Kandi Technologies Issues Updates to Holders, Says Stands By SEC Disclosures
Kandi Technologies Group, Inc. (the 'Company' or 'Kandi') (Nasdaq: KNDI), stated today that it has come to the Company's attention that a recent online article, published by a short seller, contains inaccurate and misleading information about our Company. While the Company firmly stands by its disclosures in its filings with the SEC, we are taking this opportunity to clarify certain issues as follows:
1. Kandi's $25 Million Debt/Note Payable.
As we have described clearly in our Form 10-Q for the quarterly period ended March 31, 2013 (the "10-Q"), by issuing bank notes payable rather than paying cash to suppliers, the Company can defer the payments until the date the bank notes payable are due. Simultaneously, the Company deposits restricted cash in banks to back the bank notes payable, and the restricted cash deposited in banks generates interest income. On December 24th and 25th, 2012, the Hangzhou Branch of Ping An Bank issued 140 million RMB (approximately $22 million) notes payable to the Company due on June 24th and 25th, 2013, as disclosed in our 10-Q. The Company deposited restricted cash of 50 million RMB (approximately $8 million) to Ping An Bank as collateral when the notes were issued. The Company re-paid 140 million RMB (approximately $22 million) notes in full on June 6th, 2013 and June 19th, 2013, and the Hangzhou Branch of Ping An Bank has also re-financed 150 million RMB (approximately $24 million) with new short term notes payable of $6 million and $18 million to the Company due on December 6th and December 19th, 2013 respectively. Simultaneously, the Company deposits restricted cash of 60 million RMB (approximately $9.6 million) to the bank as collateral. As we have indicated in our 10-Qs and 10-Ks, this is a common practice for the Company in conducting its normal business; using rolling notes payable from the banks, which the Company's good credit makes possible, allows us to optimize the use of our cash flow.
The remaining $3 million short term bank loan referenced in the article is a loan from Shanghai Pudong Development Bank issued on June 27, 2012 and becomes due on June 27, 2013. The Company has already arranged the repayment of the loan on June 25, 2013 and has negotiated its renewal by way of a new loan in the same amount and received approval from Shanghai Pudong Development Bank for such new loan.
2. The Shelf Registration Statement (S-3).
On April 19th, 2013, the Company filed a $ 60 million Universal Shelf Registration Statement (S-3) with the SEC which became effective on May 23, 2013. The shelf registration did not include the registration of any shares for an offering nor a prospectus for an offering of any shares. When a specific offering is planned, a prospectus supplement that describes the terms of the offering will be filed with the SEC under Rule 424(b) within two days of the supplement's first use or the determination of the offering price, whichever is earlier. A shelf registration statement (S-3) is authorized by the SEC under rule 415 allowing a single registration statement to be filed by certain qualified issuers which permit public offering of multiple securities for up to three years. In a shelf registration, securities usually are registered for sale either on a continuous or delayed basis. However, the Company's current S-3 registration is not an "At the Market" or "ATM" offering as described in the short seller's article as: "Kandi's S-3 filing is known as an "At the Money" registration statement." We believe the short seller either lacks basic knowledge of securities regulation or simply releasing misleading information to the investing public.
The Company filed a similar shelf S-3 registration statement with the SEC on November 19, 2009 which became effective December 24, 2009. Almost one year after that S-3 registration statement became effective, on December 21, 2010, the Company raised approximately $16 million with a shelf take down. On the same day, the Company filed with the SEC a Form 8-K to disclose the transaction with purchase agreement attached (http://www.sec.gov/Archives/edgar/data/1316517/000114420410067511/v206029_8k.htm) as well as a prospectus supplement to the shelf S-3 Registration Statement (http://www.sec.gov/Archives/edgar/data/1316517/000114420410067488/v206028_424b5.htm).
Subsequently, the 2009 S-3 registration statement expired in December, 2012.
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