**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| **x** | **REPORT                PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934** |
|-------|-----------------------------------------------------------------------------------------------------------------|

| **o** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

**Kandi      Technologies, Corp.**

| **Delaware**                                                                                |   |   | **87-0700927**                                      |
|---------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) |   |   | (I.R.S.                Employer Identification No.) |

**Jinhua      City Industrial Zone**

**Jinhua,      Zhejiang Province**

**People’s      Republic of China**

**Post      Code 321016**

**___________**

**(86      - 0579) 82239700**

**___________**

| Large                accelerated filer  ̈                                                            | Accelerated                filer  ̈    |
|----------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| Non-accelerated                filer  ̈                (Do not check if a smaller reporting company) | Smaller                reporting company þ |

----

**PART      I-- FINANCIAL INFORMATION**

**Item      1. Financial Statements. (Unaudited)**

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

|  **ASSETS**                                                                                                                                                                       |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                   |   | **March                31,** |   |   |   |
|                                                                                                                                                                                   |   | **2008** |   | **December                31,** |   |
|                                                                                                                                                                                   |   | **(Unaudited)** |   | **2007** |   |
|                                                                                                                                                                                   |   |   |   |   |   |
| CURRENT                ASSETS                                                                                                                                                          |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                               |   | $ | 210,002 |   | $ | 1,149,140 |   |
| Restricted                cash                                                                                                                                                         |   |   | 3,560,138 |   |   | 1,367,222 |   |
| Accounts                receivable, net of allowance for doubtful accounts of $3,456 and                $3,701 as                of March 31, 2008 and December 31, 2007, respectively |   |   | 10,299,845 |   |   | 11,401,367 |   |
| Inventories                                                                                                                                                                            |   |   | 4,198,644 |   |   | 3,293,529 |   |
| Notes                receivable, net of discount of $91,326 as of March 31,                2008                                                                                        |   |   | 1,857,266 |   |   | 47,853 |   |
| Other                receivables                                                                                                                                                       |   |   | 85,138 |   |   | 416,454 |   |
| Deposit                for acquisition                                                                                                                                                 |   |   | 12,270,859 |   |   | 12,270,859 |   |
| Prepayments                and prepaid expenses                                                                                                                                        |   |   | - |   |   | 17,774 |   |
| Due                from employees                                                                                                                                                      |   |   | 35,087 |   |   | 9,932 |   |
| Discontinued                operation                                                                                                                                                  |   |   | 13,544,938 |   |   | 14,158,890 |   |
| Total                Current Assets                                                                                                                                                    |   |   | 46,061,917 |   |   | 44,133,020 |   |
|                                                                                                                                                                                   |   |   |   |   |   |   |   |
| LONG-TERM                ASSETS                                                                                                                                                        |   |   |   |   |   |   |   |
| Plant                and equipment, net                                                                                                                                                |   |   | 10,499,108 |   |   | 10,427,176 |   |
| Land                use rights, net                                                                                                                                                    |   |   | 382,800 |   |   | 385,539 |   |
| Construction                in progress                                                                                                                                                |   |   | 1,376,802 |   |   | 1,321,832 |   |
| Discontinued                operation                                                                                                                                                  |   |   | 494,744 |   |   | 506,526 |   |
| Deferred                taxes                                                                                                                                                          |   |   | 445,801 |   |   | 405,006 |   |
| Total                Long-Term Assets                                                                                                                                                  |   |   | 13,199,255 |   |   | 13,046,079 |   |
|                                                                                                                                                                                   |   |   |   |   |   |   |   |
| TOTAL                ASSETS                                                                                                                                                            |   | $ | 59,261,172 |   | $ | 57,179,099 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                            |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                     |   | **March                31,** |   |   |   |
|                                                                                                                                                                                                                                     |   | **2008** |   | **December                31,** |   |
|                                                                                                                                                                                                                                     |   | **(Unaudited)** |   | **2007** |   |
| CURRENT                LIABILITIES                                                                                                                                                                                                       |   |   |   |   |   |
| Accounts                payable                                                                                                                                                                                                          |   | $ | 6,492,357 |   | $ | 6,333,057 |   |
| Other                payables and accrued expenses                                                                                                                                                                                       |   |   | 351,352 |   |   | 378,675 |   |
| Short-term                bank loans                                                                                                                                                                                                     |   |   | 21,594,781 |   |   | 20,869,862 |   |
| Customer                deposits                                                                                                                                                                                                         |   |   | 271,407 |   |   | 483,320 |   |
| Notes                payable                                                                                                                                                                                                             |   |   | 2,250,007 |   |   | 1,476,600 |   |
| Due                to employees                                                                                                                                                                                                          |   |   | 57,895 |   |   | 310 |   |
| Due                to related party                                                                                                                                                                                                      |   |   | 90,709 |   |   | - |   |
| Discontinued                operation                                                                                                                                                                                                    |   |   | 13,655,346 |   |   | 14,296,572 |   |
| Total                Current Liabilities                                                                                                                                                                                                 |   |   | 44,763,854 |   |   | 43,838,396 |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| LONG-TERM                LIABILITIES                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| Discontinued                operation                                                                                                                                                                                                    |   |   | 2,651 |   |   | 2,651 |   |
| Deferred                taxes                                                                                                                                                                                                            |   |   | 296,511 |   |   | 296,511 |   |
| Total                Long-Term Liabilities                                                                                                                                                                                               |   |   | 299,162 |   |   | 299,162 |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES                                                                                                                                                                                                         |   |   | 45,063,016 |   |   | 44,137,558 |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| CONTINGENCIES                                                                                                                                                                                                                            |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
| SHAREHOLDERS’                EQUITY                                                                                                                                                                                                |   |   |   |   |   |   |   |
| Common                stock, $0.001 par value; 100,000,000 shares authorized; 19,961,000                and                19,961,000 shares issued and outstanding at March 31, 2008 and December                31, 2007, respectively |   |   | 19,961 |   |   | 19,961 |   |
| Additional                paid-in capital                                                                                                                                                                                                |   |   | 7,138,105 |   |   | 7,138,105 |   |
| Retained                earnings (the restricted portion is $523,083 at March 31,                2008)                                                                                                                                   |   |   | 6,235,295 |   |   | 5,125,120 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                    |   |   |                  804,795 |   |   | 758,355 |   |
| TOTAL                SHAREHOLDERS’ EQUITY                                                                                                                                                                                          |   |   | 14,198,156 |   |   | 13,041,541 |   |
| TOTAL                LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                          |   | $ | 59,261,172 |   | $ | 57,179,099 |   |

----

**KANDI        TECHNOLOGIES, CORP.**

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES **

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)        **

|                                                                     |   | **Three                Months****Ended****March                31,****2008** |         | **Three                Months****Ended****March                31,****2007** |   |
|--------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------|--------|
| **REVENUES,                NET**                                         |   | $                                                                            | 9,487,285    |                                                                         | $      | 5,376,977 |   |
| **COST                OF GOODS SOLD**                                    |   |                                                                         | (7,305,277   | )                                                                            |   | (4,403,741 | ) |
| **GROSS                PROFIT**                                          |   |                                                                         | 2,182,008    |                                                                         |   | 973,236 |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| General                and administrative                                |   |                                                                         | 279,120      |                                                                         |   | 141,594 |   |
| Selling                and marketing                                     |   |                                                                         | 215,776      |                                                                         |   | 80,761 |   |
| Research                and development                                  |   |                                                                         | 46,610       |                                                                         |   | 11,978 |   |
| **INCOME                FROM CONTINUING OPERATIONS**                     |   |                                                                         | 1,640,502    |                                                                         |   | 738,903 |   |
| Interest                expense, net                                     |   |                                                                         | (615,540     | )                                                                            |   | (134,632 | ) |
| Government                grants                                         |   |                                                                         | 23,381       |                                                                         |   | - |   |
| Forfeiture                of customer deposits                           |   |                                                                         | -            |                                                                         |   | 265,789 |   |
| Other                income, net                                         |   |                                                                         | 21,711       |                                                                         |   | 218 |   |
| **INCOME                FROM CONTINUING OPERATIONS BEFORE INCOME TAXES** |   |                                                                         | 1,070,054    |                                                                         |   | 870,278 |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| **INCOME                TAX BENEFIT**                                    |   |                                                                         | 39,965       |                                                                         |   | - |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| **NET                INCOME FROM CONTINUING OPERATIONS**                 |   |                                                                         | 1,110,019    |                                                                         |   | 870,278 |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| **DISCONTINUED                OPERATION**                                |   |                                                                         |         |                                                                         |   |   |   |
| Income                from discontinued operation                        |   |                                                                         | 157          |                                                                         |   | 70,840 |   |
| **GAIN                FROM DISCONTINUED OPERATION**                      |   |                                                                         | 157          |                                                                         |   | 70,840 |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| **NET                INCOME**                                            |   |                                                                         | 1,110,176    |                                                                         |   | 941,118 |   |
|                                                                     |   |                                                                         |         |                                                                         |   |   |   |
| **OTHER                COMPREHENSIVE INCOME**                            |   |                                                                         |         |                                                                         |   |   |   |
| Foreign                currency translation gain                         |   |                                                                         |  46,440 |                                                                         |   | 91,058 |   |

----

**KANDI        TECHNOLOGIES, CORP.**

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES **

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

|                                                                     |   | **Three                Months Ended March 31, 2008** |       | **Three                Months Ended March 31, 2007** |   |
|--------------------------------------------------------------------------|--------|------------------------------------------------------|------------|------------------------------------------------------|--------|
| **COMPREHENSIVE                INCOME**                                  |   | $                                                    | 1,156,616  |                                                 | $      | 1,032,176 |   |
|                                                                     |   |                                                 |       |                                                 |   |   |   |
| **WEIGHTED                AVERAGE SHARES OUTSTANDING BASIC AND DILUTED** |   |                                                 | 19,961,000 |                                                 |   | 12,000,000 |   |
| **NET                INCOME PER COMMON SHARE, BASIC AND DILUTED**        |   | $                                                    | 0.06       |                                                 | $      | 0.09 |   |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

|                                                                                                            |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                            |   | **Three                Months Ended March 31,**  |   |
|                                                                                                            |   | **2008** |   | **2007** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                        |   |   |   |   |   |
| Net                income                                                                                       |   | $ | 1,110,176 |   | $ | 941,118 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                    |   |   | 362,750 |   |   | 241,791 |   |
| Deferred                taxes                                                                                   |   |   | (40,795 | ) |   | - |   |
| Forfeiture                of customer deposits                                                                  |   |   | - |   |   | (265,789 | ) |
|                                                                                                            |   |   |   |   |   |   |   |
| **Changes                in operating assets and liabilities:**                                                 |   |   |   |   |   |   |   |
| **(Increase)                Decrease In:**                                                                      |   |   |   |   |   |   |   |
| Accounts                receivable                                                                              |   |   | 1,101,521 |   |   | (955,355 | ) |
| Inventories                                                                                                     |   |   | (905,114 | ) |   | 699,127 |   |
| Other                receivables                                                                                |   |   | 331,315 |   |   | (28,332 | ) |
| Due                to employees                                                                                 |   |   | 32,431 |   |   | - |   |
| Prepayments                and prepaid expenses                                                                 |   |   | 17,774 |   |   | 96,199 |   |
| Discontinued                operation                                                                           |   |   | (1,166,257 | ) |   | 34,333 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| **Increase                (Decrease) In:**                                                                      |   |   |   |   |   |   |   |
| Accounts                payable                                                                                 |   |   | 159,300 |   |   | (561,204 | ) |
| Other                payables and accrued liabilities                                                           |   |   | (27,323 | ) |   | 53,219 |   |
| Discontinued                operation                                                                           |   |   | 1,571,810 |   |   | 11,433,523 |   |
| Customer                deposits                                                                                |   |   | (211,914 | ) |   | 1,035,946 |   |
| Net                cash provided by operating activities                                                        |   |   | 2,335,674 |   |   | 12,724,576 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                        |   |   |   |   |   |   |   |
| Purchases                of plant and equipment                                                                 |   |   | (611,471 | ) |   | (181,249 | ) |
| Purchases                of construction in progress                                                            |   |   | (55,351 | ) |   | (160,234 | ) |
| Deposit                for acquisition                                                                          |   |   | - |   |   | 646,479 |   |
| Due                from employees                                                                               |   |   | - |   |   | 171,608 |   |
| Issuances                of notes receivable                                                                    |   |   | (1,859,256 | ) |   | (4,902,596 | ) |
| Repayments                of notes receivable                                                                   |   |   | 49,842 |   |   | 347,571 |   |
| Discontinued                operation                                                                           |   |   | 11,782 |   |   | 17,465 |   |
| Net                cash used in investing activities                                                            |   |   | (2,464,454 | ) |   | (4,060,956 | ) |
|                                                                                                            |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                        |   |   |   |   |   |   |   |
| Restricted                cash                                                                                  |   |   | (2,192,916 | ) |   | - |   |
| Discontinued                operation                                                                           |   |   | (432,827 | ) |   | (11,562,911 | ) |
| Proceeds                from short term bank loans                                                              |   |   | 9,776,805 |   |   | 5,581,834 |   |
| Repayment                of short term bank loans                                                               |   |   | (9,051,887 | ) |   | (2,920,005 | ) |
| Proceeds                from notes payable                                                                      |   |   | 1,485,435 |   |   | 440,036 |   |
| Repayment                of notes payable                                                                       |   |   | (712,027 | ) |   | (13,621 | ) |
| Repayment                of advances to related parties                                                         |   |   | 90,709 |   |   | 17,288 |   |
| Net                cash used in financing activities                                                            |   |   | (1,036,708 | ) |   | (8,457,379 | ) |
|                                                                                                            |   |   |   |   |   |   |   |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

|                                                                                                                                                                                                                                 |   |                **Three                Months Ended March 31,** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|------------|
|                                                                                                                                                                                                                                 |   | **2008**                                                            |       | **2007** |   |
| **(DECREASE)                INCREASE IN CASH AND CASH EQUIVALENTS**                                                                                                                                                                  |   |                                                                | (1,165,488 | ) |   | 206,241 |   |
| Effect                of exchange rate changes on cash                                                                                                                                                                               |   |                                                                | 226,350    |   |   | 4,936 |   |
| Cash                and cash equivalents at beginning of period                                                                                                                                                                      |   |                                                                | 1,149,140  |   |   | 365,567 |   |
| **CASH                AND CASH EQUIVALENTS AT END OF PERIOD**                                                                                                                                                                        |   | $                                                                   | 210,002    |   | $ | 576,744 |   |
|                                                                                                                                                                                                                                 |   |                                                                |       |   |   |   |   |
| **SUPPLEMENTARY                CASH FLOW INFORMATION**                                                                                                                                                                               |   |                                                                |       |   |   |   |   |
| Income                taxes paid                                                                                                                                                                                                     |   | $                                                                   | -          |   | $ | 226,507 |   |
| Interest                paid                                                                                                                                                                                                         |   | $                                                                   | 439,961    |   | $ | 2,967 |   |
|                                                                                                                                                                                                                                 |   |                                                                |       |   |   |   |   |
| **SUPPLEMENTAL                NON-CASH DISCLOSURES:**                                                                                                                                                                                |
|                                                                                                                                                                                                                                 |
| 1.                    During the three months ended March 31, 2008 and 2007, $380 and $11,946                were transferred from construction in progress to plant and equipment,                respectively. |
|                                                                                                                                                                                                                                 |
| 2.     Customer                deposits of $0 and $265,789 were forfeited in the three months ended                March                31, 2008 and 2007, respectively.                                    |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      1 - **
**ORGANIZATION      AND PRINCIPAL ACTIVITIES**

**NOTE      2 - **
**BASIS      OF PRESENTATION **

**NOTE      3 - **
**PRINCIPLES      CONSOLIDATION**

|   | (i) | Continental                Development Ltd. (100% subsidiary of the                Company) |
|--------|-----|---------------------------------------------------------------------------------------------|

|   | (ii) | Zhejiang                Kandi Vehicles Co. Ltd. (“Zhejiang Kandi”) (100% subsidiary of                Continental) |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Zhejiang                Yongkong Import and Export Co. Ltd. (“Dingji”) (100%                subsidiary of Zhejiang Kandi) |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------|

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      4 - **
**USE      OF ESTIMATES **

**NOTE      5 - **
**CONCENTRATIONS**

|                               |                                 | **Sales**                                                    |                                                         |   |
|------------------------------------|--------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--------|
| **Major                Customers** |                                 | **For                the Three Months Ended March 31, 2008** | **For                the Three Months Ended March 31, 2007** |   |  **Accounts                Receivable** |
| **March                31, 2008**  | **December                31, 2007** |
| Company                A           |                                 | 31%                                                          | 27%                                                          |   | 26% | 40% |
| Company                B           |                                 | 23%                                                          | 22%                                                          |   | 20% | 19% |
| Company                C           |                                 | 13%                                                          | 19%                                                          |   | 12% | 11% |
| Company                D           |                                 | 12%                                                          | 15%                                                          |   | 12% | 8% |
| Company                E           |                                 | 6%                                                           | -                                                            |   | 5% | 7% |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      5 - **
**CONCENTRATION      (CONTINUED)**

|                               |                                 | **Purchases**                                                |                                                         |   |
|------------------------------------|--------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--------|
| **Major                Suppliers** |                                 | **For                the Three Months Ended March 31, 2008** | **For                the Three Months Ended March 31, 2007** |   | **Accounts                Payable** |
| **March                31, 2008**  | **December                31, 2007** |
| Company                F           |                                 | 7%                                                           | 35%                                                          |   | 7% | 7% |
| Company                G           |                                 | 8%                                                           | 9%                                                           |   | 5% | 6% |
| Company                H           |                                 | 4%                                                           | 16%                                                          |   | 4% | 5% |
| Company                I           |                                 | 4%                                                           | 8%                                                           |   | 4% | 5% |
| Company                J           |                                 | 4%                                                           | -                                                            |   | 4% | 4% |

**NOTE      6 - **
**FOREIGN      CURRENCY TRANSLATION**

|                                                  | **March                31, 2008** |   | **December                31, 2007** |   | **March                31,****2007** |
|-------------------------------------------------------|-----------------------------------|--------|--------------------------------------|--------|--------------------------------------|
| Period                end RMB : US$ exchange rate     | 7.0222                            |   | 7.3141                               |   | 7.7342                               |
| Average                period RMB : US$ exchange rate | 7.1682                            |   | 7.5614                               |   | 7.7715                               |

**NOTE      7 - **
**EARNINGS      PER SHARE**

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      8 - **
**FAIR      VALUE OF FINANCIAL INSTRUMENTS**

**NOTE      9 - **
**NEW      ACCOUNTING PRONOUNCEMENTS**

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      9 - **
**NEW      ACCOUNTING PRONOUNCEMENTS (CONTINUED)**

**NOTE      10 - **
**INVENTORIES**

|                             |   | **March                31,****2008** |      | **December                31,****2007** |   |
|----------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
|                             |   | **(Unaudited)**                      |      |                                    |   |
| Raw                materials     |   | $                                    | 814,327   |                                    | $      | 1,534,448 |   |
| Work-in-progress                 |   |                                 | 3,127,152 |                                    |   | 1,402,073 |   |
| Finished                goods    |   |                                 | 257,165   |                                    |   | 357,008 |   |
| Total                inventories |   | $                                    | 4,198,644 |                                    | $      | 3,293,529 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      11 - **
**NOTES**
** RECEIVABLE**

|                                                                     |   | **March                31,****2008** |      | **December                31,****2007** |   |
|--------------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
|                                                                     |   | **(Unaudited)**                      |      |                                    |   |
| Notes                receivable from unrelated companies:                |   |                                 |      |                                    |   |
| Due                June 27, 2008                                         |   | $                                    | -         |                                    | $      | 47,853 |   |
| Due                March 2, 2009                                         |   |                                 | 640,673   |                                    |   | - |   |
| Due                January 1, 2009                                       |   |                                 | 184,842   |                                    |   | - |   |
| Due                March 31, 2008 (subsequently settled on its due date) |   |                                 | 633,825   |                                    |   | - |   |
| Due                March 31, 2008 (subsequently settled on its due date) |   |                                 | 489,252   |                                    |   | - |   |
| Subtotal                                                                 |   |                                 | 1,948,592 |                                    |   | 47,853 |   |
| Notes                receivable-discount                                 |   |                                 | (91,326   | )                                       |   | - |   |
| Notes                receivable net                                      |   | $                                    | 1,857,266 |                                    | $      | 47,853 |   |

**NOTE      12 - **
**LAND      USE RIGHTS**

|                                          |   | **March                31, 2008** |    | **December                31,****2007** |   |
|-----------------------------------------------|--------|-----------------------------------|---------|-----------------------------------------|--------|
|                                          |   | **(Unaudited)**                   |    |                                    |   |
| Cost                of land use rights        |   | $                                 | 460,943 |                                    | $      | 460,943 |   |
| Less:                accumulated amortization |   |                              | (78,143 | )                                       |   | (75,404 | ) |
| Land                use rights, net           |   | $                                 | 382,800 |                                    | $      | 385,539 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

| 2008                with one year |   | $      | 8,388   |   |
|-----------------------------------|--------|--------|---------|--------|
| 2009                              |   |   | 11,183  |   |
| 2010                              |   |   | 11,183  |   |
| 2011                              |   |   | 11,183  |   |
| 2012                              |   |   | 11,183  |   |
| Thereafter                        |   |   | 329,680 |   |
| Total                             |   | $      | 382,800 |   |

**NOTE      13 - **
**PLANT      AND EQUIPMENT**

|                                          |   | **March                31,****2008** |       | **December                31,****2007** |   |
|-----------------------------------------------|--------|--------------------------------------|------------|-----------------------------------------|--------|
|                                          |   | **(Unaudited)**                      |       |                                    |   |
| At                cost:                       |   |                                 |       |                                    |   |
| Buildings                                     |   | $                                    | 4,074,937  |                                    | $      | 3,911,944 |   |
| Machinery                and equipment        |   |                                 | 8,930,520  |                                    |   | 8,572,451 |   |
| Office                equipment               |   |                                 | 101,617    |                                    |   | 93,840 |   |
| Transportation                                |   |                                 | 265,480    |                                    |   | 254,885 |   |
| Patterns                                      |   |                                 | 1,814,542  |                                    |   | 1,742,125 |   |
|                                          |   |                                 | 15,187,096 |                                    |   | 14,575,245 |   |
| Less:                Accumulated depreciation |   |                                 |       |                                    |   |   |   |
| Buildings                                     |   |                                 | (480,618   | )                                       |   | (428,834 | ) |
| Machinery                and equipment        |   |                                 | (3,891,058 | )                                       |   | (3,520,084 | ) |
| Office                equipment               |   |                                 | (71,989    | )                                       |   | (64,427 | ) |
| Transportation                                |   |                                 | (58,857    | )                                       |   | (43,765 | ) |
| Patterns                                      |   |                                 | (185,466   | )                                       |   | (90,959 | ) |
|                                          |   |                                 | (4,687,988 | )                                       |   | (4,148,069 | ) |
| Plant                and equipment, net       |   | $                                    | 10,499,108 |                                    | $      | 10,427,176 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      14 - **
**SHORT      TERM BANK LOANS**

** **

|                                                                                                                                                                                                                                                 |   | **March                31,****2008** |    | **December                31,****2007** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                 |   | **(Unaudited)**                      |    |                                    |   |
| **Loans                from ICBC-Exploration Zone Branch**                                                                                                                                                                                           |   |                                 |    |                                    |   |
|  Monthly                interest only payments at 7.88% per annum, due April 10, 2008, secured                by                the assets owned by the Company. Also                see Notes 12 and 13. (subsequently repaid on its due date) |   | $                                    | 712,028 |                                    | $      | 683,611 |   |
|  Monthly                interest only payments at 7.88% per annum, due June 5, 2008, secured                by                the assets owned by the Company. Also                see Notes 12 and 13.                                         |   |                                 | 712,028 |                                    |   | 683,611 |   |
|  Monthly                interest only payments at 8.75% per annum, due September 5, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                    |   |                                 | 427,216 |                                    |   | 410,167 |   |
|  Monthly                interest only payments at 8.75% per annum, due September 5, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                    |   |                                 | 384,495 |                                    |   | 369,150 |   |
|  Monthly                interest only payments at 8.75% per annum, due October 10, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                     |   |                                 | 427,216 |                                    |   | 410,167 |   |
|  Monthly                interest only payments at 8.75% per annum, due October 16, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                     |   |                                 | 541,141 |                                    |   | 519,544 |   |
|  Monthly                interest only payments at 8.75% per annum, due October 23, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                     |   |                                 | 498,419 |                                    |   | 478,528 |   |
|  Monthly                interest only payments at 8.75% per annum, due November 24, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                    |   |                                 | 569,623 |                                    |   | 546,889 |   |
|  Monthly                interest only payments at 8.28% per annum, due September 17, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and                13.                                   |   |                                 | 640,825 |                                    |   | - |   |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      14 - **
**SHORT      TERM BANK LOANS (CONTINUED)**

|                                                                                                                                                                                                                                                    |   | **March                31,****2008** |      | **December                31,****2007** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                    |   | **(Unaudited)**                      |      |                                    |   |
|  **Loans                from Commercial Bank-Jiangnan Branch**                                                                                                                                                                                     |   |                                 |      |                                    |   |
|  Monthly                interest only payments at 7.58 % per annum, due January 10, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and 13.                (subsequently repaid on its due date) |   |                                 | -         |                                    |   | 2,734,444 |   |
|  Monthly                interest only payments at 7.67 % per annum, due May 10, 2008, guaranteed                by the assets owned by the Company. Also see Notes 12 and 13.                (subsequently repaid on its due date)                 |   |                                 | 1,424,055 |                                    |   | 1,367,222 |   |
|  Monthly                interest only payments at 8.22% per annum, due January 10, 2009 secured                by                the assets owned by the Company. Also see Notes 12 and 13.                                                        |   |                                 | 2,848,110 |                                    |   | - |   |
|  **Loans                from ICBC-Jinhua Branch**                                                                                                                                                                                                  |   |                                 |      |                                    |   |   |   |
|  Monthly                interest only payments at 6.88% per annum, due January 18, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and 13.                (subsequently repaid on its due date)  |   |                                 | -         |                                    |   | 189,753 |   |
|  Monthly                interest only payments at 6.58% per annum, due February 1, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and 13.                (subsequently repaid on its due date)  |   |                                 | -         |                                    |   | 948,766 |   |
|  Monthly                interest only payments at 6.88% per annum, due March 3, 2008, secured                by                the assets owned by the Company. Also see Notes 12 and 13. (subsequently                repaid on its due date)     |   |                                 | -         |                                    |   | 858,883 |   |
|  Monthly                interest only payments at 7.88% per annum, due March 21, 2008, secured                by                the assets owned by the Company. Also see Notes 12 and 13. (subsequently                repaid on its due date)    |   |                                 | -         |                                    |   | 1,098,571 |   |
|  Monthly                interest only payments at 7.88% per annum, due April 16, 2008, secured                by                the assets owned by the Company. Also see Notes 12 and 13. (subsequently                repaid on its due date)    |   |                                 | 1,030,000 |                                    |   | - |   |
|  Monthly                interest only payments at 7.88% per annum, due May 21, 2008, secured                by                the assets owned by the Company. Also see Notes 12 and 13.                                                           |   |                                 | 700,000   |                                    |   | - |   |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      14 - **
**SHORT      TERM BANK LOANS (CONTINUED)**

|                                                                                                                                                                                                                                                                                                                              |   | **March                31,****2008** |       | **December                31,****2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                              |   | **(Unaudited)**                      |       |                                    |   |
|  **Loans                from Huaxia Bank**                                                                                                                                                                                                                                                                                   |   |                                 |       |                                    |   |
|  Monthly                interest only payments at 9.86% per annum, due December 24, 2008.                Guaranteed by Yongkang Tangxian Colour Metal Die-casting                Company.                                                                                                                                    |   |                                 | 2,848,110  |                                    |   | 2,734,444 |   |
|  Monthly                interest only payments at 7.84% per annum, due October 1, 2008. And                secured by the assets owned by the Company. Guaranteed by Nanlong                Group                Co.,Ltd & Zhejiang Mengdeli Electric Company. Also see Notes 12 and                13.                  |   |                                 | 2,848,110  |                                    |   | - |   |
|  **Loans                from China Everybright Bank**                                                                                                                                                                                                                                                                        |   |                                 |       |                                    |   |   |   |
|  Monthly                interest only payments at 8.22% per annum, due August 9, 2008. And                secured                by the assets owned by the Company. Guaranteed by Nanlong Group Co.,Ltd                & Zhejiang Mengdeli Electric Company. Also see Notes 12 and                13.                   |   |                                 | 4,271,377  |                                    |   | 4,101,668 |   |
|  Monthly                interest only payments at 8.96% per annum, due February 18, 2009.                And                secured by the assets owned by the Company. Guaranteed by Nanlong                Group                Co.,Ltd & Zhejiang Mengdeli Electric Company. Also see Notes 12 and                13. |   |                                 | 712,028    |                                    |   | - |   |
|  **Loans                from Shanghai Pudong Development Bank**                                                                                                                                                                                                                                                              |   |                                 |       |                                    |   |   |   |
|  Monthly                interest only payments at 6.33 % per annum, due February 14, 2008,                secured                by the assets owned by the Company. Also see Notes 12 and 13.                (subsequently repaid on its due date)                                                                          |   |                                 | -          |                                    |   | 2,734,444 |   |
| Total                                                                                                                                                                                                                                                                                                                             |   | $                                    | 21,594,781 |                                    | $      | 20,869,862 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      15 - **
**NOTES      PAYABLE**

|                                                                    |   | **March                31,****2008** |      | **December                31,****2007** |   |
|-------------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
|                                                                    |   | **(Unaudited)**                      |      |                                    |   |
| Notes                payable to unrelated companies:                    |   |                                 |      |                                    |   |
| Due                April 17, 2008 (subsequently repaid on its due date) |   | $                                    | 712,028   |                                    | $      | 683,611 |   |
| Due                September 19, 2008                                   |   |                                 | 1,424,055 |                                    |   | 683,611 |   |
| Due                November 18, 2008                                    |   |                                 | 113,924   |                                    |   | 109,378 |   |
| Total                                                                   |   | $                                    | 2,250,007 |                                    | $      | 1,476,600 |   |

|                                                                    |   | **March                31,****2008** |      | **December                31,****2007** |   |
|-------------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------------|--------|
|                                                                    |   | **(Unaudited)**                      |      |                                    |   |
| Due                April 17, 2008 (subsequently repaid on its due date) |   |                                 | 712,028   |                                    |   | 683,611 |   |
| Due                September 19, 2008                                   |   |                                 | 1,424,055 |                                    |   | 683,611 |   |
| Due                November 18, 2008                                    |   |                                 | 1,424,055 |                                    |   | - |   |
| Total                                                                   |   | $                                    | 3,560,138 |                                    | $      | 1,367,222 |   |

**NOTE      16 - **
**INCOME      TAXES**

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

|                                        |   | **For                the Three Months Ended****March                31,****(Unaudited)** |    |
|---------------------------------------------|--------|------------------------------------------------------------------------------------------|---------|
|                                        |   | **2008**                                                                                 |    | **2007** |   |
| Current:                                    |   |                                                                                     |    |   |   |
| Provision                for CIT            |   | $                                                                                        | -       |   | $ | 39,876 |   |
|                                        |   |                                                                                     |    |   |   |   |   |
| Deferred:                                   |   |                                                                                     |    |   |   |   |   |
| Provision                for CIT            |   |                                                                                     | (39,965 | ) |   | (4,984 | ) |
|                                        |   |                                                                                     |    |   |   |   |   |
| Income                tax (benefit) expense |   | $                                                                                        | (39,965 | ) | $ | 34,892 |   |

----

**KANDI      TECHNOLOGIES, CORP. **

**(FORMERLY      STONE MOUNTAIN RESOURCES, INC.)**

**AND      SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**FOR      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      16 - **
**INCOME      TAXES (CONTINUED)**

|                                                   |   | **For                the Three Months Ended****March                31,****(Unaudited)** |     |
|--------------------------------------------------------|--------|------------------------------------------------------------------------------------------|----------|
|                                                   |   | **2008**                                                                                 |     | **2007** |   |
| Computed                “expected” expense |   | $                                                                                        | 267,514  |   | $ | 287,129 |   |
| Permanent                difference                    |   |                                                                                     | (58,291  | ) |   | 45,503 |   |
| Tax                exemption                           |   |                                                                                     | (249,188 | ) |   | (332,695 | ) |
| Income                tax (benefit) expense            |   | $                                                                                        | (39,965  | ) | $ | - |   |

|                                                       |   | **March                31,****2008** |     |  **December                31, 2007** |   |
|------------------------------------------------------------|--------|--------------------------------------|----------|--------------------------------------------|--------|
|                                                       |   | **(****Unaudited)**                  |     |
| Deferred                tax assets:                        |   |                                 |     |                                       |   |   |   |
| Non-current                portion:                        |   |                                 |     |                                       |   |   |   |
| Depreciation                                               |   |                                 | 735,306  |                                       |   | 694,512 |   |
| Valuation                allowance                         |   |                                 | (289,505 | )                                          |   | (289,506 | ) |
|  Subtotal                                             |   |                                 | 445,801  |                                       |   | 405,006 |   |
| Total                deferred tax assets                   |   |                                 | 445,801  |                                       |   | 405,006 |   |
| Deferred                tax liabilities:                   |   |                                 |     |                                       |   |   |   |
| Non-current                portion:                        |   |                                 |     |                                       |   |   |   |
| Accumulated                other comprehensive (gain) loss |   |                                 | (296,511 | )                                          |   | (296,511 | ) |
| Subtotal                                                   |   |                                 | (296,511 | )                                          |   | (296,511 | ) |
| Total                deferred tax liabilities              |   |                                 | (296,511 | )                                          |   | (296,511 | ) |
| Net                deferred tax assets (liabilities)       |   | $                                    | 149,290  |                                       | $      | 108,495 |   |

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      16 - **
**INCOME      TAXES (CONTINUED)**

**NOTE      17 - **
**CONTINGENCIES**

| (a) | In                2006, the Company brought a legal action against Weifang Rongda Automobile                Trading Co., Ltd. for returned goods that were damaged. As the plaintiff,                the Company has claimed for compensation. According to the judge's                report                from the local court in Jinhua, PRC, on December 8, 2006, the                Company prevailed in the lawsuit and Weifang Rongda Automobile                Trading Co., Ltd. was required to pay approximately $26,408 as                compensation to the Company. However, the defendant appealed the                ruling to                a higher level court and the Company has not received the compensation                as                of April 30, 2008. Considering the uncertainties of the legal proceeding,                the Company did not record a contingent gain for this at March 31,                2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**KANDI        TECHNOLOGIES, CORP. **

**(FORMERLY        STONE MOUNTAIN RESOURCES, INC.)**

**AND        SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

**NOTE      18 - **
**DEPOSIT      FOR ACQUISITION**

|                                                                        |   | **Pro                Forma Combined****(Unaudited)** |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                                        |   |                                                 |   |   |   |
| **REVENUES**                                                                |   |                                                 |   |   | $ | 9,487,285 |   |
|                                                                        |   |                                                 |   |   |   |   |   |
| **GROSS                PROFIT**                                             |   |                                                 |   |   | $ | 2,182,008 |   |
|                                                                        |   |                                                 |   |   |   |   |   |
| **INCOME                FROM OPERATIONS**                                   |   |                                                 |   |   | $ | 1,640,502 |   |
|                                                                        |   |                                                 |   |   |   |   |   |
| **NET                INCOME**                                               |   |                                                 |   |   | $ | 1,110,176 |   |
|                                                                        |   |                                                 |   |   |   |   |   |
| **NET                INCOME PER SHARE****BASIC                AND DILUTED** |   |                                                 |   |   | $ | 0.06 |   |

**NOTE      19 - **
**DISCONTINUED      OPERATION **

----

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

**Results        of Operations**

***Comparison        of Three Months Ended March 31, 2008 and 2007.***

----

|                                                                     |   | **For                the Three Months Ended March 31, 2008** |      | **%                of Revenue**  |   | **For                the Three Months Ended March 31, 2007** |   | **%                of Revenue**  |      | **Change                in Amount **  |   | **Change****in                %**  |   |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------|-----------|---------------------------------------|--------|--------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------------------|--------|-----------------------------------------|--------|
| **REVENUES**                                                             |   | $                                                            | 9,487,285 |                                  |   | 100.0                                                        | %      | $                                     | 5,376,977 |                                            |   | 100.0                                   | %      | $ | 4,110,308 |   |   | 76.4 | % |
| **COST                OF GOODS SOLD**                                    |   |                                                         | 7,305,277 |                                  |   | 77.0                                                         | %      |                                  | 4,403,741 |                                            |   | 81.9                                    | %      |   | 2,901,536 |   |   | 65.9 | % |
| **GROSS                PROFIT**                                          |   |                                                         | 2,182,008 |                                  |   | 23.0                                                         | %      |                                  | 973,236   |                                            |   | 18.1                                    | %      |   | 1,208,772 |   |   | 124.2 | % |
| Selling                and Marketing                                     |   |                                                         | 215,776   |                                  |   | 2.3                                                          | %      |                                  | 80,761    |                                            |   | 1.5                                     | %      |   | 135,015 |   |   | 167.2 | % |
| General                and Administrative                                |   |                                                         | 279,120   |                                  |   | 2.9                                                          | %      |                                  | 141,594   |                                            |   | 2.6                                     | %      |   | 137,526 |   |   | 97.1 | % |
| Research                and Development                                  |   |                                                         | 46,610    |                                  |   | 0.5                                                          | %      |                                  | 11,978    |                                            |   | 0.2                                     | %      |   | 34,632 |   |   | 289.1 | % |
| **INCOME                FROM CONTINUING OPERATIONS**                     |   |                                                         | 1,640,502 |                                  |   | 17.3                                                         | %      |                                  | 738,903   |                                            |   | 13.7                                    | %      |   | 901,599 |   |   | 122.0 | % |
| Government                Grants                                         |   |                                                         | 23,381    |                                  |   | 0.2                                                          | %      |                                  | -         |                                            |   | 0.0                                     | %      |   | 23,381 |   |   | 100 | % |
| Interest                Expense, Net                                     |   |                                                         | (615,540  | )                                     |   | (6.5                                                         | %)     |                                  | (134,632  | )                                               |   | (2.5                                    | %)     |   | (480,908 | ) |   | 357.2 | % |
| Forfeiture                of Customer Deposits                           |   |                                                         | -         |                                  |   | 0.0                                                          | %      |                                  | 265,789   |                                            |   | 4.9                                     | %      |   | (265,789 | ) |   | (100.0 | %) |
| Other                Income, Net                                         |   |                                                         | 21,711    |                                  |   | 0.2                                                          | %      |                                  | 218       |                                            |   | 0.0                                     | %      |   | 21,493 |   |   | 9,859.2 | % |
| **INCOME                FROM CONTINUING OPERATIONS BEFORE INCOME TAXES** |   |                                                         | 1,070,054 |                                  |   | 11.3                                                         | %      |                                  | 870,278   |                                            |   | 16.2                                    | %      |   | 199,776 |   |   | 23.0 | % |
| **INCOME                TAX BENEFIT**                                    |   |                                                         | 39,965    |                                  |   | 0.4                                                          | %      |                                  | -         |                                            |   | 0.0                                     | %      |   | 39,965 |   |   | 100 | % |
| **NET                INCOME FROM CONTINUING OPERATIONS**                 |   |                                                         | 1,110,019 |                                  |   | 11.7                                                         | %      |                                  | 870,278   |                                            |   | 16.2                                    | %      |   | 239,741 |   |   | 27.5 | % |
| **INCOME                FROM DISCONTINUED OPERATION**                    |   |                                                         | 157       |                                  |   | 0.0                                                          | %      |                                  | 70,840    |                                            |   | 1.3                                     | %      |   | (70,683 | ) |   | (99.8 | %) |
| **NET                INCOME**                                            |   | $                                                            | 1,110,176 |                                  |   | 11.7                                                         | %      | $                                     | 941,118   |                                            |   | 17.5                                    | %      | $ | 169,058 |   |   | 18.0 | % |

***Revenue***

***Cost      of Sales***
* *

***Gross      Profit***

----

***Selling      and Marketing***

***General      and Administrative***

***Research      and Development***

***Income      Taxes***

***Income      From Discontinued Operation***

***Net      Income***

**Liquidity      and Capital Resources**

***Cash      Flows***

***Three      Months ended March 31, 2008 and 2007***

----

***Working      Capital***

**Summary      of Significant Accounting Policies**

*Earnings      Per Share*

*Fair      Value of Financial Instruments*

----

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**Item      3. Controls and Procedures**

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**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings.**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds.**

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders.**

**Item      5. Other Information.**

**Item      6. Exhibits.**

|   | 31.1 | Certification                pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange                Act of                1934. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange                Act of                1934. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

**KANDI      TECHNOLOGIES, CORP.**

| Date:                May 15, 2008  | By:   | /s/Hu              Xiaoming                                                    |   |
|-----------------------------------------|-----------------|--------------------------------------------------------------------------------|--------|
|                                    |            | Hu                XiaomingPresident                and Chief Executive Officer |   |
|                                    |
|                                    |            |                                                                           |
| Date:                May 15, 2008  | By:   | /s/Zhu              Xiaoying                                                   |   |
|                                    |            | Zhu                XiaoyingChief                Financial Officer              |   |

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