress

  (28,140 )   (39,266 )

Issuance of notes receivable

  (614,592 )   (4,225,884 )

Repayment of notes receivable

  2,430,657     2,584,147  

Short Term Investment

  (1,455,727 )   -  

Net cash provided by (used in) investing activities

$  316,269   $ (1,914,346 )

Cash provided by investing activities for the first quarter of 2016 was $ 316,269 primarily due to the result of the repayment of notes receivable of $2,430,657.

Below is the cash flow statement for the financing activities:

 

  Three Months Ended  

 

  March 31, 2016     March 31, 2015  

CASH FLOWS FROM FINANCING ACTIVITIES:

       

 Restricted cash

  -     (12,366,201 )

 Proceeds from short-term bank loans

  -     6,338,475  

Proceeds from notes payable

  2,063,766     6,663,525  

Warrant exercise

  434,666     -  

Net cash provided by financing activities

$  2,498,432   $  635,799  

50


Cash provided by financing activities for the first quarter of 2016 was $2,498,432, primarily due to the proceeds from notes payable of $2,063,766.

Working Capital

We had a working capital surplus of $72,489,812 at March 31, 2016, compared to $59,917,153 as of December 31, 2015.

We have historically financed our operations through short-term commercial bank loans from PRC banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest in a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. We believe that this situation has not changed and that short-term bank loans will be available on normal trade terms if needed.

Capital Requirements and Capital Provided

Capital requirements and capital provided for the three months ended March 31, 2016 were as follows:

 

  Three Months Ended  

 

  March 31, 2016  

 

  (In Thousands)  

Capital requirements

     

Purchase of plant and equipment

$  30  

Purchase of construction in progress

  28  

Issuance of notes receivable

  615  

Long term investment

  1,456  

Internal cash used in operations

  6,154  

Total capital Requirements

$  8,283  

 

     

Capital provided

     

Repayments of notes receivable

  2,431  

Disposal of land use rights

  14  

Proceeds from notes payable

  2,064  

Warrant exercise

  435  

Decrease in cash

  3,291  

Total capital provided

$  8,235  

51


The difference between capital provided and capital required is caused the effect of exchange rate changes over the past three months.

Recent Development Activities:

On January 21, 2016, we endorsed that Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd (the “Service Company” or “ZZY”) has signed a strategic partnership memorandum with China (Yangtze River Delta) High-speed Railway Tourism Alliance (“Yangtze Alliance”) to provide hourly car rental services under the MPT program at railway stations within Yangtze Alliance’s network. ZZY and Yangtze Alliance aim to jointly establish a “Railway + MPT hourly rental” model to promote an environmentally friendly alternative for tourists’ self-guided trips. The partnership between ZZY and Yangtze Alliance will significantly increase the number of MPT stations within the regional high-speed railway tourism network, while accelerating the adoption of electric vehicle hourly rental services. We believe our unique MPT program will receive further recognition and support, and its rapid expansion will become one of Kandi’s key growth engines.

On January 26, 2016, we announced that the JV Company has signed a strategic cooperation framework agreement with Pang Da Automobile Trade Co. Ltd. (“Pang Da”), a listed company on Shanghai Stock Exchange (601258.SS). The scope of the agreement includes, but is not limited to, establishment of Kandi and Pang Da sales teams that will share marketing resources, development of customized new energy vehicle for use at campus, and additionally, Pang Da is authorized to sell Kandi Brand pure electric vehicles (“EVs”) in specific regions. We believe this cooperation will well benefit our EV products direct sales channel in the future.

On January 28, 2016, we announced that Kandi Hainan held a groundbreaking ceremony at the construction site of the Haikou production facility at Haikou Mei’An Hi-tech Zone. After completed the Haikou Facility, we expected to have an annual capacity of 100,000 electric vehicle (EV) products. The ceremony marks the beginning of Haikou Hi-tech Zone’s first project under the government’s 13th Five-Year Plan. Attendees of the ceremony include Ni Qiang, Mayor of Haikou, Ju Lei, Deputy Mayor, Hu Xiaoming, Chairman and CEO of Kandi and other officials of the municipal government. Our Haikou facility will help the Company’s future growth and will also contribute to Hainan’s economic and eco-environmental development.

In the second half year of 2015, the Company started to cooperate with the Micro Mobility System, a Switzerland Private Company which produces the famous Razor scooter on the market from 1999, to develop a new generation of micro EV product called “Mircolino”, which provides efficient methods to facilitate city mobility. The Microlino could become the next big thing in urban electric mobility, and we expect this new product will bring Kandi into the international EV market.

In early 2016, Mr. Hu Xiaoming, the Chariman of the Company, initiated a project with the wireless conductive technology and its application on EV products, and built a team with Tsinghua University and Zhejiang University to research and develop on this project. The team had certain initial progresses that successfully developed the model for the wireless conductive technology. We believe this technology may bring the revolution for the EV industry.

52


On April 13, 2016, we announced the appointment of BDO China Shu Lun Pan Certified Public Accountants LLP (“BDO China”) as the Company’s new independent registered public accounting firm effective April 12, 2016. The appointment of BDO China was approved by the Company’s audit committee. We believe that BDO China’s experience and support will become an asset as we enter our next phase of business expansion.

On April 18, 2016, we announced two Geely Global Hawk brand electric vehicles (“EV”) models SMA7001BEV25 and SMA7000BEV05, manufactured by Kandi Electric Vehicles Group Co., Ltd. (the "JV Company", a 50/50 joint venture between Kandi and Geely Automobile), are listed on the 7th approved Directory of New Energy Vehicles, known as Public Notice No. 54, published by China’s Ministry of Industry and Information Technology (“MIIT”) and State Administration of Taxation (“SAT”) on April 15, 2016. As a result, purchasers of SMA7001BEV25 and SMA7000BEV05 would be exempted from paying the purchase tax of approximately 10% of the purchase price. Additionally, SMA7000BEV06 and SMA7001BEV05, also produced by the JV Company, now under the new trademark “Global Hawk”, are included in the MIIT and SAT’s published Public Notice No.16 the 282nd approved directory on April 1, 2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Exchange Rate Risk

Our operations are conducted mainly in the PRC. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Chinese Renminibi (“RMB”), which is our functional currency. Accordingly, our operating results are affected by changes in the exchange rate between the U.S. dollar and RMB currencies.

Economic and Political Risks

Our operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment in the PRC and foreign currency exchange. Our performance may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have evaluated, under the supervision of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of March 31, 2015. Based on this evaluation, our CEO and CFO concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

53


Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above.

Changes in Internal Control over Financial Reporting

There was no change to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors.

Changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

Although the central government has clear policies encouraging the qualified EVs, any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our EV products in particular.

For instance, on April 29, 2015, the four government departments in the PRC, Ministry of Finance, Ministry of Science and Technology, Ministry of Industry and Information Technology and National Development and Reform Commission jointly announced the subsidy policy for new energy vehicles from year 2016 to 2020, which indicated that the subsidy of year 2017-2018 will be reduced by 20% compared with that of the year 2016, and the subsidy of year 2019-2020 will be reduced by 40% compared with that of the year 2016.

In addition, starting from January 1, 2016, the MIIT announced a new list of qualified EV models to receive the national subsidy in which one criteria for EV models to receive NEV subsidy is that the highest speed must meet 100 kilometers per hour. However, the National Tax Bureau has not released the list of EV models to receive purchase tax exemption accordingly at the same time. As such, the JV Company had no EV products sold in the first quarter of 2016 because potential purchasers could not obtain any tax exemption before the updated list from the National Tax Bureau was promulgated. Although the JV Company received the tax exemption approval on four EV models it produces in early April 2016, similar policy changes or delay in policy implementation by any governmental agencies would keep impacting the Company’s future business and profitability growth.

54


Item 6. Exhibits

Exhibit Description
Number  
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF XBRL Taxonomy Definitions Linkbase Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 10, 2016 By: /s/ Hu Xiaoming
    Hu Xiaoming
    President and Chief Executive Officer
    (Principal Executive Officer)
     
     
Date: May 10, 2016 By: /s/ Wang Cheng (Henry)
    Wang Cheng (Henry)
    Chief Financial Officer
    (Principal Financial Officer and Principal
    Accounting Officer)
 

55



Exhibit 31.1

OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hu Xiaoming, certify that:

1. I have reviewed this report on Form 10-Q of Kandi Technologies Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016
 
/s/ Hu Xiaoming
Name: Hu Xiaoming
Title: President and Chief Executive Officer
(Principal Executive Officer)



Exhibit 31.2

OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Wang Cheng (Henry), certify that:

1. I have reviewed this report on Form 10-Q of Kandi Technologies Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2016
 
/s/ Wang Cheng (Henry)
Name: Wang Cheng
Title: Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)



Exhibit 32.1

CERTIFICATIONS OF CEO AND CFO PURSUANT TO
18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Kandi Technologies Group, Inc. (the “Company”) for the quarterly period ending March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Hu Xiaoming, President and Chief Executive Officer of the Company, and Wang Cheng (Henry), Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Hu Xiaoming
Name: Hu Xiaoming
Title: President and Chief Executive Officer
(Principal Executive Officer)
Date: May 10, 2016
 
/s/ Wang Cheng (Henry)
Name: Wang Cheng
Title: Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date: May 10, 2016


v3.4.0.3
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 03, 2016
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2016  
Trading Symbol kndi  
Entity Registrant Name Kandi Technologies Group, Inc.  
Entity Central Index Key 0001316517  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   47,689,638
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well Known Seasoned Issuer No  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Current assets    
Cash and cash equivalents $ 13,447,666 $ 16,738,559
Restricted cash 16,277,051 16,172,009
Short term investment 3,100,391 1,613,727
Accounts receivable 40,867,698 8,136,421
Inventories (net of provision for slow moving inventory of 489,057 and 485,901 as of March 31, 2016 and December 31, 2015, respectively 25,814,430 17,773,679
Notes receivable 11,276,387 13,033,315
Other receivables 487,077 332,922
Prepayments and prepaid expense 353,628 181,534
Due from employees 105,868 34,434
Advances to suppliers 348,761 71,794
Amount due from JV Company, net 92,789,649 76,172,471
Amount due from related party 5,585,613 40,606,162
Deferred taxes assets 744,910 0
TOTAL CURRENT ASSETS 211,199,129 190,867,027
LONG-TERM ASSETS    
Plant and equipment, net 19,539,908 20,525,126
Land use rights, net 12,934,208 12,935,121
Construction in progress 54,750,430 54,368,753
Long Term Investment 1,472,686 1,463,182
Investment in JV Company 86,034,442 90,337,899
Goodwill 322,591 322,591
Intangible assets 474,782 495,306
Other long term assets 155,020 154,019
TOTAL Long-Term Assets 175,684,067 180,601,997
TOTAL ASSETS 386,883,196 371,469,024
CURRENT LIABILITIES    
Accounts payables 91,647,247 73,957,969
Other payables and accrued expenses 1,678,011 9,544,909
Short-term loans 36,894,649 36,656,553
Customer deposits 149,688 94,026
Notes payable 5,968,252 3,850,478
Income tax payable 1,822,276 624,276
Due to employees 11,944 9,423
Deferred taxes liabilities 0 2,374,924
Financial derivate - liability 537,250 3,823,590
Deferred income 0 13,726
Total Current Liabilities 138,709,317 130,949,874
LONG-TERM LIABILITIES    
Deferred taxes liabilities 312,693 1,593,582
Financial derivate - liability 0 0
Total Long-Term Liabilities 312,693 1,593,582
TOTAL LIABILITIES 139,022,010 132,543,456
STOCKHOLDER'S EQUITY    
Common stock, $0.001 par value; 100,000,000 shares authorized; 47,019,638 and 46,964,855 shares issued and outstanding at March 31,2016 and December 31,2015, respectively 47,020 46,965
Additional paid-in capital 219,886,837 212,564,334
Retained earnings (the restricted portion is $4,172,324 and $4,172,324 at March 31,2016 and December 31,2015, respectively) 31,144,340 31,055,919
Accumulated other comprehensive loss (3,217,011) (4,741,650)
TOTAL STOCKHOLDERS' EQUITY 247,861,186 238,925,568
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 386,883,196 $ 371,469,024
v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Reserve for slow moving inventory $ 489,057 $ 485,901
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, shares issued (in shares) 47,019,638 46,964,855
Common stock, shares outstanding (in shares) 47,019,638 46,964,855
Restricted Retained Earnings $ 4,172,324 $ 4,172,324
v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
REVENUES, NET $ 50,657,893 $ 43,781,086
COST OF GOODS SOLD 43,939,795 37,410,353
GROSS PROFIT 6,718,098 6,370,733
OPERATING EXPENSES:    
Research and development 205,968 571,020
Selling and marketing 46,335 113,895
General and administrative 8,032,882 3,780,648
Total Operating Expenses 8,285,185 4,465,563
INCOME(LOSS) FROM OPERATIONS (1,567,087) 1,905,170
OTHER INCOME(EXPENSE):    
Interest income 780,181 590,480
Interest expense (442,079) (598,591)
Change in fair value of financial instruments 3,286,340 4,750,300
Government grants 194,473 0
Share of profit after tax of JV (4,822,470) 469,356
Other income, net 22,387 23,847
Total other income (loss), net (981,168) 5,235,392
INCOME BEFORE INCOME TAXES (2,548,255) 7,140,562
INCOME TAX BENEFIT (EXPENSE) 2,636,675 (1,008,909)
NET INCOME 88,420 6,131,653
OTHER COMPREHENSIVE INCOME    
Foreign currency translation 1,524,639 493,211
COMPREHENSIVE INCOME $ 1,613,059 $ 6,624,864
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 47,009,834 46,281,299
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED 47,027,744 46,397,993
NET INCOME PER SHARE, BASIC $ 0.00 $ 0.13
NET INCOME PER SHARE, DILUTED $ 0.00 $ 0.13
v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 88,420 $ 6,131,653
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 1,223,243 1,479,384
Deferred taxes (4,397,828) 0
Change in fair value of financial instruments (3,286,340) (4,750,300)
Share of profit after tax of JV Company 4,822,470 (469,356)
Stock Compensation cost 6,887,892 2,049,683
(Increase) Decrease In:    
Accounts receivable (32,225,627) (12,844,602)
Inventories (7,815,491) (11,246,265)
Other receivables (144,118) (65,602)
Due from employee (67,798) (10,225)
Prepayments and prepaid expenses (441,602) (527,687)
Amount due from JV Company (15,899,018) (19,570,708)
Increase (Decrease) In:    
Accounts payable 16,975,799 31,915,168
Other payables and accrued liabilities (7,875,311) (1,438,571)
Customer deposits 54,289 1,365
Income Tax payable 1,165,635 (130,488)
Due from related party 34,781,767 0
Net cash used in operating activities (6,153,618) (9,476,551)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of plant and equipment, net (29,696) (233,343)
Disposal of land use rights and other intangible assets 13,767 0
Purchases of construction in progress (28,140) (39,266)
Issuance of notes receivable (614,592) (4,225,884)
Repayment of notes receivable 2,430,657 2,584,147
Short Term Investment (1,455,727) 0
Net cash provided by (used in) investing activities 316,269 (1,914,346)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Restricted cash 0 (12,366,201)
Proceeds from short-term bank loans 0 6,338,475
Proceeds from notes payable 2,063,766 0
Proceeds from notes payable 0 6,663,525
Warrant exercise 434,666 0
Net cash provided by financing activities 2,498,432 635,799
NET INCREASE IN CASH AND CASH EQUIVALENTS (3,338,917) (10,755,098)
Effect of exchange rate changes on cash 48,024 11,296
Cash and cash equivalents at beginning of year 16,738,559 26,379,460
CASH AND CASH EQUIVALENTS AT END OF PERIOD 13,447,666 15,635,658
SUPPLEMENTARY CASH FLOW INFORMATION    
Income taxes paid 595,518 1,139,397
Interest paid $ 445,176 $ 577,874
v3.4.0.3
ORGANIZATION AND PRINCIPAL ACTIVITIES
3 Months Ended
Mar. 31, 2016
ORGANIZATION AND PRINCIPAL ACTIVITIES [Text Block]

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

Kandi Technologies Group, Inc. (“Kandi Technologies”) was incorporated under the laws of the State of Delaware on March 31, 2004. Kandi Technologies changed its name from Stone Mountain Resources, Inc. to Kandi Technologies, Corp. on August 13, 2007. On December 21, 2012, Kandi Technologies changed its name to Kandi Technologies Group, Inc. As used herein, the term the “Company” means Kandi Technologies and its operating subsidiaries, as described below.

Headquartered in the Jinhua city, Zhejiang Province, China, the Company is one of China’s leading producers and manufacturers of electrical vehicle products, electrical vehicle parts and off road vehicles for sale in the People’s Republic of China (the “PRC”) and global markets. The Company conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partial and wholly-owned subsidiaries of Kandi Vehicles.

The Company’s organizational chart is as follows:

**PLEASE REFER TO HTML FOR ORGANIZATIONAL CHART**

Operating Subsidiaries:

Pursuant to relevant agreements executed in January 2011, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests ( 100% profits and loss absorption rate) of Jinhua Kandi New Energy Vehicles Co., Ltd. (“Kandi New Energy”), a company in which Kandi Vehicles has 50% interest. Mr. Hu Xiaoming owns the other 50% which he entrusted Kandi Vehicles to manage Kandi New Energy. Kandi New Energy currently holds battery packing production rights (license), and supplies the battery pack to the JV Company (Defined below). It didn’t maintain the special-purpose vehicle production rights (license) on manufacturing Kandi brand electric utility vehicles. According to the JV Agreement (defined below) Kandi is not allowed to produce EVs. To avoid the maintenance fee on this license, the Company shall sell the special-purpose vehicle production rights (license) to others.

In April 2012, pursuant to a share exchange agreement, the Company acquired 100% of Yongkang Scrou Electric Co, Ltd. (“Yongkang Scrou”), a manufacturer of automobile and EV parts. Yongkang Scrou currently manufactures and sells EV drive motors, EV controllers, air conditioners and other electrical products to the JV Company (defined below).

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into by Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell EV products and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. At present, the JV Company is a holding company with products that are manufactured by its subsidiaries.

In March 2013, Kandi Vehicles formed Kandi Electric Vehicles (Changxing) Co., Ltd. (“Kandi Changxing”) in the Changxing (National) Economic and Technological Development Zone. Kandi Changxing is engaged in the production of EV products. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Changxing.

In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The Service Company is engaged in various pure EV leasing businesses, which is called “Micro Public Transportation”(“MPT”) program. The Company has 9.5% ownership interest in the Service Company through Kandi Vehicles.

In November 2013, Zhejiang Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jinhua.

In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company and is engaged in car sales business. The JV Company has 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang.

In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Shanghai.

In January 2014, Zhejiang Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jiangsu. The company is mainly engaged in EV research and development, manufacturing and sales.

In November 2015, Hangzhou Puma Investment Management Co., Ltd.(“Puma Investment”) was formed by the JV Company, which focuses on the investment and consulting service. The JV Company has 50% ownership interest in Puma Investment, and the Company, indirectly through its JV Company, has 25% economic interest in Puma Investment. The other 50% ownership is held by the Service Company.

In November 2015, Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company, which focuses on the after-market service for the EV products sold. The JV Company has 100% ownership interest in JiHeKang Service Company, and the Company, indirectly through its JV Company, has 50% economic interest in JiHeKang Service Company.

In January 2016, Kandi Electric Vehicles (Hainan) Co., Ltd. (“Kandi Hainan”) was renamed from Kandi Electric Vehicles (Wanning) Co., Ltd. (“Kandi Wanning”) which was originally formed in Wanning City of Hainan Province by Kandi Vehicles and Kandi New Energy in April 2013 and then was transferred to Haikou City in January 2016. Kandi Vehicles has 90% ownership in Kandi Hainan, and Kandi New Energy has the remaining 10% interest. However, Kandi Vehicles is, effectively, entitled to 100% of the economic benefits, voting rights and residual interests ( 100% profits and losses) of Kandi Hainan.

The Company’s primary business operations are the design, development, manufacturing and commercialization of EV products, EV parts and off road vehicles. As part of its strategic objective to become a leading manufacturer of EV products and related services, the Company has increased its focus on pure EV related products with a particular emphasis on expanding its market share in China.

v3.4.0.3
LIQUIDITY
3 Months Ended
Mar. 31, 2016
LIQUIDITY [Text Block]

NOTE 2 – LIQUIDITY

The Company had a working capital surplus of $72,489,812 as of March 31, 2016, an increase of $12,572,659 from $59,917,153 as of December 31, 2015.

As of March 31, 2016, the Company had credit lines from commercial banks of $36,894,649. The Company believes that its cash flows generated internally may not be sufficient to support the growth of future operations and to repay short-term bank loans for the next twelve (12) months. However, the Company believes its access to existing financing sources and established relationships with PRC banks will enable it to meet its obligations and fund its ongoing operations.

The Company has historically financed its operations through short-term commercial bank loans from PRC banks. The term of these loans is typically for one year, and upon the payment of all outstanding principal and interest in a particular loan, the banks have typically rolled over the loan for an additional one-year term, with adjustments made to the interest rate to reflect prevailing market rates. The Company believes this practice has been ongoing year after year and that short-term bank loans remain available on normal trade terms if needed.

v3.4.0.3
BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2016
BASIS OF PRESENTATION [Text Block]

NOTE 3 - BASIS OF PRESENTATION

The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States (“U.S. GAAP”) and have been consistently applied in the presentation of financial statements.

The financial information included herein for the three-month ended March 31, 2016 are unaudited; however, such information reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for these interim periods.

The results of operations for the three-month ended March 31, 2016 are not necessarily indicative of the results expected for the entire fiscal year ending December 31, 2016.

v3.4.0.3
PRINCIPLES OF CONSOLIDATION
3 Months Ended
Mar. 31, 2016
PRINCIPLES OF CONSOLIDATION [Text Block]

NOTE 4 – PRINCIPLES OF CONSOLIDATION

The consolidated financial statements reflect the accounts of the Company and its ownership interest in the following subsidiaries:

(i)

Continental, a wholly-owned subsidiary of the Company;

 

 

(ii)

Kandi Vehicles, a wholly-owned subsidiary of Continental;

 

 

(iii)

Kandi New Energy, a 50% owned subsidiary of Kandi Vehicles. Pursuant to relevant agreements executed in January 2011, Kandi Vehicles effectively controls a variable interest (“VIE”) of Kandi New Energy. PRC laws and regulations prohibit or restrict foreign 100% ownership of an entity who has the special purpose vehicle production license (maximum is 50%), to comply with these foreign ownership restrictions, the Company has entered various agreement with Mr. Hu Xiaoming to hold 50% equity share of Kandi New Energy on behalf. Based on the relevant agreements, Kandi Vehicles is entitled to 100% of the economic benefits, voting rights and residual interests of Kandi New Energy; Based on these contractual arrangements, the Company consolidates the financial results of Kandi New Energy required by Accounting Standards Codification (“ASC”) subtopic 810-10 (“ASC 810-10”), Consolidation: Overall (Pre-Codification): Financial Accounting Standards Board (“FASB”) Interpretation No. 46R,Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. Based on the aforementioned agreements, the Company demonstrates its ability and intention to continue to exercise the ability to obtain substantially all of the profits and absorb all of the expected losses of Kandi New Energy. All significant intercompany accounts and transactions between the Company, its subsidiaries, and Kandi New energy have been eliminated in consolidation.

 

 

(iv)

Yongkang Scrou, a wholly-owned subsidiary of Kandi Vehicles;

 

 

(v)

Kandi Hainan, a subsidiary, 10% owned by Kandi New Energy and 90% owned by Kandi Vehicles.

Equity Method Investees

The consolidated net income also includes the Company’s proportionate share of the net income or loss of its equity method investees as following:

(vi)

The JV Company, 50% owned subsidiary of Kandi Vehicles;

 

 

(vii)

Kandi Changxing, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

   
(viii)

Kandi Jinhua, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

 

 

(ix)

JiHeKang, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

 

 

(x)

Kandi Shanghai, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

 

 

(xi)

Kandi Jiangsu, a wholly-owned subsidiary of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest;

 

 

(xii)

Puma Investment, a 50%-owned subsiery of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 25% economic interest.

 

 

(xiii)

JiHeKang Service Company, a wholly-owned subsidery of the JV Company. The Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest.

All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

v3.4.0.3
USE OF ESTIMATES
3 Months Ended
Mar. 31, 2016
USE OF ESTIMATES [Text Block]

NOTE 5 – USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates.

v3.4.0.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block]

NOTE 6 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Economic and Political Risks

The Company’s operations are conducted in the PRC. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of March 31, 2016, the Company’s assets, measured at fair value, on a recurring basis, subject to the disclosure requirements of ASC 820, were as follows:

    Fair Value     Active     Significant     Significant  
    Measurements at     Markets for     Other     Unobservable  
    Reporting Date Using     Identical     Observable     Inputs  
    Quoted Prices in     Assets     Inputs     (Level 3)  
    Carrying Value as of     (Level 1)     (Level 2)        
    March 31,                    
    2016                    
Cash and cash equivalents $ 13,447,666   $ 13,447,666     -     -  
Restricted cash   16,277,051     16,277,051     -     -  
Warrants $ 537,250     -     -     537,250  

Cash and cash equivalents consist primarily of highly-rated money market funds at a variety of well-known institutions with original maturities of three months or less. Restricted cash represents time deposits on account, some of which are used to secure short-term bank loans and notes payable. The original cost of these assets approximates fair value due to their short term maturity.

Warrants, which are accounted as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. Also see Note 6(t).

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of March 31, 2016 and December 31, 2015, represented time deposits on account for earning interest income. As of March 31, 2016, the Company’s restricted cash were $16,277,051, which reflects a one-year Certificate of Time Deposit (CD) with Hangzhou Bank Jinhua Branch.

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the weighted average basis and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

(e) Accounts Receivable

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after an exhaustive collection effort. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item. As of March 31, 2016 and December 31, 2015, the Company had no allowance for doubtful accounts, as per the management’s judgment based on their best knowledge.

As of March 31, 2016 and December 31, 2015, the credit terms with the Company’s customers were typically 150 to 180 days after delivery.

(f) Notes receivable

Notes receivable represent short-term loans to third parties with the maximum term of one year. Interest income will be recognized according to each agreement between a borrower and the Company on an accrual basis. If notes receivable are paid back or written off, that transaction will be recognized in the relevant year. If the loan default is probable, reasonably assured and the loss can be reasonably estimated, the Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions being taken, the Company provides an accrual for the related foreclosure expenses and related litigation expenses. The Company also receives notes receivable from the JV Company to settle the accounts receivable

(g) Prepayments

Prepayments represent cash paid in advance to suppliers, which also includes advances to raw material suppliers, mold manufacturers, and suppliers of equipment.

As of December 31, 2013, the Company recorded a significant prepayment made by the Company to a supplier Nanjing Shangtong (as defined in Note 16) as an advance of RMB353 million ($54,721,895) and deposited by Kandi Wanning (renamed to Kandi Hainan in January 2016) to Nanjing Shangtong. As of December 31, 2015, the advance to Nanjing Shangtong was transferred to “construction-in-progress” as described in Note 16.

Advances for raw materials purchases typically are settled within two months by the Company’s receipt of raw materials. Prepayment is offset against purchase amount after equipment or materials are delivered.

(h) Plant and Equipment

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of assets, using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings 30 years
Machinery and equipment 10 years
Office equipment 5 years
Motor vehicles 5 years
Molds 5 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to expense as incurred, whereas significant renewals and betterments are capitalized.

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction, the acquisition cost of buildings or machinery and design fees. Capitalization of these costs ceases, and the construction in progress is transferred to plant and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until the assets are completed and ready for their intended use. No interest expense has been capitalized for CIP as of March 31, 2016, as the Company did not get loans for CIP.

(j) Land Use Rights

According to the Chinese laws, land in the PRC is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the government grants the user a “land use right” to use the land. The land use rights granted to the Company are being amortized using the straight-line method over the term of fifty years.

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

During the reporting period, no impairment loss was recognized.

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

  Persuasive evidence of an arrangement exists;
  Delivery has occurred or services have been rendered;
  The seller’s price to the buyer is fixed or determinable; and
  Collectability is reasonably assured.

The Company recognized revenue when the products and the risk they carry are transferred to the other party.

(m) Research and Development

Expenditures relating to the development of new products and processes, including significant improvements to existing products, are expensed as incurred. Research and development expenses were $205,968 and $571,020 for the three months ended March 31, 2016 and 2015, respectively.

(n) Government Grants

Grants and subsidies received from the PRC Government are recognized when the proceeds are received or collectible.

For the three months ended March 31, 2016 and 2015, $194,473 and $0 grants were received by the Company’s subsidiaries from the PRC government.

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the management’s best estimate on the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http://www.oanda.com

    March 31,     December 31,        March 31,  
    2016     2015     2015     
Period end RMB : USD exchange rate   6.45080     6.49270     6.13210  
Average RMB : USD exchange rate   6.54144     6.24010     6.15290  

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

(r) Segments

In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”), the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing performance of the Company. As a result of the assessment made by the chief operating decision makers, the Company has only one single operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of the stock option expenses is based on awards expected to vest, and there were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended March 31, 2016 and 2015 were $6,109,666 and $0, respectively. See Note 20.

(t) Warrant Costs

The Company’s warrant costs are recorded in liabilities in accordance with ASC 480, ASC 505 and ASC 815.

The fair value of a warrant is estimated using the Black-Scholes-Merton model and the lattice valuation model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the warrant. The risk-free interest rate for the expected term of the warrant is based on the U.S. Treasury yield curve in effect at the time of measurement. The warrants, which are freestanding derivatives and are classified as liabilities on the balance sheet, will be measured at fair value on each reporting date, with decreases in fair value recognized in earnings and increases in fair values were recognized in expenses.

(u) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of March 31, 2016 and 2015, the Company determined that it goodwill was not impaired.

(v) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of March 31, 2016.

(w) Accounting for Sale of Common Stock and Warrants

Gross proceeds are firstly allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

(x) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Kandi Vehicles, to receive a majority of their respective expected residual returns.

Additionally, as Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of the company. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the Contractual Agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

v3.4.0.3
NEW ACCOUNTING PRONOUNCEMENTS
3 Months Ended
Mar. 31, 2016
NEW ACCOUNTING PRONOUNCEMENTS [Text Block]

NOTE 7 – NEW ACCOUNTING PRONOUNCEMENTS

The FASB has issued No. 2016-07 “Topic 323, Investments—Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting,” which aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments in this Update affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted.

The FASB has issued No. 2016-08 “Topic 606, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which requires the entity to determine whether the nature of its promise is to provide good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. The amendments in this Update affect entities with transactions included within the scope of Topic 606. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2014-09. Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

The FASB has issued No. 2016-09 “Topic 718, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which aims to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments in this Update affect all entities that issue share-based payment awards to their employees. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period.

The FASB has issued No. 2016-10 “Topic 606, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The amendments in this Update clarify that contractual provisions that, explicitly or implicitly, require an entity to transfer control of additional goods or services to a customer (for example, by requiring the entity to transfer control of additional rights to use or rights to access intellectual property that the customer does not already control) should be distinguished from contractual provisions that, explicitly or implicitly, define the attributes of a single promised license (for example, restrictions of time, geographical region, or use). The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

v3.4.0.3
CONCENTRATIONS
3 Months Ended
Mar. 31, 2016
CONCENTRATIONS [Text Block]

NOTE 8 – CONCENTRATIONS

(a) Customers

For the three-month period ended March 31, 2016, the Company’s major customers, each of whom accounted for more than 10% of the Company’s consolidated revenue, were as follows:

      Sales     Accounts Receivable  
      Three Months     Three Months                
      Ended     Ended              
      March 31     March 31     March 31     December 31  
Major Customers     2016     2015     2016     2015  
Jinhua Chaoneng Automobile Sales Co. Ltd.     59%     -     26%     -  
Kandi Electric Vehicles Group Co., Ltd.     26%     -     38%     46%  

(b) Suppliers

For the three-month period ended March 31, 2016, the Company’s material suppliers, each of whom accounted for more than 10% of the Company’s total purchases, were as follows:

    Purchases     Accounts Payable    
    Three Months     Three Months              
    Ended     Ended     March 31     December 31  
    March 31     March 31              
Major Suppliers   2016     2015     2016     2015  
Dongguan Chuangming Battery Technology Co., Ltd.   47%     10%     21%     15%  
Zhejiang Tianneng Energy Technology Co., Ltd.   32%     38%     26%     24%  
v3.4.0.3
EARNINGS PER SHARE
3 Months Ended
Mar. 31, 2016
EARNINGS PER SHARE [Text Block]

NOTE 9 –EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share , which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the reporting period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible notes (using the if-converted method). For the three months ended March 31, 2016 and 2015, the average number of potentially dilutive common shares was 17,910 and 116,694, respectively. The potential dilutive common shares as at the three months ended March 31, 2016 and 2015 was 5,849,419 and 1,076,679 shares respectively.

The following is the calculation of earnings per share:

    For three months ended  
    March 31,  
    2016     2015  
Net income $ 88,420   $ 6,131,653  
Weighted average shares used in basic computation   47,009,834     46,281,299  
Dilutive shares   17,910     116,694  
Weighted average shares used in diluted computation   47,027,744     46,397,993  
             
Earnings per share:            
Basic $ 0.00   $ 0.13  
Diluted $ 0.00   $ 0.13  
v3.4.0.3
ACCOUNTS RECEIVABLE
3 Months Ended
Mar. 31, 2016
ACCOUNTS RECEIVABLE [Text Block]

NOTE 10 - ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

    March 31,     December 31,  
    2016     2015  
Accounts receivable $ 40,867,698   $ 8,136,421  
Less: Provision for doubtful debts   -     -  
Accounts receivable, net $ 40,867,698   $ 8,136,421  
v3.4.0.3
INVENTORIES
3 Months Ended
Mar. 31, 2016
INVENTORIES [Text Block]

NOTE 11 - INVENTORIES

Inventories are summarized as follows:

    March 31,     December 31,  
    2016     2015  
Raw material $ 20,044,645   $ 8,509,421  
Work-in-progress   1,703,490     1,648,498  
Finished goods   4,555,352     8,101,661  
Total inventories   26,303,487     18,259,580  
Less: provision for slowing moving inventories   (489,057 )   (485,901 )
Inventories, net $ 25,814,430   $ 17,773,679  
v3.4.0.3
NOTES RECEIVABLE
3 Months Ended
Mar. 31, 2016
NOTES RECEIVABLE [Text Block]

NOTE 12 - NOTES RECEIVABLE

Notes receivable are summarized as follows:

    March 31,     December 31,  
    2016     2015  
Notes receivable as below:            
Due September 30, 2016, interest at 7.2% per annum $ 7,884,560   $ 10,578,574  
Bank acceptance notes   3,391,827     2,454,741  
             
Notes receivable $ 11,276,387   $ 13,033,315  

Details of Notes receivable are as below as of March 31, 2016:

Index Amount ($) Counter party Relationship Nature Manner of
settlement
1 7,884,560 Yongkang HuiFeng
Guarantee Co., Ltd
No relationship
beyond loan
Receive interest income Not due
2 1,376,573 Kandi Changxing Subsidiary of
the JV Company
Payments for sales Not due
3 465,059 Kandi Shanghai Subsidiary of
the JV Company
Payments for sales Not due
4 1,550,195 Beijing Pangda
Xinhong New Energy
Automobile Sales and
Service Co. Ltd.
No relationship
beyond loan
Payments for sales Not due

Details of Notes receivable are as below as of December 31, 2015:

Index Amount ($) Counter party Relationship Nature Manner of
settlement
1 10,578,574 Yongkang HuiFeng
Guarantee Co., Ltd
No relationship
beyond loan
Receive interest income Not due
2 1,871,332 Kandi Electric
Vehicles Group
Co., Ltd.
Joint venture of
the Company
Payments for sales Not due
3 59,744 Kandi Shanghai Subsidiary of
the JV Company
Payments for sales Not due
4 523,665 Zhuhai Enpower
electrical Limited
No relationship
beyond loan
Payments for sales Not due
v3.4.0.3
AMOUNT DUE FROM RELATED PARTY
3 Months Ended
Mar. 31, 2016
AMOUNT DUE FROM RELATED PARTY [Text Block]

NOTE 13 AMOUNT DUE FROM RELATED PARTY

The details for amount due from related parties as at the March 31, 2016 and December 31, 2015 were as below:

    March 31,     December 31,  
    2016     2015  
Service Company   5,585,613     40,606,162  
Total due from related party $ 5,585,613     40,606,162  

The Company has 9.5% ownership of the Service Company and the Chairman and CEO of the Company, Mr.Hu, has 13% ownership of the Service Company. The main transactions between the Company and the Service Company are those the Service Company bought battery for the speed upgrade and EV parts for repairing and maintenance for its operating electric vehicles.

The transaction with JV Company, please refer to Note 23.

v3.4.0.3
PLANT AND EQUIPMENT
3 Months Ended
Mar. 31, 2016
PLANT AND EQUIPMENT [Text Block]

NOTE 14 – PLANT AND EQUIPMENT

Plant and equipment consisted of the following:

    March 31,     December 31,  
    2016     2015  
At cost:            
Buildings $ 13,973,387   $ 13,883,211  
Machinery and equipment   9,322,054     7,804,097  
Office equipment   486,395     395,328  
Motor vehicles   337,404     335,227  
Moulds   33,145,643     32,931,740  
    57,264,883     55,349,603  
Less : Accumulated depreciation            
Buildings $ (3,897,971 ) $ (3,755,582 )
Machinery and equipment   (8,741,563 )   (7,108,925 )
Office equipment   (233,148 )   (249,378 )
Motor vehicles   (280,429 )   (271,495 )
Moulds   (24,517,781 )   (23,385,363 )
    (37,670,892 )   (34,770,743 )
Less: provision for impairment for fixed assets   (54,083 )   (53,734 )
Plant and equipment, net $ 19,539,908   $ 20,525,126  

As of March 31, 2016 and December 31, 2015, the net book value of plant and equipment pledged as collateral for bank loans was $9,899,767 and $9,949,661, respectively.

Depreciation expenses for the first quarter of 2016 and 2015 were $1,132,732 and $1,361,481, respectively.

v3.4.0.3
LAND USE RIGHTS
3 Months Ended
Mar. 31, 2016
LAND USE RIGHTS [Text Block]

NOTE 15 – LAND USE RIGHTS

The Company’s land use rights consisted of the following:

    March 31,     December 31,  
    2016     2015  
Cost of land use rights $ 15,376,185   $ 15,276,957  
Less: Accumulated amortization   (2,441,977 )   (2,341,836 )
Land use rights, net $ 12,934,208   $ 12,935,121  

As of March 31, 2016 and December 31, 2015, the net book value of land use rights pledged as collateral for the Company’s bank loans was $9,506,449 and $9,512,598, respectively. Also see Note 17.

The amortization expense for the three months ended March 31, 2016 and 2015 was $69,987 and $97,379, respectively. Amortization expense for the next five years and thereafter is as follows:

2016 (nine months) $ 209,961  
2017   279,948  
2018   279,948  
2019   279,948  
2020   279,948  
Thereafter   11,604,455  
Total $ 12,934,208  
v3.4.0.3
CONSTRUCTION-IN-PROGRESS
3 Months Ended
Mar. 31, 2016
CONSTRUCTION-IN-PROGRESS [Text Block]

NOTE 16 - CONSTRUCTION-IN-PROGRESS

As of March 31, 2016, a total amount of advances to a supplier of RMB353,000,000, or $54,721,895, made by Kandi Hainan to Nanjing Shangtong Auto Technologies Co., Ltd. (“Nanjing Shangtong”) for equipment purchases was included in Construction in Process (“CIP”). None of the CIP was transferred to property, plant and equipment as of March 31, 2016.

Because the government of Hainan Province is enforcing a new plan to centralize the manufacturing in designated industry park, the Wanning facility will be relocated from Wanning City to Haikou City. In addition, all related expenses and assets disposal caused by the relocation were compensated by the local government. Currently Hainan facility is under construction and will be completed for production testing in the middle of 2017.

No depreciation is provided for CIP until such time as the facility is completed and placed into operation.

The contractual obligation under CIP of the Company as of March 31, 2016 is as follow:

Project     Total in CIP as of
March 31,
2016
    Contracted but
not provided for
    Total contract
amount
 
Kandi Hainan facility   $ 54,750,430   $ 6,510,820   $ 61,261,250  
Total   $ 54,750,430   $ 6,510,820   $ 61,261,250  

As of March 31, 2016 and December 31, 2015, the Company had CIP amounting to $54,750,430 and $54,368,753, respectively.

No interest expense has been capitalized for CIP as of March 31, 2016 and 2015, respectively, as the Company did not get loans for CIP.

v3.4.0.3
SHORT TERM BANK LOANS
3 Months Ended
Mar. 31, 2016
SHORT TERM BANK LOANS [Text Block]

NOTE 17 – SHORT TERM BANK LOANS

Short-term loans are summarized as follows:

    March 31,     December 31,  
    2016     2015  
Loans from China Ever-bright Bank            
Interest rate 4.698% per annum, due October 28, 2016, secured by the assets of the Company, guaranteed by Mr. Hu Xiaoming and his wife.   12,091,523     12,013,492  
Loans from Hangzhou Bank            
Interest rate 4.60% per annum, due October 13, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   7,564,953     7,516,134  
Interest rate 4.82% per annum, due July 2, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   7,750,977     7,700,956  
Interest rate 4.85% per annum, due July 12, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   3,441,434     3,419,225  
Interest rate 4.35% per annum, due March 23, 2017, secured by the assets of the Company. Also see Note 14 and Note 15.   6,045,762     -  
Interest rate 5.35% per annum, paid off on March 22, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   -     6,006,746  
  $ 36,894,649     36,656,553  

The Interest Expenses for the three months ended March 31, 2016 and 2015 were $442,079 and $587,293, respectively.

As of March 31, 2016, the aggregate amount of short-term loans that was guaranteed by various third parties was $0.

It is a common business practice among companies in the region of the PRC in which the Company is located to exchange guarantees for bank debt with no additional consideration given. It is considered a “favor for favor” business practice and is commonly required by Chinese lending banks, as in these cases.

v3.4.0.3
NOTES PAYABLE
3 Months Ended
Mar. 31, 2016
NOTES PAYABLE [Text Block]

NOTE 18 – NOTES PAYABLE

By issuing bank notes payables rather than paying cash to suppliers, the Company can defer the payments until the date the bank notes payable are due. Simultaneously, the Company may need to deposit restricted cash in banks to back up the bank notes payable. The restricted cash deposited in banks will generate interest income.

Notes payable for March 31, 2016 and December 31, 2015 were summarized as follows:

    March 31 ‚      December 31,  
    2016     2015  
Bank acceptance notes:              
Due May 12, 2016 $ 2,325,293   $ 2,310,287  
Due June 17, 2016   1,550,195     1,540,191  
Due July 6, 2016   1,550,195     -  
Due July 14, 2016   232,529     -  
Due August 23, 2016   155,020     -  
Due September 30, 2016   155,020     -  
Total $ 5,968,252     3,850,478  

A bank acceptance note is a promised future payment or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance notes specifies the amount of funds, the date, and the person to which the payment is due.

After acceptance, the draft becomes an unconditional liability of the bank, but the holder of the draft can sell (exchange) it for cash at a discount to a buyer who is willing to wait until the maturity date for the funds in the deposit.

$5,968,252 and $3,850,478 were held as collateral for the notes payable as of March 31, 2016 and December 31, 2015, respectively.

v3.4.0.3
TAXES
3 Months Ended
Mar. 31, 2016
TAXES [Text Block]

NOTE 19 – TAXES

(a) Corporation Income Tax

In accordance with the relevant tax laws and regulations of the PRC, the applicable corporate income tax (“CIT”) rate for Kandi’s subsidiaries are as below:

Company Name Applicable Corporate
Income Tax
Kandi Vehicles 15%
Kandi New Energy 25%
Yongkang Scruo 25%
Kandi Hainan 25%
JV Company 25%

The Company, qualified as a high technology company in China, was entitled to pay a reduced CIT rate of 15%. After combining with the research and development tax credit of 25% on certain qualified research and development expenses, the final effective reduced income tax rate was 15.88%. The combined tax benefits were 45.28%. The actual effective income tax rate was reduced from 25% to 13.68% in the first quarter of 2016.

According to the PRC CIT reporting system, the CIT sales cut-off base is concurrent with the value-added tax (“VAT”), which should reported to the State Administration of Taxation (“SAT”) on a quarterly basis. Since the VAT and CIT are accounted for on a VAT tax basis that recorded all sales on a “State provided official invoices” reporting system, the Company is reporting the CIT according to the SAT prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off is not done on an accrual basis but rather on a VAT taxable reporting basis. Therefore, when the Company adopted U.S. GAAP using an accrual basis, the sales cut-off CIT timing (due to the VAT reporting system) creates a temporary sales cut-off timing difference. This difference is reflected in the deferred tax assets or liabilities calculations on the income tax estimate reported elsewhere on the report.

Effective January 1, 2007, the Company adopted ASC 740, Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2016, the Company did not have a liability for unrecognized tax benefits. The Company files income tax returns to the U.S. Internal Revenue Services (“IRS”) and states where the Company has operations. The Company is subject to U.S. federal or state income tax examinations by the IRS and relevant state tax authorities for years after 2006. During the periods open to examination, the Company has net operating loss carry forwards (“NOLs”) for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in China. As of March 31, 2016, the Company was not aware of any pending income tax examinations by U.S. and China tax authorities. The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2016, the Company has no accrued interest or penalties related to uncertain tax positions. The Company has not recorded a provision for U.S. federal income tax f as of March 31, 2016 due to the net operating loss in the first quarter of 2016 and an accumulated net operating loss carry forward from prior years in the United States.

Income tax expense (benefit) for the three months ended March 31, 2016 and 2015 is summarized as follows:

    For Three Months Ended    
    March 31,  
    (Unaudited)    
    2016     2015  
Current:            
Provision for CIT $ (2,636,675 ) $ 1,008,909  
Provision for Federal Income Tax   -     -  
Deferred:            
Provision for CIT   -     -  
Income tax expense (benefit) $ (2,636,675 ) $ 1,008,909  

The Company’s income tax expense (benefit) differs from the “expected” tax expense for the three months ended March 31, 2016 and 2015 (computed by applying the U.S. Federal Income Tax rate of 34% and PRC CIT rate of 25%, respectively, to income before income taxes) as follows:

    For Three Months Ended  
    March 31,  
    (Unaudited)  
    2016     2015  
             
Computed “expected” expense $ (3,957,325 ) $ 3,109,591  
Favorable tax rate   (113,208 )   (2,416,981 )
Permanent differences   (1,243,626 )   (27,713 )
Valuation allowance   2,677,484     344,012  
Income tax expense (benefit) $ (2,636,675 ) $ 1,008,909  

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of March 31, 2016 and December 31, 2015 are summarized as follows:

    March 31‚     December 31‚  
    2016     2015    
    (Unaudited)        
Current portion:            
Deferred tax assets (liabilities):            
                               Expense $ (170,862 )   (272,953 )
Subtotal   (170,862 )   (272,953 )
             
Deferred tax assets (liabilities):            
Sales cut-off difference derived from Value Added
Tax reporting system to calculate PRC Corporation
Income Tax in accordance with the PRC State
Administration of Taxation
  915,772     290,850  
                           Other   -     (2,392,821 )
Subtotal   915,772     (2,101,971 )
             
Total deferred tax assets (liabilities) – current portion   744,910     (2,374,924 )
             
Non-current portion:            
Deferred tax assets (liabilities):            
                           Depreciation   (312,693 )   (353,115 )
                           Loss carried forward   2,677,484     7,645,386  
                           Valuation allowance   (2,677,484 )   (7,645,386 )
Subtotal   (312,693 )   (353,115 )
             
Deferred tax liabilities:            
                           Accumulated other comprehensive gain   -     (1,240,467 )
Subtotal   -     (1,240,467 )
             
Total deferred tax assets – non-current portion   (312,693 )   (1,593,582 )
             
Net deferred tax assets (liabilities) $ 432,217     (3,968,506 )

(b) Tax Benefit (Holiday) Effect

For the three months ended March 31, 2016 and 2015, the PRC CIT rate was 25%. Certain subsidiaries of the Company are entitled to tax benefit (holidays) for the three months ended March 31, 2016 and 2015.

The combined effects of the income tax expense exemptions and reductions available to the Company for the three months ended March 31, 2016 and 2015 are as follows:

    For the Three Months Ended   
    March 31,  
    (Unaudited)  
    2016     2015  
Tax benefit (holiday) credit $ (113,208 ) $ 2,416,981  
Basic net income per share effect $ (0.002 ) $ 0.052  
v3.4.0.3
STOCK OPTIONS AND WARRANTS
3 Months Ended
Mar. 31, 2016
STOCK OPTIONS AND WARRANTS [Text Block]

NOTE 20 - STOCK OPTIONS AND WARRANTS

(a) Stock Options

On May 29, 2015, the Compensation Committee of the Board of Directors of the Company approved the grant of stock options to purchase 4,900,000 shares of common stock at an exercise price of $9.72 per share to the Company’s directors, officers and senior employees. The stock options will vest ratably over three years and expire on the tenth anniversary of the grant date. The Company valued the stock options at $39,990,540 and will amortize the stock compensation expense using the straight-line method over the service period from May 29, 2015 through May 29, 2018. The value of the options was estimated using the Black Scholes Model with an expected volatility of 90%, expected life of 10 years, risk-free interest rate of 2.23% and expected dividend yield of 0.00%.

The fair value of the 4,900,000 options issued to the employees and directors on May 29, 2015 is $8.1613 per share.

(b) Warrants

On June 26, 2013, the Company entered into a securities purchase agreement (the “2013 Securities Purchase Agreement”) with certain institutional investors (the “Third Round Investors”) that closed on July 1, 2013, pursuant to which the Company sold to the Third Round Investors, in a registered direct offering, an aggregate of 4,376,036 shares of the Company’s common stock at a negotiated purchase price of $6.03 per share. Under the 2013 Securities Purchase Agreement, the Third Round Investors also received Series A warrants for the purchase of up to 1,750,415 shares of the Company’s common stock at an exercise price of $7.24 per share and an option to make an additional investment in the form of Series B warrants and Series C warrants, Series B warrants to purchase a maximum aggregate of 728,936 shares of the Company’s common stock at an exercise price of $7.24 per share and Series C warrants to purchase a maximum aggregate of 291,574 shares of the Company’s common stock at an exercise price of $8.69 (the “Third Round Warrants”). As of June 30, 2014, all the Third Round Warrants had been exercised on a cash basis. In addition, the placement agent for this transaction also received warrants for the purchase of up to 262,562 shares of the Company’s common stock at an exercise price of $7.24 per share (the “Third Round Placement Agent Warrants”), which will expire on July 1, 2016, with a fair value of $1.054 per share.. The warrants agreement contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet.

On January 15, 2014, the Company sold to certain institutional investors warrants to purchase an aggregate of 1,429,393 shares of the Company’s common stock at an exercise price of $15 per share (the “January 2014 Warrants”)for a total purchase price of approximately $14,294. According to the warrant subscription agreement by and among the Company and the holders, the exercise price was reduced by a credit of $0.01, which reflected the price per warrant share paid in connection with the issuance of the January 2014 Warrants. Consequently, the effective exercise price per warrant share is $14.99. The January 2014 Warrants expired on January 30, 2015 and no investors exercised their warrants.

On March 19, 2014, the Company entered into a securities purchase agreement with certain purchasers (the “Fourth Round Investors”), pursuant to which the Company sold to the Fourth Round Investors, in a registered direct offering, an aggregate of 606,000 shares of common stock, at a negotiated purchase price of $18.24 per share, for aggregate gross proceeds to the Company of approximately $11,053,440, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. As part of the transaction, the Fourth Round Investors also received warrants for the purchase of up to 90,900 shares of the Company’s common stock at an exercise price of $22.80 per share (the “Fourth Round Warrants”). In addition, the placement agent for this transaction also received warrants for the purchase of up to 36,360 shares of the Company’s common stock at an exercise price of $22.80 per share, which was adjusted to $9.72 on July 27, 2015. The Fourth Round Warrants have a term of eighteen months and are exercisable by the holders at any time after the date of issuance. On August 8, 2015, the Company extended the expiration date of these warrants from September 21, 2015 to January 20, 2016, among these warrants, 44,783 share were exercised in January 2016 and the rest warrant shares were expired and without exercise. The warrants agreement contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet

On September 4, 2014, the Company entered in a securities purchase agreement with certain purchasers (the “Fifth Round Investors”), pursuant to which the Company sold to the Fifth Round Investors, in a registered direct offering, an aggregate of 4,127,908 shares of its common stock at a price of $17.20 per share, for aggregate gross proceeds to the Company of approximately $71 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company (the “Fifth Round Financing”). As part of the transaction, the Fifth Round Investors also received warrants for the purchase of up to 743,024 shares of the Company’s common stock at an exercise price of $21.50 per share (the “Fifth Round Warrants”), which was adjusted to $9.72 on July 27, 2015. The Fifth Round Warrants have a term of seventeen months and are exercisable by the holders at any time after the date of issuance. On August 8, 2015, the Company extended the expiration date of these warrants from February 4, 2016 to June 3, 2016. In addition, the placement agent for this transaction also received warrants for the purchase of up to 206,395 shares of the Company’s common stock at an exercise price of $20.64 per share, which was adjusted to as exercise price of $9.72 per share in December 2015 due to its financial consulting service. The placement agent’s warrants are exercisable for a term of seventeen months after the six months from the issuance. As of March 31, 2016, the fair value of the Fifth Round Warrants was $0.22 per share and the fair value of the Fifth Round Placement Agent Warrants was $0.46 per share. The warrants agreement contains the downward ratchet protection and anti-dilution terms, so we clarified these warrants as liabilities on the balance sheet.

v3.4.0.3
STOCK AWARD
3 Months Ended
Mar. 31, 2016
STOCK AWARD [Text Block]

NOTE 21 – STOCK AWARD

In connection with the appointment of Mr. Henry Yu as a member of the Board of Directors (the “Board”), and as compensation, the Board authorized the Company to provide Mr. Henry Yu with 5,000 shares of Company's restricted common stock every six months, beginning in July 2011.

As compensation for having Mr. Jerry Lewin to serve as a member of the Board, the Board authorized the Company to provide Mr. Jerry Lewin with 5,000 shares of Company's restricted common stock every six months, beginning in August 2011.

As compensation for having Ms. Kewa Luo to serve as the Company’s investor relation officer, the Board authorized the Company to provide Ms. Kewa Luo with 5,000 shares of Company's common stock every six months, beginning in September 2013.

The fair value of stock awards based on service is determined based on the closing price of the common stock on the date the shares are granted. The compensation costs for awards of common stock are recognized over the requisite service period of six months.

On December 30, 2013, the Board approved a proposal (as submitted by the Compensation Committee) of an award for selected executives and other key employees comprising a total of 335,000 shares of common stock for each fiscal year, beginning with the 2013 fiscal year, under the Company’s 2008 Omnibus Long-Term Incentive Plan (the “Plan”), if the Company’s “Non-GAAP Net Income” for the current fiscal year increased by 10% comparing to that of the prior year. The specific number of shares of common stock to be issued in respect of such award could proportionally increase or decrease if the actual Non-GAAP Net Income increase is more or less than 10%. “Non-GAAP Net Income” means the Company’s net income for a particular year calculated in accordance with GAAP, excluding option-related expenses, stock award expenses, and the effects caused by the change of fair value of financial derivatives. For example, if Non-GAAP Net Income for the 2014 fiscal year increased by 10% compared to the Non-GAAP Net Income for the 2013 fiscal year, the selected executives and other key employees each would be granted his or her target amount of common stock of the Company. If Non-GAAP Net Income in 2014 is less than Non-GAAP Net Income in 2013, then no common stock would be granted. If Non-GAAP Net Income in 2014 increased compared to Non-GAAP Net Income in 2013 but the increase is less than 10%, then the target amount of the common stock grant would be proportionately decreased. If Non-GAAP Net Income in 2014 increased compared to Non- GAAP Net Income in 2013 but the increase is more than 10%, then the target amount of the common stock grant would be proportionately increased up to 200% of the target amount. Any such increase in the grant would be subject to the total number of shares available under the Plan, and the Company’s Board and shareholders will need to approve an increase in the number of shares reserved under the Plan if the number of shares originally reserved is used up. On May 20, 2015, the shareholders of the Company approved an increase of 9,000,000 shares under the Plan at its annual meeting. The fair value of each award granted under the Plan is determined based on the closing price of the Company’s stock on the date of grant of the award. To the extent that the performance goal is not met and so no shares become due, no compensation cost is recognized and any recognized compensation cost during the applicable year is reversed. The compensation expense is recognized in General and Administrative Expenses. The stock award was below starting from 2013 based on the above award plan:

Issue Date (dd-mm-yyyyy) For Year Shares
22-05-2014 2013 801,163
15-04-2015 / 12-06-2015 2014 670,000
13-04-2016 2015 670,000
v3.4.0.3
INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2016
INTANGIBLE ASSETS [Text Block]

NOTE 22 – INTANGIBLE ASSETS

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets other than goodwill:

    Remaining
useful life
    March 31,
2016
    December 31,
2015
 
Gross carrying amount:                  
Trade name   5.75 years   $ 492,235   $ 492,235  
Customer relations   5.75 years     304,086     304,086  
          796,321     796,321  
Less : Accumulated amortization                  
Trade name       $ (198,756 ) $ (186,069 )
Customer relations         (122,783 )   (114,946 )
          (321,539 )   (301,015 )
Intangible assets, net       $ 474,782   $ 495,306  

The aggregate amortization expense for those intangible assets that continue to be amortized is reflected in amortization of intangible assets in the consolidated statements of income, and comprehensive income were $20,523 and $20,524 for the three months ended March 31, 2016 and 2015, respectively.

Amortization expense for the next five years and thereafter is as follows:

2016(ninemonths) $ 61,571  
2017   82,095  
2018   82,095  
2019   82,095  
2020   82,095  
Thereafter   84,831  
Total $ 474,782  
v3.4.0.3
SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY
3 Months Ended
Mar. 31, 2016
SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY [Text Block]

NOTE 23 – SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY

The Company’s consolidated net income includes the Company’s proportionate share of the net income or loss of the Company’s equity method investees. When the Company records its proportionate share of net income, it increases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss, it decreases equity income (loss) – net in the Company’s consolidated statements of income and the Company’s carrying value in that investment. All intra-entity profits and losses with the Company’s equity method investees have been eliminated.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”)

In March 2013, pursuant to a joint venture agreement (the “JV Agreement”) entered into between Kandi Vehicles and Shanghai Maple Guorun Automobile Co., Ltd. (“Shanghai Guorun”), a 99%-owned subsidiary of Geely Automobile Holdings Ltd. (“Geely”), the parties established Zhejiang Kandi Electric Vehicles Co., Ltd. (the “JV Company”) to develop, manufacture and sell electric vehicles (“EVs”) and related auto parts. Each of Kandi Vehicles and Shanghai Guorun has 50% ownership interest in the JV Company. In the fourth quarter of 2013, Kandi Vehicles entered into an ownership transfer agreement with the JV Company pursuant to which Kandi Vehicles transferred 100% of its ownership in Kandi Changxing to the JV Company. As a result, the Company indirectly has 50% economic interest in Kandi Changxing through its 50% ownership interest in the JV Company after this transfer. In November 2013, Zhejiang Kandi Electric Vehicles Jinhua Co., Ltd. (“Kandi Jinhua”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jinhua, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jinhua. In November 2013, Zhejiang JiHeKang Electric Vehicle Sales Co., Ltd. (“JiHeKang”) was formed by the JV Company. The JV Company has 100% ownership interest in JiHeKang, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang. In December 2013, the JV Company entered into an ownership transfer agreement with Shanghai Guorun pursuant to which the JV Company acquired 100% ownership of Kandi Electric Vehicles (Shanghai) Co., Ltd. (“Kandi Shanghai”). As a result, Kandi Shanghai is a wholly-owned subsidiary of the JV Company, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Shanghai. In January 2014, Zhejiang Kandi Electric Vehicles Jiangsu Co., Ltd. (“Kandi Jiangsu”) was formed by the JV Company. The JV Company has 100% ownership interest in Kandi Jiangsu, and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in Kandi Jiangsu. In addition, In July 2013, Zhejiang ZuoZhongYou Electric Vehicle Service Co., Ltd. (the “Service Company”) was formed. The JV Company had a 19% ownership interest in the Service Company. In March 2014, the JV Company changed its name to Kandi Electric Vehicles Group Co., Ltd. In August 2015, the JV Company transferred its shares of the Service Company to Shanghai Guorun and Kandi Vehicles for 9.5% respectively. As the result, the JV Company no longer has any ownership of the Service Company since the transfer. In November 2015, Hangzhou Puma Investment Management Co., Ltd. (“Puma Investment”) was formed by the JV Company. The JV Company has 50% ownership interest in Puma Investment and the Company, indirectly through its 50% ownership interest in the JV Company, has 25% economic interest in Puma Investment. In November 2015,Hangzhou JiHeKang Electric Vehicle Service Co., Ltd. (“JiHeKang Service Company”) was formed by the JV Company. The JV Company has 100% ownership interest in JiHeKang Service Company and the Company, indirectly through its 50% ownership interest in the JV Company, has 50% economic interest in JiHeKang Service Company.

As of March 31, 2016, the JV Company consolidated the following entities on its financial statements: (1) 100% interest in Kandi Changxing; (2) 100% interest in Kandi Jinhua; (3) 100% interest in JiHeKang; (4) 100% interest in Kandi Shanghai; (5) 100% interest in Kandi Jiangsu; (6) 100% interest in JiHeKang Service; and (7) 50% interest in Puma Investment. The Company accounted for its investments in the JV Company under the equity method of accounting as the Company has 50% ownership interest in the JV Company. Therefore, the Company’s consolidated net income for the three months ended March 31, 2016, included equity income from the JV Company during such periods.

The combined results of operations and financial position of the JV Company are summarized below:

    Three months ended  
    March 31,  
    2016     2015  
Condensed income statement information:            
Net sales $ (495,567 ) $ 30,564,996  
Gross income   (1,062,647 )   7,980,664  
Net income   (8,068,447 )   803,221  
Company’s equity in net income of JV $ (4,034,224 ) $ 401,610  

    March 31,     December 31,  
    2016                         2015  
Condensed balance sheet information:            
Current assets $ 411,728,560   $ 455,368,595  
Noncurrent assets   195,864,187     191,145,583  
Total assets $ 607,592,746   $ 646,514,178  
Current liabilities   386,899,933     429,487,683  
Noncurrent liabilities   47,023,088     36,348,514  
Equity   173,669,725     180,677,981  
Total liabilities and equity $ 607,592,746   $ 646,514,178  

Starting from January 1, 2016, one criterion for the EV models to receive NEV subsidy is that the highest speed must meet 100 kilometers per hour, and the Ministry of Industry and Information Technology of China, or the MIIT, announced a new list of qualified EV models to receive the national subsidy. However, the National Tax Bureau has not released the list of EV models to receive purchase tax exemption accordingly. As such, the JV Company had no EV products sold in the first quarter of 2016 because potential purchasers could not obtain any tax exemption before the updated list from the National Tax Bureau was promulgated. The JV Company received the tax exemption approval on four EV models in early April 2016 and has started to sell EV products.

Note: The following table illustrates the captions used in the Company’s Income Statements for its equity based investment in the JV Company.

The Company’s equity method investment in the JV Company for the three months ended March 31, 2016 and 2015 are as follows:

    Three Months ended  
    March 31,  
    2016     2015  
Investment in JV Company, beginning of the period, $ 90,337,899   $ 83,309,095  
Share of profit   (4,034,224 )   401,610  
Intercompany transaction elimination   (789,329 )   (116,252 )
Year 2015 unrealized profit realized   1,083     183,998  
Exchange difference   519,013     292,327  
Investment in JV Company, end of the period $ 86,034,442   $ 84,070,778  

Sales to the Company’s customers, the JV Company and its subsidiaries, for the three months ended March 31, 2016 were $13,474,975 or 28% of the Company’s total revenue, a decrease of 53.6% of the sales to the JV Company from the same quarter last year. The sales to the JV Company and its subsidiaries were primarily the sales of battery packs, body parts, EV drive motors, EV controllers, air conditioning units and other auto parts, the breakdown of the sales to the JV Company and its subsidiaries is as follows:

    Three Months ended  
    March 31,  
    2016     2015  
JV Company $ 13,085,636   $   -  
Kandi Changxing   160,597     17,605,302  
Kandi Shanghai   158,201     9,859,319  
Kandi Jinhua   52,264     1,590,383  
Kandi Jiangsu   18,277     -  
Total sales to JV $ 13,474,975   $ 29,055,004  

As of March 31, 2016 and December 31, 2015, the amount due from the JV Company and its subsidiaries, net was $92,789,650 and $76,172,471, respectively, of which the majority was the balances with the JV Company, Kandi Jinhua, Kandi Changxing, Kandi Jiangsu and Kandi Shanghai. The breakdown is as below:

    March 31,     December 31,  
    2016     2015  
             
Kandi Shanghai $ (295,339 ) $ (4,488,379 )
Kandi Changxing   17,295,169     3,249,445  
Kandi Jinhua   5,465,384     6,218,177  
Kandi Jiangsu   18,533     11,453  
JV Company   70,305,902     71,181,775  
Consolidated JV $ 92,789,649   $ 76,172,471  

Within the receivables from the JV Company, the $23,252,930 was a one-year entrusted loan that Kandi Vehicle lent to the JV Company from December 16, 2015 to June 15, 2016 carrying an annual interest rate 8.7%, which will not be adjusted after the withdrawal during the lending period. The loan was organized by Bank of Communications Hangzhou Zhongan Branch as the agent bank between Kandi Vehicle and the JV Company. Entrusted loans are commonly found in China, where direct borrowing and lending between commercial enterprises are restricted.

v3.4.0.3
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2016
COMMITMENTS AND CONTINGENCIES [Text Block]

NOTE 24 – COMMITMENTS AND CONTINGENCIES

Guarantees and pledged collateral for outer parties bank loans

As of March 31, 2016, the Company provided guarantees for the following outer parties:

(1) Guarantees for bank loans

    March 31,     December 31,  
Guarantee provided to   2016     2015  
Zhejiang Shuguang industrial Co., Ltd.   4,495,566     4,466,555  
Nanlong Group Co., Ltd.   3,100,391     3,080,383  
Kandi Electric Vehicles Group Co., Ltd.   50,381,348     50,056,216  
Total $ 57,977,305   $ 57,603,154  

On March 15, 2013, the Company entered into a guarantee contract to serve as the guarantor of Nanlong Group Co., Ltd.(“NGCL”) from March 15, 2016 to March 15, 2018 for NGCL's loan amount of $3,100,391 from Shanghai Pudong Development Bank Jinhua Branch with related loan period from March 15, 2013 to March 15, 2016, which was extended to September 15, 2016. NGCL is not related to the Company but it has provided guarantees for the Company in the past due to industry customs. Under this guarantee contract, the Company agreed to perform all obligations of NGCL under the loan contract if NGCL fails to perform its obligations as set forth therein.

On July 20, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company from July 20, 2016 to July 19, 2018 for the bank loans of $11,626,465 from Bank of China with related loan period from July 20, 2015 to July 19, 2016. Under this guarantee contract, the Company agreed to perform all obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

On September 29, 2015, the Company entered into a guarantee contract to serve as the guarantor of Zhejiang Shuguang Industrial Co., Ltd. (“ZSICL”) from September 29, 2015 to September 28, 2018 for the bank loan amount of $4,495,566 from Ping An Bank with related loan period from September 29, 2015 to September 28, 2016. ZSICL is not related to the Company. Under this guarantee contract, the Company agreed to perform all obligations of ZSICL under the loan contract if ZSICL fails to perform its obligations as set forth therein.

On December 14, 2015, the Company entered into a guarantee contract to serve as the guarantor for the JV Company from December 14, 2016 to December 13, 2018 for the bank loans of $38,754,883 from China Import & Export Bank with related loan period from December 14, 2015 to December 13, 2016. Under this guarantee contract, the Company agreed to perform all obligations of the JV Company under the loan contract if the JV Company fails to perform its obligations as set forth therein.

(2) Pledged collateral for outer parties bank loans

As of March 31, 2016 and December 31, 2015, none of the Company's land use rights or plant and equipment were pledged as collateral securing bank loans to outer parties.

v3.4.0.3
SEGMENT REPORTING
3 Months Ended
Mar. 31, 2016
SEGMENT REPORTING [Text Block]

NOTE 25 –SEGMENT REPORTING

The Company has only one single operating segment. The Company’s revenue and long-lived assets are primarily derived from and located in the PRC. The Company only has operations in the PRC.

The following table sets forth revenues by geographic area:

    Three Months Ended March 31  
    2016           2015        
    Sales Revenue     Percentage     Sales Revenue     Percentage  
Overseas $ 621,722     1%   $ 786,496     2%  
China   50,036,170     99%     42,994,590     98%  
Total $ 50,657,893     100%   $ 43,781,086     100%  
v3.4.0.3
Related Party Transactions
3 Months Ended
Mar. 31, 2016
Related Party Transactions [Text Block]

NOTE 26 – Related Party Transactions

The Board of Directors must approve all related party transactions. All material related party transactions will be made or entered into on terms that are no less favorable to the Company than can be obtained from unaffiliated third parties.

The following table lists the sales to related parties as of the three months ended March 31, 2016 and 2015:

    March 31,     March 31,  
    2016     2015  
             
Service Company   3,208,502     -  
Total $ 3,208,502     -  

The Company has 9.5% ownership of the Service Company and Mr.Hu, Chairman and CEO of the Company, has 13% ownership of the Service Company. The main transactions between the Company and the Service Company is that the Service Company needs to buy battery for the speed upgrade and also EV parts for the repairing and maintenance for its operating electric vehicles.

For the transaction with JV Company, please refer to Note 23 for the details.

v3.4.0.3
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2016
Economic and Political Risks [Policy Text Block]

(a) Economic and Political Risks

The Company’s operations are conducted in the PRC. As a result, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC economy. In addition, the Company’s earnings are subject to movements in foreign currency exchange rates when transactions are denominated in Renminbi (“RMB”), which is the Company’s functional currency. Accordingly, the Company’s operating results are affected by changes in the exchange rate between the U.S. dollar and the RMB.

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s performance may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Fair Value of Financial Instruments [Policy Text Block]

(b) Fair Value of Financial Instruments

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of March 31, 2016, the Company’s assets, measured at fair value, on a recurring basis, subject to the disclosure requirements of ASC 820, were as follows:

    Fair Value     Active     Significant     Significant  
    Measurements at     Markets for     Other     Unobservable  
    Reporting Date Using     Identical     Observable     Inputs  
    Quoted Prices in     Assets     Inputs     (Level 3)  
    Carrying Value as of     (Level 1)     (Level 2)        
    March 31,                    
    2016                    
Cash and cash equivalents $ 13,447,666   $ 13,447,666     -     -  
Restricted cash   16,277,051     16,277,051     -     -  
Warrants $ 537,250     -     -     537,250  

Cash and cash equivalents consist primarily of highly-rated money market funds at a variety of well-known institutions with original maturities of three months or less. Restricted cash represents time deposits on account, some of which are used to secure short-term bank loans and notes payable. The original cost of these assets approximates fair value due to their short term maturity.

Warrants, which are accounted as liabilities, are treated as derivative instruments, and are measured at each reporting date for their fair value using Level 3 inputs. Also see Note 6(t).

Cash and Cash Equivalents [Policy Text Block]

(c) Cash and Cash Equivalents

The Company considers highly-liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash, as of March 31, 2016 and December 31, 2015, represented time deposits on account for earning interest income. As of March 31, 2016, the Company’s restricted cash were $16,277,051, which reflects a one-year Certificate of Time Deposit (CD) with Hangzhou Bank Jinhua Branch.

Inventories [Policy Text Block]

(d) Inventories

Inventories are stated at the lower of cost or net realizable value (market value). The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the weighted average basis and comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

Accounts Receivable [Policy Text Block]

(e) Accounts Receivable

Accounts receivable are recognized and carried at net realizable value. An allowance for doubtful accounts is recorded in periods in which the Company determines a loss is probable, based on its assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Accounts are written off after an exhaustive collection effort. If accounts receivable are to be provided for, or written off, they are recognized in the consolidated statement of operations within the operating expenses line item. As of March 31, 2016 and December 31, 2015, the Company had no allowance for doubtful accounts, as per the management’s judgment based on their best knowledge.

As of March 31, 2016 and December 31, 2015, the credit terms with the Company’s customers were typically 150 to 180 days after delivery.

Notes receivable [Policy Text Block]

(f) Notes receivable

Notes receivable represent short-term loans to third parties with the maximum term of one year. Interest income will be recognized according to each agreement between a borrower and the Company on an accrual basis. If notes receivable are paid back or written off, that transaction will be recognized in the relevant year. If the loan default is probable, reasonably assured and the loss can be reasonably estimated, the Company will recognize income if the written-off loan is recovered at a future date. In case of any foreclosure proceedings or legal actions being taken, the Company provides an accrual for the related foreclosure expenses and related litigation expenses. The Company also receives notes receivable from the JV Company to settle the accounts receivable

Prepayments [Policy Text Block]

(g) Prepayments

Prepayments represent cash paid in advance to suppliers, which also includes advances to raw material suppliers, mold manufacturers, and suppliers of equipment.

As of December 31, 2013, the Company recorded a significant prepayment made by the Company to a supplier Nanjing Shangtong (as defined in Note 16) as an advance of RMB353 million ($54,721,895) and deposited by Kandi Wanning (renamed to Kandi Hainan in January 2016) to Nanjing Shangtong. As of December 31, 2015, the advance to Nanjing Shangtong was transferred to “construction-in-progress” as described in Note 16.

Advances for raw materials purchases typically are settled within two months by the Company’s receipt of raw materials. Prepayment is offset against purchase amount after equipment or materials are delivered.

Plant and Equipment [Policy Text Block]

(h) Plant and Equipment

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of assets, using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

Buildings 30 years
Machinery and equipment 10 years
Office equipment 5 years
Motor vehicles 5 years
Molds 5 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to expense as incurred, whereas significant renewals and betterments are capitalized.

Construction in Progress [Policy Text Block]

(i) Construction in Progress

Construction in progress (“CIP”) represents the direct costs of construction, the acquisition cost of buildings or machinery and design fees. Capitalization of these costs ceases, and the construction in progress is transferred to plant and equipment, when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until the assets are completed and ready for their intended use. No interest expense has been capitalized for CIP as of March 31, 2016, as the Company did not get loans for CIP.

Land Use Rights [Policy Text Block]

(j) Land Use Rights

According to the Chinese laws, land in the PRC is owned by the government and land ownership rights cannot be sold to an individual or to a private company. However, the government grants the user a “land use right” to use the land. The land use rights granted to the Company are being amortized using the straight-line method over the term of fifty years.

Accounting for the Impairment of Long-Lived Assets [Policy Text Block]

(k) Accounting for the Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets subject to amortization, when events and circumstances warrant such a review, pursuant to the guidelines established in Statement of Financial Accounting Standards (“SFAS”) No. 144 (now known as “ASC 360”). The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

During the reporting period, no impairment loss was recognized.

Revenue Recognition [Policy Text Block]

(l) Revenue Recognition

Revenue represents the invoiced value of goods sold. Revenue is recognized when the Company ships the goods to its customers and all of the following criteria are met:

  Persuasive evidence of an arrangement exists;
  Delivery has occurred or services have been rendered;
  The seller’s price to the buyer is fixed or determinable; and
  Collectability is reasonably assured.

The Company recognized revenue when the products and the risk they carry are transferred to the other party.

Research and Development [Policy Text Block]

(m) Research and Development

Expenditures relating to the development of new products and processes, including significant improvements to existing products, are expensed as incurred. Research and development expenses were $205,968 and $571,020 for the three months ended March 31, 2016 and 2015, respectively.

Government Grants [Policy Text Block]

(n) Government Grants

Grants and subsidies received from the PRC Government are recognized when the proceeds are received or collectible.

For the three months ended March 31, 2016 and 2015, $194,473 and $0 grants were received by the Company’s subsidiaries from the PRC government.

Income Taxes [Policy Text Block]

(o) Income Taxes

The Company accounts for income tax using an asset and liability approach, which allows for the recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The accounting for deferred tax calculation represents the management’s best estimate on the most likely future tax consequences of events that have been recognized in our financial statements or tax returns and related future anticipation. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.

Foreign Currency Translation [Policy Text Block]

(p) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred.

Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period, which rates are obtained from the website: http://www.oanda.com

    March 31,     December 31,        March 31,  
    2016     2015     2015     
Period end RMB : USD exchange rate   6.45080     6.49270     6.13210  
Average RMB : USD exchange rate   6.54144     6.24010     6.15290  
Comprehensive Income [Policy Text Block]

(q) Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation changes.

Segments [Policy Text Block]

(r) Segments

In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”), the Company’s chief operating decision makers rely upon the consolidated results of operations when making decisions about allocating resources and assessing performance of the Company. As a result of the assessment made by the chief operating decision makers, the Company has only one single operating segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.

Stock Option Expenses [Policy Text Block]

(s) Stock Option Expenses

The Company’s stock option expenses are recorded in accordance with ASC 718 and ASC 505.

The fair value of stock options is estimated using the Black-Scholes-Merton model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the option. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The recognition of the stock option expenses is based on awards expected to vest, and there were no estimated forfeitures. ASC standards require forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The stock-based option expenses for the three months ended March 31, 2016 and 2015 were $6,109,666 and $0, respectively. See Note 20.

Warrant Costs [Policy Text Block]

(t) Warrant Costs

The Company’s warrant costs are recorded in liabilities in accordance with ASC 480, ASC 505 and ASC 815.

The fair value of a warrant is estimated using the Black-Scholes-Merton model and the lattice valuation model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s common stock. The expected life assumption is primarily based on the expiration date of the warrant. The risk-free interest rate for the expected term of the warrant is based on the U.S. Treasury yield curve in effect at the time of measurement. The warrants, which are freestanding derivatives and are classified as liabilities on the balance sheet, will be measured at fair value on each reporting date, with decreases in fair value recognized in earnings and increases in fair values were recognized in expenses.

Goodwill [Policy Text Block]

(u) Goodwill

The Company allocates goodwill from business combinations to reporting units based on the expectation that the reporting unit is to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassigns goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgments, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that goodwill is impaired. If the more likely than not threshold is met, the Company performs a quantitative impairment test.

As of March 31, 2016 and 2015, the Company determined that it goodwill was not impaired.

Intangible assets [Policy Text Block]

(v) Intangible assets

Intangible assets consist of trade names and customer relations associated with the purchase price from the allocation of Yongkang Scrou. Such assets are being amortized over their estimated useful lives of 9.7 years. Intangible assets are amortized as of March 31, 2016.

Accounting for Sale of Common Stock and Warrants [Policy Text Block]

(w) Accounting for Sale of Common Stock and Warrants

Gross proceeds are firstly allocated according to the initial fair value of the freestanding derivative instruments (i.e. the warrants issued to the Company’s investors in its previous offerings, or the “Investor Warrants”). The remaining proceeds are allocated to common stock. The related issuance expenses, including the placement agent cash fees, legal fees, the initial fair value of the warrants issued to the placement agent and others were allocated between the common stock and the Investor Warrants based on how the proceeds are allocated to these instruments. Expenses related to the issuance of common stock were charged to paid-in capital. Expenses related to the issuance of derivative instruments were expensed upon issuance.

Consolidation of variable interest entities [Policy Text Block] (x) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded, based on the contractual arrangements, that Kandi New Energy is a VIE and that the Company’s wholly-owned subsidiary, Kandi Vehicles, absorbs a majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Kandi Vehicles, to receive a majority of their respective expected residual returns.

Additionally, as Kandi New Energy is under common control with other entities, the consolidated financial statements have been prepared as if the transactions had occurred retroactively as to the beginning of the reporting period of these consolidated financial statements.

Control and common control are defined under the accounting standards as “an individual, enterprise, or immediate family members who hold more than 50 percent of the voting ownership interest of each entity.” Because the owners collectively own 100% of Kandi New Energy, and have agreed to vote their interests in concert since the establishment of each of these three companies as memorialized the Voting Rights Proxy Agreement, the Company believes that the owners collectively have control and common control of the company. Accordingly, the Company believes that Kandi New Energy was constructively held under common control by Kandi Vehicles as of the time the Contractual Agreements were entered into, establishing Kandi Vehicles as their primary beneficiary. Kandi Vehicles, in turn, is owned by Continental, which is owned by the Company.

v3.4.0.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Fair Value, by Balance Sheet Grouping [Table Text Block]
    Fair Value     Active     Significant     Significant  
    Measurements at     Markets for     Other     Unobservable  
    Reporting Date Using     Identical     Observable     Inputs  
    Quoted Prices in     Assets     Inputs     (Level 3)  
    Carrying Value as of     (Level 1)     (Level 2)        
    March 31,                    
    2016                    
Cash and cash equivalents $ 13,447,666   $ 13,447,666     -     -  
Restricted cash   16,277,051     16,277,051     -     -  
Warrants $ 537,250     -     -     537,250  
Schedule of Property and Equipment Estimated Useful Lives [Table Text Block]
Buildings 30 years
Machinery and equipment 10 years
Office equipment 5 years
Motor vehicles 5 years
Molds 5 years
Schedule of Average Foreign Currency Exchange Rates [Table Text Block]
    March 31,     December 31,        March 31,  
    2016     2015     2015     
Period end RMB : USD exchange rate   6.45080     6.49270     6.13210  
Average RMB : USD exchange rate   6.54144     6.24010     6.15290  
v3.4.0.3
CONCENTRATIONS (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Revenue and Accounts Receivable Percentage by Major Customers [Table Text Block]
      Sales     Accounts Receivable  
      Three Months     Three Months                
      Ended     Ended              
      March 31     March 31     March 31     December 31  
Major Customers     2016     2015     2016     2015  
Jinhua Chaoneng Automobile Sales Co. Ltd.     59%     -     26%     -  
Kandi Electric Vehicles Group Co., Ltd.     26%     -     38%     46%  
Schedule of Purchases and Accounts Payable Percentage by Major Suppliers [Table Text Block]
    Purchases     Accounts Payable    
    Three Months     Three Months              
    Ended     Ended     March 31     December 31  
    March 31     March 31              
Major Suppliers   2016     2015     2016     2015  
Dongguan Chuangming Battery Technology Co., Ltd.   47%     10%     21%     15%  
Zhejiang Tianneng Energy Technology Co., Ltd.   32%     38%     26%     24%  
v3.4.0.3
EARNINGS PER SHARE (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
    For three months ended  
    March 31,  
    2016     2015  
Net income $ 88,420   $ 6,131,653  
Weighted average shares used in basic computation   47,009,834     46,281,299  
Dilutive shares   17,910     116,694  
Weighted average shares used in diluted computation   47,027,744     46,397,993  
             
Earnings per share:            
Basic $ 0.00   $ 0.13  
Diluted $ 0.00   $ 0.13  
v3.4.0.3
ACCOUNTS RECEIVABLE (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Accounts Receivable [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Accounts receivable $ 40,867,698   $ 8,136,421  
Less: Provision for doubtful debts   -     -  
Accounts receivable, net $ 40,867,698   $ 8,136,421  
v3.4.0.3
INVENTORIES (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Inventories [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Raw material $ 20,044,645   $ 8,509,421  
Work-in-progress   1,703,490     1,648,498  
Finished goods   4,555,352     8,101,661  
Total inventories   26,303,487     18,259,580  
Less: provision for slowing moving inventories   (489,057 )   (485,901 )
Inventories, net $ 25,814,430   $ 17,773,679  
v3.4.0.3
NOTES RECEIVABLE (Tables)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Schedule of Notes Receivable [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Notes receivable as below:            
Due September 30, 2016, interest at 7.2% per annum $ 7,884,560   $ 10,578,574  
Bank acceptance notes   3,391,827     2,454,741  
             
Notes receivable $ 11,276,387   $ 13,033,315  
 
Schedule of Details of Notes Receivable [Table Text Block]
Index Amount ($) Counter party Relationship Nature Manner of
settlement
1 7,884,560 Yongkang HuiFeng
Guarantee Co., Ltd
No relationship
beyond loan
Receive interest income Not due
2 1,376,573 Kandi Changxing Subsidiary of
the JV Company
Payments for sales Not due
3 465,059 Kandi Shanghai Subsidiary of
the JV Company
Payments for sales Not due
4 1,550,195 Beijing Pangda
Xinhong New Energy
Automobile Sales and
Service Co. Ltd.
No relationship
beyond loan
Payments for sales Not due
Index Amount ($) Counter party Relationship Nature Manner of
settlement
1 10,578,574 Yongkang HuiFeng
Guarantee Co., Ltd
No relationship
beyond loan
Receive interest income Not due
2 1,871,332 Kandi Electric
Vehicles Group
Co., Ltd.
Joint venture of
the Company
Payments for sales Not due
3 59,744 Kandi Shanghai Subsidiary of
the JV Company
Payments for sales Not due
4 523,665 Zhuhai Enpower
electrical Limited
No relationship
beyond loan
Payments for sales Not due
v3.4.0.3
AMOUNT DUE FROM RELATED PARTY (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Related Party Transactions [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Service Company   5,585,613     40,606,162  
Total due from related party $ 5,585,613     40,606,162  
v3.4.0.3
PLANT AND EQUIPMENT (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Plant and Equipment [Table Text Block]
    March 31,     December 31,  
    2016     2015  
At cost:            
Buildings $ 13,973,387   $ 13,883,211  
Machinery and equipment   9,322,054     7,804,097  
Office equipment   486,395     395,328  
Motor vehicles   337,404     335,227  
Moulds   33,145,643     32,931,740  
    57,264,883     55,349,603  
Less : Accumulated depreciation            
Buildings $ (3,897,971 ) $ (3,755,582 )
Machinery and equipment   (8,741,563 )   (7,108,925 )
Office equipment   (233,148 )   (249,378 )
Motor vehicles   (280,429 )   (271,495 )
Moulds   (24,517,781 )   (23,385,363 )
    (37,670,892 )   (34,770,743 )
Less: provision for impairment for fixed assets   (54,083 )   (53,734 )
Plant and equipment, net $ 19,539,908   $ 20,525,126  
v3.4.0.3
LAND USE RIGHTS (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Land Use Rights [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Cost of land use rights $ 15,376,185   $ 15,276,957  
Less: Accumulated amortization   (2,441,977 )   (2,341,836 )
Land use rights, net $ 12,934,208   $ 12,935,121  
Schedule of Land Use Rights Expected Amortization Expense [Table Text Block]
2016 (nine months) $ 209,961  
2017   279,948  
2018   279,948  
2019   279,948  
2020   279,948  
Thereafter   11,604,455  
Total $ 12,934,208  
v3.4.0.3
CONSTRUCTION-IN-PROGRESS (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Construction in Progress [Table Text Block]
Project     Total in CIP as of
March 31,
2016
    Contracted but
not provided for
    Total contract
amount
 
Kandi Hainan facility   $ 54,750,430   $ 6,510,820   $ 61,261,250  
Total   $ 54,750,430   $ 6,510,820   $ 61,261,250  
v3.4.0.3
SHORT TERM BANK LOANS (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Short-term Bank Loans [Table Text Block]
    March 31,     December 31,  
    2016     2015  
Loans from China Ever-bright Bank            
Interest rate 4.698% per annum, due October 28, 2016, secured by the assets of the Company, guaranteed by Mr. Hu Xiaoming and his wife.   12,091,523     12,013,492  
Loans from Hangzhou Bank            
Interest rate 4.60% per annum, due October 13, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   7,564,953     7,516,134  
Interest rate 4.82% per annum, due July 2, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   7,750,977     7,700,956  
Interest rate 4.85% per annum, due July 12, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   3,441,434     3,419,225  
Interest rate 4.35% per annum, due March 23, 2017, secured by the assets of the Company. Also see Note 14 and Note 15.   6,045,762     -  
Interest rate 5.35% per annum, paid off on March 22, 2016, secured by the assets of the Company. Also see Note 14 and Note 15.   -     6,006,746  
  $ 36,894,649     36,656,553  
v3.4.0.3
NOTES PAYABLE (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Notes Payable [Table Text Block]
    March 31 ‚      December 31,  
    2016     2015  
Bank acceptance notes:              
Due May 12, 2016 $ 2,325,293   $ 2,310,287  
Due June 17, 2016   1,550,195     1,540,191  
Due July 6, 2016   1,550,195     -  
Due July 14, 2016   232,529     -  
Due August 23, 2016   155,020     -  
Due September 30, 2016   155,020     -  
Total $ 5,968,252     3,850,478  
v3.4.0.3
TAXES (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Net Corporate Income Tax [Table Text Block]
Company Name Applicable Corporate
Income Tax
Kandi Vehicles 15%
Kandi New Energy 25%
Yongkang Scruo 25%
Kandi Hainan 25%
JV Company 25%
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]
    For Three Months Ended    
    March 31,  
    (Unaudited)    
    2016     2015  
Current:            
Provision for CIT $ (2,636,675 ) $ 1,008,909  
Provision for Federal Income Tax   -     -  
Deferred:            
Provision for CIT   -     -  
Income tax expense (benefit) $ (2,636,675 ) $ 1,008,909  
Schedule of Expected Components of Income Tax Expense (Benefit) [Table Text Block]
    For Three Months Ended  
    March 31,  
    (Unaudited)  
    2016     2015  
             
Computed “expected” expense $ (3,957,325 ) $ 3,109,591  
Favorable tax rate   (113,208 )   (2,416,981 )
Permanent differences   (1,243,626 )   (27,713 )
Valuation allowance   2,677,484     344,012  
Income tax expense (benefit) $ (2,636,675 ) $ 1,008,909  
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
    March 31‚     December 31‚  
    2016     2015    
    (Unaudited)        
Current portion:            
Deferred tax assets (liabilities):            
                               Expense $ (170,862 )   (272,953 )
Subtotal   (170,862 )   (272,953 )
             
Deferred tax assets (liabilities):            
Sales cut-off difference derived from Value Added
Tax reporting system to calculate PRC Corporation
Income Tax in accordance with the PRC State
Administration of Taxation
  915,772     290,850  
                           Other   -     (2,392,821 )
Subtotal   915,772     (2,101,971 )
             
Total deferred tax assets (liabilities) – current portion   744,910     (2,374,924 )
             
Non-current portion:            
Deferred tax assets (liabilities):            
                           Depreciation   (312,693 )   (353,115 )
                           Loss carried forward   2,677,484     7,645,386  
                           Valuation allowance   (2,677,484 )   (7,645,386 )
Subtotal   (312,693 )   (353,115 )
             
Deferred tax liabilities:            
                           Accumulated other comprehensive gain   -     (1,240,467 )
Subtotal   -     (1,240,467 )
             
Total deferred tax assets – non-current portion   (312,693 )   (1,593,582 )
             
Net deferred tax assets (liabilities) $ 432,217     (3,968,506 )
Summary of Income Tax Holiday [Table Text Block]
    For the Three Months Ended   
    March 31,  
    (Unaudited)  
    2016     2015  
Tax benefit (holiday) credit $ (113,208 ) $ 2,416,981  
Basic net income per share effect $ (0.002 ) $ 0.052  
v3.4.0.3
STOCK AWARD (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]
Issue Date (dd-mm-yyyyy) For Year Shares
22-05-2014 2013 801,163
15-04-2015 / 12-06-2015 2014 670,000
13-04-2016 2015 670,000
v3.4.0.3
INTANGIBLE ASSETS (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Intangible Assets [Table Text Block]
    Remaining
useful life
    March 31,
2016
    December 31,
2015
 
Gross carrying amount:                  
Trade name   5.75 years   $ 492,235   $ 492,235  
Customer relations   5.75 years     304,086     304,086  
          796,321     796,321  
Less : Accumulated amortization                  
Trade name       $ (198,756 ) $ (186,069 )
Customer relations         (122,783 )   (114,946 )
          (321,539 )   (301,015 )
Intangible assets, net       $ 474,782   $ 495,306  
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
2016(ninemonths) $ 61,571  
2017   82,095  
2018   82,095  
2019   82,095  
2020   82,095  
Thereafter   84,831  
Total $ 474,782  
v3.4.0.3
SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Combined Results of Condensed Income Statement Information [Table Text Block]
    Three months ended  
    March 31,  
    2016     2015  
Condensed income statement information:            
Net sales $ (495,567 ) $ 30,564,996  
Gross income   (1,062,647 )   7,980,664  
Net income   (8,068,447 )   803,221  
Company’s equity in net income of JV $ (4,034,224 ) $ 401,610  
Schedule of Combined Results of Condensed Balance Sheet Information [Table Text Block]
    March 31,     December 31,  
    2016                         2015  
Condensed balance sheet information:            
Current assets $ 411,728,560   $ 455,368,595  
Noncurrent assets   195,864,187     191,145,583  
Total assets $ 607,592,746   $ 646,514,178  
Current liabilities   386,899,933     429,487,683  
Noncurrent liabilities   47,023,088     36,348,514  
Equity   173,669,725     180,677,981  
Total liabilities and equity $ 607,592,746   $ 646,514,178  
Schedule of Changes in the Companys Investment [Table Text Block]
    Three Months ended  
    March 31,  
    2016     2015  
Investment in JV Company, beginning of the period, $ 90,337,899   $ 83,309,095  
Share of profit   (4,034,224 )   401,610  
Intercompany transaction elimination   (789,329 )   (116,252 )
Year 2015 unrealized profit realized   1,083     183,998  
Exchange difference   519,013     292,327  
Investment in JV Company, end of the period $ 86,034,442   $ 84,070,778  
Schedule of Combined Results of Operations and Financial Position [Table Text Block]
    Three Months ended  
    March 31,  
    2016     2015  
JV Company $ 13,085,636   $   -  
Kandi Changxing   160,597     17,605,302  
Kandi Shanghai   158,201     9,859,319  
Kandi Jinhua   52,264     1,590,383  
Kandi Jiangsu   18,277     -  
Total sales to JV $ 13,474,975   $ 29,055,004  
Schedule of Significant Balances [Table Text Block]
    March 31,     December 31,  
    2016     2015  
             
Kandi Shanghai $ (295,339 ) $ (4,488,379 )
Kandi Changxing   17,295,169     3,249,445  
Kandi Jinhua   5,465,384     6,218,177  
Kandi Jiangsu   18,533     11,453  
JV Company   70,305,902     71,181,775  
Consolidated JV $ 92,789,649   $ 76,172,471  
v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Guarantees For Bank Loans [Table Text Block]
    March 31,     December 31,  
Guarantee provided to   2016     2015  
Zhejiang Shuguang industrial Co., Ltd.   4,495,566     4,466,555  
Nanlong Group Co., Ltd.   3,100,391     3,080,383  
Kandi Electric Vehicles Group Co., Ltd.   50,381,348     50,056,216  
Total $ 57,977,305   $ 57,603,154  
v3.4.0.3
SEGMENT REPORTING (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]
    Three Months Ended March 31  
    2016           2015        
    Sales Revenue     Percentage     Sales Revenue     Percentage  
Overseas $ 621,722     1%   $ 786,496     2%  
China   50,036,170     99%     42,994,590     98%  
Total $ 50,657,893     100%   $ 43,781,086     100%  
v3.4.0.3
Related Party Transactions (Tables)
3 Months Ended
Mar. 31, 2016
Schedule of Sales to Related Parties [Table Text Block]
    March 31,     March 31,  
    2016     2015  
             
Service Company   3,208,502     -  
Total $ 3,208,502     -  
v3.4.0.3
ORGANIZATION AND PRINCIPAL ACTIVITIES (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Organization And Principal Activities 1 100.00%
Organization And Principal Activities 2 100.00%
Organization And Principal Activities 3 50.00%
Organization And Principal Activities 4 50.00%
Organization And Principal Activities 5 100.00%
Organization And Principal Activities 6 99.00%
Organization And Principal Activities 7 50.00%
Organization And Principal Activities 8 100.00%
Organization And Principal Activities 9 50.00%
Organization And Principal Activities 10 50.00%
Organization And Principal Activities 11 9.50%
Organization And Principal Activities 12 100.00%
Organization And Principal Activities 13 50.00%
Organization And Principal Activities 14 50.00%
Organization And Principal Activities 15 100.00%
Organization And Principal Activities 16 50.00%
Organization And Principal Activities 17 50.00%
Organization And Principal Activities 18 100.00%
Organization And Principal Activities 19 50.00%
Organization And Principal Activities 20 50.00%
Organization And Principal Activities 21 100.00%
Organization And Principal Activities 22 50.00%
Organization And Principal Activities 23 50.00%
Organization And Principal Activities 24 50.00%
Organization And Principal Activities 25 25.00%
Organization And Principal Activities 26 50.00%
Organization And Principal Activities 27 100.00%
Organization And Principal Activities 28 50.00%
Organization And Principal Activities 29 90.00%
Organization And Principal Activities 30 10.00%
Organization And Principal Activities 31 100.00%
Organization And Principal Activities 32 100.00%
v3.4.0.3
LIQUIDITY (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Liquidity 1 $ 72,489,812
Liquidity 2 12,572,659
Liquidity 3 59,917,153
Liquidity 4 $ 36,894,649
v3.4.0.3
PRINCIPLES OF CONSOLIDATION (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Principles Of Consolidation 1 50.00%
Principles Of Consolidation 2 100.00%
Principles Of Consolidation 3 50.00%
Principles Of Consolidation 4 50.00%
Principles Of Consolidation 5 100.00%
Principles Of Consolidation 6 10.00%
Principles Of Consolidation 7 90.00%
Principles Of Consolidation 8 50.00%
Principles Of Consolidation 9 50.00%
Principles Of Consolidation 10 50.00%
Principles Of Consolidation 11 50.00%
Principles Of Consolidation 12 50.00%
Principles Of Consolidation 13 50.00%
Principles Of Consolidation 14 50.00%
Principles Of Consolidation 15 50.00%
Principles Of Consolidation 16 50.00%
Principles Of Consolidation 17 50.00%
Principles Of Consolidation 18 50.00%
Principles Of Consolidation 19 50.00%
Principles Of Consolidation 20 50.00%
Principles Of Consolidation 21 25.00%
Principles Of Consolidation 22 50.00%
Principles Of Consolidation 23 50.00%
v3.4.0.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - 3 months ended Mar. 31, 2016
¥ in Millions
USD ($)
yr
d
CNY (¥)
yr
d
Summary Of Significant Accounting Policies 1 $ 16,277,051  
Summary Of Significant Accounting Policies 2 150 150
Summary Of Significant Accounting Policies 3 | d 180 180
Summary Of Significant Accounting Policies 4 | ¥   ¥ 353
Summary Of Significant Accounting Policies 5 $ 54,721,895  
Summary Of Significant Accounting Policies 6 205,968  
Summary Of Significant Accounting Policies 7 571,020  
Summary Of Significant Accounting Policies 8 194,473  
Summary Of Significant Accounting Policies 9 0  
Summary Of Significant Accounting Policies 10 6,109,666  
Summary Of Significant Accounting Policies 11 $ 0  
Summary Of Significant Accounting Policies 12 | yr 9.7 9.7
Summary Of Significant Accounting Policies 13 50.00% 50.00%
Summary Of Significant Accounting Policies 14 100.00% 100.00%
v3.4.0.3
CONCENTRATIONS (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Concentrations 1 10.00%
Concentrations 2 10.00%
v3.4.0.3
EARNINGS PER SHARE (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
shares
Earnings Per Share 1 17,910
Earnings Per Share 2 116,694
Earnings Per Share 3 5,849,419
Earnings Per Share 4 1,076,679
v3.4.0.3
AMOUNT DUE FROM RELATED PARTY (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Amount Due From Related Party 1 9.50%
Amount Due From Related Party 2 13.00%
v3.4.0.3
PLANT AND EQUIPMENT (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Plant And Equipment 1 $ 9,899,767
Plant And Equipment 2 9,949,661
Plant And Equipment 3 1,132,732
Plant And Equipment 4 $ 1,361,481
v3.4.0.3
LAND USE RIGHTS (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Land Use Rights 1 $ 9,506,449
Land Use Rights 2 9,512,598
Land Use Rights 3 69,987
Land Use Rights 4 $ 97,379
v3.4.0.3
CONSTRUCTION-IN-PROGRESS (Narrative) (Details) - 3 months ended Mar. 31, 2016
USD ($)
CNY (¥)
Construction-in-progress 1 | ¥   ¥ 353,000,000
Construction-in-progress 2 $ 54,721,895  
Construction-in-progress 3 54,750,430  
Construction-in-progress 4 $ 54,368,753  
v3.4.0.3
SHORT TERM BANK LOANS (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Short Term Bank Loans 1 $ 442,079
Short Term Bank Loans 2 587,293
Short Term Bank Loans 3 $ 0
v3.4.0.3
NOTES PAYABLE (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Notes Payable 1 $ 5,968,252
Notes Payable 2 $ 3,850,478
v3.4.0.3
TAXES (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Taxes 1 15.00%
Taxes 2 25.00%
Taxes 3 15.88%
Taxes 4 45.28%
Taxes 5 25.00%
Taxes 6 13.68%
Taxes 7 34.00%
Taxes 8 25.00%
Taxes 9 25.00%
v3.4.0.3
STOCK OPTIONS AND WARRANTS (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
yr
$ / shares
shares
Stock Options And Warrants 1 | shares 4,900,000
Stock Options And Warrants 2 $ 9.72
Stock Options And Warrants 3 | $ $ 39,990,540
Stock Options And Warrants 4 90.00%
Stock Options And Warrants 5 | yr 10
Stock Options And Warrants 6 2.23%
Stock Options And Warrants 7 0.00%
Stock Options And Warrants 8 | shares 4,900,000
Stock Options And Warrants 9 $ 8.1613
Stock Options And Warrants 10 | shares 4,376,036
Stock Options And Warrants 11 $ 6.03
Stock Options And Warrants 12 | shares 1,750,415
Stock Options And Warrants 13 $ 7.24
Stock Options And Warrants 14 | shares 728,936
Stock Options And Warrants 15 $ 7.24
Stock Options And Warrants 16 | shares 291,574
Stock Options And Warrants 17 | $ $ 8.69
Stock Options And Warrants 18 | shares 262,562
Stock Options And Warrants 19 $ 7.24
Stock Options And Warrants 20 $ 1.054
Stock Options And Warrants 21 | shares 1,429,393
Stock Options And Warrants 22 $ 15
Stock Options And Warrants 23 | $ $ 14,294
Stock Options And Warrants 24 | $ 0.01
Stock Options And Warrants 25 | $ $ 14.99
Stock Options And Warrants 26 | shares 606,000
Stock Options And Warrants 27 $ 18.24
Stock Options And Warrants 28 | $ $ 11,053,440
Stock Options And Warrants 29 | shares 90,900
Stock Options And Warrants 30 $ 22.80
Stock Options And Warrants 31 | shares 36,360
Stock Options And Warrants 32 $ 22.80
Stock Options And Warrants 33 | $ $ 9.72
Stock Options And Warrants 34 44,783
Stock Options And Warrants 35 | shares 4,127,908
Stock Options And Warrants 36 $ 17.20
Stock Options And Warrants 37 | $ $ 71,000,000
Stock Options And Warrants 38 | shares 743,024
Stock Options And Warrants 39 $ 21.50
Stock Options And Warrants 40 | $ $ 9.72
Stock Options And Warrants 41 | shares 206,395
Stock Options And Warrants 42 $ 20.64
Stock Options And Warrants 43 9.72
Stock Options And Warrants 44 0.22
Stock Options And Warrants 45 $ 0.46
v3.4.0.3
STOCK AWARD (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
shares
Stock Award 1 5,000
Stock Award 2 5,000
Stock Award 3 5,000
Stock Award 4 335,000
Stock Award 5 10.00%
Stock Award 6 10.00%
Stock Award 7 10.00%
Stock Award 8 10.00%
Stock Award 9 10.00%
Stock Award 10 200.00%
Stock Award 11 9,000,000
v3.4.0.3
INTANGIBLE ASSETS (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Intangible Assets 1 $ 20,523
Intangible Assets 2 $ 20,524
v3.4.0.3
SUMMARIZED INFORMATION OF EQUITY METHOD INVESTMENT IN THE JV COMPANY (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
km
Summarized Information Of Equity Method Investment In The Jv Company 1 99.00%
Summarized Information Of Equity Method Investment In The Jv Company 2 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 3 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 4 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 5 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 6 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 7 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 8 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 9 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 10 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 11 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 12 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 13 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 14 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 15 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 16 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 17 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 18 19.00%
Summarized Information Of Equity Method Investment In The Jv Company 19 9.50%
Summarized Information Of Equity Method Investment In The Jv Company 20 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 21 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 22 25.00%
Summarized Information Of Equity Method Investment In The Jv Company 23 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 24 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 25 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 26 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 27 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 28 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 29 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 30 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 31 100.00%
Summarized Information Of Equity Method Investment In The Jv Company 32 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 33 50.00%
Summarized Information Of Equity Method Investment In The Jv Company 34 | km 100
Summarized Information Of Equity Method Investment In The Jv Company 35 $ 13,474,975
Summarized Information Of Equity Method Investment In The Jv Company 36 28.00%
Summarized Information Of Equity Method Investment In The Jv Company 37 53.60%
Summarized Information Of Equity Method Investment In The Jv Company 38 $ 92,789,650
Summarized Information Of Equity Method Investment In The Jv Company 39 76,172,471
Summarized Information Of Equity Method Investment In The Jv Company 40 $ 23,252,930
Summarized Information Of Equity Method Investment In The Jv Company 41 8.70%
v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Commitments And Contingencies 1 $ 3,100,391
Commitments And Contingencies 2 11,626,465
Commitments And Contingencies 3 4,495,566
Commitments And Contingencies 4 $ 38,754,883
v3.4.0.3
Related Party Transactions (Narrative) (Details)
3 Months Ended
Mar. 31, 2016
Related Party Transactions 1 9.50%
Related Party Transactions 2 13.00%
v3.4.0.3
Schedule of Fair Value, by Balance Sheet Grouping (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 1 $ 13,447,666
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 2 13,447,666
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 3 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 4 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 5 16,277,051
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 6 16,277,051
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 7 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 8 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 9 537,250
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 10 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 11 0
Summary Of Significant Accounting Policies Schedule Of Fair Value, By Balance Sheet Grouping 12 $ 537,250
v3.4.0.3
Schedule of Property and Equipment Estimated Useful Lives (Details)
3 Months Ended
Mar. 31, 2016
yr
Summary Of Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 1 30
Summary Of Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 2 10
Summary Of Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 3 5
Summary Of Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 4 5
Summary Of Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 5 5
v3.4.0.3
Schedule of Average Foreign Currency Exchange Rates (Details)
3 Months Ended
Mar. 31, 2016
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 1 6.45080
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 2 6.49270
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 3 6.13210
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 4 6.54144
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 5 6.24010
Summary Of Significant Accounting Policies Schedule Of Average Foreign Currency Exchange Rates 6 6.15290
v3.4.0.3
Schedule of Revenue and Accounts Receivable Percentage by Major Customers (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 1 59.00%
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 2 $ 0
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 3 26.00%
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 4 $ 0
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 5 26.00%
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 6 $ 0
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 7 38.00%
Concentrations Schedule Of Revenue And Accounts Receivable Percentage By Major Customers 8 46.00%
v3.4.0.3
Schedule of Purchases and Accounts Payable Percentage by Major Suppliers (Details)
3 Months Ended
Mar. 31, 2016
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 1 47.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 2 10.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 3 21.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 4 15.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 5 32.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 6 38.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 7 26.00%
Concentrations Schedule Of Purchases And Accounts Payable Percentage By Major Suppliers 8 24.00%
v3.4.0.3
Schedule of Earnings Per Share, Basic and Diluted (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 1 $ 88,420
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 2 6,131,653
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 3 47,009,834
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 4 46,281,299
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 5 17,910
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 6 116,694
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 7 47,027,744
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 8 $ 46,397,993
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 9 0.00
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 10 0.13
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 11 0.00
Earnings Per Share Schedule Of Earnings Per Share, Basic And Diluted 12 0.13
v3.4.0.3
Schedule of Accounts Receivable (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Accounts Receivable Schedule Of Accounts Receivable 1 $ 40,867,698
Accounts Receivable Schedule Of Accounts Receivable 2 8,136,421
Accounts Receivable Schedule Of Accounts Receivable 3 0
Accounts Receivable Schedule Of Accounts Receivable 4 0
Accounts Receivable Schedule Of Accounts Receivable 5 40,867,698
Accounts Receivable Schedule Of Accounts Receivable 6 $ 8,136,421
v3.4.0.3
Schedule of Inventories (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Inventories Schedule Of Inventories 1 $ 20,044,645
Inventories Schedule Of Inventories 2 8,509,421
Inventories Schedule Of Inventories 3 1,703,490
Inventories Schedule Of Inventories 4 1,648,498
Inventories Schedule Of Inventories 5 4,555,352
Inventories Schedule Of Inventories 6 8,101,661
Inventories Schedule Of Inventories 7 26,303,487
Inventories Schedule Of Inventories 8 18,259,580
Inventories Schedule Of Inventories 9 (489,057)
Inventories Schedule Of Inventories 10 (485,901)
Inventories Schedule Of Inventories 11 25,814,430
Inventories Schedule Of Inventories 12 $ 17,773,679
v3.4.0.3
Schedule of Notes Receivable (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Notes Receivable Schedule Of Notes Receivable 1 7.20%
Notes Receivable Schedule Of Notes Receivable 2 $ 7,884,560
Notes Receivable Schedule Of Notes Receivable 3 10,578,574
Notes Receivable Schedule Of Notes Receivable 4 3,391,827
Notes Receivable Schedule Of Notes Receivable 5 2,454,741
Notes Receivable Schedule Of Notes Receivable 6 11,276,387
Notes Receivable Schedule Of Notes Receivable 7 $ 13,033,315
v3.4.0.3
Schedule of Details of Notes Receivable (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Notes Receivable Schedule Of Details Of Notes Receivable 1 $ 7,884,560  
Notes Receivable Schedule Of Details Of Notes Receivable 2 1,376,573  
Notes Receivable Schedule Of Details Of Notes Receivable 3 465,059  
Notes Receivable Schedule Of Details Of Notes Receivable 4 $ 1,550,195  
Notes Receivable Schedule Of Details Of Notes Receivable 1   $ 10,578,574
Notes Receivable Schedule Of Details Of Notes Receivable 2   1,871,332
Notes Receivable Schedule Of Details Of Notes Receivable 3   59,744
Notes Receivable Schedule Of Details Of Notes Receivable 4   $ 523,665
v3.4.0.3
Schedule of Related Party Transactions (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Amount Due From Related Party Schedule Of Related Party Transactions 1 $ 5,585,613
Amount Due From Related Party Schedule Of Related Party Transactions 2 40,606,162
Amount Due From Related Party Schedule Of Related Party Transactions 3 5,585,613
Amount Due From Related Party Schedule Of Related Party Transactions 4 $ 40,606,162
v3.4.0.3
Schedule of Plant and Equipment (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Plant And Equipment Schedule Of Plant And Equipment 1 $ 13,973,387
Plant And Equipment Schedule Of Plant And Equipment 2 13,883,211
Plant And Equipment Schedule Of Plant And Equipment 3 9,322,054
Plant And Equipment Schedule Of Plant And Equipment 4 7,804,097
Plant And Equipment Schedule Of Plant And Equipment 5 486,395
Plant And Equipment Schedule Of Plant And Equipment 6 395,328
Plant And Equipment Schedule Of Plant And Equipment 7 337,404
Plant And Equipment Schedule Of Plant And Equipment 8 335,227
Plant And Equipment Schedule Of Plant And Equipment 9 33,145,643
Plant And Equipment Schedule Of Plant And Equipment 10 32,931,740
Plant And Equipment Schedule Of Plant And Equipment 11 57,264,883
Plant And Equipment Schedule Of Plant And Equipment 12 55,349,603
Plant And Equipment Schedule Of Plant And Equipment 13 (3,897,971)
Plant And Equipment Schedule Of Plant And Equipment 14 (3,755,582)
Plant And Equipment Schedule Of Plant And Equipment 15 (8,741,563)
Plant And Equipment Schedule Of Plant And Equipment 16 (7,108,925)
Plant And Equipment Schedule Of Plant And Equipment 17 (233,148)
Plant And Equipment Schedule Of Plant And Equipment 18 (249,378)
Plant And Equipment Schedule Of Plant And Equipment 19 (280,429)
Plant And Equipment Schedule Of Plant And Equipment 20 (271,495)
Plant And Equipment Schedule Of Plant And Equipment 21 (24,517,781)
Plant And Equipment Schedule Of Plant And Equipment 22 (23,385,363)
Plant And Equipment Schedule Of Plant And Equipment 23 (37,670,892)
Plant And Equipment Schedule Of Plant And Equipment 24 (34,770,743)
Plant And Equipment Schedule Of Plant And Equipment 25 (54,083)
Plant And Equipment Schedule Of Plant And Equipment 26 (53,734)
Plant And Equipment Schedule Of Plant And Equipment 27 19,539,908
Plant And Equipment Schedule Of Plant And Equipment 28 $ 20,525,126
v3.4.0.3
Schedule of Land Use Rights (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Land Use Rights Schedule Of Land Use Rights 1 $ 15,376,185
Land Use Rights Schedule Of Land Use Rights 2 15,276,957
Land Use Rights Schedule Of Land Use Rights 3 (2,441,977)
Land Use Rights Schedule Of Land Use Rights 4 (2,341,836)
Land Use Rights Schedule Of Land Use Rights 5 12,934,208
Land Use Rights Schedule Of Land Use Rights 6 $ 12,935,121
v3.4.0.3
Schedule of Land Use Rights Expected Amortization Expense (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 1 $ 209,961
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 2 279,948
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 3 279,948
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 4 279,948
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 5 279,948
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 6 11,604,455
Land Use Rights Schedule Of Land Use Rights Expected Amortization Expense 7 $ 12,934,208
v3.4.0.3
Schedule of Construction in Progress (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Construction-in-progress Schedule Of Construction In Progress 1 $ 54,750,430
Construction-in-progress Schedule Of Construction In Progress 2 6,510,820
Construction-in-progress Schedule Of Construction In Progress 3 61,261,250
Construction-in-progress Schedule Of Construction In Progress 4 54,750,430
Construction-in-progress Schedule Of Construction In Progress 5 6,510,820
Construction-in-progress Schedule Of Construction In Progress 6 $ 61,261,250
v3.4.0.3
Schedule of Short-term Bank Loans (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Short Term Bank Loans Schedule Of Short-term Bank Loans 1 4.698%
Short Term Bank Loans Schedule Of Short-term Bank Loans 2 $ 12,091,523
Short Term Bank Loans Schedule Of Short-term Bank Loans 3 $ 12,013,492
Short Term Bank Loans Schedule Of Short-term Bank Loans 4 4.60%
Short Term Bank Loans Schedule Of Short-term Bank Loans 5 $ 7,564,953
Short Term Bank Loans Schedule Of Short-term Bank Loans 6 $ 7,516,134
Short Term Bank Loans Schedule Of Short-term Bank Loans 7 4.82%
Short Term Bank Loans Schedule Of Short-term Bank Loans 8 $ 7,750,977
Short Term Bank Loans Schedule Of Short-term Bank Loans 9 $ 7,700,956
Short Term Bank Loans Schedule Of Short-term Bank Loans 10 4.85%
Short Term Bank Loans Schedule Of Short-term Bank Loans 11 $ 3,441,434
Short Term Bank Loans Schedule Of Short-term Bank Loans 12 $ 3,419,225
Short Term Bank Loans Schedule Of Short-term Bank Loans 13 4.35%
Short Term Bank Loans Schedule Of Short-term Bank Loans 14 $ 6,045,762
Short Term Bank Loans Schedule Of Short-term Bank Loans 15 $ 0
Short Term Bank Loans Schedule Of Short-term Bank Loans 16 5.35%
Short Term Bank Loans Schedule Of Short-term Bank Loans 17 $ 0
Short Term Bank Loans Schedule Of Short-term Bank Loans 18 6,006,746
Short Term Bank Loans Schedule Of Short-term Bank Loans 19 36,894,649
Short Term Bank Loans Schedule Of Short-term Bank Loans 20 $ 36,656,553
v3.4.0.3
Schedule of Notes Payable (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Notes Payable Schedule Of Notes Payable 1 $ 2,325,293
Notes Payable Schedule Of Notes Payable 2 2,310,287
Notes Payable Schedule Of Notes Payable 3 1,550,195
Notes Payable Schedule Of Notes Payable 4 1,540,191
Notes Payable Schedule Of Notes Payable 5 1,550,195
Notes Payable Schedule Of Notes Payable 6 0
Notes Payable Schedule Of Notes Payable 7 232,529
Notes Payable Schedule Of Notes Payable 8 0
Notes Payable Schedule Of Notes Payable 9 155,020
Notes Payable Schedule Of Notes Payable 10 0
Notes Payable Schedule Of Notes Payable 11 155,020
Notes Payable Schedule Of Notes Payable 12 0
Notes Payable Schedule Of Notes Payable 13 5,968,252
Notes Payable Schedule Of Notes Payable 14 $ 3,850,478
v3.4.0.3
Schedule of Net Corporate Income Tax (Details)
3 Months Ended
Mar. 31, 2016
Taxes Schedule Of Net Corporate Income Tax 1 15.00%
Taxes Schedule Of Net Corporate Income Tax 2 25.00%
Taxes Schedule Of Net Corporate Income Tax 3 25.00%
Taxes Schedule Of Net Corporate Income Tax 4 25.00%
Taxes Schedule Of Net Corporate Income Tax 5 25.00%
v3.4.0.3
Schedule of Components of Income Tax Expense (Benefit) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Taxes Schedule Of Components Of Income Tax Expense (benefit) 1 $ (2,636,675)
Taxes Schedule Of Components Of Income Tax Expense (benefit) 2 1,008,909
Taxes Schedule Of Components Of Income Tax Expense (benefit) 3 0
Taxes Schedule Of Components Of Income Tax Expense (benefit) 4 0
Taxes Schedule Of Components Of Income Tax Expense (benefit) 5 0
Taxes Schedule Of Components Of Income Tax Expense (benefit) 6 0
Taxes Schedule Of Components Of Income Tax Expense (benefit) 7 (2,636,675)
Taxes Schedule Of Components Of Income Tax Expense (benefit) 8 $ 1,008,909
v3.4.0.3
Schedule of Expected Components of Income Tax Expense (Benefit) (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 1 $ (3,957,325)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 2 3,109,591
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 3 (113,208)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 4 (2,416,981)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 5 (1,243,626)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 6 (27,713)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 7 2,677,484
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 8 344,012
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 9 (2,636,675)
Taxes Schedule Of Expected Components Of Income Tax Expense (benefit) 10 $ 1,008,909
v3.4.0.3
Schedule of Deferred Tax Assets and Liabilities (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Taxes Schedule Of Deferred Tax Assets And Liabilities 1 $ (170,862)
Taxes Schedule Of Deferred Tax Assets And Liabilities 2 (272,953)
Taxes Schedule Of Deferred Tax Assets And Liabilities 3 (170,862)
Taxes Schedule Of Deferred Tax Assets And Liabilities 4 (272,953)
Taxes Schedule Of Deferred Tax Assets And Liabilities 5 915,772
Taxes Schedule Of Deferred Tax Assets And Liabilities 6 290,850
Taxes Schedule Of Deferred Tax Assets And Liabilities 7 0
Taxes Schedule Of Deferred Tax Assets And Liabilities 8 (2,392,821)
Taxes Schedule Of Deferred Tax Assets And Liabilities 9 915,772
Taxes Schedule Of Deferred Tax Assets And Liabilities 10 (2,101,971)
Taxes Schedule Of Deferred Tax Assets And Liabilities 11 744,910
Taxes Schedule Of Deferred Tax Assets And Liabilities 12 (2,374,924)
Taxes Schedule Of Deferred Tax Assets And Liabilities 13 (312,693)
Taxes Schedule Of Deferred Tax Assets And Liabilities 14 (353,115)
Taxes Schedule Of Deferred Tax Assets And Liabilities 15 2,677,484
Taxes Schedule Of Deferred Tax Assets And Liabilities 16 7,645,386
Taxes Schedule Of Deferred Tax Assets And Liabilities 17 (2,677,484)
Taxes Schedule Of Deferred Tax Assets And Liabilities 18 (7,645,386)
Taxes Schedule Of Deferred Tax Assets And Liabilities 19 (312,693)
Taxes Schedule Of Deferred Tax Assets And Liabilities 20 (353,115)
Taxes Schedule Of Deferred Tax Assets And Liabilities 21 0
Taxes Schedule Of Deferred Tax Assets And Liabilities 22 (1,240,467)
Taxes Schedule Of Deferred Tax Assets And Liabilities 23 0
Taxes Schedule Of Deferred Tax Assets And Liabilities 24 (1,240,467)
Taxes Schedule Of Deferred Tax Assets And Liabilities 25 (312,693)
Taxes Schedule Of Deferred Tax Assets And Liabilities 26 (1,593,582)
Taxes Schedule Of Deferred Tax Assets And Liabilities 27 432,217
Taxes Schedule Of Deferred Tax Assets And Liabilities 28 $ (3,968,506)
v3.4.0.3
Summary of Income Tax Holiday (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Taxes Summary Of Income Tax Holiday 1 $ (113,208)
Taxes Summary Of Income Tax Holiday 2 $ 2,416,981
Taxes Summary Of Income Tax Holiday 3 (0.002)
Taxes Summary Of Income Tax Holiday 4 0.052
v3.4.0.3
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Stock Award Disclosure Of Share-based Compensation Arrangements By Share-based Payment Award 1 $ 801,163
Stock Award Disclosure Of Share-based Compensation Arrangements By Share-based Payment Award 2 670,000
Stock Award Disclosure Of Share-based Compensation Arrangements By Share-based Payment Award 3 $ 670,000
v3.4.0.3
Schedule of Intangible Assets (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
yr
Intangible Assets Schedule Of Intangible Assets 1 | yr 5.75
Intangible Assets Schedule Of Intangible Assets 2 $ 492,235
Intangible Assets Schedule Of Intangible Assets 3 $ 492,235
Intangible Assets Schedule Of Intangible Assets 4 | yr 5.75
Intangible Assets Schedule Of Intangible Assets 5 $ 304,086
Intangible Assets Schedule Of Intangible Assets 6 304,086
Intangible Assets Schedule Of Intangible Assets 7 796,321
Intangible Assets Schedule Of Intangible Assets 8 796,321
Intangible Assets Schedule Of Intangible Assets 9 (198,756)
Intangible Assets Schedule Of Intangible Assets 10 (186,069)
Intangible Assets Schedule Of Intangible Assets 11 (122,783)
Intangible Assets Schedule Of Intangible Assets 12 (114,946)
Intangible Assets Schedule Of Intangible Assets 13 (321,539)
Intangible Assets Schedule Of Intangible Assets 14 (301,015)
Intangible Assets Schedule Of Intangible Assets 15 474,782
Intangible Assets Schedule Of Intangible Assets 16 $ 495,306
v3.4.0.3
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 1 $ 61,571
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 2 82,095
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 3 82,095
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 4 82,095
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 5 82,095
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 6 84,831
Intangible Assets Schedule Of Finite-lived Intangible Assets, Future Amortization Expense 7 $ 474,782
v3.4.0.3
Schedule of Combined Results of Condensed Income Statement Information (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 1 $ (495,567)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 2 30,564,996
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 3 (1,062,647)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 4 7,980,664
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 5 (8,068,447)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 6 803,221
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 7 (4,034,224)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Income Statement Information 8 $ 401,610
v3.4.0.3
Schedule of Combined Results of Condensed Balance Sheet Information (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 1 $ 411,728,560
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 2 455,368,595
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 3 195,864,187
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 4 191,145,583
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 5 607,592,746
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 6 646,514,178
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 7 386,899,933
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 8 429,487,683
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 9 47,023,088
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 10 36,348,514
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 11 173,669,725
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 12 180,677,981
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 13 607,592,746
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Condensed Balance Sheet Information 14 $ 646,514,178
v3.4.0.3
Schedule of Changes in the Companys Investment (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 1 $ 90,337,899
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 2 83,309,095
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 3 (4,034,224)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 4 401,610
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 5 (789,329)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 6 (116,252)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 7 1,083
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 8 183,998
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 9 519,013
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 10 292,327
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 11 86,034,442
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Changes In The Companys Investment 12 $ 84,070,778
v3.4.0.3
Schedule of Combined Results of Operations and Financial Position (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 1 $ 13,085,636
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 2 0
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 3 160,597
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 4 17,605,302
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 5 158,201
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 6 9,859,319
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 7 52,264
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 8 1,590,383
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 9 18,277
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 10 0
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 11 13,474,975
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Combined Results Of Operations And Financial Position 12 $ 29,055,004
v3.4.0.3
Schedule of Significant Balances (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 1 $ (295,339)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 2 (4,488,379)
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 3 17,295,169
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 4 3,249,445
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 5 5,465,384
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 6 6,218,177
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 7 18,533
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 8 11,453
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 9 70,305,902
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 10 71,181,775
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 11 92,789,649
Summarized Information Of Equity Method Investment In The Jv Company Schedule Of Significant Balances 12 $ 76,172,471
v3.4.0.3
Schedule of Guarantees For Bank Loans (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 1 $ 4,495,566
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 2 4,466,555
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 3 3,100,391
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 4 3,080,383
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 5 50,381,348
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 6 50,056,216
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 7 57,977,305
Commitments And Contingencies Schedule Of Guarantees For Bank Loans 8 $ 57,603,154
v3.4.0.3
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 1 $ 621,722
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 2 1.00%
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 3 $ 786,496
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 4 2.00%
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 5 $ 50,036,170
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 6 99.00%
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 7 $ 42,994,590
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 8 98.00%
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 9 $ 50,657,893
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 10 100.00%
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 11 $ 43,781,086
Segment Reporting Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas 12 100.00%
v3.4.0.3
Schedule of Sales to Related Parties (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
Related Party Transactions Schedule Of Sales To Related Parties 1 $ 3,208,502
Related Party Transactions Schedule Of Sales To Related Parties 2 0
Related Party Transactions Schedule Of Sales To Related Parties 3 3,208,502
Related Party Transactions Schedule Of Sales To Related Parties 4 $ 0
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