UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
For the transition period from _____________ to _____________
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
People’s Republic of
(Address of principal executive offices, Zip Code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of each of the issuer’s classes of common stock, as of November 8, 2023 is as follows:
| Class of Securities | Shares Outstanding | |
| Common Stock, $0.001 par value |
CBAK ENERGY TECHNOLOGY, INC.
TABLE OF CONTENTS
i
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
FINANCIAL STATEMENTS
CBAK ENERGY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
September 30, 2022 AND 2023
CBAK ENERGY TECHNOLOGY, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
1
CBAK Energy Technology, Inc. and Subsidiaries
Condensed consolidated Balance Sheets
As of December 31, 2022 and September 30, 2023
(Unaudited)
(In US$ except for number of shares)
| Note | December 31, 2022 | September 30, 2023 | |||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Pledged deposits | 2 | ||||||||||
| Trade and bills receivable, net | 3 | ||||||||||
| Inventories | 4 | ||||||||||
| Prepayments and other receivable | 5 | ||||||||||
| Receivables from former subsidiary, net | 17 | ||||||||||
| Income tax recoverable | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | 6 | ||||||||||
| Construction in progress | 7 | ||||||||||
| Long-term investments, net | 8 | ||||||||||
| Prepaid land use rights | 9 | ||||||||||
| Intangible assets, net | 10 | ||||||||||
| Deposit paid for acquisition of long-term investments | 13 | ||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Deferred tax assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Trade and bills payable | 14 | $ | $ | ||||||||
| Short-term bank borrowings | 15 | ||||||||||
| Other short-term loans | 15 | ||||||||||
| Accrued expenses and other payables | 16 | ||||||||||
| Payables to former subsidiaries, net | 17 | ||||||||||
| Deferred government grants, current | 18 | ||||||||||
| Product warranty provisions | 19 | ||||||||||
| Warrants liability | 26 | ||||||||||
| Operating lease liability, current | 9 | ||||||||||
| Finance lease liability, current | 9 | ||||||||||
| Total current liabilities | |||||||||||
| Deferred government grants, non-current | 18 | ||||||||||
| Product warranty provisions | 19 | ||||||||||
| Operating lease liability, non-current | 9 | ||||||||||
| Accrued expenses and other payables, non-current | 16 | ||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | 27 | ||||||||||
| Shareholders’ equity | |||||||||||
| Common stock $ | |||||||||||
| Donated shares | |||||||||||
| Additional paid-in capital | |||||||||||
| Statutory reserves | |||||||||||
| Accumulated deficit | ( | ) | ( | ) | |||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | |||||||
| Less: Treasury shares | ( | ) | ( | ) | |||||||
| Total shareholders’ equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and shareholder’s equity | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
2
CBAK Energy Technology, Inc. and Subsidiaries
Condensed consolidated Statements of Operations and Comprehensive Income (Loss)
For the three and nine months ended September 30, 2022 and 2023
(Unaudited)
(In US$ except for number of shares)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
| Note | 2022 | 2023 | 2022 | 2023 | ||||||||||||||
| Net revenues | 29 | $ | $ | $ | $ | |||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Recovery of (provision for) doubtful accounts | ( | ) | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Operating (loss) income | ( | ) | ( | ) | ( | ) | ||||||||||||
| Finance income (expenses), net | ( | ) | ( | ) | ||||||||||||||
| Other (expenses) income, net | ( | ) | ( | ) | ||||||||||||||
| Change in fair value of warrants | ||||||||||||||||||
| Income (loss) before income tax | ( | ) | ( | ) | ||||||||||||||
| Income tax credit (expenses) | 20 | ( | ) | |||||||||||||||
| Net (loss) income | ( | ) | ||||||||||||||||
| Less: Net loss attributable to non-controlling interest | ||||||||||||||||||
| Net (loss) income attributable to CBAK Energy Technology, Inc. | $ | ( | ) | $ | $ | $ | ||||||||||||
| Net (loss) income | ( | ) | ||||||||||||||||
| Other comprehensive loss | ||||||||||||||||||
| – Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive (loss) income | ( | ) | ( | ) | ( | ) | ||||||||||||
| Less: Comprehensive loss attributable to non-controlling interest | ||||||||||||||||||
| Comprehensive (loss) income attributable to CBAK Energy Technology, Inc. | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Income (loss) per share | 25 | |||||||||||||||||
| – Basic | $ | ( | )* | $ | $ | $ | ||||||||||||
| – Diluted | $ | ( | )* | $ | $ | $ | ||||||||||||
| Weighted average number of shares of common stock: | 25 | |||||||||||||||||
| – Basic | ||||||||||||||||||
| – Diluted | ||||||||||||||||||
| * |
See accompanying notes to the condensed consolidated financial statements.
3
CBAK Energy Technology, Inc. and Subsidiaries
Condensed consolidated statements of changes in shareholders’ equity (deficit)
For the three months ended September 30, 2022 and 2023
(Unaudited)
(In US$ except for number of shares)
| Common stock issued | Additional | Accumulated other | Non- | Treasury shares | Total shareholders’ | |||||||||||||||||||||||||||||||||||||||
| Number of | Donated | paid-in | Statutory | Accumulated | comprehensive | Controlling | Number of | equity | ||||||||||||||||||||||||||||||||||||
| shares | Amount | shares | capital | reserves | deficit | income (loss) | interest | shares | Amount | (deficit) | ||||||||||||||||||||||||||||||||||
| Balance as of July 1, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Share-based compensation for employee and director stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Capital injection | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Balance as of July 1, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation for employee and director stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued to employees and directors for stock awards | - | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
4
CBAK Energy Technology, Inc. and Subsidiaries
Condensed consolidated statements of changes in shareholders’ equity (deficit)
For the nine months ended September 30, 2022 and 2023
(Unaudited)
(In US$ except for number of shares)
| Common stock issued | Additional | Accumulated other | Non- | Treasury shares | Total shareholders’ | |||||||||||||||||||||||||||||||||||||||
| Number of | Donated | paid-in | Statutory | Accumulated | comprehensive | Controlling | Number of | equity | ||||||||||||||||||||||||||||||||||||
| shares | Amount | shares | capital | reserves | deficit | Income (loss) | interest | shares | Amount | (deficit) | ||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation for employee and director stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued to employees and directors for stock awards | - | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||
| Capital injection | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation for employee and director stock awards | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued to employees and directors for stock awards | - | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
5
CBAK Energy Technology, Inc. and subsidiaries
Condensed consolidated statements of cash flows
For the nine months ended September 30, 2022 and 2023
(Unaudited)
(In US$)
| Nine months ended September 30, | ||||||||
| 2022 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for doubtful accounts and bad debts written off | ||||||||
| Amortization of operating lease | ||||||||
| Write-down of inventories | ||||||||
| Share-based compensation | ||||||||
| Changes in fair value of warrants liability | ( | ) | ( | ) | ||||
| Loss on disposal of property, plant and equipment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and bills receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepayments and other receivable | ( | ) | ||||||
| Investment in sales-type lease | ||||||||
| Trade and bills payable | ||||||||
| Accrued expenses and other payables and product warranty provisions | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Trade receivable from and payables to former subsidiaries | ( | ) | ||||||
| Income tax recoverable | ( | ) | ||||||
| Deferred tax assets | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Deposit paid for acquisition of long-term investment | ( | ) | ||||||
| Purchases of property, plant and equipment and construction in progress | ( | ) | ( | ) | ||||
| Proceeds on disposal of property, plant and equipment | ||||||||
| Investment in equity method investment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from bank borrowings | ||||||||
| Repayment of bank borrowings | ( | ) | ( | ) | ||||
| Repayment of borrowings from Mr. Ye Junnan | ( | ) | ||||||
| Borrowings from a shareholder | ||||||||
| Repayment of borrowings from a shareholder | ( | ) | ||||||
| Borrowings from a related party | ||||||||
| Capital injection from non-controlling interests | ||||||||
| Borrowings from unrelated parties | ||||||||
| Repayment of borrowings from a unrelated party | ( | ) | ||||||
| Proceeds from finance lease | ||||||||
| Principal payments of finance leases | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents and restricted cash | ||||||||
| Cash and cash equivalents and restricted cash at the beginning of period | ||||||||
| Cash and cash equivalents and restricted cash at the end of period | $ | $ | ||||||
| Supplemental non-cash investing and financing activities: | ||||||||
| Transfer of construction in progress to property, plant and equipment | $ | $ | ||||||
| Lease liabilities arising from obtaining right-of-use assets | $ | $ | ||||||
| Cash paid during the year for: | ||||||||
| Income taxes | $ | $ | ||||||
| Interest, net of amounts capitalized | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements.
6
CBAK Energy Technology, Inc. and subsidiaries
Notes to the condensed consolidated financial statements
For the three and nine months ended September 30, 2022 and 2023
(Unaudited)
(In US$ except for number of shares)
1. Principal Activities, Basis of Presentation and Organization
Principal Activities
CBAK Energy Technology, Inc. (formerly known as China BAK Battery, Inc.) (“CBAK” or the “Company”) is a corporation formed in the State of Nevada on October 4, 1999 as Medina Copy, Inc. The Company changed its name to Medina Coffee, Inc. on October 6, 1999 and subsequently changed its name to China BAK Battery, Inc. on February 14, 2005. CBAK and its subsidiaries (hereinafter, collectively referred to as the “Company”) are principally engaged in the manufacture, commercialization and distribution of a wide variety of standard and customized lithium ion (known as “Li-ion” or “Li-ion cell”) high power rechargeable batteries. Prior to the disposal of BAK International Limited (“BAK International”) and its subsidiaries (see below), the batteries produced by the Company were for use in cellular telephones, as well as various other portable electronic applications, including high-power handset telephones, laptop computers, power tools, digital cameras, video camcorders, MP3 players, electric bicycles, hybrid/electric vehicles, and general industrial applications. After the disposal of BAK International and its subsidiaries on June 30, 2014, the Company will focus on the manufacture, commercialization and distribution of high power lithium ion rechargeable batteries for use in cordless power tools, light electric vehicles, hybrid electric vehicles, electric cars, electric busses, uninterruptable power supplies and other high power applications.
The shares of the Company traded in the over-the-counter market through the Over-the-Counter Bulletin Board from 2005 until May 31, 2006, when the Company obtained approval to list its common stock on The NASDAQ Global Market, and trading commenced that same date under the symbol “CBAK”.
On January 10, 2017, the Company filed Articles of Merger with the Secretary of State of Nevada to effectuate a merger between the Company and the Company’s newly formed, wholly owned subsidiary, CBAK Merger Sub, Inc. (the “Merger Sub”). According to the Articles of Merger, effective January 16, 2017, the Merger Sub merged with and into the Company with the Company being the surviving entity (the “Merger”). As permitted by Chapter 92A.180 of Nevada Revised Statutes, the sole purpose of the Merger was to effect a change of the Company’s name.
Effective November 30, 2018, the trading symbol for common stock of the Company was changed from CBAK to CBAT. Effective at the opening of business on June 21, 2019, the Company’s common stock started trading on the Nasdaq Capital Market.
Basis of Presentation and Organization
On November 6, 2004, BAK International, a non-operating holding company that had substantially the same shareholders as Shenzhen BAK Battery Co., Ltd (“Shenzhen BAK”), entered into a share swap transaction with the shareholders of Shenzhen BAK for the purpose of the subsequent reverse acquisition of the Company. The share swap transaction between BAK International and the shareholders of Shenzhen BAK was accounted for as a reverse acquisition of Shenzhen BAK with no adjustment to the historical basis of the assets and liabilities of Shenzhen BAK.
On January 20, 2005, the Company completed a share swap transaction with the shareholders of BAK International. The share swap transaction, also referred to as the “reverse acquisition” of the Company, was consummated under Nevada law pursuant to the terms of a Securities Exchange Agreement entered by and among CBAK, BAK International and the shareholders of BAK International on January 20, 2005. The share swap transaction has been accounted for as a capital-raising transaction of the Company whereby the historical financial statements and operations of Shenzhen BAK are consolidated using historical carrying amounts.
7
Also on January 20, 2005, immediately prior to
consummating the share swap transaction, BAK International executed a private placement of its common stock with unrelated investors whereby
it issued an aggregate of
Under accounting principles generally accepted in the United States of America (“US GAAP”), escrow agreements such as the one established by Mr. Li generally constitute compensation if, following attainment of a performance threshold, shares are returned to a company officer. The Company determined that without consideration of the compensation charge, the performance thresholds for the year ended September 30, 2005 would be achieved. However, after consideration of a related compensation charge, the Company determined that such thresholds would not have been achieved. The Company also determined that, even without consideration of a compensation charge, the performance thresholds for the year ended September 30, 2006 would not be achieved.
While the
At the time the escrow shares relating to the
2006 performance threshold were transferred to the investors in fiscal year 2007, the Company should have recognized a credit to donated
shares and a debit to additional paid-in capital, both of which are elements of shareholders’ equity. This entry is not material
because total ordinary shares issued and outstanding, total shareholders’ equity and total assets do not change; nor is there any
impact on income or earnings per share. Therefore, previously filed consolidated financial statements for the fiscal year ended September
30, 2007 will not be restated. This share transfer has been reflected in these financial statements by reclassifying the balances of certain
items as of October 1, 2007. The balances of donated shares and additional paid-in capital as of October 1, 2007 were credited and debited
by $
In November 2007, Mr. Li delivered the
Beginning on March 13, 2008, the Company entered into settlement agreements (the “2008 Settlement Agreements”) with certain investors in the January 2005 private placement. Since the other investors have never submitted any claims regarding this matter, the Company did not reach any settlement with them.
8
Pursuant to the 2008 Settlement Agreements, the
Company and the settling investors have agreed, without any admission of liability, to a settlement and mutual release from all claims
relating to the January 2005 private placement, including all claims relating to the escrow shares related to the 2005 performance threshold
that had been placed into escrow by Mr. Li, as well as all claims, including claims for liquidated damages relating to registration rights
granted in connection with the January 2005 private placement. Under the 2008 Settlement Agreement, the Company has made settlement payments
to each of the settling investors of the number of shares of the Company’s common stock equivalent to
Pursuant to the Li Settlement Agreement, the 2008
Settlement Agreements and upon the release of the
As of September 30, 2023, the Company had not received any claim from the other investors who have not been covered by the “2008 Settlement Agreements” in the January 2005 private placement.
As the Company has transferred the
On August 14, 2013, Dalian BAK Trading Co., Ltd
was established as a wholly owned subsidiary of China BAK Asia Holding Limited (“BAK Asia”) with a registered capital of $
On December 27, 2013, Dalian BAK Power Battery
Co., Ltd was established as a wholly owned subsidiary of BAK Asia with a registered capital of $
On May 4, 2018, CBAK New Energy (Suzhou) Co.,
Ltd (“CBAK Suzhou”) was established as a
9
On November 21, 2019, Dalian CBAK Energy Technology
Co., Ltd (“CBAK Energy”) was established as a wholly owned subsidiary of BAK Asia with a registered capital of $
On July 14, 2020, the Company acquired BAK Asia
Investments Limited (“BAK Investments”), a company incorporated under Hong Kong laws, from Mr. Xiangqian Li, the Company’s
former CEO, for a cash consideration of HK$
On July 31, 2020, BAK Investments formed a wholly
owned subsidiary CBAK New Energy (Nanjing) Co., Ltd. (“CBAK Nanjing”) in China with a registered capital of $
On August 6, 2020, Nanjing CBAK New Energy Technology
Co., Ltd. (“Nanjing CBAK”) was established as a wholly owned subsidiary of CBAK Nanjing with a registered capital of RMB
On November 9, 2020, Nanjing Daxin New Energy
Automobile Industry Co., Ltd (“Nanjing Daxin”) was established as a wholly owned subsidiary of CBAK Nanjing with a register
capital of RMB
On April 21, 2021, CBAK Power, along with Shenzhen
BAK Power Battery Co., Ltd (BAK SZ), Shenzhen Asian Plastics Technology Co., Ltd (SZ Asian Plastics) and Xiaoxia Liu, entered into an
investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu Zhu, and Jiangsu Saideli Pharmaceutical Machinery
Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd (“DJY”). CBAK Power has paid $
On August 4, 2021, Daxin New Energy Automobile
Technology ( Jiangsu) Co., Ltd (“Jiangsu Daxin”) was established as a wholly owned subsidiary of Nanjing CBAK with a register
capital of RMB
On July 20, 2021, CBAK Power entered into a framework
agreement relating to CBAK Power’s investment in Zhejiang Hitrans Lithium Battery Technology Co., Ltd (“Hitrans”, formerly
known as Zhejiang Meidu Hitrans Lithium Battery Technology Co., Ltd), pursuant to which CBAK Power agreed to acquire
On
July 8, 2022, Hitrans held its second shareholder meeting (“the shareholder meeting”) in 2022 to pass a resolution to increase
the registered capital of Hitrans from RMB
10
On
December 8, 2022, CBAK Power entered into equity interest transfer agreements with five individuals to disposal in aggregate
On March 10, 2023, CBAK Power entered into an
agreement with Nanjing BFD to transfer the
On July 6, 2018, Guangdong Meidu Hitrans
Resources Recycling Technology Co., Ltd. (“Guangdong Hitrans”) was established as a
On October 9, 2021, Shaoxing Haisheng International
Trading Co., Ltd. (“Haisheng”) was established as a wholly owned subsidiary of Hitrans with a register capital of RMB
On July 25, 2023, CBAK New Energy (Shangqiu) Co.,
Ltd (“CBAK Shangqiu”) was established as a wholly owned subsidiary of CBAK Power with a registered capital of RMB
The Company’s condensed consolidated financial statements have been prepared under US GAAP.
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company and its subsidiaries, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liability established in the PRC or Hong Kong. The accompanying condensed consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company’s subsidiaries to present them in conformity with US GAAP.
The interim condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2022 and 2023 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on April 14, 2023.
11
In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim condensed consolidated financial position as of September 30, 2023, its interim condensed consolidated results of operations and cash flows for the three and nine months ended September 30, 2022 and 2023, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
On December 8, 2020, the Company entered into
a securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering,
an aggregate of
12
On May 10, 2021, the Company entered into that Amendment No. 1 to the Series B Warrant (the “Series B Warrant Amendment”) with each of the holders of the Company’s outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August 31, 2021.
As of August 31, 2021, the Company had not received any notices from the investors to exercise Series B warrants. As of the date of this report, Series B warrants, along with Series A-2 warrants, had both expired.
As of September 30, 2023, the Company had $
The Company is currently expanding its product lines and manufacturing capacity in its Dalian, Nanjing and Zhejiang plant which requires more funding to finance the expansion. The Company plans to raise additional funds through banks borrowings and equity financing in the future to meet its daily cash demands, if required.
COVID-19
The Company business has been and may continue to be adversely affected by the COVID-19 pandemic or other health epidemics and outbreaks. The Company’s manufacturing facilities in Dalian, Nanjing and Shaoxing were not producing at full capacity when restrictive measures were in force during 2022, which negatively affected the Company operational and financial results. China began to modify its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements were lifted in December 2022.
The extent of the impact of the COVID-19 pandemic that will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify, as the actions that the Company, other businesses and governments may take to contain the spread of COVID-19 continue to evolve. Because of the significant uncertainties surrounding the COVID-19 pandemic, the extent of the future business interruption and the related financial impact cannot be reasonably estimated at this time.
The severity of the impact of the COVID-19 pandemic on the Company’s business will continue to depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the new variants of COVID-19, the efficacy and distribution of COVID-19 vaccines and the extent and severity of the impact on the global supply chain and the Company’s customers, service providers and suppliers, all of which are uncertain and cannot be reasonably predicted at this time. As of the date of issuance of the Company’s condensed consolidated financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. The Company is monitoring and assessing the evolving situation closely and evaluating its potential exposure.
Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has accumulated deficit from recurring net losses incurred for the prior years and significant short-term debt obligations maturing in less than one year as of September 30, 2023. These conditions raise substantial doubt about the Company ability to continue as a going concern. The Company’s plan for continuing as a going concern included improving its profitability, and obtaining additional debt financing, loans from existing directors and shareholders for additional funding to meet its operating needs. There can be no assurance that the Company will be successful in the plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Revenue Recognition
The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.
13
Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
Contract liability
The Company’s contract liabilities consist
of deferred revenue associated with batteries development and deposits received from customers allocated to the performance obligations
that are unsatisfied. Changes in contract liability balances were not materially impacted by business acquisition, change in estimate
of transaction price or any other factors during any of the years presented.
| September 30 | ||||||||
| 2022 | 2023 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Development fees collected/ deposits received | ||||||||
| Development and sales of batteries revenue recognized | ( | ) | ||||||
| Foreign exchange adjustment | ( | ) | ||||||
| Balance at end of period | $ | $ | ||||||
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company applied the new standard beginning January 1, 2023 using the modified retrospective method. This adoption did not have material impact on the Company’s condensed consolidated financial statements.
Recently Issued But Not Yet Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Adoption of the ASUs is on a modified retrospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact that the adoption of ASU 2017-04 will have on its condensed consolidated financial statement presentation or disclosures.
14
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. This creates an exception to the general recognition and measurement principles in ASC 805. As a smaller reporting company, ASU 2021-08 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2023, with early adoption permitted. The amendments in this ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company does not anticipate that the adoption of this guidance will have a material impact on the condensed consolidated financial statements.
In March 2023, the FASB issued ASU 2023-01, Lease (Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01 will have on the condensed consolidated financial statement presentations and disclosures.
In March 2023, the FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, that is intended to improve the accounting and disclosures for investments in tax credit structures. This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. The Company does not anticipate that the adoption of ASU 2023-02 to have material impact on the condensed consolidated financial statement presentation or disclosures.
In October 2023, the FASB issued Accounting Standards Update No. 2023-06 to clarify or improve disclosure and presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB accounting standard codification with the SEC's regulations. The Company is currently evaluating the provisions of the amendments and the impact on its condensed consolidated financial statement presentations and disclosures.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
2. Pledged deposits
Pledged deposits as of December 31, 2022 and September 30, 2023 consisted pledged deposits with banks for bills payable (note 14).
15
3. Trade and Bills Receivable, net
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Trade receivable | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Bills receivable | ||||||||
| $ | $ | |||||||
Included in trade and bills receivables are retention
receivables of $
| Balance as at December 31, 2022 | $ | |||
| Adoption of ASC Topic 326 | ||||
| Balance as at January 1, 2023 | ||||
| Current period provision, net | ||||
| Reversal – recoveries by cash | ( | ) | ||
| Foreign exchange adjustment | ( | ) | ||
| Balance as at September 30, 2023 | $ |
4. Inventories
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Raw materials | $ | $ | ||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
During the three months ended September 30, 2022
and 2023, write-downs of obsolete inventories to lower of cost or net realizable value of $
During the nine months ended September 30, 2022
and 2023, write-downs of obsolete inventories to lower of cost or net realizable value of $
5. Prepayments and Other Receivable
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Value added tax recoverable | $ | $ | ||||||
| Prepayments to suppliers | ||||||||
| Deposits | ||||||||
| Staff advances | ||||||||
| Prepaid operating expenses | ||||||||
| Receivables from sales of vehicles | ||||||||
| Others | ||||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| $ | $ | |||||||
16
| Balance as at December 31, 2022 | $ | |||
| Adoption of ASC Topic 326 | ||||
| Balance as at January 1, 2023 | ||||
| Current period provision, net | ||||
| Foreign exchange adjustment | ( | ) | ||
| Balance as at September 30, 2023 | $ |
6. Property, Plant and Equipment, net
| December 31, 2022 | September 30, 2023 | |||||||
| Buildings | $ | $ | ||||||
| Leasehold Improvements | ||||||||
| Machinery and equipment | ||||||||
| Office equipment | ||||||||
| Motor vehicles | ||||||||
| Impairment | ( | ) | ( | ) | ||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Carrying amount | $ | $ | ||||||
During the three months ended September 30, 2022
and 2023, the Company incurred depreciation expense of $
During the nine months ended September 30, 2022
and 2023, the Company incurred depreciation expense of $
The Company has not yet obtained the property
ownership certificates of the buildings in its Dalian manufacturing facilities with a carrying amount of $
During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company’s property, plant and equipment. The impairment charge, if any, represented the excess of carrying amounts of the Company’s property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company’s production facilities. The Company believes that there was no impairment during the three and nine months ended September 30, 2022 and 2023.
17
7. Construction in Progress
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Construction in progress | $ | $ | ||||||
| Prepayment for acquisition of property, plant and equipment | ||||||||
| Carrying amount | $ | $ | ||||||
Construction in progress as of December 31, 2022 and September 30, 2023 mainly comprised capital expenditures for the construction of the facilities and production lines of CBAK Power, Nanjing CBAK and Hitrans.
For the three months ended September 30, 2022
and 2023, the Company capitalized interest of and $
For the nine months ended September 30, 2022 and
2023, the Company capitalized interest of and $
8. Long-term investments, net
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Investments in equity method investees | $ | $ | ||||||
| Investments in non-marketable equity | ||||||||
| $ | $ | |||||||
| Balance as at January 1, 2022 | $ | |||
| Investments made | ||||
| Income from investment | ||||
| Foreign exchange adjustment | ( |
) | ||
| Balance as of December 31, 2022 | ||||
| Foreign exchange adjustment | ( |
) | ||
| Balance as of September 30, 2023 | $ |
In August 2022, Nanjing CBAK, along with two unrelated
third parties of the Company, Guangxi Guiwu Recycle Resources Company Limited (“Guangxi Guiwu”) and Mr. Weidong Xu,
an unrelated third party entered into an investment agreement to jointly set up a new company - Guangxi Guiwu CBAK New Energy Technology
Co., Ltd (“Guangxi Guiwu CBAK”) in which each party holding
Guangxi Guiwu CBAK commenced operations in 2023. For the period ended September 30, 2023, no income from the above investment was recorded.
18
| December 31, 2022 | September 30, 2023 | |||||||
| Cost | $ | $ | ||||||
| Impairment | ( | ) | ( | ) | ||||
| Carrying amount | $ | $ | ||||||
On April 21, 2021, CBAK Power, along with Shenzhen
BAK Power Battery Co., Ltd (BAK Shenzhen), Shenzhen Asian Plastics Technology Co., Ltd (SZ Asian Plastics) and Xiaoxia Liu (collectively
the “Investors”), entered into an investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu
Zhu, and Jiangsu Saideli Pharmaceutical Machinery Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd (“DJY”),
a privately held company. CBAK Power has paid $
On April 2023, DJY board declared dividend of
$
On November 28, 2022, Nanjing CBAK along with
Shenzhen Education for Industry Investment Co., Ltd. and Wenyuan Liu, an individual investor, set up Nanjing CBAK Education For Industry
Technology Co., Ltd (“CBAK Education”) with a registered capital of RMB
Non-marketable equity securities are investments in privately held companies without readily determinable market value. The Company measures investments in non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3. The Company adjusts the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other operating income (expense), net. The Company recognized impairment loss for the three and nine months period ended September 30, 2022 and 2023.
9. Lease
| Prepaid | ||||
| land | ||||
| lease payments | ||||
| Balance as of January 1, 2022 | $ | |||
| Amortization charge for the year | ( | ) | ||
| Foreign exchange adjustment | ( | ) | ||
| Balance as of December 31, 2022 | ||||
| Amortization charge for the period | ( | ) | ||
| Foreign exchange adjustment | ( | ) | ||
| Balance as of September 30, 2023 | $ | |||
In August 2014 and November 2021, the Group acquired land use rights to build a factory of the Company in Dalian, PRC and Zhejiang, PRC.
19
Lump sum payments were made upfront to acquire
the leased land from the owners with lease periods of
Amortization expenses of the prepaid land use
rights were $
No impairment loss was made to the carrying amounts of the prepaid land use right for the three and nine months ended September 30, 2022 and 2023.
(b) Operating lease
On June 1, 2021, Hitrans entered into a lease
agreement with liquid gas supplier for a year term for supplying liquid nitrogen and oxygen, commencing on July 1, 2021. The monthly
rental payment is approximately RMB
20
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Operating lease cost – straight line | $ | $ | $ | $ | ||||||||||||
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Property, plant and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ||||||
| Impairment | ( | ) | ||||||
| Property, plant and equipment, net under finance lease | ||||||||
| Finance lease liabilities, current | ||||||||
| Finance lease liabilities, non-current | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Finance lease cost: | ||||||||||||||||
| Depreciation of assets | ||||||||||||||||
| Interest of lease liabilities | ||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||
| Operating leases | Finance leases | |||||||
| Remainder of 2023 | $ | $ | ||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| Thereafter | ||||||||
| Total undiscounted cash flows | ||||||||
| Less: imputed interest | ( | ) | ||||||
| Present value of lease liabilities | $ | $ | ||||||
21
Lease term and discount rate:
| December 31, 2022 | September 30, 2023 | |||||||
| Weighted-average remaining lease term | ||||||||
| Land use rights | ||||||||
| Operating lease | ||||||||
| Finance lease | ||||||||
| Weighted-average discount rate | ||||||||
| Land use rights | ||||||||
| Operating lease | % | % | ||||||
| Finance lease | % | % | ||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Operating cash outflows from operating assets | $ | $ | $ | $ | ||||||||||||
10. Intangible Assets, net
| December 31, 2022 | September 30, 2023 | |||||||
| Computer software at cost | $ | $ | ||||||
| Sewage discharge permit* | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Amortization expenses were $
Amortization expenses were $
| Remainder of 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total | $ |
22
11. Acquisition of subsidiaries
On April 1, 2021, CBAK Power entered into a framework
investment agreement with Hangzhou Juzhong Daxin Asset Management Co., Ltd. (“Juzhong Daxin”) for a potential acquisition
of Hitrans. Juzhong Daxin is the trustee of
On July 20, 2021, CBAK Power entered into a framework
agreement relating to CBAK Power’s investment in Hitrans, pursuant to which CBAK Power will acquire
As of the date of the Acquisition Agreement,
the
In addition, as of the date of the Acquisition
Agreement, Meidu Graphene’s
As a part of the transaction, CBAK Power entered
into a loan agreement with Hitrans to lend Hitrans approximately RMB
23
CBAK Power shall pay all other fees due to
Juzhong Daxin in accordance with the Letter of Intent. According to the Acquisition Agreement, Mr. Ye will first acquire
The transfer of
Upon the closing of the Acquisition, CBAK Power
became the largest shareholder of Hitrans holding
The Company completed the valuations necessary
to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of
goodwill was determined and recognized as of the respective acquisition date.
| Cash and bank | $ | |||
| Debts product | ||||
| Trade and bills receivable, net | ||||
| Inventories | ||||
| Prepayments and other receivables | ||||
| Income tax recoverable | ||||
| Amount due from trustee | ||||
| Property, plant and equipment, net | ||||
| Construction in progress | ||||
| Intangible assets, net | ||||
| Prepaid land use rights, non- current | ||||
| Leased assets, net | ||||
| Deferred tax assets | ||||
| Short term bank loan | ( | ) | ||
| Other short term loans – CBAK Power | ( | ) | ||
| Trade accounts and bills payable | ( | ) | ||
| Accrued expenses and other payables | ( | ) | ||
| Deferred government grants | ( | ) | ||
| Land appreciation tax | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Less: Waiver of dividend payable | ||||
| Total net assets acquired | ||||
| Non-controlling interest ( | ( | ) | ||
| Goodwill | ||||
| Total identifiable net assets | $ |
24
| RMB | USD | |||||||
| Cash consideration for | ||||||||
| Cash consideration for | ||||||||
| Total Purchase Consideration | ||||||||
The transaction resulted in a purchase price
allocation of $
The Company performed Goodwill impairment test at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change indicating the asset might be impaired. Goodwill was fully impaired as of December 31, 2022. No impairment loss of Goodwill of the reporting unit of Hitrans was recognized for the three and nine months ended September 30, 2022.
12.
| Balance as of January 1, 2022 | $ | |||
| Impairment of goodwill | ( | ) | ||
| Foreign exchange adjustment | ( | ) | ||
| Balance as of December 31, 2022 and September 30, 2023 | $ |
The Company performed goodwill impairment test at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change indicating the asset might be impaired. As of December 31, 2022, the Company performed testing on reporting unit of NCM precursor and cathode materials products (“Hitrans Reporting unit”)
The Company first assessed qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. For those reporting units where it is determined that it is more likely than not that their fair values are less than the units’ carrying amounts, the Company will perform the first step of a two-step quantitative goodwill impairment test. After performing the assessment, if the carrying amounts of the reporting units are higher than their fair values, the Company will perform the second step of the two-step quantitative goodwill impairment test.
In 2022 and 2021, the Company performed qualitative assessments for Hitrans reporting unit. Based on the requirements of ASC 350-20-35-3C through ASC 350-20-35-3G, the Company evaluated all relevant factors, weighed all factors in their totality. For the year ended December 31, 2022, as the financial performance of Hitrans reporting unit was below original expectations, fair value of this reporting unit was indicated to be lower than its carrying value. For this reporting unit, where it was determined that it was more likely than not that its fair value was less than the units’ carrying amount after performing the qualitative assessment, as a result, the Company performed the two-step quantitative goodwill impairment test for these two reporting units.
25
For the two-step goodwill impairment test, the Company estimated the fair value with either income approach or asset approach for specific reporting unit components. With the income approach, the Company estimates the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on the best estimate of future net sales and operating expenses, based primarily on expected expansion, pricing, market share, and general economic conditions. Certain estimates of discounted cash flows involve businesses with limited financial history and developing revenue models. Changes in these forecasts could significantly change the amount of impairment recorded, if any. Asset based approach is used in evaluating the fair value of some specific components which is deemed as the most prudent approach due to the unpredictability of future cash flows.
The result of step one impairment test for the
Hitrans reporting unit failed, with its determined fair value lower than the book value. The Company performed step two impairment test,
applying the income approach, resulting an impairment loss of goodwill of $
13. Deposit paid for acquisition of long-term investments
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Investments in non-marketable equity | $ | - | $ | |||||
| Investments in equity method investees | ||||||||
On September 27, 2023, Nanjing CBAK New Energy Technology Co., Ltd.
(“Nanjing CBAK”) entered into an Equity Transfer Agreement (the “Equity Transfer Agreement”) with Shenzhen BAK
Battery Co., Ltd. (“SZ BAK”), under which SZ BAK shall sell a five percent (
SZ BAK and BAK SZ were the Company’s former subsidiary up to June 30, 2014. Mr, Xiangqian Li, the Company’s former CEO, is the director of SZ BAK and BAK SZ.
The Company will measure the investments in BAK SZ as non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis upon the completion. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.
26
On September 27, 2023, Zhejiang Hitrans Lithium Technology Co., Ltd.
(“Hitrans”), entered into an Equity Transfer Contract (the “Equity Transfer Contract”) with Mr. Shengyang Xu,
pursuant to which Hitrans will initially acquire a
And within three months following the Initial
Acquisition, Mr. Xu shall transfer an additional
The Company will apply the equity method of accounting to account for the equity investments in Zhejiang Shengyang upon the completion of the Initial Acquisition, over which it has significant influence but does not own a majority equity interest or otherwise control.
14. Trade and Bills Payable
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Trade payable | $ | $ | ||||||
| Bills payable | ||||||||
| – Bank acceptance bills | ||||||||
| – Letter of credit | ||||||||
| $ | $ | |||||||
All the bills payable are of trading nature and will mature within one year from the issue date.
The bank acceptance bills were pledged by:
| (i) | the Company’s bank deposits (Note 2); |
| (ii) | $ |
| (iii) | the Company’s prepaid land use rights (note 9) |
15. Loans
Bank loans:
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Short-term bank borrowings | $ | $ | ||||||
27
On November 16, 2021, the Company obtained banking
facilities from Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB
In January 2023, the Company renewed the banking
facilities with Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB
On April 19, 2021, the Company obtained five-year
acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB
On March 21, 2022, the Company renewed the above
acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB
On January 17, 2022, the Company obtained a one-year
term facility from Agricultural Bank of China with a maximum amount of RMB
On February 9, 2022, the Company obtained a one-year
term facility from Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB
On March 8, 2022, the Company obtained a one-year
term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB
28
On April 28, 2022, the Company obtained a three-year term facility
from Industrial and Commercial Bank of China Nanjing Gaochun branch, with a maximum amount of RMB
On June 22, 2022, the Company obtained another one-year term facility
from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB
On September 25, 2022, the Company entered into
another one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB
The Company entered into another one-year term facility with Jiangsu
Gaochun Rural Commercial Bank with a maximum amount of RMB
On December 9, 2022, the Company obtained a RMB
On January 7, 2023,
29
On March 29, 2023, the Company and Bank of China
Limited entered into a short-term loan agreement for one year from March 29, 2023 to March 28, 2024 for a maximum loan amount to RMB
On April 19, 2023, the Company and Bank of Nanjing
Gaochun Branch entered into a short-term loan agreement for one year from April 10, 2023 to April 9, 2024 for RMB
On June 9, 2023, the Company and China Zheshang
Bank Co., Ltd Shangyu Branch entered into a short-term loan agreement for one year from June 9, 2023 to June 7, 2024 for a maximum loan
amount to RMB
On July 31, 2023, the Company obtained a three-year
term facility from Bank of China Gaochun Branch, with a maximum amount of RMB
On August 3, 2023, the Company and Bank of China
entered into a short term loan agreement for one year from August 3, 2023 to August 2, 2024 for a maximum amount of RMB
The Company borrowed a series of acceptance bills
from Agricultural Bank of China totaling RMB
The Company borrowed a series of acceptance bills
from China Zheshang Bank Co. Ltd Shenyang Branch totaling RMB
The Company borrowed a series of acceptance bills
from China Zheshang Bank Co. Ltd Shangyu Branch totaling RMB
The Company borrowed a series of acceptance bills
from Shaoxing Branch of Bank of Communications Co., Ltd totaling RMB
The Company borrowed a series of acceptance bills
from China Merchants Bank Dalian Branch totaling RMB
30
The Company borrowed a series of acceptance bills
from Bank of China Limited totaling RMB
The Company borrowed a series of acceptance bills
from Jiangsu Gaochun Rural Commercial Bank totaling RM24.8 million (approximately $
The Company borrowed a series of acceptance bills
from China CITIC Bank totaling RMB
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Pledged deposits (note 2) | $ | $ | ||||||
| Bills receivables (note 3) | ||||||||
| Right-of-use assets (note 9) | ||||||||
| Buildings | ||||||||
| $ | $ | |||||||
As of September 30, 2023, the Company had unutilized
committed banking facilities totaled $
During the three months ended September 30, 2022
and 2023, interest of $
During the nine months ended September 30, 2022
and 2023, interest of $
Other short-term loans:
| December 31, | September 30, | ||||||||||
| Note | 2022 | 2023 | |||||||||
| Advance from related parties | |||||||||||
| – Mr. Xiangqian Li, the Company’s Former CEO | (a) | $ | $ | ||||||||
| – Mr. Yunfei Li | (b) | ||||||||||
| Advances from unrelated third party | |||||||||||
| – Mr. Wenwu Yu | (c) | ||||||||||
| – Ms. Longqian Peng | (c) | ||||||||||
| – Suzhou Zhengyuanwei Needle Ce Co., Ltd | (d) | ||||||||||
| $ | $ | ||||||||||
| (a) |
| (b) |
| (c) |
31
During the three months ended September 30, 2022
and 2023, interest of $
During the nine months ended September 30, 2022
and 2023, interest of $
16. Accrued Expenses and Other Payables
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Construction costs payable | $ | $ | ||||||
| Equipment purchase payable | ||||||||
| Liquidated damages* | ||||||||
| Accrued staff costs | ||||||||
| Customer deposits | ||||||||
| Deferred revenue (note 1) | ||||||||
| Accrued operating expenses | ||||||||
| Dividend payable to non-controlling interest (note 17) | ||||||||
| Value-added tax and other tax payables | ||||||||
| Other payables | ||||||||
| Less: non-current portion | ||||||||
| Deferred revenue | ||||||||
| $ | $ | |||||||
| * |
On November 9, 2007, the Company completed a
private placement for the gross proceeds to the Company of $
On December 21, 2007, pursuant to the registration
rights agreement, the Company filed a registration statement on Form S-3, which was declared effective by the SEC on May 7, 2008. As
a result, the Company estimated liquidated damages amounting to $
32
17. Balances and Transactions With Related Parties
| Name of Entity or Individual | Relationship with the Company | |
| New Era Group Zhejiang New Energy Materials Co., Ltd. | ||
| Zhengzhou BAK Battery Co., Ltd | ||
| Shenzhen BAK Battery Co., Ltd (“SZ BAK”) | ||
| Shenzhen BAK Power Battery Co., Ltd (“BAK SZ”) | ||
| Zhejiang Shengyang Renewable Resources Technology Co., Ltd. |
| (a) |
| (b) |
| (c) |
Related party transactions:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Purchase of batteries from Zhengzhou BAK Battery Co., Ltd | $ | $ | $ | $ | ||||||||||||
| Purchase of materials from Zhejiang Shengyang Renewable Resources Technology Co., Ltd | $ | $ | $ | $ | ||||||||||||
| Sales of cathode raw materials to Zhengzhou BAK Battery Co., Ltd | $ | $ | $ | $ | ||||||||||||
| Sales of cathode raw materials to Shenzhen BAK Power Battery Co., Ltd | $ | $ | $ | $ | ||||||||||||
Related party balances:
Receivables from former subsidiary, net
| December 31, 2022 | September 30, 2023 | |||||||
| Receivables from Shenzhen BAK Power Battery Co., Ltd | $ | $ | ||||||
| Less: Allowance for credit losses | ||||||||
| $ | ||||||||
33
Other balances due from/ (to) related parties
| December 31, 2022 | September 30, 2023 | |||||||
| Trade receivable, net – Zhengzhou BAK Battery Co., Ltd. (i) | $ | $ | ||||||
| Bills receivable – Issued by Zhengzhou BAK Battery Co., Ltd. (ii) | $ | $ | ||||||
| Trade payable, net – Zhengzhou BAK Battery Co., Ltd (iii) | $ | $ | ||||||
| Trade payable, net – Zhejiang Shengyang Renewable Resources Technology Co., Ltd | $ | $ | ||||||
| Deposit paid for acquisition of long-term investments - Shenzhen BAK Power Battery Co., Ltd. (note 13) | $ | $ | ||||||
| Dividend payable to non-controlling interest of Hitrans (note 16) | $ | $ | ||||||
| (i) |
| (ii) |
| (iii) |
Payables to former subsidiaries
| December 31, 2022 | September 30, 2023 | |||||||
| Payables to Shenzhen BAK Power Battery Co., Ltd | $ | ( | ) | $ | ( | ) | ||
Balance as of December 31, 2022 and September 30, 2023 consisted of payables for purchase of inventories from Shenzhen BAK Power Battery Co., Ltd.
18. Deferred Government Grants
| December 31, | September 30, | |||||||
| 2022 | 2023 | |||||||
| Total government grants | $ | $ | ||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
Government grants that are received in advance are deferred and recognized in the consolidated statements of operations over the period necessary to match them with the costs that they are intended to compensate. Government grants in relation to the achievement of stages of research and development projects are recognized in the consolidated statements of operations when amounts have been received and all attached conditions have been met. Non-refundable grants received without any further obligations or conditions attached are recognized immediately in the consolidated statements of operations.
On October 17, 2014, the Company received a subsidy
of RMB
34
On June 23, 2020, BAK Asia, the Company wholly-owned
Hong Kong subsidiary, entered into a framework investment agreement with Jiangsu Gaochun Economic Development Zone Development Group
Company (“Gaochun EDZ”), pursuant to which the Company intended to develop certain lithium battery projects that aim to have
a production capacity of 8Gwh. Gaochun EDZ agreed to provide various support to facilitate the development and operation of the projects.
From 2020 to the report date, the Company received RMB
For the year ended December 31, 2021, the Company
recognized RMB
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Cost of revenues | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Other income (expenses), net | ( | ) | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
19. Product Warranty Provisions
| December 31, 2022 | September 30, 2023 | |||||||
| Balance at beginning of year | $ | $ | ||||||
| Warranty costs incurred | ( | ) | ( | ) | ||||
| (Reversal) provision for the year/ period | ( | ) | ||||||
| Foreign exchange adjustment | ( | ) | ( | ) | ||||
| Balance at end of year/ period | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
20. Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities
| (a) | Income taxes in the consolidated statements of comprehensive loss(income) |
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| PRC income tax: | ||||||||||||||||
| Current income tax | $ | $ | $ | $ | ||||||||||||
| Deferred income tax (credit) expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
35
United States Tax
CBAK is a Nevada corporation that is subject
to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to
as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including,
but not limited to, (1) reducing the U.S. federal corporate income tax rate from
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law and included a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries. The Company recognizes taxes due under the GILTI provision as a current period expense. As of December 31, 2022 and September 30, 2023, the Company does not have any aggregated positive tested income; and as such, does not have additional provision amount recorded for GILTI tax.
No provision for income taxes in the United States has been made as CBAK had no taxable income for the three and nine months ended September 30, 2022 and 2023.
Hong Kong Tax
BAK Asia and BAK Investment are subject to Hong
Kong profits tax rate of
PRC Tax
The CIT Law in China applies an income tax rate
of
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Income (loss) before income taxes | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| United States federal corporate income tax rate | % | % | % | % | ||||||||||||
| Income tax credit computed at United States statutory corporate income tax rate | ( | ) | ( | ) | ||||||||||||
| Reconciling items: | ||||||||||||||||
| Rate differential for PRC earnings | ( | ) | ( | ) | ||||||||||||
| Tax effect of entity at preferential tax rate | ||||||||||||||||
| Non-taxable (income) expenses | ( | ) | ( | ) | ||||||||||||
| Share based payments | ||||||||||||||||
| Utilization of tax losses | ( | ) | ||||||||||||||
| Valuation allowance on deferred tax assets | ( | ) | ( | ) | ||||||||||||
| Income tax (credit) expenses | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
36
| (b) | Deferred tax assets and deferred tax liabilities |
| December 31, 2022 | September 30, 2023 | |||||||
| Deferred tax assets | ||||||||
| Trade receivable | $ | $ | ||||||
| Inventories | ||||||||
| Property, plant and equipment | ||||||||
| Long-term investments, net | ||||||||
| Intangible assets | ||||||||
| Accrued expenses, payroll and others | ||||||||
| Provision for product warranty | ||||||||
| Net operating loss carried forward | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, non-current | $ | $ | ||||||
| Deferred tax liabilities, non-current | ||||||||
| Long-lived assets arising from acquisitions | $ | $ | ||||||
As of December 31, 2022 and September 30, 2023,
the Company’s U.S. entity had net operating loss carry forwards of $
According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.
The impact of an uncertain income tax positions
on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant
tax authority. An uncertain income tax position will not be recognized if it has less than a
37
21. Statutory reserves
As stipulated by the relevant laws and regulations
in the PRC, company established in the PRC (the “PRC subsidiary”) is required to maintain a statutory reserve made out of
profit for the year based on the PRC subsidiary’ statutory financial statements which are prepared in accordance with the accounting
principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually
and is not to be less than
In addition, as a result of the relevant PRC
laws and regulations which impose restriction on distribution or transfer of assets out of the PRC statutory reserve, $
22. Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. Management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, their current interest rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Valuation of debt products depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The fair value of these debt products classified as Level 2 is established by reference to the prices quoted by respective fund administrators.
The fair value of warrants was determined using the Binomial Model, with level 3 inputs (Note 26).
The fair value of share options was determined using the Binomial Model, with level 3 inputs (Note 24).
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, pledged deposits, trade accounts and bills receivable, other receivables, balances with former subsidiaries, notes payable, other short-term loans, short-term and long-term bank loans and other payables approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest.
23. Employee Benefit Plan
Full time employees of the Company in the PRC
participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing
fund and other welfare benefits are provided to the employees. The Company accrues for these benefits based on certain percentages of
the employees’ salaries, up to a maximum amount specified by the local government. The total employee benefits expensed as incurred
were $
24. Share-based Compensation
Restricted Shares and Restricted Share Units
Restricted shares granted on June 30, 2015
On June 12, 2015, the Board of Director approved
the CBAK Energy Technology, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) for Employees, Directors and Consultants of
the Company and its Affiliates. The maximum aggregate number of Shares that may be issued under the Plan is ten million (
38
On June 30, 2015, pursuant to the 2015 Plan,
the Compensation Committee of the Company’s Board of Directors granted an aggregate of
All the restricted shares granted in respect of the restricted shares granted on June 30, 2015 have been vested on March 31, 2018.
As of September 30, 2023, there was no unrecognized
stock-based compensation associated with the above restricted shares and
Restricted shares granted on April 19, 2016
On April 19, 2016, pursuant to the Company’s
2015 Plan, the Compensation Committee of the Board of Directors of the Company granted an aggregate of
All the restricted shares granted in respect of the restricted shares granted on April 16, 2016 had been vested on June 30, 2019.
As of September 30, 2023, there was no unrecognized
stock-based compensation associated with the above restricted shares and
Restricted share units granted on August 23, 2019
On August 23, 2019, pursuant to
The Company recorded non-cash share-based compensation expense of
and $
All the restricted share units granted in respect of the restricted share units granted on August 23, 2019 had been vested on March 2022. As of September 30, 2023, there was no unrecognized stock-based compensation associated with the above restricted share units.
Restricted share units granted on October 23, 2020
On October 23, 2020, pursuant to the Company’s
2015 Plan, the Compensation Committee granted an aggregate of
39
The Company recorded non-cash share-based compensation
expense of $
The Company recorded non-cash share-based compensation
expense of $
| Non-vested share units as of January 1, 2023 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Non-vested share units as of September 30, 2023 |
All the restricted share units granted on October
23, 2020 had been vested on April 30, 2023. As of September 30 2023, there was no unrecognized stock-based compensation with the above
restricted share units and
Employees Stock Ownership Program on November 29, 2021
On November 29, 2021, pursuant to the Company’s
2015 Plan, the Compensation Committee granted options to obtain an aggregate of
The fair value of the stock options granted to
directors of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated
using the following assumptions: estimated life of six months to five years, volatility of
The fair value of the stock options granted to
certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options
was calculated using the following assumptions: estimated life of six months to five years, volatility of
As of September 30, 2023, there was unrecognized
stock-based compensation $
Restricted share units granted and stock ownership program on April 11, 2023
On April 11, 2023, pursuant to the Company’s
2015 Plan, the Compensation Committee granted an aggregate of
40
The Company recorded non-cash share-based compensation
expense of $
The fair value of the stock options granted to
directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value
of the options was calculated using the following assumptions: estimate life of
As of September 30, 2023, non-vested restricted share units granted on April 11, 2023 are as follows:
| Non-vested share units as of April 11, 2023 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Forfeited | ( | ) | ||
| Non-vested share units as of September 30, 2023 | ||||
As of September 30, 2023, there was unrecognized
stock-based compensation $
Restricted share units granted and stock ownership program on August 22, 2023
On August 22, 2023, pursuant to the Company’s
2015 Plan, the Compensation Committee granted an aggregate of
The Company recorded non-cash share-based compensation
expense of $
The fair value of the stock options granted to
directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair
value of the options was calculated using the following assumptions: estimate life of
As of September 30, 2023, non-vested restricted share units granted on August 22, 2023 are as follows:
| Non-vested share units as of August 22, 2023 | ||||
| Granted | ||||
| Vested | ||||
| Forfeited | ||||
| Non-vested share units as of September 30, 2023 | ||||
As of September 30, 2023, there was unrecognized
stock-based compensation $
41
| Number of Shares | Average Exercise Price per Share | Aggregate Intrinsic Value* | Weighted Average Remaining Contractual Term in Years | |||||||||||||
| Outstanding at January 1, 2023 | $ | $ | ||||||||||||||
| Exercisable at January 1, 2023 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Outstanding at September 30, 2023 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2023 | $ | $ | ||||||||||||||
| * |
As the Company itself is an investment holding company which is not expected to generate operating profits to realize the tax benefits arising from its net operating loss carried forward, no income tax benefits were recognized for such stock-based compensation cost under the stock option plan for the three and nine months ended September 30, 2022 and 2023.
25. Income (Loss) Per Share
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | $ | ||||||||||
| Less: Net loss attributable to non-controlling interests | ||||||||||||||||
| Net income (loss) attributable to shareholders of CBAK Energy Technology, Inc. | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted average shares outstanding – basic (note) | ||||||||||||||||
| Dilutive unvested restricted stock | ||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||
| Income (loss) per share | ||||||||||||||||
| - Basic | $ | ( | )* | $ | $ | $ | ||||||||||
| - Diluted | $ | ( | )* | $ | $ | $ | ||||||||||
| * |
| Note: | Including |
42
For the three and nine months ended September
30, 2022,
For the three and nine months ended September
30, 2023,
26. Warrants
On December 8, 2020, the Company entered in a
securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering,
an aggregate of
On May 10, 2021, the Company entered into that Amendment No. 1 to the Series B Warrant (the “Series B Warrant Amendment”) with each of the holders of the Company’s outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August 31, 2021.
As of the date of this report, Series B warrant, along with Series A-2 warrants, had both expired.
There was a total of
43
Warrants issued in the 2020 Financing
Warrants holder | Investor Warrants | Placement Agent Warrants | ||||||
| Appraisal Date | December 31, 2022 | December 31, 2022 | ||||||
| Market price per share (USD/share) | $ | $ | ||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | % | % | ||||||
| Appraisal Date | September 30, 2023 | September 30, 2023 | ||||||
| Market price per share (USD/share) | $ | $ | ||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | % | % | ||||||
Warrants issued in the 2021 Financing
| Warrants holder | Investor Warrants | Placement Agent Warrants | ||||||
| Appraisal Date | Series A1 December 31, 2022 | December 31, 2022 | ||||||
| Market price per share (USD/share) | ||||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | % | % | ||||||
| Warrants holder | Investor Warrants | Placement Agent Warrants | ||||||
| Appraisal Date | Series A1 September 30, 2023 | September 30, 2023 | ||||||
| Market price per share (USD/share) | ||||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | % | % | ||||||
| December 31, 2022 | September 30, 2023 | |||||||
| Balance at the beginning of the year | $ | $ | ||||||
| Warrants issued to institution investors | ||||||||
| Warrants issued to placement agent | ||||||||
| Warrants redeemed | ||||||||
| Fair value change of the issued warrants included in earnings | ( | ) | ( | ) | ||||
| Balance at end of year/ period | ||||||||
44
| Number of Warrants | Average Exercise Price | Weighted Average Remaining Contractual Term in Years | ||||||||||
| Outstanding at January 1, 2023 | $ | |||||||||||
| Exercisable at January 1, 2023 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised / surrendered | - | |||||||||||
| Expired | - | |||||||||||
| Outstanding at September 30, 2023 | ||||||||||||
| Exercisable at September 30, 2023 | ||||||||||||
27. Commitments and Contingencies
| (i) | Capital Commitments |
| December 31, 2022 | September 30, 2023 | |||||||
| For construction of buildings | $ | $ | ||||||
| For purchases of equipment | ||||||||
| Capital injection | ||||||||
| Acquisition of long-term investments | ||||||||
| $ | $ | |||||||
| (ii) | Litigation |
During its normal course of business, the Company may become involved in various lawsuits and legal proceedings. However, litigation is subject to inherent uncertainties, and an adverse result may arise from time to time will affect its operation. Other than the legal proceedings set forth below, the Company is currently not aware of any such legal proceedings or claims that the Company believe will have an adverse effect on the Company’s operation, financial condition or operating results.
On July 7, 2016, Shenzhen Huijie Purification
System Engineering Co., Ltd (“Shenzhen Huijie”), one of the Company’s contractors, filed a lawsuit against CBAK Power
in the Peoples’ Court of Zhuanghe City, Dalian, (the “Court of Zhuanghe”) for failure to pay pursuant to the terms of
the contract and entrusting part of the project of the contract to a third party without their prior consent. The plaintiff sought a total
amount of $
45
On June 30, 2017, according to the trial of first
instance, the Court of Zhuanghe ruled that CBAK Power should pay the remaining contract amount of RMB
In December 2020, CBAK Power received notice from
Court of Dalian Economic and Technology Development Zone that Haoneng filed another lawsuit against CBAK Power for failure to pay pursuant
to the terms of the purchase contract. Haoneng sought a total amount of $
28. Concentrations and Credit Risk
| (a) | Concentrations |
| Three months ended September 30, | ||||||||||||||||
| Sales of finished goods and raw materials | 2022 | 2023 | ||||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer B | % | % | ||||||||||||||
| Customer C | % | * | * | |||||||||||||
46
| Nine months ended September 30, | ||||||||||||||||
| Sales of finished goods and raw materials | 2022 | 2023 | ||||||||||||||
| Customer A | $ | $ | % | |||||||||||||
| Customer B | % | |||||||||||||||
| Customer C | % | |||||||||||||||
| Zhengzhou BAK Battery Co., Ltd (note 17) | % | % | ||||||||||||||
| * |
| December 31, 2022 | September 30, 2023 | |||||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Zhengzhou BAK Battery Co., Ltd (note 17) | % | % | ||||||||||||||
| * | Comprised less than |
| Three months ended September 30, | ||||||||||||||||
| 2022 | 2023 | |||||||||||||||
| Supplier A | $ | % | $ | * | * | |||||||||||
| Supplier D | % | * | * | |||||||||||||
| Supplier E | % | * | * | |||||||||||||
| Supplier F | * | * | % | |||||||||||||
| Zhejiang Shengyang Renewable Resources Technology Co., Ltd (“Shengyang”) (note 13) | % | * | * | |||||||||||||
| Zhengzhou BAK Battery Co., Ltd (note 17) | % | % | ||||||||||||||
| Nine months ended September 30, | ||||||||||||||||
| 2022 | 2023 | |||||||||||||||
| Supplier B | $ | % | $ | |||||||||||||
| Supplier C | % | % | ||||||||||||||
| Zhengzhou BAK Battery Co., Ltd (note 17) | % | |||||||||||||||
| * |
The Company had the following suppliers that individually
comprised
| December 31, 2022 | September 30, 2023 | |||||||||||||||
| Supplier A | $ | % | $ | |||||||||||||
| Supplier C | % | |||||||||||||||
| Zhengzhou BAK Battery Co., Ltd (note 17) | % | % | ||||||||||||||
| * |
47
| (b) | Credit Risk |
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and pledged deposits. As of December 31, 2022 and September 30, 2023, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality.
For the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.
29. Segment Information
The Group’s chief operating decision maker has been identified as the Chief Executive Officer (“CEO”) who reviews financial information of operating segments based on US GAAP amounts when making decisions about allocating resources and assessing performance of the Company.
As a result of the Hitrans
acquisition discussed in Note 11, the Group determined that Hitrans met the criteria for separate reportable segment given its financial
information is separately reviewed by the Group’s CEO. As a result, the Group determined that it operated in
The Company primarily operates in the PRC and substantially all of the Company’s long-lived assets are located in the PRC.
The Company’s chief
operating decision maker evaluates performance based on each reporting segment’s net revenue, cost of revenues, operating expenses,
operating income, finance income (expense), other income and net income.
| For the three months ended September 30, 2022 | CBAT | Hitrans | Corporate unallocated (note) | Consolidated | ||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Finance income (expenses), net | ( | ) | ||||||||||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||||||||||
| Income tax credit | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| For the three months ended September 30, 2023 | CBAT | Hitrans | Corporate unallocated (note) | Consolidated | ||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Finance (expenses) income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income, net | ||||||||||||||||
| Income tax credit | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
48
| For the nine months ended September 30, 2022 | CBAT | Hitrans | Corporate unallocated (note) | Consolidated | ||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating (loss) income | ( | ) | ( | ) | ( | ) | ||||||||||
| Finance income (expenses), net | ( | ) | ( | ) | ||||||||||||
| Other income (expenses), net | ( | ) | ||||||||||||||
| Income tax expenses | ( | ) | ( | ) | ||||||||||||
| Net (loss) income | ( | ) | ( | ) | ||||||||||||
| For the nine months ended September 30, 2023 | CBAT | Hitrans | Corporate unallocated (note) | Consolidated | ||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Finance (expenses) income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income, net | ||||||||||||||||
| Income tax expenses | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| As of September 30, 2023 | ||||||||||||||||
| Identifiable long-lived assets | ||||||||||||||||
| Total assets | ||||||||||||||||
Note:
49
Net revenues by product:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| High power lithium batteries used in: | ||||||||||||||||
| Electric vehicles | $ | $ | $ | $ | ||||||||||||
| Light electric vehicles | ||||||||||||||||
| Uninterruptable supplies | ||||||||||||||||
| Materials used in manufacturing of lithium batteries | ||||||||||||||||
| Cathode | ||||||||||||||||
| Precursor | ||||||||||||||||
| Total consolidated revenue | $ | $ | $ | $ | ||||||||||||
Net revenues by geographic area:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
| Mainland China | $ | $ | $ | $ | ||||||||||||
| Europe | ||||||||||||||||
| Others | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Substantially all of the Company’s long-lived assets are located in the PRC.
30. Subsequent events
The Company has evaluated subsequent events from September 30, 2023 to the date the financial statements were issued and has determined that there are no items to disclose.
50
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.
Special Note Regarding Forward Looking Statements
Statements contained in this report include “forward-looking statements” within the meaning of such term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A, “Risk Factors” described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Use of Terms
Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:
| ● | “Company”, “we”, “us” and “our” are to the combined business of CBAK Energy Technology, Inc., a Nevada corporation, and its consolidated subsidiaries; |
| ● | “BAK Asia” are to our Hong Kong subsidiary, China BAK Asia Holdings Limited; |
| ● | “CBAK Trading” are to our PRC subsidiary, Dalian CBAK Trading Co., Ltd.; |
| ● | “CBAK Power” are to our PRC subsidiary, Dalian CBAK Power Battery Co., Ltd.; |
| ● | “CBAK Suzhou” are to our PRC subsidiary, CBAK New Energy (Suzhou) Co., Ltd.; |
| ● | “CBAK Energy” are to our PRC subsidiary, Dalian CBAK Energy Technology Co., Ltd.; |
| ● | “BAK Investments” are to our Hong Kong subsidiary, BAK Asia Investments Limited; |
| ● | “CBAK Nanjing” are to our PRC subsidiary, CBAK New Energy (Nanjing) Co., Ltd; |
| ● | “Nanjing CBAK” are to our PRC subsidiary, Nanjing CBAK New Energy Technology Co., Ltd.; |
| ● | “Nanjing BFD” are to our PRC subsidiary, Nanjing BFD New Energy Technology Co., Ltd., a company that was formerly known as Nanjing Daxin New Energy Automobile Industry Co., Ltd; |
51
| ● | “Hitrans” are to our 67.33% owned PRC subsidiary, Zhejiang Hitrans Lithium Battery Technology (we, through CBAK Power, hold 67.33% of registered equity interests of Hitrans, representing 71.38% of paid-up capital. On March 10, 2023, CBAK Power entered into an agreement with Nanjing BFD to transfer the 67.33% equity interests that CBAK Power holds in Hitrans to Nanjing BFD. As of the date of this report, we have suspended the execution of this agreement. CBAK Power continues holding 67.33% equity interests of Hitrans); |
| ● | “Guangdong Hitrans” are to Hitrans’s 80% owned PRC subsidiary, Guangdong Meidu Hitrans Resources Recycling Technology Co., Ltd.; |
| ● | “Haisheng” are to Hitrans’s wholly-owned PRC subsidiary, Shaoxing Haisheng International Trading Co., Ltd.; |
| ● | “China” and “PRC” are to the People’s Republic of China; |
| ● | “RMB” are to Renminbi, the legal currency of China; |
| ● | “U.S. dollar”, “$” and “US$” are to the legal currency of the United States; |
| ● | “SEC” are to the United States Securities and Exchange Commission; |
| ● | “Securities Act” is to the Securities Act of 1933, as amended; and |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended. |
Overview
We are a manufacturer of new energy high power lithium batteries that are mainly used in light electric vehicles, electric vehicles, electric tools, energy storage (such as uninterruptible power supply (UPS) applications) and other high-power applications. Our primary product offering consists of new energy high power lithium batteries, but we are also seeking to expand into the production and sale of light electric vehicles. After completing the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) of Hitrans in November 2021, we entered the business of developing and manufacturing NCM precursor and cathode materials. Hitrans is a leading developer and manufacturer of ternary precursor and cathode materials in China, whose products have a wide range of applications including electric vehicles, electric tools, high-end digital products and storage, among others.
We acquired our operating assets, including customers, employees, patents and technologies from our former subsidiary BAK International (Tianjin) Ltd. (“BAK Tianjin”). We acquired these assets in exchange for a reduction in accounts receivable from our former subsidiaries that were disposed of in June 2014.
As of September 30, 2023, we report financial and operational information in two segments: (i) production of high-power lithium battery cells and (ii) manufacture and sales of materials used in high power lithium battery cells.
We currently conduct our business through (i) three wholly-owned operating subsidiaries in China that we own through BAK Asia, an investment holding company formed under the laws of Hong Kong on July 9, 2013; (ii) CBAK Nanjing, a wholly-owned subsidiary in China that we own through BAK Investments, an investment holding company formed under the laws of Hong Kong and acquired by us on July 14, 2020; (iii) Nanjing CBAK, a 100% owned subsidiary of CBAK Nanjing; (iv) Nanjing BFD, a wholly owned subsidiary of CBAK Nanjing; and (v) Hitrans, a subsidiary of CBAK Power, which we own 67.33% of its registered equity interests (representing 71.38% of paid-up capital) through CBAK Power. As of September 30, 2023, our equity interests in Hitrans had reduced to 67.33% as a result of Hitrans’s subsequent equity financings and our transfer of some of our equity interests in Hitrans to certain investors.
As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on April 14, 2023 and other reports filed with the SEC, we completed capital intensive construction undertakings in Nanjing to expand the Company’s manufacturing capabilities for lithium batteries in the second half of 2021. In addition, we have been expanding our business by developing new products, fostering new partnerships and strategic acquisition of companies that complement and augment our business.
Due to the growing environmental pollution problem, the Chinese government has been providing support to the development of new energy facilities and vehicles for the past several years. It is expected that we will be able to secure more potential orders from the new energy market. We believe that with the booming market demand for high power lithium-iron products, we can continue as a going concern and return to profitability sustainably.
52
Financial Performance Highlights for the Quarter Ended September 30, 2023
The following are some financial highlights for the quarter ended September 30, 2023:
| ● | Net revenues: Net revenues increased by $5.7 million, or 10%, to $63.4 million for the three months ended September 30, 2023, from $57.7 million for the same period in 2022. |
| ● | Gross profit: Gross profit was $12.2 million, representing an increase of $8.8 million, for the three months ended September 30, 2023, from gross profit of $3.5 million for the same period in 2022. |
| ● | Operating income (loss): Operating income was $5.3 million for the three months ended September 30, 2023, reflecting an increase in income of $6.8 million from an operating loss of $1.5 million for the same period in 2022. |
| ● | Net income (loss): Net income was $5.8 million for the three months ended September 30, 2023, compared to a net loss of $0.8 million for the same period in 2022. |
| ● | Fully diluted income per share: Fully diluted income per share was $0.07 for the three months ended September 30, 2023, as compared to fully diluted income per share of $0.00 for the same period in 2022. |
Financial Statement Presentation
Net revenues. The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.
Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred it the expected amortization period of the asset that it would have recognized is on year or less or the amount is immaterial.
Revenue from product sales is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
Cost of revenues. Cost of revenues consists primarily of material costs, employee remuneration for staff engaged in production activity, share-based compensation, depreciation and related expenses that are directly attributable to the production of products. Cost of revenues also includes write-downs of inventory to lower of cost and net realizable value.
53
Research and development expenses. Research and development expenses primarily consist of remuneration for R&D staff, share-based compensation, depreciation and maintenance expenses relating to R&D equipment, and R&D material costs.
Sales and marketing expenses. Sales and marketing expenses consist primarily of remuneration for staff involved in selling and marketing efforts, including staff engaged in the packaging of goods for shipment, warranty expenses, advertising cost, depreciation, share-based compensation and travel and entertainment expenses. We do not pay slotting fees to retail companies for displaying our products, engage in cooperative advertising programs, participate in buy-down programs or similar arrangements.
General and administrative expenses. General and administrative expenses consist primarily of employee remuneration, share-based compensation, professional fees, insurance, benefits, general office expenses, depreciation, liquidated damage charges and bad debt expenses.
Finance costs, net. Finance costs consist primarily of interest income and interest on bank loans, net of capitalized interest.
Income tax expenses. Our subsidiaries in PRC are subject to an income tax rate of 25%, except that Hitrans and CBAK Power have been recognized as a “High and New Technology Enterprise” and enjoyed a preferential tax rate of 15% from 2021 to 2024. Our Hong Kong subsidiaries are subject to profits tax at a rate of 16.5%. However, because we did not have any assessable income derived from or arising in Hong Kong, the entities had not paid any such tax.
Results of Operations
Comparison of Three Months Ended September 30, 2022 and 2023
The following tables set forth key components of our results of operations for the periods indicated.
(All amounts, other than percentages, in thousands of U.S. dollars)
| Three Months Ended September 30, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| Net revenues | $ | 57,722 | 63,441 | 5,719 | 10 | % | ||||||||||
| Cost of revenues | (54,262 | ) | (51,193 | ) | 3,069 | -6 | % | |||||||||
| Gross profit | 3,460 | 12,248 | 8,788 | 254 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 2,385 | 2,578 | 193 | 8 | % | |||||||||||
| Sales and marketing expenses | 835 | 1,116 | 281 | 34 | % | |||||||||||
| General and administrative expenses | 1,866 | 3,241 | 1,375 | 74 | % | |||||||||||
| (Recovery) provision of doubtful accounts | (143 | ) | 24 | 167 | -117 | % | ||||||||||
| Total operating expenses | 4,943 | 6,959 | 2,016 | 41 | % | |||||||||||
| Operating (loss) income | (1,483 | ) | 5,289 | 6,772 | -457 | % | ||||||||||
| Finance income (expense), net | 687 | (447 | ) | (1,134 | ) | -165 | % | |||||||||
| Other (expense) income, net | (991 | ) | 602 | 1,593 | -161 | % | ||||||||||
| Change in fair value of warrants liability | 936 | 15 | (921 | ) | -98 | % | ||||||||||
| Income (loss) before income tax | (851 | ) | 5,459 | 6,310 | -741 | % | ||||||||||
| Income tax (expense) credit | 2 | 305 | 303 | 15,150 | % | |||||||||||
| Net income (loss) | (849 | ) | 5,764 | 6,613 | -779 | % | ||||||||||
| Less: Net loss attributable to non-controlling interests | 848 | 571 | (277 | ) | -33 | % | ||||||||||
| Net (loss) income attributable to shareholders of CBAK Energy Technology, Inc. | $ | (1 | ) | 6,335 | 6,336 | -633,600 | % | |||||||||
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Net revenues. Net revenues increased by $5.7 million, or 10%, to $63.4 million for the three months ended September 30, 2023, from $57.7 million for the same period in 2022.
The following table sets forth the breakdown of our net revenues by end-product applications.
(All amounts in thousands of U.S. dollars other than percentages)
| Three months ended September 30, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| High power lithium batteries used in: | ||||||||||||||||
| Electric vehicles | $ | 20 | 403 | 383 | 1,915 | % | ||||||||||
| Light electric vehicles | 1,147 | 1,114 | (33 | ) | -3 | % | ||||||||||
| Uninterruptable supplies | 24,679 | 42,810 | 18,131 | 73 | % | |||||||||||
| 25,846 | 44,327 | 18,481 | 72 | % | ||||||||||||
| Materials used in manufacturing of lithium batteries | ||||||||||||||||
| Cathode | 11,195 | 10,380 | (815 | ) | -7 | % | ||||||||||
| Precursor | 20,681 | 8,734 | (11,947 | ) | -58 | % | ||||||||||
| 31,876 | 19,114 | (12,762 | ) | -40 | % | |||||||||||
| Total | $ | 57,722 | 63,441 | 5,719 | 10 | % | ||||||||||
Net revenues from sales of batteries for electric vehicles were $0.4 million for the three months ended September 30, 2023 as compared to nil in the same period of 2022, representing an increase of $0.4 million.
Net revenues from sales of batteries for light electric vehicles were $1.1 million for the three months ended September 30, 2023 and 2022.
Net revenues from sales of batteries for uninterruptable power supplies were $42.8 million in the three months ended September 30, 2023, as compared with $24.7 million in the same period in 2022, representing an increase of $18.1 million, or 73%. The significant growth was attributed to the ongoing surge in orders we had received from our major existing clients.
Net revenues from sales of materials used in manufacturing of lithium batteries were $19.1 million for the three months ended September 30, 2023, as compared to $31.9 million for the same period of 2022. This primarily resulted from a rapid decrease in raw material prices during 2023, which led to significant downward pressure on the pricing of our battery material products.
Cost of revenues. Cost of revenues decreased to $51.2 million for the three months ended September 30, 2023, as compared to $54.3 million for the same period in 2022, a decrease of $3.1 million, or 6%. The decrease in cost of revenues resulted from significant decrease of materials sales from our battery materials segment. The cost of revenues includes written down of obsolete inventories of $0.5 million for the three months ended September 30, 2023, as compared to write down of obsolete inventories of $0.3 million for the same period in 2022. We write down the inventory value whenever there is an indication that it is impaired.
Gross profit. Gross profit for the three months ended September 30, 2023 was $12.2 million, or 19.3% of net revenues as compared to gross profit of $3.5 million, or 6.0% of net revenues, for the same period in 2022. The significant increase of gross profit was corresponded to our higher profit from batteries segment.
Research and development expenses. Research and development expenses increased to approximately $2.6 million for the three months ended September 30, 2022, as compared to approximately $2.4 million for the same period in 2022, a slight increase of $0.2 million, or 8%. The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and Hitrans and compensation expenses incurred for restricted share units and options granted to our employees on April 11, 2023 and August 22, 2023. We incurred $1.4 million in salaries and social insurance cost (including share-based compensation) during the three months ended September 30, 2023 compared to $1.1 million during the three months ended September 30, 2022.
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Sales and marketing expenses. Sales and marketing expenses increased to approximately $1.1 million for the three months ended September 30, 2023, as compared to approximately $0.8 million for the same period in 2022, an increase of approximately $0.3 million, or 34%. As a percentage of revenues, sales and marketing expenses were 1.76% and 1.45% for the three months ended September 30, 2023 and 2022, respectively. The increase mainly resulted from an increase of $0.3 million in marketing expenses, as compared to the three months ended September 30, 2022. We have expanded our marketing efforts since the beginning of 2023 after the lift of travel restrictions and quarantine requirements.
General and administrative expenses. General and administrative expenses increased to $3.2 million, or 5.1% of revenues, for the three months ended September 30, 2023, as compared to $1.9 million, or 3.2% of revenues, for the same period in 2022, representing an increase of $1.4 million, or 74%. The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and Hitrans and compensation expenses incurred for restricted share units and options granted to our employees on April 11, 2023 and August 22, 2023. We incurred $1.6 million in salaries and social insurance cost (including share-based compensation) during the three months ended September 30, 2023 compared to $1.0 million during the three months ended September 30, 2022. With the expansion of Nanjing CBAK, our operating expenses and consultancy expenses increased by $0.7 million to $1.2 million for the three months ended September 30, 2023 compared to $0.5 million for the three months ended September 30, 2022
Provision for (recovery of) doubtful accounts. Provision of doubtful accounts was $24,623 for the three months ended September 30, 2023, as compared to a reversal of provision $142,966 for the same period in 2022. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions.
Operating income (loss). As a result of the above, our operating income totaled $5.3 million for the three months ended September 30, 2023, as compared to $1.5 million operating loss for the same period in 2022, representing an increase of $6.8 million, or 457%.
Finance income (expenses), net. Finance expenses, net was $0.4 million for the three months ended September 30, 2023, as compared to finance income, net of $0.7 million for the same period in 2022, representing an increase of $1.1 million in expenses. The finance expenses increase was mainly resulted from interest on average balances of bank borrowings and changes to exchange rates. We capitalized interest on bank borrowings of $0.3 million and nil to the cost of construction in progress for the three months ended September 30, 2023 and 2022, respectively.
Other income (expenses), net. Other income was $0.6 million for the three months ended September 30, 2023, as compared to other expenses of $1.0 million for the same period in 2022. The other income increase was mainly due to $0.7 million generated from batteries development for the three months ended September 30, 2023, while the other expenses were mainly related to a $2.1 million loss from dismantlement of Hitrans buildings partially offset by $0.6 million debts release from our suppliers during the three months ended September 30, 2022.
Changes in fair value of warrants liability. We issued warrants in the financings we consummated in December 2020 and February 2021. We determined that these warrants should be accounted for as derivative liabilities, as the warrants are dominated in a currency (U.S. dollar) other than our functional currency. The change in fair value of warrants liability is mainly due to the share price fluctuations.
Income tax credit (expenses). Income tax credit was $305,431 for the three months ended September 30, 2023 compared to an income tax expense of $2,012 for the three months ended September 30, 2022.
Net income (loss). As a result of the foregoing, we had a net income of $5.8 million for the three months ended September 30, 2023, compared to net loss of $0.9 million for the same period in 2022.
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Comparison of Nine Months Ended September 30, 2022 and 2023
The following tables set forth key components of our results of operations for the periods indicated.
(All amounts, other than percentages, in thousands of U.S. dollars)
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| Net revenues | 194,268 | 148,259 | (46,009 | ) | -24 | % | ||||||||||
| Cost of revenues | (179,956 | ) | (129,220 | ) | 50,736 | -28 | % | |||||||||
| Gross profit | 14,312 | 19,039 | 4,727 | -33 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 7,998 | 8,014 | 16 | 0 | % | |||||||||||
| Sales and marketing expenses | 2,362 | 2,801 | 439 | 19 | % | |||||||||||
| General and administrative expenses | 6,557 | 9,303 | 2,746 | 42 | % | |||||||||||
| Provision for doubtful accounts | 69 | 286 | 217 | 314 | % | |||||||||||
| Total operating expenses | 16,986 | 20,404 | 3,418 | 20 | % | |||||||||||
| Operating loss | (2,674 | ) | (1,365 | ) | 1,309 | -49 | % | |||||||||
| Finance income (expense), net | 72 | (189 | ) | (261 | ) | -363 | % | |||||||||
| Other (expenses) income, net | (1,165 | ) | 1,023 | 2,188 | -188 | % | ||||||||||
| Change in fair value of warrants liability | 4,699 | 136 | (4,563 | ) | -97 | % | ||||||||||
| Income (loss) before income tax | 932 | (395 | ) | (1,327 | ) | -142 | % | |||||||||
| Income tax (expense) credit | (84 | ) | 1,015 | 1,099 | -1,308 | % | ||||||||||
| Net income | 848 | 620 | (228 | ) | -27 | % | ||||||||||
| Less: Net loss attributable to non-controlling interests | 401 | 1,699 | 1,298 | 324 | % | |||||||||||
| Net income attributable to shareholders of CBAK Energy Technology, Inc. | 1,249 | 2,319 | 1,070 | 86 | % | |||||||||||
Net revenues. Net revenues decreased by $46.0 million, or 24%, to $148.3 million for the nine months ended September 30, 2022, from $136.5 million for the same period in 2022.
The following table sets forth the breakdown of our net revenues by end-product applications.
(All amounts in thousands of U.S. dollars other than percentages)
| Nine months ended September 30, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| High power lithium batteries used in: | ||||||||||||||||
| Electric vehicles | $ | 20 | 2,359 | 2,339 | 11,695 | % | ||||||||||
| Light electric vehicles | 1,907 | 4,230 | 2,323 | 122 | % | |||||||||||
| Uninterruptable supplies | 64,655 | 89,574 | 24,919 | 39 | % | |||||||||||
| 66,582 | 96,163 | 29,581 | 44 | % | ||||||||||||
| Materials used in manufacturing of lithium batteries | ||||||||||||||||
| Cathode | 66,083 | 31,071 | (35,012 | ) | -53 | % | ||||||||||
| Precursor | 61,603 | 21,025 | (40,578 | ) | -66 | % | ||||||||||
| 127,686 | 52,096 | (75,590 | ) | -59 | % | |||||||||||
| Total | $ | 194,268 | $ | 148,259 | (46,009 | ) | -24 | % | ||||||||
Net revenues from sales of batteries for electric vehicles were $2.4 million for the nine months ended September 30, 2023 as compared to nil in the same period of 2022, representing an increase of $2.3 million. This was partly because our batteries now have improved features and higher quality, making them more attractive to electric vehicle manufacturers. Additionally, the downstream market for electric vehicles continued to grow in 2023, leading to an increase in demand for EV battery products. As a result, we were able to secure more orders and increase our sales volume.
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Net revenues from sales of batteries for light electric vehicles were $4.2 million for the nine months ended September 30, 2023, as compared to $1.9 million in the same period of 2022, marking an increase of $2.3 million, or 122%. We will continue to penetrate the market for batteries used in light electric vehicles.
Net revenues from sales of batteries for uninterruptable power supplies were $89.6 million in the nine months ended September 30, 2023, as compared with $64.7 million in the same period in 2022, representing an increase of $24.9 million, or 39%.
Net revenues from sales of materials used in manufacturing of lithium batteries were $52.1 million for the nine months ended September 30, 2023, as compared to $127.7 million for the same period of 2022. This primarily resulted from a rapid decrease in raw material prices during 2023, which led to significant downward pressure on the pricing of our battery material products.
Cost of revenues. Cost of revenues decreased to $129.2 million for the nine months ended September 30, 2023, as compared to $180.0 million for the same period in 2022, a decrease of $50.7 million, or 28%. The decrease in cost of revenues resulted from significant decrease of materials sales from our battery materials segment. The cost of revenues includes written off of obsolete inventories of $2.1 million for nine months ended September 30, 2023, as compared to $1.2 million for the same period in 2022. We write down the inventory value whenever there is an indication that it is impaired.
Gross profit. Gross profit for the nine months ended September 30, 2023 was $19.0 million, or 12.84% of net revenues as compared to gross profit of $4.3 million, or 7.4% of net revenues, for the same period in 2022.
Research and development expenses. Research and development expenses increased slightly to approximately $8.0 million for the nine months ended September 30, 2023, as compared to approximately $7.9 million for the same period in 2022.
Sales and marketing expenses. Sales and marketing expenses increased to approximately $2.8 million for the nine months ended September 30, 2023, as compared to approximately $2.4 million for the same period in 2022, an increase of approximately $0.4 million, or 19%. As a percentage of revenues, sales and marketing expenses were 1.9% and 1.2% for the nine months ended September 30, 2023 and 2022, respectively. The increase mainly resulted from an increase of $0.5 million in marketing expenses, as compared to the nine months ended September 30, 2022. We have expanded our marketing effort since the beginning of 2023 after the lift of travel restrictions and quarantine requirements, including hosting the Company’s inaugural corporate open day on June 28, 2023.
General and administrative expenses. General and administrative expenses increased to $9.3 million, or 6.3% of revenues, for the nine months ended September 30, 2023, as compared to $6.6 million, or 3.4% of revenues, for the same period in 2022, representing an increase of $2.7 million, or 42%.The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and Hitrans and compensation expenses incurred for restricted share units and options granted to our employees on April 11, 2023 and August 22, 2023. We incurred $4.7 million in salaries and social insurance cost (including share-based compensation) during the nine months ended September 30, 2023 compared to $3.2 million during the nine months ended September 30, 2022. With the expansion of Nanjing CBAK, our operating expenses and consultancy expenses increased by $1.2 million to $3.0 million for the nine months ended September 30, 2023 compared to $1.8 million for the nine months ended September 30, 2022.
Provision for doubtful accounts. Provision for doubtful accounts was $0.3 million and $0.1 million for the nine months ended September 30, 2023 and 2022, respectively. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions.
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Operating loss. As a result of the above, our operating loss totaled $1.4 million for the nine months ended September 30, 2023, as compared to $2.7 million of operating loss for the same period in 2022, representing a decrease of $1.3 million, or 49%.
Finance (expenses) income, net. Finance expense, net was $0.2 million for the nine months ended September 30, 2023, as compared to finance income, net of $0.1 million for the same period in 2022, representing an expense decrease of $0.3 million. The finance income increase was mainly resulted from a decrease in interest expenses on bank borrowings and changes to exchange rates. We capitalized interest on bank borrowings of $0.6 million to the cost of construction in progress for the nine months ended September 30, 2023.
Other income (expenses), net. Other income was $1.0 million for the nine months ended September 30, 2023 as compared to other expenses, net $1.2 million for the nine months ended September 30, 2022, respectively. The difference was mainly resulted from the $2.7 million loss from dismantlement of Hitrans’s buildings and disposal of assets in the nine months ended September 30, 2022..
Changes in fair value of warrants liability. We issued warrants in the financings we consummated in December 2020 and February 2021. We determined that these warrants should be accounted for as derivative liabilities, as the warrants are dominated in a currency (U.S. dollar) other than our functional currency. The change in fair value of warrants liability is mainly due to the share price fluctuations.
Income tax credit (expense). Income tax credit was $1.0 million for the nine months ended September 30, 2023 compared to an income tax expenses of $84,230 for the nine months ended September 30, 2022.
Net income (loss). As a result of the foregoing, we had a net income of $0.6 million for the nine months ended September 30, 2023, compared to net income of $0.8 million for the same period in 2022.
Liquidity and Capital Resources
We had financed our liquidity requirements from a variety of sources, including short-term bank loans, other short-term loans and bills payable under bank credit agreements, advance from our related and unrelated parties, investors and issuance of capital stock and other equity-linked securities.
As of September 30, 2023, we had cash and cash equivalents of $45.7 million. Our total current assets were $136.3 million and our total current liabilities were $161.3 million as of September 30, 2023, resulting in a net working capital deficit of $25.0 million.
As of September 30, 2023, we had an accumulated deficit of $129.6 million. We had an accumulated deficit from recurring net losses incurred for the prior years and significant short-term debt obligations maturing in less than one year as of September 30, 2023. These factors raise substantial doubts about our ability to continue as a going concern. The report from our independent registered public accounting firm for the year ended December 31, 2022 included an explanatory paragraph in respect of the substantial doubt of our ability to continue as a going concern.
These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Lending from Financial Institutions
On November 16, 2021, we obtained banking facilities from Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB120.1 million (approximately $16.6 million) with the term from November 18, 2021 to November 18, 2026. The facility was secured by our land use rights and buildings. Under the facility, we have borrowed RMB59.0 million (approximately $8.5 million) as of December 31, 2022.
In January 2023, we renewed the banking facilities with Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB160.0 million (approximately $22.1 million) with the term from January 2023 to December 2027. The facility was secured by our land use rights and buildings. Under the facility, we have borrowed RMB148.5 million (approximately $20.4 million) as of September 30, 2023, bearing interest at 3.65% per annum expiring through February to May 2024.
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On April 19, 2021, we obtained five-year acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB84.4 million (approximately $11.6 million). Any amount drawn under the facilities requires security in the form of cash or bank acceptance bills receivable of at least the same amount. Under the facilities, as of December 31, 2021, we borrowed a total of RMB10 million (approximately $1.4 million) from Bank of Ningbo Co., Ltd in the form of bills payable for a various term expiring from January to February 2022, which was secured by our cash totaling RMB10 million (approximately $1.4 million). We repaid the bills in January to February 2022.
On March 21, 2022, we renewed the above acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB71.6 million ($9.9 million) with other terms remain the same. Under the facilities, as of December 31, 2022 and September 30, 2023, we borrowed a total of RMB15.9 million (approximately $2.3 million) and RMB43.4 million (approximately $6.0 million), respectively, in the form of bills payable for various terms expiring from October 2023 to February 2024, which was secured by our cash totaling RMB15.9 million (approximately $2.3 million) and RMB43.4 million (approximately $6.0 million), respectively.
On January 17, 2022, we obtained a one-year term facility from Agricultural Bank of China with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 105% of benchmark rate of the People’s Bank of China (“PBOC”) for short-term loans, which is 3.85% per annum. The facility was guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan and secured by an unrelated third party, Jiangsu Credits Financing Guarantee Co., Ltd. We borrowed RMB10 million (approximately $1.4 million) on January 20, 2022 for a term until January 16, 2023. We repaid RMB10 million (approximately $1.4 million) early on January 5, 2023. On January 6, 2023, we borrowed a one-year term loan of RMB10 million (approximately $1.4 million) for a period of one year to January 4, 2024, bearing interest at 120% of benchmark rate of the PBOC for short-term loans, which is 3.85% per annum, while other terms and guarantee remain the same.
On February 9, 2022, we obtained a one-year term facility from Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 124% of benchmark rate of the People’s Bank of China (“PBOC”) for short-term loans, which is 4.94% per annum. The facility was guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan. We borrowed RMB10 million (approximately $1.4 million) on February 17, 2022 for a term until January 28, 2023. We repaid RMB10 million (approximately $1.4 million) on January 16, 2023. On January 17, 2023, we borrowed a one-year loan of RMB10 million (approximately $1.4 million) bearing interest at 129% of benchmark rate of PBOC for short-term loans, which is 4.70% per annum. for a term until January 13, 2024.
On March 8, 2022, we obtained a one-year term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 5.5% per annum. The facility was guaranteed by 100% equity in CBAK Power held by BAK Asia and our CEO, Mr. Yunfei Li. We borrowed RMB10 million (approximately $1.4 million) on the same date. On May 17, 2022, we repaid the loan principal and related loan interests early.
On April 28, 2022, we obtained a three-year term facility from Industrial and Commercial Bank of China Nanjing Gaochun branch, with a maximum amount of RMB12 million (approximately $1.7 million) with the term from April 21, 2022 to April 21, 2025. The facility was guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan. Under the facility, we borrowed RMB10 million (approximately $1.5 million) on April 29, 2022, bearing interest at 3.95% per annum for a term until April 29, 2023. We repaid RMB10 million (approximately $1.4 million) on April 19, 2023. On April 20, 2023, we borrowed another one-year loan of RMB10 million (approximately $1.4 million) bearing interest at 102.5% of benchmark rate of PBOC for short-term loans, which is 3.90% per annum for a term until April 19, 2024.
On June 22, 2022, we obtained another one-year term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 4.5% per annum. The facility was guaranteed by 100% equity in CBAK Power held by BAK Asia and our CEO, Mr. Yunfei Li. We borrowed RMB10 million (approximately $1.4 million) on the same date for a term until June 21, 2023. On November 10, 2022, we repaid the loan principal and the related loan interests early.
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On September 25, 2022, we entered into another one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB9 million (approximately $1.3 million) bearing interest rate at 4.81% per annum. The facility was guaranteed by 100% equity in CBAK Nanjing held by BAK Investment and our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan. We borrowed RMB9 million (approximately $1.3 million) on September 27, 2022 for a term until September 24, 2023. We repaid the loan on September 24, 2023.
We entered into another one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB9 million (approximately $1.2 million) bearing interest rate at 4.6% per annum for a period from September 24, 2023 to August 31, 2024. The facility was guaranteed by 100% equity in CBAK Nanjing held by BAK Investment and our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan. We borrowed RMB9 million (approximately $1.2 million) on September 27, 2023 for a term until September August 31, 2024.
On November 8, 2022, we entered into a short-term loan agreement with China CITIC Bank Shaoxing Shengzhong Branch to August 9, 2023 with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest rate at 4.35% per annum. We borrowed RMB10 million (approximately $1.4 million) on the same date. We have repaid RMB5 million (approximately $0.7 million), RMB0.2 million (approximately $0.1 million) and RMB4.8, million (approximately $0.7 million) on November 16, 2022, December 27, 2022 and August 9, 2023, respectively. We entered into another short-term loan agreement with China CITIC Bank Shaoxing Branch for a one-year short-term loan agreement with a maximum amount of RMB0.2 million (approximately $0.1 million) for December 27, 2022 to December 27, 2023, bearing interest rate at 4.20% per annum. We entered into another loan agreement with China CITIC Bank Shaoxing Shengzhong Branch for a short-term loan of RMB4.8 million (approximately $0.7 million) from August 10, 2023 to May 2, 2024, bearing interest rate at 4.3% per annum. We borrowed RMB4.8 million (approximately $0.7 million) on the same date.
On December 9, 2022, we obtained a RMB5 million (approximately $0.7 million) letter of credit from China CITIC Bank Shaoxing Shengzhong Branch for a period to October 30, 2024 for settlement of Hitrans purchase. We utilized RMB1.5 million (approximately $0.2 million) letter of credit at an interest rate of 2.7% for a period of one year to January 5, 2024.
On January 7, 2023, we obtained a two-year term facility from Postal Savings Bank of China, Nanjing Gaochun Branch with a maximum amount of RMB10 million (approximately $1.4 million) for a period from January 7, 2023 to January 6, 2025. The facility was guaranteed by our CEO, Mr. Yunfei Li, Mr. Yunfei Li’s wife Ms. Qinghui Yuan and CBAK New Energy (Nanjing) Co., Ltd. We borrowed RMB5 million (approximately $0.7 million) on January 12, 2023 for a term of one year until January 11, 2024, bearing interest at 3.65% per annum. We repaid the above early on June 15, 2023. On June 27, 2023, we entered into another loan agreement for one year from June 27, 2023 to June 26, 2024 under the two-year term facility for a maximum loan amount of RMB10 million (approximately $1.4 million) bearing interest rate at 3.85% pr annum. We borrowed RMB10 million (approximately $1.4 million) on the same date. The loan was guaranteed by our CEO, Mr. Yunfei Li, Mr. Yunfei Li’s wife Ms. Qinghui Yuan and CBAK New Energy (Nanjing) Co., Ltd.
On March 29, 2023, we and Bank of China Dalian Jinpu New Area Branch entered into a short-term loan agreement for one year from March 29, 2023 to March 28, 2024 for a maximum loan amount to RMB5 million (approximately $0.7 million) bearing interest rate at 3.65% per annum. We borrowed RMB5 million (approximately $0.7 million) on the same date. The loan was secured by our buildings in Dalian.
On April 19, 2023, we and Bank of Nanjing Gaochun Branch entered into a short-term loan agreement for one year from April 10, 2023 to April 9, 2024 for RMB10 million (approximately $1.4 million) bearing interest rate at 3.7% per annum. We borrowed RMB10 million (approximately $1.4 million) on April 23, 2023. The loan was guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan.
On June 9, 2023, we and China Zheshang Bank Co., Ltd Shangyu Branch entered into a short-term loan agreement for one year from June 9, 2023 to June 7, 2024 for a maximum loan amount to RMB4 million (approximately $0.6 million) bearing interest rate at 4.55% per annum. We borrowed RMB4 million (approximately $0.6 million) on the same date.
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On July 31, 2023, we obtained a three-year term facility from Bank of China Gaochun Branch, with a maximum amount of RMB10 million (approximately $1.4 million) with the term from July 31, 2023 to July 30, 2026. The facility was guaranteed by our CEO, Mr, Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan. Under the facility, we borrowed RMB10 million (approximately $1.4 million) on July 31, 2023, bearing interest rate at 3.95% per annum.
On August 3, 2023, we and Bank of China Dalian Jinpu New Area Branch entered into a short term loan agreement for one year from August 3, 2023 to August 2, 2024 for a maximum amount of RMB10 million (approximately $1.4 million) bearing interest rate at 3.55% per annum. We borrowed RMB10 million (approximately $1.4 million) on the same date. The loan was secured by our buildings in Dalian.
We borrowed a series of acceptance bills from Agricultural Bank of China Nanjing Gaochung Branch totaling RMB5.3 million (approximately $0.7 million) for various terms expiring in October 2023 to December 2023, which was secured by our cash totaling RMB5.3 million (approximately $0.7 million).
We borrowed a series of acceptance bills from China Zheshang Bank Co. Ltd Shenyang Branch totaling RMB83.5 million (approximately $11.5 million) for various terms through January to March 2024, which was secured by our cash totaling RMB83.5 million (approximately $11.5 million).
We borrowed a series of acceptance bills from China Zheshang Bank Co. Ltd Shangyu Branch totaling RMB83.0 million (approximately $11.4 million) for various terms through January to March 2024, which was secured by our cash totaling RMB51.8 million (approximately $7.1 million) and our bills receivable totaling RMB28.2 million (approximately $3.9 million).
We borrowed a series of acceptance bills from Shaoxing Branch of Bank of Communications Co., Ltd totaling RMB7.0 million (approximately $0.9 million) for various terms ending through October 2023, which was secured by our cash totaling RMB3.5 million (approximately $0.5 million) land use rights and buildings in Zhejiang.
We borrowed a series of acceptance bills from China Merchants Bank Dalian Branch totaling RMB25.8 million (approximately $3.5 million) for various terms through October to December 2023, which was secured by our cash totaling RMB25.8 million (approximately $3.5 million).
We borrowed a series of acceptance bills from Bank of China Dalian Jinzhou Branch totaling RMB35.2 million (approximately $4.8 million) for various terms through September to December 2023, which was secured by our cash totaling RMB35.2 million (approximately $4.8 million).
We borrowed a series of acceptance bills from Jiangsu Gaochun Rural Commercial Bank totaling RM24.8 million (approximately $3.4 million) for various terms through March 2024, which was secured by our cash totaling RMB24.8 million (approximately $3.4 million).
We borrowed a series of acceptance bills from China CITIC Bank Shaoxing Shengzhong Branch totaling RMB44.1 million (approximately $6.1 million) for various terms through October 2023 to March 2024, which was secured by our cash totaling RMB35.8 million (approximately $4.9 million) and bills receivable totaling RMB8.5 million (approximately $1.2 million).
As of September 30, 2023, we had unutilized committed banking facilities of $8.2 million. We plan to renew these loans upon maturity and intend to raise additional funds through bank borrowings in the future to meet our daily cash demands, if required.
Equity and Debt Financings from Investors
We have also obtained funds through private placements, registered direct offerings and other equity and note financings.
On December 8, 2020, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we issued in a registered direct offering, an aggregate of 9,489,800 shares of common stock of the Company at a per share purchase price of $5.18, and warrants to purchase an aggregate of 3,795,920 shares of common stock of the Company at an exercise price of $6.46 per share exercisable for 36 months from the date of issuance, for gross proceeds of approximately $49.16 million, before deducting fees to the placement agent and other offering expenses payable by the Company.
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On February 8, 2021, we entered into another securities purchase agreement with the same investors, pursuant to which we issued in a registered direct offering, an aggregate of 8,939,976 shares of common stock of the Company at a per share purchase price of $7.83. In addition, we issued to the investors (i) in a concurrent private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering, the Series B warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.83 and exercisable for 90 days from the date of issuance; and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992 shares of common stock, at a per share exercise price of $7.67 and exercisable for 45 months from the date of issuance. We received gross proceeds of approximately $70 million from the registered direct offering and the concurrent private placement, before deducting fees to the placement agent and other offering expenses payable by the Company.
On May 10, 2021, we entered into the Series B Warrant Amendment with each of the holders of the Company’s outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August 31, 2021.
As of August 31, 2021, we had not received any notices from the investors to exercise Series B warrants. Series B warrants, along with Series A-2 warrants, had both expired on September 1, 2021.
We currently are expanding our product lines and manufacturing capacity in our Dalian, Nanjing and Zhejiang plants, which requires additional funding to finance the expansion. We may also require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. We plan to renew these loans upon maturity, if required, and plan to raise additional funds through bank borrowings and equity financing in the future to meet our daily cash demands, if required. However, there can be no assurance that we will be successful in obtaining this financing. If our existing cash and bank borrowing are insufficient to meet our requirements, we may seek to sell equity securities, debt securities or borrow from lending institutions. We can make no assurance that financing will be available in the amounts we need or on terms acceptable to us, if at all. The sale of equity securities, including convertible debt securities, would dilute the interests of our current shareholders. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.
The accompanying condensed consolidated financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty related to our ability to continue as a going concern.
The following table sets forth a summary of our cash flows for the periods indicated:
(All amounts in thousands of U.S. dollars)
| Nine Months Ended September 30, | ||||||||
| 2022 | 2023 | |||||||
| Net cash provided by operating activities | $ | 16,695 | $ | 20,745 | ||||
| Net cash used in investing activities | (9,923 | ) | (28,737 | ) | ||||
| Net cash provided by financing activities | 12,401 | 18,525 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (3,890 | ) | (2,201 | ) | ||||
| Net increase in cash and cash equivalents and restricted cash | 15,283 | 8,332 | ||||||
| Cash and cash equivalents and restricted cash at the beginning of period | 26,354 | 37,356 | ||||||
| Cash and cash equivalents and restricted cash at the end of period | $ | 41,637 | $ | 45,688 | ||||
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Operating Activities
Net cash provided by operating activities was $20.7 million in the nine months ended September 30, 2023. The net cash provided by operating activities for the nine months ended September 30, 2023 was mainly attributable to our net income of $10.4 million (before non-cash depreciation and amortization, provision for of doubtful debts, write-down of inventories, share-based compensation, and change in fair value of warrant liability), an increase of $24.9 million of trade and bills payables, a decrease of $7.8 million of inventories, a decrease of $5.1 million of trade receivable from our former subsidiary offset by an increase of trade and bills receivable of $20.5 million, an increase of prepayments and other receivables of $1.8 million and an increase of $3.8 million of accrued expenses and other payables.
Net cash provided by operating activities was $16.7 million in the nine months ended September 30, 2022 was mainly attributable to our net income of $5.9 million (before loss on disposal of property, plant and equipment, non-cash depreciation and amortization, recovery of doubtful debts, write-down of inventories, share-based compensation and change in fair value of warrant liability), a decrease of $24.4 million in trade and bills receivables, a decrease of $6.8 million of prepayments and other receivables, an increase of $29.0 million in inventory and an increase of $4.7 million receivable from our former subsidiary, partially offset by $13.1 million decrease of trade and bills payables.
Investing Activities
Net cash used in investing activities was $28.7 million for the nine months ended September 30, 2023, as compared to $9.9 million in the same period of 2022. The net cash used in investing activities comprised the purchases of property, plant and equipment and construction in progress $24.9 million and $3.8 million on deposit paid for acquisition of long-term investments. Net cash used in investing activities was $9.9 million for the nine months ended September 30, 2022, comprised of the purchases of property, plant and equipment and construction in progress.
Financing Activities
Net cash provided by financing activities was $18.5 million in the nine months ended September 30, 2023. The net cash provided by financing activities for the nine months ended September 30, 2023 was mainly attributable to $36.4 million advances from bank borrowings offset by repayment of bank borrowings of $16.6 million and $0.8 million repayment on finance lease.
Net cash provided by financing activities was $12.4 million in the nine months ended September 30, 2022. The net cash provided by financing activities in the nine months ended September 30, 2022 mainly comprised proceeds of $12-.0 million from bank borrowings, $1.5 million borrowings from shareholders and $1.5 million borrowings from unrelated parties and $1.4 million injection from non-controlling interests, partially offset by repayment of bank borrowings of $1.5 million and repayment of borrowings from Mr. Ye Junnan of $3.8 million.
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As of September 30, 2023, the principal amounts outstanding under our credit facilities and lines of credit were as follows:
(All amounts in thousands of U.S. dollars)
| Maximum amount available | Amount borrowed | |||||||
| Long-term credit facilities: | ||||||||
| Shaoxing Branch of Bank of Communications Co., Ltd | $ | 21,026 | $ | 20,408 | ||||
| Industrial and Commercial Bank of China Nanjing Gaochun Branch | 1,649 | 1,375 | ||||||
| Postal Savings Bank of China Nanjing Gaochun Branch | 1,375 | 1,375 | ||||||
| 24,050 | 23,158 | |||||||
| Short-term credit facilities: | ||||||||
| China CITIC Bank Shaoxing Shengzhong Branch | 687 | 687 | ||||||
| Jiangsu Gaochun Rural Commercial Bank | 2,611 | 2,611 | ||||||
| Agricultural Bank of China Nanjing Gaochung Branch | 1,375 | 1,375 | ||||||
| Bank of China Dalian Jinpu New Area Branch | 2,062 | 2,062 | ||||||
| Bank of China Gaochun Branch | 1,374 | 1,374 | ||||||
| Bank of Nanjing Gaochun Branch | 1,375 | 1,375 | ||||||
| China Zheshang Bank Co., Ltd Shangyu Branch | 549 | 549 | ||||||
| Bank of Jilin Co., Ltd | 6,872 | - | ||||||
| 16,905 | 10,033 | |||||||
| Other lines of credit: | ||||||||
| Shaoxing Branch of Bank of Communications Co., Ltd | 968 | 968 | ||||||
| Agricultural Bank of China Nanjing Gaochun Branch | 729 | 729 | ||||||
| Jiangsu Gaochun Rural Commercial Bank | 3,403 | 3,403 | ||||||
| Bank of Ningbo. Nanjing Gaochun Branch | 5,966 | 5,966 | ||||||
| China Zheshang Bank Co., Ltd Shangyu Branch | 11,405 | 11,405 | ||||||
| China Merchants Bank Co., Ltd, Dalian Development Zone Branch | 3,534 | 3,534 | ||||||
| Bank of China Dalian Jinzhou Branch | 4,833 | 4,833 | ||||||
| China Zheshang Bank Co. Ltd Shenyang Branch | 11,473 | 11,473 | ||||||
| China CITIC Bank Shaoxing Shengzhong Branch | 6,752 | 6,272 | ||||||
| 49,063 | 48,583 | |||||||
| Total | $ | 90,018 | $ | 81,774 | ||||
Capital Expenditures
We incurred capital expenditures of $24.9 million and $9.8 million in the nine months ended September 30, 2023 and 2022, respectively. Our capital expenditures were used primarily to construct or upgrade our Dalian, Nanjing and Zhejiang facilities.
We estimate that our total capital expenditures in fiscal year 2023 will reach approximately $80 million. Such funds will be used to construct new plants with new product lines and battery module packing lines.
Critical Accounting Policies
Our condensed consolidated financial information has been prepared in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (1) the reported amounts of our assets and liabilities, (2) the disclosure of our contingent assets and liabilities at the end of each fiscal period and (3) the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
There were no material changes to the critical accounting policies previously disclosed in our audited consolidated financial statements for the year ended December 31, 2022 included in the Annual Report on Form 10-K filed on April 14, 2023.
Changes in Accounting Standards
Please refer to Note 1 to our condensed consolidated financial statements, “Principal Activities, Basis of Presentation and Organization—Recently Adopted Accounting Standards” and “—Recently Issued But Not Yet Adopted Accounting Pronouncements” for a discussion of relevant pronouncements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Management conducted its evaluation of disclosure controls and procedures under the supervision of our Chief Executive Officer and our Interim Chief Financial Officer. Based upon, and as of the date of this evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of September 30, 2023.
As we disclosed in our Annual Report on Form 10-K filed with the SEC on April 14, 2023, during our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, management identified the following material weakness in our internal control over financial reporting:
| ● | We did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements. |
| ● | We do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted in the United States commensurate with our financial reporting requirements. |
In order to cure the foregoing material weakness, we have taken or are taking the following remediation measures:
| ● | We are in the process of hiring a permanent chief financial officer with significant U.S. GAAP and SEC reporting experience. Ms. Xiangyu Pei was appointed by the Board of Directors of the Company as the Interim Chief Financial Officer on August 23, 2019. Ms. Xiangyu Pei resigned as our Interim Chief Financial Officer on August 22, 2023 but has continued to serve in the Company’s finance department and on the board of director, and Mr. Jiewei Li was appointed as the Company’s Chief Financial Officer on August 22, 2023. |
| ● | We have regularly offered our financial personnel trainings on internal control and risk management. We have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines. We plan to continue to provide trainings to our financial team and our other relevant personnel on the U.S. GAAP accounting guidelines applicable to our financial reporting requirements. |
We intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weakness that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.
Changes in Internal Control over Financial Reporting
Except for the matters described above, there were no changes in our internal controls over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The information set forth in Note 27 “Commitments and Contingencies—(ii) Litigation” to our condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated by reference herein.
ITEM 1A. RISK FACTORS.
There are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Other than as previously disclosed in current reports on Form 8-K, there were no unregistered sales of equity securities or repurchase of common stock during the period covered by this report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS.
The following exhibits are filed as part of this report or incorporated by reference:
| Exhibit No. | Description | |
| 31.1 | Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 9, 2023
| CBAK ENERGY TECHNOLOGY, INC. | ||
| By: | /s/ Yunfei Li | |
| Yunfei Li | ||
| Chief Executive Officer | ||
| By: | /s/ Jiewei Li | |
| Jiewei Li | ||
| Chief Financial Officer | ||
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