Kandi Technolgies Corp (KNDI)

[PennyPerser]

Bad news here for KNDI, read this:

In a premium email alert sent to members on 9/27/2012 we wrote about KNDI, "Connecting the Dots:KNDI's Clever but Apparent Related Party Transactions".

KNDI is the latest Chinese small cap RTO that the GeoTeam has discovered with curious transactions with undisclosed related parties that not only bring into question the nature of the transactions but the credibility of the company itself. Given this backdrop it is not surprising that KNDI makes the dubious portrayal of a bright future for its electric vehicle ("EV") business. The facts on the ground clearly indicate KNDI's EV business hasn't gotten off the ground and we question its viability.

The transactions we analyzed involved at least nine individuals with connections to KNDI and its Chairman and seven different entities. The transactions all appeared to be planned well in advance and involved individuals who were senior executives of KNDI's management team either at the time of or shortly before the transactions were completed. When all was said and done two of the transactions resulted in the transfer of $20 million in cash and stock to individuals influenced or controlled by KNDI's chairman. The other transaction involved the sale of KNDI's import and export business to individuals who also had close ties to KNDI and its Chairman. It seems KNDI's Chairman prefers dealing with individuals he may know, influence or control. We highly doubt that any of the transactions we analyzed were negotiated on an arm's length basis.

Investors should take note of the fact that the referenced individuals controlled two entities that were party to the transactions. One of the entities became KNDI's largest supplier and the other one of its largest customers. The chain of events is suspicious, given the related parties involved in the transactions, leading us to ponder if they were possibly planned, structured and staged in a manner intended to confuse regulators and investors attempting to perform due diligence on the company.

To see our full report go here.

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